Armstrongs Handbook of Human Resource Management Practice A Guide To The Theory and Practice of People Management 16nbsped 1398606634 9781398606630

i
P R A I S E F O R A R M S T RO N G’ S
H A N D B O O K O F H U M A N R E S O U RC E
MA N A G E M E N T P R AC T I C E
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 (about a previous edition)
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-in-Chief, People Management (about a previous edition)
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, Academic Lead, Workforce Planning and Resources, University of Lincoln
(about a previous edition)
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, retired Adjunct Professor, School of Business, University of Iceland (about a previous
edition)
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, Maynooth University, School of Business (about a previous edition)
Michael Armstrong could well be offering the definitive text in the field… an excellent book.
The Times Higher Education Supplement (about a previous edition)
Topical, comprehensive, well-informed and student-friendly.
Dr Izabela Robinson, Associate Lecturer, Northampton Business School (about a previous edition)
The gold standard when it comes to HRM texts.
Connie Nolan, former Senior Lecturer, Canterbury Christ Church University (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 practising 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
MICHAEL ARMSTRONG
Armstrong on Reinventing Performance Management
Armstrong’s Essential Human Resource Management Practice
Armstrong’s Handbook of Learning and Development
Armstrong’s Handbook of Management and Leadership for HR
Armstrong’s Handbook of Performance Management
Armstrong’s Handbook of Reward Management Practice (with Duncan Brown)
Armstrong’s Handbook of Strategic Human Resource Management
Armstrong’s Job Evaluation Handbook
Evidence-Based Reward Management (with Duncan Brown and Peter Reilly)
How to Be an Even Better Manager
How to Manage People
Human Capital Management (with Angela Baron)
The Reward Management Toolkit (with Ann Cummins)

MICHAEL ARMSTRONG
iii
WITH STEPHEN TAYLOR
16TH EDITION
ARMSTRONG’S
HANDBOOK OF
HUMAN RESOURCE
MANAGEMENT
PRACTICE
A guide to the theory and
practice of people management
iv
Publisher’s note
Every possible effort has been made to ensure that the information contained in this book is
accurate at the time of going to press, and the publishers and authors cannot accept
responsibility for any errors or omissions, however caused. No responsibility for loss or damage
occasioned to any person acting, or refraining from action, as a result of the material in this
publication can be accepted by the editor, the publisher or the author.
First edition published in 1977 as A Handbook of Personnel Management Practice by Kogan Page
Seventh edition published in 1999 as A Handbook of Human Resource Management Practice
Eleventh edition published in 2009 as Armstrong’s Handbook of Human Resource Management Practice
Sixteenth edition 2023
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 transmitted, 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 8 W 38th Street, Suite 902 4737/23 Ansari Road
London New York, NY 10018 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, 2023
The right of Michael Armstrong to be identified as the authors of this work has been asserted by them
in accordance with the Copyright, Designs and Patents Act 1988.
ISBNs
Hardback 978 1 3986 0665 4

Paperback 978 1 3986 0663 0
Ebook 978 1 3986 0664 7
British Library Cataloguing-in-Publication Data
A CIP record for this book is available from the British Library.
Library of Congress Cataloging-in-Publication Data

Names: Armstrong, Michael, 1928- author. | Taylor, Stephen, 1965- author.
Title: Armstrong’s handbook of human resource management practice / Michael
Armstrong, with Stephen Taylor.
Description: 16th edition. | London; New York, NY: Kogan Page, 2023. |
Includes bibliographical references and index.
Identifiers: LCCN 2022049912 (print) | LCCN 2022049913 (ebook) | ISBN
9781398606630 (paperback) | ISBN 9781398606654 (hardback) | ISBN
9781398606647 (ebook)
Subjects: LCSH: Personnel management–Handbooks, manuals, etc.
Classification: LCC HF5549.17 .A76 2023 (print) | LCC HF5549.17 (ebook) |
DDC 658.3–dc23/eng/20221019
LC record available at https://lccn.loc.gov/2022049912
LC ebook record available at https://lccn.loc.gov/2022049913
Typeset by Integra Software Services, Pondicherry

Print production managed by Jellyfish
Printed and bound by CPI Group (UK) Ltd, Croydon CR0 4YY
v
CO N T E N T S I N B R I E F
List of figures xxxi

List of tables xxxiii
Preface xxxv
PA R T I Fundamentals of human resource management 1
01 The essence of HRM 3
02 Human capital management 17
03 The context of HRM 24
04 The future of work 27
05 HRM and organizational performance 35
06 The ethical dimension of HRM 47
07 Corporate social responsibility 57
PA R T I I The strategic approach to HRM 63
08 Strategic HRM 65
09 HR strategy 74
PA R T I I I Delivering HR 85
10 The role of HR 87
11 The HRM role of line managers 100
PA R T I V Human resource management processes 107
12 Evidence-based HRM 109
13 HR analytics 113
14 Digital HRM 119

vi Contents in Brief
15 Knowledge management 127
16 Competency-based HRM 131
PA R T V Organization 137
17 Organizational behaviour 139
18 Organization design 158
19 Work design 164
20 Job design 171
21 Organization development 179
PA R T V I Factors affecting the behaviour of people at work 193
22 Motivation 195
23 Commitment 210
24 Employee engagement 218
PA R T V I I People resourcing 231
25 Resourcing strategy 233
26 Workforce planning 235
27 Recruitment and selection 245
28 Talent management 265
PA R T V I I I Employment practices 275
29 The employee experience 277
30 Managing employment 281
31 Managing diversity and inclusion 298

Contents in Brief vii
32 Managing flexibility 303
33 Managing home and hybrid working 309
PA R T I X Learning and development 317
34 The basis of learning and development 319
35 Strategic learning and development 325
36 Organizational learning and the learning organization 329
37 Individual learning 334
38 The process of learning and development 344
39 The practice of learning and development 353
40 Leadership and management development 366
PA R T X Performance management 375
41 The basis of performance management 377
42 Performance management systems 383
43 Performance leadership 393
PA R T X I Reward management 401
44 The basis of reward management 403
45 Reward strategy 415
46 The practice of reward management 420
47 Managing reward for special groups 435
48 Reducing the gender pay gap 445
PA R T X I I Employment relations 453
49 The basis of employment relations 455
50 Employment relations strategy 459

viii Contents in Brief
51 The employment relationship 464
52 The psychological contract 469
53 The practice of industrial relations 473
54 Employee voice 479
55 Employee communications 486
PA R T X I I I Employee wellbeing 491
56 Principles and practice of employee wellbeing 493
57 Health and safety 501
PA R T X I V HR practices 513
58 HR policies 515
59 HR procedures 522
60 Dealing with the legal aspects of employment 528
PA R T X V International HRM 543
61 The basis of international HRM 545
62 The practice of international HRM 551
63 Managing expatriates 559
PA R T X V I People management skills and competencies 569
64 Strategic people management skills 571
65 Business skills 573
66 Dealing with business issues from an HR perspective 581
67 Problem-solving and decision-making skills 586
68 Analytical and critical skills 591
69 Research skills 596

Contents in Brief ix
70 Statistical skills 608
71 Selection interviewing skills 613
72 Job, role and skills analysis and competency modelling 623
73 Learning and development skills 638
74 Negotiating skills 643
75 Change management 649
76 Influencing skills 659
77 Leadership 663
78 Handling people problems 671
79 Handling challenging conversations 678
80 Managing conflict 679
81 Political skills 683
82 Project management 687
PA R T X V I I Conclusion 689
83 Trends in HRM 691
CIPD Profession Map: Cross-references to text 696

Author index 700
Subject index 705
x
THIS PAGE IS INTENTIONALLY LEFT BLANK

xi
CO N T E N T S
List of figures xxxi

List of tables xxxiii
Preface xxxv
PA R T I Fundamentals of human resource management 1
01 The essence of HRM 3
Introduction 3
The practice of HRM 3
The HR architecture 3
The HR system 4
The philosophy of people management 11
People practices 12
References 15
02 Human capital management 17
Introduction 17
Human capital management defined 17
The concept of human capital 17
The constituents of human capital 18
Measuring human capital 19
Approaches to HRM raised by human capital theory 20
HCM and investment decisions 20
References 22
03 The context of HRM 24
Introduction 24
Environmental factors 24
The labour market 25
References 26
04 The future of work 27
Introduction 27
The nature of work 27
Theories explaining the meaning of work 27
What is happening to work? 29
The factors affecting work 29
xii Contents
What is happening to work now? 30

What is going to happen to work? 32
References 33
05 HRM and organizational performance 35
Introduction 35
Measuring organizational performance 35
The impact of HR 36
How HRM makes an impact 38
The development of high-performance working 42
High-performance work systems 42
References 45
06 The ethical dimension of HRM 47
Introduction 47
The meaning and concerns of ethics 47
The nature of ethical decisions and judgements 47
Fairness 48
Equity theory 49
Justice 49
HRM ethical guidelines 50
Ethical dilemmas 52
The ethical role of HR 53
References 55
07 Corporate social responsibility 57
Introduction 57
Corporate social responsibility defined 57
Strategic CSR defined 58
CSR activities 58
The rationale for CSR 59
The opposing view 59
Social responsibility investment criteria 60
Benefits of CSR 60
The basis for developing a CSR strategy 60
The role of HR 61
References 62
PA R T I I The strategic approach to HRM 63
08 Strategic HRM 65
Introduction 65
The nature of strategic human resource management 65
The resource-based view of SHRM 66
Strategic fit 67
Contents xiii
Critical evaluation of the concept of SHRM 70

References 72
09 HR strategy 74
Introduction 74
The nature of HR strategy 74
Approaches to HR strategy 75
Developing HR strategy 78
Implementing HR strategy 81
References 82
PA R T I I I Delivering HR 85
10 The role of HR 87
Introduction 87
The HR function 87
The role of the HR professional 92
References 98
11 The HRM role of line managers 100
Introduction 100
The people management role of line managers 100
How well does devolution to line managers of HR responsibilities work? 101
Factors affecting the quality of the implementation of HRM by line managers 102
Dealing with the factors 103
References 105
PA R T I V Human resource management processes 107
12 Evidence-based HRM 109
Introduction 109
Evidence-based HRM defined 109
Evidence-based management 109
The approach to evidence-based HRM 110
References 112
13 HR analytics 113
Introduction 113
HR analytics defined 113
The purpose of HR analytics 113
The content of HR analytics 114
The process of HR analytics 114
xiv Contents
Types of HR analytics 114

Keeping people informed 118
References 118
14 Digital HRM 119
Introduction 119
Digital HRM defined 119
The purpose of digital HRM 119
The uses of digital HRM 120
Digital transformation 121
Human resource information system (HRIS) 121
Cloud computing 121
Artificial intelligence 122
Managing digital HRM 123
References 126
15 Knowledge management 127
Introduction 127
Knowledge management defined 127
The meaning of knowledge 127
Approaches to knowledge management 128
Knowledge management issues 129
Implementing knowledge management 129
References 130
16 Competency-based HRM 131
Introduction 131
Competency defined 131
Knowledge, skills and abilities (KSAs) 132
Competency frameworks 132
Developing a competency framework 133
Approaches to using competencies 133
Applications of competency-based HRM 134
Keys to success in using competencies 134
References 135
PA R T V Organization 137
17 Organizational behaviour 139
Introduction 139
Organizational behaviour defined 139
The sources and applications of organizational behaviour theory 140
How organizations function 141
Organizational culture 144
Contents xv
Organizational climate 147

Organizational processes 148
Characteristics of people 150
Implications for HR specialists 153
References 156
18 Organization design 158
Introduction 158
Organization design theories 158
Organization design guidelines 159
Organizational choice 160
The approach to organization design 161
Successful organization design 162
References 163
19 Work design 164
Introduction 164
Work design – a short history 164
Work system design 164
Approaches to work design 165
The role of HR in work design 168
References 169
20 Job design 171
Introduction 171
Job quality 171
What is a good job? 172
The practice of job design 173
Principles of job design 175
Approaches to job design 176
Responsibility for job design 176
Job crafting 176
References 178
21 Organization development 179
Introduction 179
Organization development defined 179
The nature of organization development 179
The story of organization development 180
Organization development strategy 183
Organization development programmes 184
Organizational diagnosis 184
Conclusions on organization development 189
References 190
xvi Contents
PA R T V I Factors affecting the behaviour of people at work 193
22 Motivation 195
Introduction 195
The meaning of motivation 195
Reinforcement theory 196
Content theory 196
Process theory 199
Intrinsic and extrinsic motivation 201
Motivation and job satisfaction 202
Motivation and financial incentives 205
Conclusions on motivation theory 205
Motivation strategies 205
References 207
23 Commitment 210
Introduction 210
The meaning of organizational commitment 210
Mutuality and commitment 210
Commitment and performance 211
The mutual gains perspective 211
Commitment and engagement 212
Factors affecting commitment 212
Critical evaluation of the concept of commitment 213
Developing a commitment strategy 214
References 216
24 Employee engagement 218
Introduction 218
The meaning of employee engagement 218
The theory of engagement 219
The components of employee engagement 219
Drivers of employee engagement 221
Outcomes of engagement 221
Engagement strategy 222
Enhancing job engagement 222
Enhancing organizational engagement 225
Burnout 225
Measuring engagement 226
Critical evaluation of the concept of employee engagement 227
References 229
Contents xvii
PA R T V I I People resourcing 231
25 Resourcing strategy 233
Introduction 233
Strategic resourcing 233
The nature of resourcing strategies 233
Reference 234
26 Workforce planning 235

Introduction 235
Workforce planning defined 235
The link between workforce and business/corporate planning 236
Incidence of workforce planning 236
Workforce planning issues 236
Systematic workforce planning 237
Approach to workforce planning 241
References 243
27 Recruitment and selection 245
Introduction 245
The recruitment and selection process 245
Defining requirements 246
Attracting candidates 247
Sourcing candidates 248
Screening applications 253
Selection methods 253
Selection interviews 255
Selection testing 257
Assessment centres 260
Making the decision 260
Provisional offers and obtaining references 261
Offering employment 262
Following up 262
Dealing with recruitment problems 262
References 263
28 Talent management 265
Introduction 265
Talent management defined 265
Talent management policy 266
Talent management strategy 267
The process of talent management 268
The talent pool 268
Talent planning 269
xviii Contents
Resourcing 269
Identifying talent 269
Talent development 271
References 274
PA R T V I I I Employment practices 275
29 The employee experience 277
Introduction 277
The concept of the employee experience 277
References 280
30 Managing employment 281
Introduction 281
Introduction to the organization 281
Managing employee retention 283
Employee turnover 285
Redundancy 289
Fire and rehire 289
Dismissal 290
Absence management 290
Presenteeism 293
References 296
31 Managing diversity and inclusion 298
Introduction 298
The meaning and significance of managing diversity and inclusion 298
The rationale for managing diversity and inclusion 299
How to manage diversity and inclusion 299
References 302
32 Managing flexibility 303
Introduction 303
Forms of flexibility 303
Flexible working 305
Zero-hours contracts 306
The role of HR 307
References 308
33 Managing home and hybrid working 309
Introduction 309
Incidence of home and hybrid working 309
Working from home: general considerations 310
Contents xix
Employers 310
Line managers 311
Individual employees 312
Managing home and hybrid working processes 313
References 315
PA R T I X Learning and development 317
34 The basis of learning and development 319
Introduction 319
Learning and development defined 319
The basis of learning 319
The elements of learning and development 319
Formal and informal learning 320
Connected learning 322
The components of learning and development 322
Relationships between L&D and other people management activities 322
The ethical dimension 322
The state of L&D 322
References 324
35 Strategic learning and development 325
Introduction 325
Strategic learning and development 325
Learning and development strategies 325
Formulating and implementing L&D strategies 327
Reference 328
36 Organizational learning and the learning organization 329
Introduction 329
Organizational learning 329
The learning organization 331
Comparison of the organizational learning and learning organization concepts 332
References 333
37 Individual learning 334
Introduction 334
The characteristics of individual learning 334
How people learn 335
The 70:20:10 model 337
Self-directed learning 337
Learning to learn 340
Personal development planning 341
xx Contents
Continuing professional development 341

References 342
38 The process of learning and development 344
Introduction 344
Identify learning needs 344
Planning learning and development 347
Implement 347
Evaluate learning 347
References 352
39 The practice of learning and development 353
Introduction 353
Workplace learning 353
Social learning 356
Digital learning 357
Training 361
Apprenticeships 364
References 365
40 Leadership and management development 366
Introduction 366
Leadership and management development defined 366
The nature of leadership and management 366
Leadership development 368
Management development 370
Criteria for leadership and management development 373
References 374
PA R T X Performance management 375
41 The basis of performance management 377
Introduction 377
Performance management defined 377
The purpose and aims of performance management 378
The nature of performance management 378
The impact of performance management 379
Performance management – the ethical dimension 379
Factors affecting the approach to managing performance 380
Choice of approach to managing performance 380
How managers can manage performance 380
References 382
Contents xxi
42 Performance management systems 383
Introduction 383
Features of a performance management system 383
Performance and development planning 383
Monitoring 385
Reviewing 385
360-degree feedback 386
The reality of performance management 387
Performance management issues 388
References 391
43 Performance leadership 393
Introduction 393
What ‘engaging managers’ do 393
The concept of performance leadership 394
Performance leadership skills 395
Performance conversations 395
Conclusion 398
References 399
PA R T X I Reward management 401
44 The basis of reward management 403
Introduction 403
Reward management defined 403
The reward system 404
Aims of reward management 404
Reward drivers 405
Values and beliefs 405
Reward policy 406
Financial rewards 410
Non-financial rewards 411
Total reward 411
References 414
45 Reward strategy 415
Introduction 415
The content of reward strategy 415
Formulating reward strategy 416
Critical evaluation of the concept of reward strategy 418
References 419
xxii Contents
46 The practice of reward management 420
Introduction 420
Market pricing 420
Job evaluation 421
Base pay management 422
Contingent pay 426
Recognition schemes 429
Employee benefits 429
Administering reward management 430
References 434
47 Managing reward for special groups 435
Introduction 435
Executive remuneration 435
Reward management for sales and customer service staff 438
Paying manual workers 440
References 444
48 Reducing the gender pay gap 445
Introduction 445
Reasons for the gender pay gap 445
Actions to reduce gender pay gaps 446
Narrowing the gap at organizational level 448
References 451
PA R T X I I Employment relations 453
49 The basis of employment relations 455
Introduction 455
The meaning of employment relations 455
Approaches to employment relations 456
Management style in employment relations 456
Employment relations policies 457
References 458
50 Employment relations strategy 459
Introduction 459
The nature of employment relations strategy 459
Strategy for creating a constructive and positive employment relations climate 460
Strategy for achieving mutual gains 460
Partnership agreement strategy 461
Strategy for building trust 461
Employee voice strategy 461
Contents xxiii
Trade union recognition strategy 462

References 463
51 The employment relationship 464
Introduction 464
The nature of the employment relationship 464
The basis of the employment relationship 464
Labour process theory and the employment relationship 465
Employment relationship contracts 466
Managing the employment relationship 466
Developing a climate of trust 467
References 468
52 The psychological contract 469
Introduction 469
The psychological contract defined 469
The significance of the psychological contract 470
The psychological contract and the employment relationship 470
How psychological contracts develop 470
The problem with psychological contracts 470
Developing and maintaining a positive psychological contract 471
References 472
53 The practice of industrial relations 473
Introduction 473
Trade union membership 473
Union recognition 473
Collective bargaining 474
Collective agreements 475
Dispute resolution 476
Informal employee relations processes 477
References 478
54 Employee voice 479
Introduction 479
The need for employee voice 479
Degrees of employee voice 479
Direct voice 480
Indirect voice 482
Employees’ experience of voice 483
References 484
xxiv Contents
55 Employee communications 486
Introduction 486
The importance of communications 486
What should be communicated 486
Approach to communications 487
Communication channels 487
Employee communication strategy 488
References 489
PA R T X I I I Employee wellbeing 491
56 Principles and practice of employee wellbeing 493
Introduction 493
The basis of wellbeing 493
The case for caring about wellbeing 494
Factors affecting wellbeing 495
Employee wellbeing strategy 495
References 499
57 Health and safety 501
Introduction 501
Managing health and safety at work 501
Health and safety policies 501
Conducting risk assessments 502
Health and safety audits 504
Health and safety inspections 505
Accident prevention 505
Occupational health programmes 506
Managing stress 506
Measuring health and safety performance 507
Communicating the need for better health and safety practices 508
Health and safety training 508
Organizing health and safety 509
References 511
PA R T X I V HR practices 513
58 HR policies 515
Introduction 515
Why have HR policies? 515
Overall HR policy 515
Specific HR policies 516
Developing HR policies 520
Implementing HR policies 520
Contents xxv
59 HR procedures 522
Introduction 522
Capability procedure 522
Disciplinary procedure 523
Grievance procedure 524
Redundancy procedure 525
60 Dealing with the legal aspects of employment 528
Introduction 528
Employment law provisions 528
How is employment law enforced? 536
HRM and employment law 537
Dealing with Employment Tribunal claims and cases 539
References 542
PA R T X V International HRM 543
61 The basis of international HRM 545
Introduction 545
The international scene 545
International HRM strategies 546
Contextual factors 546
Convergence and divergence 548
References 549
62 The practice of international HRM 551
Introduction 551
HR in international subsidiaries 551
Differences between international and domestic HRM 552
Workforce planning 552
Resourcing 552
International talent management 554
International performance management 554
International reward management 555
Multicultural working 556
Role of the international HR function 556
References 558
63 Managing expatriates 559
Introduction 559
Why use expatriates? 559
The process of managing expatriates 559
Resourcing policies 560
xxvi Contents
Recruitment and selection policies 561

Preparation policy 562
Assimilation and support 562
Career management 563
Performance management 563
Re-entry policies 564
Pay and allowances policies 564
References 566
PA R T X V I People management skills and competencies 569
64 Strategic people management skills 571
Introduction 571
The strategic role of the HR professional 571
The strategic business partner model 571
The strategic skills required 571
Reference 572
65 Business skills 573
Introduction 573
Business skills 573
Financial skills 574
Business models 577
Business model innovation 577
References 580
66 Dealing with business issues from an HR perspective 581
Introduction 581
Identify business issues 581
Establish people factors 582
Critically analyse relevant HR policy and practice 582
Conduct or participate in research 583
Analyse quantitative and qualitative information 583
Draw conclusions 584
Prepare and make the business case 584
Reference 585
67 Problem-solving and decision-making skills 586

Introduction 586
Problem solving 586
Decision making 588
References 590
Contents xxvii
68 Analytical and critical skills 591
Introduction 591
Analytical skills 591
Diagnostic skills 592
Logical reasoning 592
Critical thinking 593
Critical evaluation 593
Developing and justifying arguments 594
A final word 594
References 595
69 Research skills 596
Introduction 596
The nature of research 596
Planning and conducting research programmes 597
Research methodology 598
Methods of collecting data 599
Processes involved in research 602
References 607
70 Statistical skills 608
Introduction 608
Frequency 608
Measures of central tendency 608
Measures of dispersion 608
Correlation 609
Regression 609
Causality 610
Tests of significance 610
Testing hypotheses 611
References 612
71 Selection interviewing skills 613
Introduction 613
Preparing for the interview 613
Conducting a selection interview 614
Types of interviews 615
Selection interview questions 617
Common interviewing mistakes 619
Coming to a conclusion 620
References 622
xxviii Contents
72 Job, role and skills analysis and competency modelling 623
Introduction 623
Definitions 623
Job analysis 624
Job descriptions 626
Role analysis and role profiles 628
Skills analysis 628
Competency modelling 632
References 637
73 Learning and development skills 638
Introduction 638
Coaching 638
Mentoring 639
Facilitating 639
Job instruction 640
References 642
74 Negotiating skills 643
Introduction 643
The process of negotiation 643
Stages of negotiation 643
Negotiating and bargaining skills 647
Reference 648
75 Change management 649
Introduction 649
Change 649
The process of change management 650
The responsibility for change 655
Guidelines for change management 656
References 657
76 Influencing skills 659
Introduction 659
Persuading people 659
Case presentation 660
Making a business case 660
Facilitating 661
Coordinating discussions 661
77 Leadership 663
Introduction 663
The meaning of leadership 663
Contents xxix
Leadership theories 663

What leaders do 664
Leadership styles 664
Types of leaders 665
The qualities of a good leader 667
Effective leadership 668
References 669
78 Handling people problems 671
Introduction 671
Approach 671
Disciplinary issues 671
Absenteeism 672
Handling poor timekeeping 673
Handling negative behaviour 674
Dealing with under-performance 676
79 Handling challenging conversations 678
80 Managing conflict 679
Introduction 679
Handling inter-group conflict 679
Handling interpersonal conflict 680
Resolving conflict between team members 681
Reference 682
81 Political skills 683
Introduction 683
Typical political approaches 683
Using political means to get things done 684
Political sensitivity 684
Dangers of politics 684
Dealing with organizational politics 685
Reference 686
82 Project management 687
Introduction 687
Project planning 687
Setting up the project 688
Controlling the project 688
xxx Contents
PA R T X V I I Conclusion 689
83 Trends in HRM 691
Introduction 691
Overall trends 691
Specific trends 693
References 695
CIPD profession map: Cross-references to text 696

Author index 700
Subject index 705
xxxi
LIST OF FIGURES
FIGURE 0.1 Handbook route map xxxvii

FIGURE 1.1 An HR system 5
FIGURE 2.1 Human capital evaluation – Civil Aviation Authority 21
FIGURE 5.1 The black box phenomenon 39
FIGURE 5.2 Impact of HRM on organizational performance 40
FIGURE 5.3 The AMO model as a framework for performance-enhancing HRM practices 41
FIGURE 9.1 The different strategy domains 75
FIGURE 9.2 The Five Strategic Pillars at MHCLG 77
FIGURE 9.3 HR effectiveness checklist 79
FIGURE 9.4 Stakeholder analysis matrix 80
FIGURE 9.5 The Selfridge stakeholder value model 80
FIGURE 12.1 Interrelationships between the components of evidence-based management 111
FIGURE 17.1 Sources and applications of organization behaviour theory 140
FIGURE 20.1 Model of job quality 172
FIGURE 22.1 The process of motivation according to content theory 197
FIGURE 22.2 Motivation model (Porter and Lawler) 199
FIGURE 24.1 IES model of employee engagement 220
FIGURE 24.2 How reward policies influence performance through engagement 224
FIGURE 26.1 Workforce planning flow chart 238
FIGURE 27.1 Example of a person specification 247
FIGURE 27.2 Example of an application form 252
FIGURE 27.3 Use of different types of selection methods 254
FIGURE 27.4 A normal curve 258
FIGURE 28.1 The process of talent management 268
FIGURE 28.2 A nine-point performance/potential assessment grid 270
FIGURE 28.3 The CEMEX model of talent management 272
FIGURE 30.1 A survival curve 287
FIGURE 33.1 Guidelines for managing home and hybrid workers 312
FIGURE 34.1 Formal and informal learning 320
FIGURE 34.2 The components of learning and development 321
FIGURE 36.1 Single- and double-loop learning 330
FIGURE 37.1 The Kolb learning cycle 335
FIGURE 38.1 Learning needs analysis – areas and methods 345
FIGURE 38.2 The learning gap 345
FIGURE 38.3 A learning specification 346
FIGURE 39.1 Systematic training model 361
xxxii List of Figures
FIGURE 41.1 Lloyds Banking Group: Definition of the purpose of the performance management
system 378
FIGURE 42.1 The performance management cycle 384
FIGURE 42.2 Model of the performance management system in Astra-Zeneca 384
FIGURE 42.3 Model of the performance management system in Halifax Bank 385
FIGURE 42.4 Model of the performance management system in Pfizer Inc 385
FIGURE 42.5 Performance management form (part 1) 386
FIGURE 42.6 Performance management form (part 2) 387
FIGURE 43.1 Example of competency profile for a performance leader with positive and
negative indicators 396
FIGURE 43.2 Features of effective performance and development conversations 397
FIGURE 44.1 The reward system 404
FIGURE 44.2 Reward drivers 405
FIGURE 44.3 Total reward model 411
FIGURE 45.1 A model of the reward strategy development process 417
FIGURE 46.1 Typical grade and pay structures 423
FIGURE 46.2 A direct link between ratings and pay increases 432
FIGURE 46.3 A pay matrix 432
FIGURE 51.1 Dimensions of the employment relationship 465
FIGURE 54.1 Stages of employee voice 480
FIGURE 70.1 Examples of charts 609
FIGURE 70.2 A scattergram with regression (trend) line 610
FIGURE 71.1 Telephone interview assessment form 616
FIGURE 71.2 Example of an interview rating form 621
FIGURE 72.1 Example of a job description 627
FIGURE 72.2 Example of a role profile 629
FIGURE 72.3 Example of a generic role profile 630
FIGURE 74.1 Negotiating range with a settlement zone 646
FIGURE 74.2 Negotiating range without a settlement zone 646
FIGURE 77.1 John Adair’s model of leadership 664
xxxiii
L I S T O F TA B L E S
TABLE 1.1 Comparison between HRM and people management 13

TABLE 5.1 Research on the link between HRM and organizational performance 37
TABLE 5.2 Components of an HPWS 43
TABLE 10.1 Key HR specialist competency areas 95
TABLE 13.1 HR data and their possible uses 115
TABLE 16.1 Example of a basic competency framework 132
TABLE 16.2 Example of competency framework definition with positive and negative
indicators 133
TABLE 17.1 Schools of organization theory 142
TABLE 18.1 Mechanistic and organic design 161
TABLE 21.1 Organization development activities 187
TABLE 22.1 Summary of motivation theories 203
TABLE 22.2 Motivation strategies 206
TABLE 24.1 Employee engagement management competency framework 223
TABLE 27.1 Validity of different selection methods 254
TABLE 30.1 A survival rate analysis 287
TABLE 30.2 Leavers’ length of service analysis 288
TABLE 37.1 The practical implications of learning theory 338
TABLE 37.2 The staged self-directed learning model 340
TABLE 44.1 Theories explaining pay levels 407
TABLE 46.1 Summary description of different formal grade and pay structures 424
TABLE 46.2 Summary of individual contingent pay schemes 427
TABLE 47.1 Summary of payment and incentive arrangements for sales staff 438
TABLE 47.2 Comparison of shop floor payment-by-result schemes 441
TABLE 48.1 Actions that can be taken by organizations to reduce a gender pay gap 448
TABLE 56.1 Wellbeing factors and actions 495
TABLE 62.1 Advantages and disadvantages of using PCNs or HCNs 553
TABLE 69.1 Analysis of basic data collection methods 604
TABLE 71.1 Dos and don’ts of selection interviewing 620
TABLE 72.1 Criteria for a fully rigorous competency definition (Shippman et al, 2000) 633
TABLE 74.1 Commercial and industrial relations negotiations compared 644
xxxiv

xxxv
P R E FA C E TO T H E 16 T H E D I T I O N
T his 16th edition of the Handbook of Human

Resource Management Practice includes
new chapters on the future of work, digital
●● Parts V and VI cover the general
considerations relating to organizational
and individual behaviour that need to be
HRM, the employee experience, managing taken into account in planning and
home and hybrid working, performance leader- managing the specific HRM practices
ship and trends in HRM. Other chapters have dealt with in subsequent parts of the
been extensively revised and the handbook has book.
been brought up to date by reference to the ●● Parts VII to XIII contain descriptions of
findings of a number of significant research pro- the main HRM activities, namely
jects and other investigations of how HRM op- resourcing, employment, learning and
erates in practice. development, performance management,
The plan of the book is illustrated in the reward management, employment
‘route map’ shown in Figure 0.1. The logic of relations and employee wellbeing.
the sequence of 16 parts is as follows.
●● Part XIV describes the HR practices
●● Part I provides a conceptual framework concerned with HR policies, HR
for the rest of the handbook. It consists procedures and dealing with employment
of a general introduction to human legislation.
resource management (HRM) and ●● Part XV is concerned with international
human capital management HCM), a HRM. It covers the special
description of the context within which considerations that affect how
HRM operates, analyses of the future of organizations manage the people
work and the contribution HRM makes working in other countries, including
to performance and, finally, two chapters local inhabitants and expatriates. These
covering respectively the important considerations include how the HRM
subjects of HRM ethics and corporate practices described in earlier parts may
social responsibility. need to be adapted to suit international
●● Part II extends the descriptions of the requirements.
fundamental features of HRM covered ●● Part XVI is devoted to describing the
in Part I to examine the more dynamic considerable range of skills and
aspects of HRM – generally in the competencies needed by HR
process of strategic HRM, and professionals.
specifically in the formulation and
●● Part XVII presents conclusions on trends
implementation of specific HRM.
in HRM.
●● Part III describes how HRM is delivered
through the HR function and line The appendix provides cross-references from
managers. the core and specialist knowledge requirements
set out in the current version of the CIPD
●● Part IV deals with the HRM processes
Profession Map to the text.
that affect the whole organization,
The companion website at www.koganpage.
namely evidence-based HRM, HR
com/Armstrong/HRMPresources provides extensive
analytics, digital HRM, the growing use
additional resources for lecturers and students.
of artificial intelligence (AI), knowledge
These comprise:
management, competency-based HRM,
the ethical dimension of HRM and ●● A lecturer’s manual containing notes on
corporate social responsibility. how teaching could be organized by
xxxvi Preface
reference to the chapters in the main text and ●● A student’s manual consisting of material
the supplementary material in the manual. that can be used to reinforce the contents of
Suggestions are made on various kinds of the main book. Summaries of each chapter
semesters and guidance is provided on the links are provided and in addition most of the
between the handbook text and CIPD core and chapters include supplementary abstracts
specialist knowledge requirements. The manual from relevant HRM literature. To assist in
includes sections for each chapter containing a revision, the extra material includes multiple-
summary of the main learning points, an outline choice questions and ‘flash’ cards containing
of the subject matter, discussion points and questions and answers about key aspects of
questions with comments on the points to be the subject matter.
considered. In many chapters there are multiple-
choice questions, case studies and role-playing There are also:
exercises. Most of the chapters contain
●● A number of case studies
supplementary abstracts from relevant HRM
publications. ●● A glossary of HRM terms
●● Additional material is provided for lecturers ●● An HRM bibliography
in the shape of PowerPoint slides with notes
covering all the chapters.
Preface xxxvii
F I G U R E 0.1 Handbook route map
2 The strategic approach to HRM 3 Delivering HR

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

practices development (L&D) management management (RM)
25 Resourcing strategy 29 The employee 34 The basis of L&D 41 The basic of 44 The basis of RM
26 Workforce planning experience 35 Strategic L&D performance 45 Reward strategy
27 Recruitment and 30 Managing 36 Organizational management 46 The practice of RM
selection employment learning 42 Performance 47 Managing reward
28 Talent management 31 Managing diversity 37 Individual learning management for special groups
and inclusion 38 The process of L&D systems 48 Reducing the
32 Managing 39 The practice of L&D 43 Performance gender pay gap
flexibility. 40 Leadership and leadership
33 Managing home management
and hybrid working development
12 Employment 13 Employee 14 HR practices 15 International HRM

relations wellbeing
49 The basis of 56 The practice of 58 HRM policies 61 The basis of
employment relations employee wellbeing 59 HRM procedures international HRM
50 Employment 57 Health and safety 60 Dealing with the 62 The practice of
relations strategy legal aspects of international HRM
51 The employment employment 63 Managing
relationship expatriates
52 The psychological
contract
53 The practice of
industrial relations
54 Employee voice
55 Employee
communications
16 HR skills and competencies
64 Strategic skills 73 L&D skills

65 Business skills 74 Negotiating skills
66 Dealing with business issues 75 Change management
67 Problem-solving and decision-making skills 76 Influencing skills
68 Analytical and critical skille 77 Leadership
69 Research skills 78 Handling people problems
70 Statistical skills 79 Handling challenging conversations
71 Selection interviewing 80 Managing conflict
72 Job, role and competency analysis 81 Political skills
82 Project management
17 Conclusion: Trends in HRM

xxxviii

1
PART I
Fundamentals of human
resource management
PA R T I CO N T E N T S
01 The essence of HRM

02 Human capital management
03 The context of HRM
04 The future of work
05 HRM and organizational performance
06 The ethical dimension of HRM
07 Corporate social responsibility
Chapter 1 covers the conceptual basis of human

Introduction resource management and the characteristics of an
HR system.
Human resource management (HRM) is about the Chapter 2 examines the associated concept of
management of people in order to achieve desired human capital management (HCM). This is c oncerned
results. with a basic tenet of human resource management –
that people should be valued as assets. It is therefore
The aim of this part is to look at HRM in general
important to measure the value of that human capital
and review a number of the factors that affect it in
and make good use of the information gained from
order to provide a backcloth to the detailed consid-
the measurements.
eration given to the practice of HRM elsewhere in
The practice of HRM is affected by the context
the handbook.
in which it takes place and this is covered in
The term HRM generally refers to the overall
Chapter 3. A separate chapter (4) is devoted to an
concept and practice of human resource manage-
important aspect of the context – the future of work
ment, while the term HR often refers specifically to
as affected by developments in new technology and
the function responsible for HRM or HRM practi-
events such as the Covid-19 pandemic.
tioners. However, HR is frequently used as a syn-
onymous term for HRM.
2 Part 1 | Fundamentals of Human Resource Management
A theme running through most of the chapters in social responsibilities. This includes acting ethically
this book is the impact of different aspects of HRM in accordance with articulated values when dealing
on performance. Chapter 5 provides a background with any matters concerning employees and other
for these discussions by considering how HRM stakeholders and exercising concern over social and
makes an impact. environmental issues. These issues are dealt with in
Another theme throughout the handbook is the Chapters 6 and 7 respectively.
need for organizations to take full account of their
3
01
The essence of HRM
This is explained by contingency theory which states
Introduction that HRM practices must fit the organization’s envi-
ronment and circumstances. This is the notion of
Organizations depend on people. They have to obtain
‘best fit’ which contrasts with that of ‘best practice’.
and develop the capable, skilled, and engaged em-
The latter makes the dubious assumption that there
ployees they need, manage their performance, reward
is a set of best HRM practices that are universal in
them in accordance with their contribution, create
the sense that they are best in any situation. The sig-
and maintain positive employment relationships and
nificance of contingency theory is that it draws at-
provide for their wellbeing. In essence, this is what
tention to the needs, first to be clear about how any
human resource management (HRM) is about.
proposed or existing HR practice will fit the particu-
The ultimate responsibility for how an organiza-
lar needs and characteristics of the organization, and
tion manages people rests with senior managers.
second to avoid simply reproducing what is regarded
They are responsible for good governance – provid-
as best practice irrespective of its relevance.
ing leadership to ensure that the organization func-
The process of managing people is carried out
tions effectively. They set the tone and make policy
through the HR system within the framework of
decisions on key matters affecting the employment,
what is termed the HR architecture.
development and wellbeing of employees. Line
managers bring these polices to life. HR or people
management professionals are there to provide
both senior management and line managers with
The HR architecture
the advice, support and services they need.
The HR architecture is a comprehensive representa-
The practice of managing people as described in
tion of all that is involved in HRM. It incorporates the
the first section of this chapter is commonly referred
HR system of policies and practices, the roles and be-
to as HRM (human resource management) or HR
haviour of managers and employees generally and the
(human resources). This does not necessarily mean
contribution made by members of the HR function.
that it is deliberately based on the philosophy of
The term ‘HR architecture’ was first used by
HRM as developed in the 1980s. It is often no more
Becker and Gerhart (1996: 786) in an article exam-
than a convenient label. As Storey (2007: 6) pointed
ining the strategic impact of HR on key perfor-
out: ‘In its generic broad and popular sense it
mance outcomes. They wrote that ‘There may be a
[HRM] simply refers to any system of people man-
best HR system but whatever the bundles or con-
agement.’ The term people management is being
figurations of policies implemented, the individual
increasingly used as an alternative to HRM, espe-
policies must be aligned with one another and be
cially by the Chartered Institute of Personnel and
consistent with the HR architecture if they are ulti-
Development (the CIPD).
mately to have an effect on firm performance.’ The
concept was developed by Lepak and Snell (1999),
who stated that the HR architecture in an organiza-
The practice of HRM tion consists of its different employment modes,
employment relationships and HR configurations.
How HRM is practised will vary according to the
They suggested that it draws attention to HRM as a
type of organization, the kind of people employed
and the context in which the organization operates.
strategic asset, enables the study of the alternative ful, focused organizational cultures that help to
employment arrangements used by firms and helps structure and direct employee behaviour and effort
those concerned to understand which forms of towards desired organizational goals. They also em-
human capital have the potential to be a source of phasized the important role of implementation in
competitive advantage. As explained by Becker et al translating the intended HRM system into action.
(2001:12): ‘We use the term HR architecture to This point was later reinforced by Nishii and Wright
broadly describe the continuum from the HR pro- (2008) who observed that there are gaps between
fessionals within the HR function, to the system of intended and implemented HR systems and be-
HR-related policies and practices, through the com- tween implemented and perceived HR systems.
petencies, motivation and associated behaviours of
the firm’s employees.’
The concept of HR architecture highlights the The components of an HR system
fact that managing people is a complex process af-
An HR system as illustrated in Figure 1.1 incorpo-
fected by a number of interconnected factors. As
rates:
Lepak and Snell (1999: 32) emphasized:
●● HR strategies, which define the direction in
It may be inappropriate to simplify the nature
which it is intended that HRM should go in
of human capital investments and suggest that
there exists a single “optimal” HR architecture each of its main areas of activity. The concept
for managing all employees. Rather, we of strategic human resource emphasizes the
believe that the most appropriate mode of importance of integrating HR strategies with
investment in human capital will vary for corporate strategies to ensure that the former
different types of human capital. support the achievement of organizational
goals. It also stresses the need to integrate
strategies covering different aspects of HR
The HR system with one another.
●● HR policies, which set out what HR does
The HR system provides the basis for managing peo- and provide guidelines defining how specific
ple in an organization in order to achieve the results aspects of HR should be applied and
required. The core of the system consists of a set of implemented.
interrelated and jointly supportive HRM practices ●● HR practices, which consist of the HR
or activities. The range and nature of these activities activities involved in managing and
is governed by the organization’s context (its inter- developing people and in managing the
nal and external environments) and by its people employment relationship. These are part of
management philosophy, strategies and policies. The the HR architecture and provide the core of
HR system is a key component of the HR architec- the system. They are affected by the
ture, which is in turn affected by the behaviours of considerations of stakeholder interests,
employees and the contribution of the HR function. corporate social responsibility and HR
values. The CIPD Profession map describes
these as ‘people activities’.
A strong HR system
The system will be aligned to the interests of stake-
Bowen and Ostroff (2004) advocated a ‘strong’ HR holders. It will take account of the need to exercise
system to ensure the more effective implementation social responsibility and to be value-driven.
of HRM practices. They developed a model of
HRM in which HR practices can be viewed as com-
munications from the employer to employee. They Stakeholder interests
suggested that ‘when the HRM system is perceived
as high in distinctiveness, consistency, and consen- The system needs to satisfy the interests of stakehold-
sus, it will create a strong situation’ (2004: 208). ers. A stakeholder (a term introduced by Freeman,
They argued that a strong HRM system can signifi- 1984) is a person or a body that has a legitimate in-
cantly affect firm performance by creating power- terest in an organization. Internal stakeholders can
Chapter 1 | The Essence of HRM 5
F I G U R E 1.1 An HR system
Stakeholder interests
Context – internal Context – internal

HR policies and
and external HR strategies HR values and external
procedures practices
environment environment
Employee HR
HR architecture
behaviours function
HR processes HR practices International HRM
Strategic Organization Resourcing Learning Reward Employment Employee

HRM and management relations wellbeing
development
Human Organization Workforce Performance Employment Wellbeing

capital design planning management relationship policy and
management practice
Knowledge Organization Recruitment Organizational Job Industrial Managing

management development and selection learning evaluation relations diversity and
and pay inclusion
surveys
HR analytics Work design Talent Individual Base pay Employee Health and
management learning management voice safety
and
contingent pay
Digital HRM Job design Employment Leadership Employee Employee

practices and benefits communi-
management cations
development
Employment
law
compliance
The employee experience

include the owners of a company (shareholders or be covered in a value statement is provided by

the authorities or trustees in charge of an organiza- the following British Standards Institution (2015)
tion), senior management and employees generally. standards:
External stakeholders consist of customers, clients,
●● People working on behalf of the organization
suppliers and the community or public at large. In a
have intrinsic value, in addition to their
business, its owners and its senior management as
protections under the law or in regulation,
principal agents of those owners are two of the key
which needs to be respected.
stakeholders. They will aim to achieve competitive
advantage (the ability to outperform competitors) ●● Stakeholders and their interests are integral
and financial success (maximize shareholder value) to the best interests of the organization.
as a necessary requirement for the survival of the ●● Every organization is part of wider society
business. In a not-for-profit organization the aim of and has a responsibility to respect its social
those in charge will be to achieve its purpose effec- contract as a corporate citizen and operate in
tively and efficiently. In both cases, these aims will be a manner that is sustainable.
expressed as strategic goals. ●● A commitment to valuing people who work
Employees are the other key stakeholders in an on behalf of the organization and to meeting
organization. Their interests will be to be treated the requirements of the standard is made and
fairly and justly, to be given opportunities and a rea- supported at the highest level.
sonable degree of security, and to be provided with
a working environment in which their wellbeing is An example of a ten-point value statement is given
properly looked after. The interests of the external below:
stakeholders are addressed through corporate social 1 People should be treated with dignity and
responsibility policies and practices. respect.
2 Just treatment is the absolute right of all
Corporate social responsibility employees.
3 The organization has a duty of care for those
Corporate social responsibility (CSR) is exercised by who work there and should promote their
organizations when they conduct their business in wellbeing in the broadest sense.
an ethical way, taking account of the social, environ-
mental and economic impact of how they operate, 4 People have the moral right to be dealt with
and going beyond compliance. A socially responsi- properly above and beyond their legal rights.
ble approach to running an organization will d irectly 5 Everyone should be given the scope to use
affect its HR philosophy and, therefore, its HR and develop their talents effectively.
strategies and policies. 6 People should have equal access to
opportunities at work in line with their
capabilities.
Values for managing people 7 People should be able to influence the
Organizations and the HR function within them decisions that affect them.
should be value-driven. The values should be based 8 The environment should enable different
on the belief that people are valuable in themselves kinds of people to thrive and succeed.
as well as sources of value. Values may not be ar-
9 The organization is committed to dealing
ticulated although they can be an important albeit
with diversity and inclusion on the basis that
implicit aspect of the corporate culture: ‘the way
everyone should be valued as an individual
things are done around here’. But there is much to
and treated fairly irrespective of their race,
be said for expressing them formally as a value
gender, level of disability, religion, sexual
statement so that they function as a set of guiding
orientation or age.
principles – setting out what is believed to be
appropriate behaviour and action. The nature of 10 The organization has to exercise social
these will be affected by the culture and context of responsibility by being concerned with the
the organization. But guidance on what might interests of all its stakeholders.
Values such as these form the basis of good people Digital HRM – the use of digital technologies in the
practice. They will be influenced by the philosophies form of web-based applications involving analytics,
attached to the concepts of HRM and people man- artificial intelligence (AI), cloud technologies, com-
agement as examined later in this chapter. However, puter hardware and software, smart phones and
while it is not too difficult to devise and publish a set social media to help deliver HRM services.
of values, it is much more difficult to put them into
HR procedures – these set out the ways in which
practice, to make them ‘values in use’. It is helpful if
certain actions concerning people should be carried
they are articulated but they are more likely to influ-
out by the management or individual managers. In
ence behaviour when employees have participated in
effect, they constitute a formalized approach to
developing them and if they are explicitly supported
dealing with specific matters of policy and practice
by people management policies and practice and by
such as handling disciplinary issues, redundancies
the example and leadership of senior management.
or poor performance (capability).
The main components of the model illustrated in
Figure 1.1 in terms of processes, practices and the Employment law compliance – ensuring that em-
employee experience are described below. ployment law requirements are met by the organi-
zation and its individual managers and employees
and dealing with employment law issues if they
HR processes arise.
Strategic human resource management (SHRM) –
an approach to managing people that is concerned
with ensuring that key issues of human resource
HR practices
management are dealt with strategically in order to Organization – designing organization structures,
support the achievement of organizational goals. work systems and jobs and developing organiza-
Dealing with HR issues strategically means decid- tions to ensure that they function effectively.
ing what needs to be done now and in the longer
Resourcing – the employment activities of:
term through the integration of HR strategies with
business strategy and with one another, and then ●● workforce planning – establishing an
ensuring that what needs to be done is done. SHRM organization’s people requirements so that
can be regarded as an attitude of mind rather than plans can be made to satisfy them;
a set of prescribed techniques. ●● recruitment and selection – finding the
Human capital management (HCM) – treating peo- people the organization needs and deciding
ple as assets and achieving competitive advantage which applicants or candidates should be
by strategic investments in those assets. It involves appointed to fill vacancies.
measuring the value of human capital in order to ●● talent management – ensuring that the
represent the value of people and making good use organization has the capable and well-
of the information gained from measurements gen- qualified people it needs to attain its goals. It
erated by HR analytics. involves the systematic attraction, retention,
identification and development of individuals
Knowledge management – storing, sharing and
who are of particular value to an
making good use of the wisdom, understanding and
organization.
expertise accumulated in an organization about its
processes, techniques and operations. Employment – managing the employee experience
(what happens to people at work and how they feel
HR analytics – the application of mathematical, sta-
about it) and dealing with the following aspects of
tistical and data collection techniques to obtain
employment in an organization: induction (on-
data on and therefore insight into HR matters con-
boarding), release and retention of employees, ab-
cerned with the application and impact of HR em-
sence management, fulfilling the obligations of the
ployment, learning and development and reward
organization to promote inclusion and manage di-
strategies, policies and practices, and to inform
versity, seeking ways in which to increase flexible
evidence-based HR decisions.
working to benefit both individuals and the organi- Employee wellbeing – improving the quality of
zation and managing home and hybrid workers. working life of individuals in terms of their experi-
ence of work – how satisfied they are with their job
Learning and development – ensuring that the or-
and how the organization treats them. This includes
ganization has the capable people it needs to achieve
their work–life balance, flexible working, physical,
its goals. Learning and development takes place at
mental and financial wellbeing, relationships with
organizational and individual levels. It involves ena-
their line manager and colleagues and the extent to
bling employees to acquire knowledge and skills
which they have a sense of purpose and feel in con-
and develop their potential through experience and
trol of what they do.
social contacts, coaching, mentoring, guidance pro-
vided by line managers, self-managed learning, digi- International HRM – the process of managing peo-
tal learning and formal training provided by the ple across international boundaries by multina-
organization. It includes special arrangements for tional companies (MNCs). It involves the w
orldwide
developing leadership and management capabilities. management of people, not just the management of
expatriates.
Performance management – the continuous process
of agreeing objectives for individuals and teams, HR processes and procedures – implementing HRM
aligning those objectives with the strategic goals of through a variety of processes and procedures that
the organization, planning performance to achieve affect the approach adopted in practice areas and
the objectives, reviewing and assessing progress, support the implementation of HR strategies, poli-
taking steps to improve performance when neces- cies and activities. They interact with one another
sary and developing the capabilities of people. and other aspects of people management and there-
Performance management is exercised by line man- fore play a key part in the operation of HRM as a
agers acting as performance leaders. It provides a system.
means of identifying learning and development
needs and rewarding people through recognition
and the provision of opportunities as well as in- The employee experience
forming performance pay decisions where these are
The employee experience is about what happens to
required.
people at work and how they feel about it. This is
Reward management – the development, implemen- influenced by all the other HR activities in the HR
tation and maintenance of a reward system that system. The reactions of employees to these activi-
provides for contribution and merit to be recog- ties and their views about them should be taken into
nized by financial and non-financial means. account in deciding on the nature of the activities.
Financial reward management consists of processes
for deciding the value of jobs (job evaluation and
pay surveys), base pay management (administering HRM as a philosophy
pay structures), contingent (performance) pay and
HRM as a philosophy presents a particular view of
employee benefits such as pensions. Non-financial
the ways in which people should be managed at
reward management means providing rewards by
work which may directly or indirectly affect an or-
recognition or by giving people the scope for
ganization’s people management philosophy. As
achievement, responsibility, autonomy, influence
originally conceived, HRM emphasizes the impor-
and personal growth.
tance of a strategic approach, proposes that people
Employment relations (also known as employee re- should be treated as assets rather than costs, and
lations) – managing the employment relationship indicates that it is primarily the responsibility of
and the psychological contract and relating to em- senior management.
ployees either collectively through trade unions
(industrial relations) or individually. Employment
relations also involve providing employees with a Origins
voice and developing communications between HRM emerged in the 1980s as a conceptual frame-
them and management. work for the management of human resources
nderpinned by a number of theories drawn from

u suggested by Keenoy (1997: 838) that ‘hard and soft
the behavioural sciences and from the fields of stra- HRM are complementary rather than mutually ex-
tegic management, human capital management and clusive practices.’ Research in eight UK organizations
industrial relations. As Hendry and Pettigrew by Truss et al (1997) indicated that the distinction
(1990: 18) observed: ‘HRM was heavily normative between hard and soft HRM was not as precise as
from the start: it provided a diagnosis and proposed some commentators have implied.
solutions.’ They also stated that ‘What HRM did at
this point was to wrap around some of the observ-
able changes, while providing a focus for challeng- Themes
ing deficiencies – in attitudes, scope, coherence and
An analysis of HRM philosophy was made by
direction – of existing personnel management’ (20).
Karen Legge (1989: 25) who looked at a number of
The ‘founding fathers’ of HRM were two teams
HRM models and suggested that their common
of US academics. Beer et al (1984: 1) in their
themes were that
‘Harvard framework’ proposed that ‘Human re-
source management (HRM) involves all manage- … human resource policies should be integrated
ment decisions and actions that affect the nature of with strategic business planning and used
the relationship between the organization and em- to reinforce an appropriate (or change an
ployees – its human resources.’ They argued that the inappropriate) organizational culture, that
three characteristic features of HRM were that (1) a human resources are valuable and a source of
strategic approach is adopted involving the align- competitive advantage, that they may be tapped
ment of competitive strategy and HR policies, (2) most effectively by mutually consistent policies
employees are regarded as social capital (assets that promote commitment and which, as a
consequence, foster a willingness in employees
rather than costs) and (3) senior management, not
to act flexibly in the interests of the ‘adaptive
the HR function, is responsible for HR policy deci-
organization’s’ pursuit of excellence.
sions. In the ‘Michigan framework’ or ‘matching
model’, Fombrun et al (1984: 37) recommended This description of the HRM philosophy was rein-
that HR systems and the organization structure forced by John Storey (2001:7) who wrote that
should be managed in a way that is congruent with
The beliefs of HRM include the assumptions that
organizational strategy: ‘The critical management
it is the human resource which gives competitive
task is to align the formal structure and human re-
edge, that the aim should be to enhance employee
source systems so that they drive the strategic objec- commitment, that HR decisions are of strategic
tives of the organization.’ importance and that therefore HR policies should
In the UK the founding fathers were followed by be integrated into the business strategy.
a number of commentators who developed, ex-
plained and frequently criticized the concept. Guest
(1987: 505) stated that ‘Human resource manage-
ment appears to lean heavily on theories of commit- Criticisms of HRM
ment and motivation and other ideas derived from On the face of it, the original philosophy of HRM
the field of organizational behaviour.’ And Karen had much to offer, at least to management. But for
Legge (2005: 101) commented that ‘The term some time HRM has been a controversial topic in
[HRM] was taken up by both UK managers (for academic circles. Peccei (2004) identified two main
example, Armstrong, 1987; Fowler, 1987) and UK perspectives. The first ‘optimistic’ one is the idea that
academics.’ HRM can make a positive impact on the wellbeing of
Storey (1989: 8) distinguished between the ‘hard’ employees. In accordance with social exchange the-
and ‘soft’ versions of HRM. He wrote that ‘The hard ory, when management adopts progressive HR poli-
one emphasizes the quantitative, calculative and busi- cies that provide a more interesting, supportive and
ness-strategic aspects of managing human resources rewarding work environment, workers will respond
in as “rational” a way as for any other economic fac- with enhanced levels of engagement with the organi-
tor. By contrast, the soft version traces its roots to the zation and their work and thus achieve higher levels
human-relations school; it emphasizes communica- of performance. Both the organization and its em-
tion, motivation and leadership.’ However, it was
ployees will therefore benefit – the concept of ‘mutual other long-standing values and stakeholders.
gains’. In contrast, the second ‘pessimistic’ perspec- Unless HRM reasserts its independence, it is likely
tive is that HRM is potentially harmful to employees to wither both in academic and practitioner circles.
and leads to the intensification of work and their sys- Dundon et al (2017:19) referred to the ‘inherent bias
tematic exploitation. It is employers rather than em- in managerial writings to treat workers as objects to
ployees who benefit from HRM – profits before be subservient to some employer-led mission.’ They
people. also commented unfavourably on the unitarist fla-
An early criticism was made by a practitioner, vour of mainstream HRM – the belief that manage-
Alan Fowler (1987: 3): ment and employees share the same concerns. Guest
At the heart of the concept is the complete (2017: 22) noted that, while what he called the mu-
identification of employees with the aims and tual gains model suggests that HRM should benefit
values of the business – employee involvement both individuals and organizations, ‘the dominant
but on the company’s terms. Power in the HRM models within HRM theory and research continue
system remains very firmly in the hands of to focus largely on ways to improve performance,
the employer. Is it really possible to claim full with employee concerns very much a secondary con-
mutuality when at the end of the day the employer sideration.’ Dundon and Rafferty (2018: 377) ar-
can decide unilaterally to close the company or sell gued that HRM as a form of professional practice
it to someone else? ‘… is at risk of impoverishment. The main reason
Keenoy (1990: 3) developed this notion and referred for this… is ideological individualism and marketi-
to HRM as a ‘wolf in sheep’s clothing’ – fundamen- sation with an attendant neglect of wider organiza-
tally exploitative (that’s what happens to resources) tional, employee and societal concerns.’
but presented under the guise of the contention that There is something in these criticisms although
human factors were paramount (a ‘humanistic’ ap- they tend to ignore the positive proposals of Michael
proach). This view was reinforced by Legge (1998: Beer and his colleagues or fail to take account of the
42) who asserted that HRM is ‘macho-management fact that managements can exploit employees and
dressed up as benevolent paternalism’. Guest (1999: ignore their interests irrespective of the philosophy
6) referred to such comments as the ‘radical critique of HRM.
of HRM’ and summarized them as follows: Armstrong (2000) suggested that many of the
practices associated with the concept of human re-
This view of HRM, in which workers are viewed source management were flourishing under different
primarily as resources or objects, is attractive to names before the notion of HRM emerged. There
some managers, if only to remind them of past have been a number of developments in these prac-
neglect of a potentially untapped resource. But it
tices, for example HR analytics, performance man-
is also an easy and familiar target for criticism.
agement, talent management, competency-based
It reflects a long-standing capitalist tradition in
HR, the focus on experiential and self-managed
which the worker is viewed as a commodity. The
learning, the attention paid to employee engagement
resultant exploitation may be paternalist and
benevolent; but equally, it may operate against and the concept of total reward, but they have not
the interests of workers. Essentially, workers are been driven by the theory and philosophy of HRM.
simply resources to be squeezed and disposed of as The fact that the pace of change in people manage-
business requirements dictate. More importantly, ment is faster than before the 1980s is not attribut-
the interests of workers and their wellbeing are of able to the advent of HRM. It has been forced on
no significance in themselves. organizations by the rapidly changing business, po-
litical, economic and social environment. And the
Marchington (2015: 176) observed that criticisms quoted above could equally apply to the
HRM has always been located at the interface of approach of ‘profits before people’ as practiced by
potentially conflicting forces within organizations. some businesses, which owes little to the HRM con-
However, in its quest for legitimacy, HRM has cept and a lot to a perspective on capitalism in
tended primarily to look up the hierarchy and which, as Hyman (1987) observed, meant that em-
focus on narrow performance goals, so neglecting ployers required employees to be both dependable
and disposable.
ering HRM as a social system, in contrast to the

The philosophy of people dominant individual perspective, puts the rela-
management tionships between stakeholders at the centre of
our studies’ (432).
The term ‘human resources’ is controversial. Osterby In a business, its owners and its senior manage-
and Coster (1992: 31) claimed that it ‘reduces people ment as principal agents of those owners are two
to the same category of value as materials, money of the key stakeholders. They will aim to achieve
and technology – all resources, and resources are financial success as a necessary requirement for the
only valuable to the extent they can be exploited or survival of the business. So where does HRM
leveraged into economic value.’ This view has accel- stand? Boxall (2013: 59) noted that ‘HR strategy is
erated the move to replace it with ‘people manage- part and parcel of a larger business model, and it
ment’ and this is the term that is generally used by fails if it does not serve the economic imperatives
the Chartered Institute of Personnel and Development that are essential to that model.’ However, a funda-
(CIPD). However, it is not enough simply to replace mental feature of people management is that
HRM with a more acceptable name. A philosophy of policies and practices should be looked at and de-
people management needs to be developed to pro- veloped in accordance with the interests of the
vide guidance on how people should be treated. This people affected by them, not just the economic
should be based on two interrelated principles. The needs of the business. Thompson and Harley
first is the use of a multi-stakeholder approach The (2007: 149) remarked that
second is that employees should be regarded as peo- In an environment where employee skills and
ple rather than as exploitable resources. commitment are central to organizational
success it is precisely by giving employees more
that organizations will gain more… Successful
Treating employees as stakeholders strategies therefore rely on aligning employer and
employee interests.
Employees have a stake in their organization that is
just as important as the stake held by owners and A multi-stakeholder approach to managing the em-
senior management. The attention given to the in- ployment relationship recognizes the need to sat-
terests of employees has to equal the attention given isfy the interests of the owners (the shareholders)
to the interests of the business. In their seminal of a business or achieve the purposes of a public or
book on HRM, Beer et al (1984: 15) observed that voluntary sector organization. It also recognizes
the interests of the management of the organiza-
HRM policies are and indeed should be
tion and the organization’s responsibilities to its
influenced by the interests of various stakeholders:
suppliers and the public at large (the community).
shareholders, management, employees, community
and government. Unless these policies are Equally, however, it recognizes the interests of the
influenced by all stakeholders, the enterprise will people the organization employs and acts accord-
fail to meet the needs of these stakeholders in the ingly. People are not simply treated as resources –
long run and it will fail as an institution. commodities or disposable factors of production
who exist to be exploited at the behest of the own-
In 2015 Michael Beer, Paul Boselie and Chris ers and management. Essentially, people manage-
Brewster reviewed the state of this somewhat ment aims to achieve a balance between the needs
neglected perspective after 30 years. They stated of employees and those of the other stakeholders,
that ‘we need to take a wider, more contextual, hard though that may be. It pursues employment
more multi-layered approach founded on the policies that are socially legitimate and produce
long-term needs of all relevant stakeholders’ benefits for both employees and employers. It
(2015: 427). They also argued that ‘Fundamental avoids the temptation to look upwards and focus
to a multi-stakeholder approach must be the crea- on the strategic (business) aims of the organization
tion, maintenance, and development of a culture at the expense of the wellbeing of the people in the
of trust among the different stakeholders. Consid organization.
Treating employees as people What good people practice looks

rather than as exploitable like
resources Good people practice is based on the evidence-
based analysis of the circumstances of the organiza-
John Rawls (1973: 183) wrote that ‘We must treat
tion, the challenges it has to meet, its people
persons solely as ends and not in any way as means.’
requirements in terms of numbers and skills, and
Schneider (1987: 450) argued that ‘Organizations
the levels of motivation, commitment and engage-
are the people in them; that people make the place.’
ment employees need to play their part in achieving
Managing the employee experience is a ‘bottom up’
the organization’s strategic goals. The purpose and
rather than a ‘top down’ process. To enhance the
objectives of people practices will be clearly defined
experience, the starting point is to gain understand-
by reference to this analysis. Account will be taken
ing of how employees perceive what it is like to
of good practice elsewhere but care will be exer-
work in the organization and from that analysis ob-
cised to ensure that this practice fits the particular
tain the evidence on what needs to be done to deal
circumstances of the organization.
with any issues.
Good people practice will be underpinned by the
belief as expressed by the CIPD (2020: 21) that
‘Ultimately, all employees need to work in a sup-
Comparison between HRM and portive, engaging environment that welcomes indi-
people management vidual perspectives.’ It will be strongly influenced by
the views of line managers and employees generally
People management involves all aspects of manag-
on what is required. Good people practices are
ing employees in accordance with the principles of
clear, easy to understand and readily administered
adopting a multi-stakeholder approach and treating
by line managers with the help and guidance of peo-
them as valued resources. A people management
ple professionals as necessary.
system will cover the same areas as an HRM sys-
tem. People professionals will be responsible for the
same things as HR professionals, but the ways in
which they do them will differ. A comparison of the
The impact of people practices
characteristics of HRM with those of people man- People management practices impact on:
agement is given in the table below.
●● performance – of individuals and the whole
organization through resourcing and skills
People practices development;
●● behaviour – influencing motivation,
People practices are defined in the CIPD’s Profession commitment and engagement;
Map (2021) as ‘the processes and approaches that ●● culture – through organizational
we use across the employee life cycle: learning needs development interventions;
analysis, creating talent pools, developing people ●● structures – by influencing organization
policies, analysing people data, managing griev- design;
ances, recruiting people.’ The areas covered by peo-
●● systems – by influencing work and job
ple practices are similar to the HR system activities
design.
described earlier in this chapter but a philosophy of
people management does or should guide their de-
velopment and implementation.
As the CIPD stated, people practices are applied
Developing integrated people
in each stage of the employee life cycle. This c onsists practices
of the six stages of an employee’s involvement with
Complementary practices should be bundled into
an organization, namely: attraction, recruitment,
an integrated whole as described in Chapter 4. A
onboarding, development, retention and s eparation.
strategic approach is required, necessitating the use
TA B L E 1.1 Comparison between HRM and people management

HRM (Traditional version) People management
Concept/ Calvinism (focus on the values of order Quakerism (emphasis on non-authoritarian

philosophy and regularity) fellowship)
Darwin (survival of the fittest) Rawls (treat people as ends, not means)
Ownership and Shareholder/senior management driven Multi-stakeholder with employees as key

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

relationship Legal employment contracts Psychological contracts
Compliance Voluntarism
De-recognition Partnership/mutual gains
Focus on managing diversity Focus on both inclusion and diversity
Formal joint consultation processes Importance attached to all forms of
employee voice
Work Work intensification Emphasis on job quality

Mechanistic Flexible working
Analytics Descriptive Predictive

Annual engagement survey Pulse surveys
Digital Human resource information systems Web-based applications: social media,

cloud technologies, chatbots, smart phones
Learning and Systematic training Workplace/experiential/self-managed/social

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

emphasis Individual Collective
Rewards and Financial emphasis Total reward and recognition

incentives Highly differentiated More widely shared – tackle low pay issues
Individual performance pay and bonuses Profit sharing
Performance Formal system Line managers as performance leaders

management Results and pay focus Strengths-based and development focus
Annual event Continuous dialogue and feedback
Formal system
SOURCE Adapted from an unpublished paper by Duncan Brown

of evidence-based HRM that involves line manag- terms, for example, of return on investment.
ers and other employees (see Chapters 9 and 12). Reactions should be obtained from those responsi-
ble for implementing and managing the practice
and those affected by it on how well it is working
Testing new people practices and the extent to which it is meeting their needs.
The costs and benefits of the practice should be as-
New people management practices need to be
sessed and an estimate of the added value it has
tested to ensure that their objectives and perfor-
produced. Any problems in implementing the pol-
mance criteria are being attained. These should
icy or practice should be identified and methods of
have been defined when they were initiated in
solving them worked out.
Key learning points
Managing people areas of activity. The concept of strategic human

resource emphasizes the importance of integrating
Organizations have to obtain and develop the talented, HR strategies with corporate strategies to ensure
skilled and engaged people they need, manage their that HR strategies support the achievement of
performance, reward them in accordance with their organizational goals.
contribution, create and maintain positive employment
relationships and provide for the wellbeing of their ●● HR policies, which set out what HR is there to do
employees. and provide guidelines defining how specific
aspects of HR should be applied and
implemented.
The HR architecture
●● HR practices, which consist of the HR activities
The HR architecture is a comprehensive representation
involved in managing and developing people and in
of all that is involved in HRM. It incorporates the HR
managing the employment relationship.
system of policies and practices, the roles and
behaviour of managers and employees generally and
the contribution made by members of the HR function. HRM philosophy
HRM philosophy emphasizes the importance of a
The HR system strategic approach, proposes that people should be
treated as assets rather than costs and indicates that
The core of the HR system is a set of interrelated and
it is primarily the responsibility of senior management.
jointly supportive people management practices or
activities. The range and nature of these activities is
governed by the organization’s context – its internal People management philosophy
and external environments – and its HR philosophy, A philosophy of people management should be based
strategies and policies. on two interrelated principles: the first is the use of a
The components of an HR system are: multi-stakeholder approach; the second is that
●● HR strategies, which define the direction in which it employees should be regarded as people rather than
is intended that HRM should go in each of its main as exploitable resources.
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17
02
Human capital
management
the contribution of people and measuring the effec-
Introduction tiveness of the HR practices used to manage them.
As pointed out by Delery and Roumpi (2017: 9),
Human capital management (HCM) is an approach human capital in the shape of intellectual and social
to managing people which recognizes their value capital is different from other types of resources in
and the importance of measuring that value. It re- that it is owned by employees and can be transferred
gards people as assets and emphasizes that competi- to other firms if they leave. Therefore, it is critical
tive advantage is achieved by strategic investments for firms to use HRM systems to enhance existing
in those assets. As Hitt et al (2001) established levels of human capital, initially by attracting high-
through their research in professional service firms, quality people and providing them with develop-
leveraging human capital had a positive effect on ment opportunities, and then preventing the loss of
firm performance. their human capital investments to other firms by
This chapter starts with a definition of the con- enhancing the commitment of employees to the firm
cept of human capital and continues with an analy- and applying retention policies. As Wright et al
sis of its constituents and a discussion of how it can (1994: 320) noted: ‘Sustained competitive advan-
be measured. The chapter then describes the ap- tage is achieved only by the interaction between the
proaches to people management raised by human human capital pool and the HR practices.’
capital theory, and concludes with a look at invest- Skaggs and Youndt (2004) used a sample of 234
ment decisions and HCM. service organizations and found strong empirical sup-
port to indicate that if fit is achieved between human
capital and the organization's strategic positioning,
Human capital management the result is positive organizational performance.
defined
Human capital management (HCM) is concerned The concept of human
with the knowledge, skills, abilities and capacity to
develop and innovate possessed by people in an or-
capital
ganization and the added value they therefore pro- Human capital is the knowledge, skills and abilities
vide. It treats them as assets to be invested in of the people employed in an organization. Human
through resourcing, talent management and learn- capital theory regards people as assets and stresses
ing and development policies and practices. The aim that investment by organizations in people will gen-
is to enhance the value of the organization’s human erate worthwhile returns. It was noted by Wong
capital so that the business can perform successfully (2017: 2) that:
in the short and longer term and achieve competi-
tive advantage. HCM also involves measuring the The [human capital] journey starts with clarity on
value of an organization’s human capital, assessing the value that the organisation and its activities
provide. That value proposition then forms the Human capital is an intangible asset in the form
basis for determining what value is created and of a stock of knowledge and it is indeed the knowl-
where people add value to capital. Implicit in this edge, skills and abilities of individuals that create
is the quality and ideology behind the management value. That is why the focus has to be on means of
of people. attracting, retaining, developing and maintaining
Adam Smith (1776) originated the idea of human the human capital they represent.
capital (like so many other economic concepts). He Human capital theory is related to the resource-
stated that: ‘The acquired wealth of nations derives based view which states that the unique nature of
from the acquired abilities of people – their educa- human capital resources within the firm have the po-
tion, experience, skills and health.’ tential to generate sustainable competitive a dvantage
Wright and McMahon (2011: 101) explained (Nyberg et al, 2014; Ployhart, 2006).
that:
Each individual in the organization has
characteristics that comprise human capital. He/
The constituents of human
she also engages in the processing of information, capital
interpretation and reaction to that information
in making choices about how to feel and behave. Human capital consists of intellectual, social and
The aggregation of human capital, we propose, organizational capital. The intellectual knowledge
constitutes the organization or unit’s ‘human capital’. possessed by people is enhanced by the interactions
The significance of the term was emphasized by between them (social capital) and generates the in-
Schultz (1961: 1) as follows: stitutionalized knowledge possessed by an organi-
zation (organizational capital).
Although it is obvious that people acquire useful
skills and knowledge, it is not obvious that these
skills and knowledge are a form of capital, that this
capital is in substantial part a product of deliberate
Intellectual capital
investment, that it has grown in Western countries The concept of human capital is associated with the
at a much faster rate than conventional (non- overarching notion of intellectual capital, which is de-
human) capital, and that its growth may well be fined as the stocks and flows of knowledge available
the most distinctive feature of the economic system: to an organization. These can be regarded as the intan-
gible resources associated with people that, together
Schultz also commented that: ‘Attributes… which
with tangible resources (money and physical assets),
are valuable and can be augmented by appropriate
comprise the market or total value of a business.
investment will be treated as human capital…
Consider all human abilities to be either innate or
acquired’ (1961: ipage 21).
Scarborough and Elias (2002: ix) observed
Social capital
that: ‘The concept of human capital is most use- Social capital consists of the knowledge derived
fully viewed as a bridging concept – that is, it de- from networks of relationships within and outside
fines the link between HR practices and business the organization. Social capital has been defined by
performance in terms of assets rather than busi- Putnam (1996: 66) as ‘the features of social life –
ness processes.’ They pointed out that human cap- networks, norms and trust – that enable participants
ital is to a large extent ‘non-standardized, tacit, to act together more effectively to pursue shared ob-
dynamic, context dependent and embodied in peo- jectives’. It is important to take into account social
ple’. These characteristics make it difficult to eval- capital considerations, that is, the ways in which
uate human capital, bearing in mind that ‘the knowledge is developed and learning takes place
features of human capital that are so crucial to (social learning) through interaction between peo-
firm performance are the flexibility and creativity ple. Bontis et al (1999) commented that it is flows as
of individuals, their ability to develop skills over well as stocks that matter. Intellectual capital devel-
time and to respond in a motivated way to differ- ops and changes over time and a significant part is
ent contexts’ (ix). played in these processes by people acting together.
Chapter 2 | Human Capital Management 19
Organizational capital Absolute measures

Organizational or structural capital is the institution- As McMahan and Harris (2013: 114) observed:
alized knowledge possessed by an organization that ‘Human capital has been measured in a multitude
is stored in databases, manuals, etc. Ployhart and of ways and has been related to an array of indi-
Moliterno (2011) defined it as ‘a unit-level resource vidual outcomes.’ They identified the following ap-
that is created from the emergence of individuals’ proaches to the establishment of absolute measures,
knowledge, skills, abilities and other attributes’. They ie measures that indicate the total value of human
present an ‘emergence’ model explaining how a num- capital in an organization:
ber of individuals with specific human capital en-
●● A single rater, eg the head of HR, makes an
dowments can be combined in such a way that a
overall assessment using a scale including
‘human capital resource’ emerges at the unit level.
items such as levels of education, training,
skills and abilities, and performance – but
this is a subjective judgement from someone
Measuring human capital who may not have the information required
to make it.
Human capital management is concerned with
measuring the value of people – establishing their ●● Multiple raters – this reduces individual bias
contribution to organizational performance in order but is still largely subjective.
to provide insight into the strengths and weaknesses ●● Aggregation of individual measures to a
of the organization’s approach to managing this key higher level of analysis (team or
resource. Such measurements can assess the extent organization) – the challenge is to find
to which the organization has sufficient numbers of individual levels of analysis that can be
the sort of people it needs and analyse the operation aggregated.
and effectiveness of HR a ctivities. Thus, they can
inform the process of developing human resource
management strategy and indicate what steps need Specific measures
to be taken to change policy or practice.
The selection and use of specific measures or met-
But the CIPD (2018) warned that: ‘Understanding
rics will be dependent on the context of the organi-
the context of data is key and as such there is no
zation. They could be drawn from the following
single measure, or set of measures, which can ade-
groups of human capital data relating to different
quately convey human capital value. Organisations
aspects of HR suggested by the CIPD (2018):
need to decide which measures are relevant to them
and will give them the information they need to ●● workforce composition: demographics data
effectively communicate the value and contribu- including age, gender and ethnicity;
tion of human capital both internally and exter- ●● recruitment and retention: number of
nally.’ The CIPD also noted that ‘the emphasis for resignations/vacancies/applications, length of
measurement is no longer on absolute measures of service;
human capital, but instead concentrates on specific
●● skills, qualifications and competencies: levels
information to enable informed decision making.’
of expenditure on training, types of training
There is, however, still a belief, at least in some
provided, length of time to reach competence
academic circles, that absolute measures of the total
levels, data on training needs;
value of human capital are useful, although it is rec-
ognized that establishing them presents considerable, ●● performance management: performance
possibly insurmountable, difficulties. This might ex- management results, productivity and
plain why less interest is being taken in them by prac- profitability data, targets set and met, levels
titioners. Approaches to developing absolute and of customer satisfaction, customer loyalty;
specific (contextual) measures and representing the ●● employee relations and voice: findings from
value of people in different ways are discussed below. employee attitude surveys;
pay and benefits: overall wage bill costs,

●●
distribution of individual performance-related
Approaches to HRM raised
pay awards, level of total reward package; by human capital theory
●● regulatory compliance: includes data on the
compliance of employees to established An approach to HRM based on human capital the-
standards and guidelines for working ory involves obtaining answers to these questions:
practices in particular disciplines;
●● What are the key performance drivers that
●● organization development and design: create value?
includes data on spans of control, skills mix
and talent pipelines. ●● What skills do we have?
●● What skills do we need now and in the
This data could contribute to the measurement of future to meet our strategic aims?
the absolute value of human capital but, essentially,
they perform the function of enabling evidence- ●● How are we going to attract, develop and
based decisions on the development of HR strategy retain these skills?
and on the management of different parts of the HR ●● How can we develop a culture and
system. The collection, analysis and interpretation environment in which organizational and
of this data is the function of the operational wing individual learning takes place that meets both
of human capital management, HR analytics (see our needs and the needs of our employees?
Chapter 13). An approach to human capital meas- ●● How can we provide for both the explicit
urement used by the Civil Aviation Authority is and tacit knowledge created in our
shown in Figure 2.1 below. organization to be captured, recorded and
used effectively?
What should we do to demonstrate to our
Representing the value of people in ●●
employees that they are valued?
different ways
Representing the value of people in an organization
focuses attention on the importance of enhancing
HCM and investment
that value as a means of improving organizational decisions
performance. Analysis of data on trends in values
provides a basis for HR planning and for monitor- Business investors need to know about the business
ing the effectiveness of HR policies and practices. they are thinking of investing in by reference to non-
Value can be measured in financial terms in financial (HCM) criteria as well as financial ones.
terms of the cost of employing people (the ratio of The non-financial criteria include environmental,
employment costs to the total costs incurred by the social and governance (ESG) factors as well as the
organization). In commercial enterprises value can quality of management and the workforce. But as
also be measured in terms of the contribution made the CIPD (2019: 4) noted: ‘The intangible nature of
by employees to the profitability of the business human capital means that it is difficult for investors
(profit per employee). to understand exactly how people create value for
Value can be represented in non-financial terms organisations.’ The CIPD also observed (4) that:
by reference to the skills base and levels of capabil-
ity in the organization. The data for these can be HR leaders and people professionals have a key
provided by preparing and updating skills invento- role to play in helping investors understand both
ries and by analysing information on organizational the value of the workforce and people-related risk
through the collection and reporting of data to help
performance and the outcome of individual perfor-
uncover how people add value in organisations and
mance reviews.
inform better business decision-making.
The CIPD (2019) research established that inves-
tors saw management quality as being the most
important factor.
F I G U R E 2.1 Human capital evaluation – Civil Aviation Authority

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

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

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

people people
• Are we continually raising • Performance

the bar on performance? management
• Are we developing our • Training evaluation
staff effectively? • External customer survey
• Are our ‘customers’
satisfied with our
performance?
Key learning points
Human capital management defined ●● HCM also involves measuring the value of an
organization’s human capital, assessing the
●● Human capital management (HCM) is an approach contribution of people and measuring the
to managing people that regards them as assets effectiveness of the HR practices used to manage
and emphasizes that competitive advantage is them.
achieved by strategic investments in those assets
●● Human capital in the shape of intellectual and
●● It is concerned with the knowledge, skills, abilities social capital is different from other types of
and capacity to develop and innovate possessed by resources in that it is owned by employees and can
people in an organization and the added value they be transferred to other firms if they leave.
therefore provide. It treats them as assets to be Therefore, it is critical for firms to use HRM
invested in through resourcing, talent management systems to enhance existing levels of human
and learning and development policies and capital, initially by attracting high-quality people
practices. and providing them with development
opportunities, and then preventing the loss of their Representing the value of people in
human capital investments to other firms by
enhancing the commitment of employees to the
different ways
firm and applying retention policies. Representing the value of people in an organization
focuses attention on the importance of enhancing that
value as a means of improving organizational
Human capital defined performance.
Human capital is the knowledge, skills and abilities of Value can be represented in terms of profit, cost,
the people employed in an organization. Human capital skills and capability.
theory regards people as assets and stresses that
investment by organizations in people will generate Approaches to people management raised
worthwhile returns. by human capital theory
An approach to people management based on human
Constituents of human capital
capital theory involves obtaining answers to these
●● Intellectual capital – the stocks and flows of questions:
knowledge available to an organization.
●● What are the key performance drivers that create
●● Social capital – the knowledge derived from value?
networks of relationships within and outside the
●● What skills do we have?
organization.
●● What skills do we need?
●● Organizational or structural capital – the
institutionalized knowledge possessed by an ●● How are we going to attract, develop and retain
organization that is stored in databases, manuals, etc. these skills?
●● How can we ensure that organizational and
Measuring human capital individual learning take place?
Human capital management is concerned with ●● How can we provide for the knowledge created in
measuring the value of people – establishing their our organization to be used effectively?
contribution to organizational performance in order to
provide insight into the strengths and weaknesses of
the organization’s approach to managing its key
HCM and investment decisions
resource. Business investors need to know about the
The CIPD (2018) has noted that ‘the emphasis for business they are thinking of investing in by
measurement is no longer on absolute measures of reference to non-financial (HCM) criteria as well
human capital, but instead context specific information as financial ones.
to enable informed decision making’.
References
Bontis, N, Dragonetti, N C, Jacobsen, K and Roos, G Chartered Institute of Personnel and Development
(1999) The knowledge toolbox: a review of the (2018) Human Capital Fact Sheet, London, CIPD
tools available to measure and manage intangible Chartered Institute of Personnel and
resources, European Management Journal, 17 (4), Development (2019) The Intangible Workforce,
pp 391–402 London, CIPD
Delery, J E and Roumpi, D (2017) Strategic human Putnam, R D (1996) The strange disappearance of
resource management, human capital and civic America, The American Prospect, Winter,
competitive advantage: is the field going in circles?, pp 34–48
Human Resource Management Journal, 27 (1), pp Scarborough, H and Elias, J (2002) Evaluating
1–21 Human Capital, London, CIPD
Hitt, M A, Bierman, L, Shimizu, K and Kochhar, R Schultz, T W (1961) Investment in human capital,
(2001) Direct and indirect effects of human American Economic Review, 51, March, pp 1–17
capital on strategy and performance in Skaggs, B C and Youndt, M A (2004) Strategic
professional service firms: a resource-based positioning, human capital and performance in
perspective, Academy of Management Journal, 44 service organizations: a customer interaction
(1), pp 13–28 approach, Strategic Management Journal, 25 (1),
McMahan, G C and Harris, C M (2013) Measuring pp 85−99
human capital, in (eds) J Paauwe, D E Guest and Smith, Adam (1776) The Wealth of Nations, published
P M Wright, HRM and Performance, Chichester, by Penguin Books, Harmondsworth, 1986
Wiley, pp 111–28 Wong, W (2017) Foreword, in E Houghton, Human
Nyberg, A J, Moliterno, T P, Hale, D and Lepak, D P Capital Analytics and Reporting: Exploring theory
(2014) Resource-based perspectives on unit-level and evidence, London, CIPD
human capital: a review and integration, Journal Wright, P M and McMahan, G C (2011) Exploring
of Management, 40 (1), pp 316–46 human capital: putting ‘human’ back into strategic
Ployhart, R E (2006) Staffing in the 21st century: new human resource management, Human Resource
challenges and strategic opportunities, Journal of Management Journal, 21 (2), pp 93–104
Management, 32, pp 868−97 Wright, P M, McMahan, G C and McWilliams, A
Ployhart, R E and Moliterno, T P (2011) Emergence of (1994) Human resources and sustained
the human capital resource: a multilevel model, competitive advantage: a resource-based
Academy of Management Review, 36 (1), pp perspective, International Journal of Human
127–50 Resource Management, 5 (2), pp 301–26
24
03
The context of HRM
Introduction The internal environment
The internal environment of an organization con-
Typical approaches to HRM and typical organiza-
sists of its social system (the ways in which work
tions don’t exist. In accordance with contingency
groups are organized and the interactions that take
theory, the situation of an organization – its con-
place) and its technical system (the ways in which
text – will strongly influence how it operates.
the work is organized and carried out to deliver
Descriptions in textbooks like this can be no more
products or services to customers, clients or the
than generalizations that suggest possible ap-
public). The other contextual factors are the sector
proaches: they cannot be prescriptive in the sense
in which the organization operates (eg public, pri-
of laying down what should be done in all circum-
vate, voluntary, manufacturing, service), and its
stances. It all depends. This point was originally
size, complexity, technology, culture and financial
stressed by Karen Legge (1978: 87) who wrote:
circumstances. Two other important factors are the
‘Different organizational and environmental cir-
type of people it employs and the presence or ab-
cumstances will necessitate transformation of gen-
sence of trade unions. HRM activities in firms that
eral prescription into concrete strategy adapted to
function flexibly and informally and mainly employ
the situation in which it is to operate.’ More re-
knowledge workers are likely to be substantially
cently, Dundon and Rafferty (2018: 380) stated
different from those in firms where the majority of
that: ‘HRM in organizations cannot be fully un-
workers are employed in activities such as manufac-
derstood in an atomic sense isolated from eco-
turing, delivery or customer service (eg call centres).
nomic, social, and institutional interconnecting
A strong trade union presence will affect such ac-
relationships.’
tivities as the way in which employment decisions
The aim of this chapter is to examine the main
are made, day-to-day interactions between manage-
contextual factors that affect people management
ment and the workforce take place, and pay
and the practice of HRM, namely environmental
management.
factors (the nature of the internal and external envi-
The financial situation of the organization is
ronments), the impact of emerging technology and
another factor affecting HR activities. Some chief
the nature and state of the labour market.
executive officers and many chief financial officers
regard expenditure on HR as a cost rather than an
investment. When costs have to be cut it is often the
Environmental factors HR budget that suffers.
Internal and external environmental factors exert
considerable influence on how the organization The external environment
functions. This includes the need for concern over
the impact of the organization on issues such as The external environment impacts on organizations
pollution. Environmental factors will have a direct through the forces of national and international com-
effect on the organization’s human resource man- petition, the state of the financial and labour markets,
agement policies and practices. economic and societal trends, the deregulation of
Chapter 3 | The Context of HRM 25
markets and the impact of globalization. Another permanent jobs and zero-hours contracts (see
major influence is the constant state of change in the Chapter 4) affects the nature of the labour market
external environment, which may be turbulent, even and the approaches adopted by employers to
chaotic, as a result of such events as the Covid-19 satisfy their employment requirements. Currently,
pandemic and, in the UK, Brexit. This is about the almost 26 per cent of employment is in part-time
impact of ‘VUCA’ (volatility, uncertainty, complexity work and self-employment now accounts for
and ambiguity). Organizations are also influenced by around 15 per cent of total employment.
changes in the nature of work, developments in new
technology, the availability of skills and government
interventions, and initiatives in the shape of support The supply of labour
for skills development, legislation and regulations.
In the latter half of 2021 serious problems in the sup-
ply of labour emerged. They had existed before but,
according to the CIPD (2021), were intensified by the
The labour market Covid-19 pandemic not, as was often assumed, by
Brexit. The intensity of this problem may diminish
The labour market is the place where employers over time but the likelihood is that labour shortages of
seek workers and workers seek employment. one sort of another will persist for a variety of reasons.
Rubery et al (2016: 246) made the following obser- The stock of EU-born workers in the UK fell by
vations about its characteristics: 7.4 per cent between October and December 2019
Cross-national comparative research suggests that and October and December 2020. This was caused
the UK’s deregulated labour market is the most by the high concentration of EU nationals that were
likely among European countries to generate a ‘lean’ employed in occupations and sectors worst hit by
model of work organisation, described by teamwork, the pandemic. The CIPD (2021) expressed concern
job rotation, relatively low worker autonomy, tight that a sizeable proportion of EU citizens who have
quantitative production rules and relatively high use left the UK won’t return, which is likely to contrib-
of fixed-term employment. It is less likely to generate ute to recruitment difficulties in the medium term.
employee commitment for which fair treatment and This will especially involve low-wage industries
job security are critical ingredients. such as hospitality, food processing, social care, re-
tail and agriculture, many of whom rely on EU
workers. The CIPD also noted that this should force
The composition of the UK labour employers to make full use of available UK work-
market ers, especially those recently made redundant with
relevant skills and up-to-date experience. However,
As reported by the Taylor Review (2017), full-time, without a significant injection of skills investment
permanent work as an employee continues to from both government and employers, many UK
make up the majority of employment in the UK jobseekers will be unable to fill some of the vacan-
(63 per cent). However, there has been a shift cies that the reduction in the supply of overseas
towards more flexible forms of working with
workers will create when the economy recovers.
changes in levels of part-time working and self- The problems for employers may be compounded
employment. The rise of the gig economy of short- further by demographic and population trends,
term contracts or freelance work as opposed to which do not point to a growth in the workforce.
Key learning points
Contingency theory many different ways depending on their contexts.

And so does HRM. Contingency theory tells us that
Typical approaches to HRM and typical definitions of aims, policies and strategies, lists of
organizations don’t exist. Organizations function in activities and analyses of the role of the HR function
are only valid if they are related to the competition, the deregulation of markets and the
circumstances of the organization impact of globalization (the process by which
businesses or other organizations develop
Environmental factors international influence or start operating on an
international scale).
Environmental factors inside and outside the Organizations are also influenced by the state of
organization exert a major influence on how the the financial and labour markets, economic and
organization functions and on its human resource societal trends, developments in new technology and
management policies and practices. government interventions in the shape of legislation
and regulations.
The internal environment
The internal environment of an organization consists of The labour market
its social system (the ways in which work groups are The labour market is the place where employers seek
organized and the interactions that take place) and its workers and workers seek employment. Recruitment
technical system (the ways in which the work is problems arise because of skills shortages or the
organized and carried out to deliver products or reduction in the numbers of workers from overseas.
services to customers or clients).
The external environment

The external environment impacts on organizations
through the forces of national and international
References
Chartered Institute of Personnel and Development Rubery, J, Keizer, A and Grimshaw, D (2016)
(2021) Employers and the Government are Flexibility bites back: the multiple and hidden
Sleep-Walking into a Labour Supply Crisis, costs of flexible employment policies, Human
London, CIPD Resource Management Journal, 26 (3), pp 235–51
Dundon, T and Rafferty, A (2018) The (potential) The Taylor Review of Modern Working Practices
demise of HRM? Human Resource Management (2017), https://assets.publishing.service.gov.uk/
Journal, 28 (3), pp 377–91 government/uploads/system/uploads/attachment_
Legge, K (1978) Power, Innovation and Problem data/file/627671/good-work-taylor-review-
Solving in Personnel Management, Maidenhead, modern-working-practices-rg.pdf (archived at
McGraw-Hill https://perma.cc/2RFK-HZL5)
27
04
The future of work
Introduction Labour process theory
Labour process theory was originally formulated by
The nature of work is changing rapidly. Why this is Karl Marx (translated in 1976). His idea was that
happening is discussed later in this chapter. But in surplus is appropriated from labour by paying it
order to appreciate what is taking place it is first less than the value it adds to the labour process.
necessary to explore the nature of work, the theo- Capitalists therefore design that process to secure
ries that explain the meaning of work and the fac- the extraction of surplus value. The human capacity
tors that affect it. to produce is subordinated to the exploitative de-
mands of the capitalist, which is an alien power
confronting the worker who becomes a ‘crippled
The nature of work monstrosity by furthering his skill as if in a forcing
house through the suppression of a whole world of
Work is the exertion of effort and the application of productive drives and inclinations.’
knowledge and skills to achieve a purpose. Most Considerably later, a version of labour process
people work to earn a living – to make money. But theory was produced by Braverman (1974). His
they can also work because of the other satisfac- view was that the introduction of modern management
tions it brings, such as doing something worthwhile, techniques, in conjunction with mechanization and
a sense of achievement, the opportunity to use and automation, secures the real subordination of la-
develop capabilities, companionship and the scope bour and de-skilling of work in the office as well as
to exercise power. Within organizations, the nature on the shop floor. He claimed that the r emoval of
of the work people carry out and what they feel all forms of control from the worker is ‘the ideal
about it are expressed in the employment relation- toward which management tends, and in pursuit of
ship and by the psychological contract as covered in which it uses every productive innovation shaped
Chapters 51 and 52 respectively. This is summed up by science.’ This, he asserted, was e ssentially the ap-
by the term ‘the employee experience’ which covers plication of ‘Taylorism’ (ie F W Taylor’s concept of
everything that happens to people during the course scientific management, meaning the use of system-
of their employment. atic observation and measurement, task specialism
and, in effect, the reduction of workers to the level
of efficiently functioning machinery).
Theories explaining Braverman’s notion of labour process theory has
been criticized as simplistic by subsequent commen-
the meaning of work tators such as Littler and Salaman (1982) who ar-
gued that there are numerous determinants in the
The theories explaining the meaning of work exam- labour process. And Friedman (1977) thought that
ined in this section are labour process theory, agency Braverman’s version neglects the diverse and so-
theory and exchange theory. The concepts of the phisticated character of management control as it
pluralist and unitarist frames of reference, the in- responds not only to technological advances but
sight on job satisfaction and design provided by the also to changes in the degree and intensity of worker
‘job demands-resources model’, and attitudes to resistance and new product and labour market
work are also considered. conditions. Storey (1995) contended that ‘the la-
bour process bandwagon… is now holed and 4 Level of comparisons – people evaluate the
patched beyond repair’. outcome of an interaction against profit they
But commentators such as Newton and Findlay are foregoing elsewhere.
(1996) believe that labour process theory explains
how managements have at their disposal a range of Unitary and pluralist frames
mechanisms through which control is exercised:
‘Job performance and assessment is at the heart of of reference
the labour process.’ They consider that manage- One of the often-expressed aims of human resource
ments are constantly seeking ways to improve the management is to increase the engagement of people
effectiveness of control mechanisms to achieve and their commitment to the organization by get-
compliance: ‘They try to achieve the last drop of ting them to share its values and integrate their own
surplus value’ out of their labour. There is some- work objectives with those of the organization. This
thing to be said for this point of view although it concept adopts a unitary frame of reference; in other
does not apply to all managements. words, as expressed by Gennard and Judge (2005),
organizations are assumed to be ‘harmonious and
Agency theory integrated, all employees sharing the organizational
goals and working as members of one team.’
Agency or principal agent theory indicates that Alternatively, the pluralist perspective sees or-
principals (owners and managers) have to develop ganizations as coalitions of interest groups and
ways of monitoring and controlling the activities of recognizes the legitimacy of different interests and
their agents (staff). It suggests that principals may values. This is perhaps a more realistic view than
have problems in ensuring that agents do what they the idealistic unitary concept. It can be argued that
are told. It is necessary for them to clear up ambi- a unitary belief is a managerialist assumption and
guities by setting objectives and monitoring perfor- that the legitimate interests of the other members of
mance to ensure that objectives are achieved. a pluralistic society – the stakeholders – will have
Agency theory has been criticized by Gomez- their own interests which should be respected.
Mejia and Balkin (1992) as ‘managerialist’. Armstrong
(1996: 597) wrote that: ‘It looks at the employment
relationship purely from management’s point of view The job demands-resources model
and regards employees as objects to be motivated by The job demands-resources model based on re-
the carrot and stick. It is a dismal theory which sug- search by Demerouti et al (2001) and Crawford
gests that people cannot be trusted.’ et al (2010) classifies job attributes and other related
work experiences into two broad categories: (1) job
Exchange theory demands that can be challenging such as complex-
ity, responsibility, workload, or a hindrance, for
Exchange theory explains organizational behaviour example role ambiguity, conflict and overload, and
in terms of the rewards and costs incurred in the (2) job resources, for example autonomy, supervi-
interaction between employers and employees. sory support, feedback, access to information, de-
There are four concepts: velopment opportunities. Challenging demands and
1 Rewards – payouts that satisfy needs job resources are positively related to engagement
emerging from the interactions between levels and hindrance demands are negatively related.
individuals and their organizations.
2 Costs – fatigue, stress, anxiety, punishments Attitudes to work
and the value of the reward that people have Attitudes to work vary. Some people just see work as
lost because of the lack of opportunity. a means to an end while others see it as a source of
3 Outcomes – rewards minus costs. If positive, fulfillment. Galbraith (1973: 75), argued for a dis-
the interaction yields a ‘profit’ and this is tinction between ‘people for whom work is exhaust-
satisfactory as long as it exceeds the ing, fastidious and disagreeable and… those who
minimum level of expectations. manifestly take pleasure from it and feel no stress
from it, with a gratifying sense of their personal
importance, perhaps, or the visible superiority they
Chapter 4 | The Future of Work 29
feel in placing others under their orders.’ Those in the Current emerging technology centres on artificial
latter category tend to be the highest-paid workers. intelligence (AI), including both machine learning
and robotics. This latest era is changing the nature
of work in new ways, where the technology not
What is happening to work? only assists in basic physical tasks, but also [in]
tasks that require higher cognitive functions. In
The nature of work is changing. Organizations are addition, AI and automation can result in new
integrations and co-operation possibilities and
functioning more flexibly. They tend to specialize
challenges, which also can create new types of jobs
more and are organized organically, ie they are rela-
and services.
tively informal with the emphasis on lateral pro-
cesses and networking – a ‘lattice structure’ – which As a result of this impact, some commentators have
is often flat, ie non-hierarchical without many lay- predicted large-scale job losses. A report by the
ers of management. There has been a shift away OECD (2019) suggested that, because of automa-
from large-scale industrial production, with a dra- tion, more than one in ten jobs (14 per cent) will
matic decline in manufacturing jobs and a rise in cease to exist within the coming 15–20 years and a
service work. A significant increase has taken place further 32 per cent will be significantly different.
in the number of employers that an individual em- However, the Taylor Review of Modern Working
ployee expects to work for during his or her career. Practises (2017) noted that, as confirmed by re-
The demographics of the workforce have changed search such as that undertaken by Deloitte in 2015,
in the direction of an increased proportion of women, technological advancements and the automation of
greater ethnic diversity, more educated employees and individual tasks result in job creation as well as sub-
an ageing workforce. There has been a growth in the stitution of labour. This is the concept of the
number of employees engaged in ‘knowledge work’ – augmentation of human work, rather than its re-
for example, professional services and new product placement. The following comments were made by
and service development. More flexible working is Deloitte (2015: 11):
taking place with an increasing proportion of part-
This new study has shown that technology is
timers. A persistent ‘bad-jobs’ trap exists in the UK
having a profound effect on the UK’s workforce.
with too many workers in low-skill, low-wage jobs Lower-skilled, routine jobs are progressively being
being unable to progress out of these jobs. The gig replaced by higher-skilled, non-routine jobs that
economy with its short-term contracts is thriving. And require dexterity, creativity, digital know-how
the Covid-19 pandemic has led to a considerable in- and other ‘softer’ people skills. This technology-
crease in home working. driven shift has already created nearly four times
more jobs than have been lost, and it has brought
considerable additional value to the UK’s economy.
The factors affecting work It also accentuates the importance of generating
and retaining the right skills in the workforce.
Work is affected by the impact of emerging tech-
But there may be a time lag between job losses and
nologies, digitalization, the pressure for work inten-
job creation.
sification, the emergence of new forms of the
There is also evidence from research conducted
employment relationship, eg the gig economy, and,
by the CIPD in conjunction with Loughborough
importantly, environmental changes – economic,
University (2017a) that new technology can im-
social and events such as the Covid-19 pandemic
prove the quality of work by removing mundane
and, in the UK, Brexit.
tasks and allowing for some degree of role expan-
sion. Examples identified by the research included:
The impact of emerging ●● An automated dispensing system in a UK
hospital reduced the amount of time
technologies pharmacists spent in the dispensary, which
New technologies are affecting work in a number of was better used to care for patients on
ways as explained by the CIPD (2019: 4). wards.
●● An automated decision support system for study established that intensification commonly oc-
air traffic controllers, advising them on curred in workplaces where new computerized
optimal solutions in a real-time setting, equipment or other information and communica-
increased their performance and accuracy tion technology had recently been introduced.
without increasing their workload. Other factors included increased competitiveness
●● A comparison of a realistic rail-signalling and the pressure on employers to cut costs and a
automation model and experienced human change in the balance of power between employers
rail signal operators found that as automation and employees, although high work intensity was
increased, the perceived workload of human not associated with reductions in the number of em-
operators, both mentally and physically, ployees (downsizing).
decreased and the consistency of performance
increased.
What is happening to work
The CIPD (2019: 33) observed that ‘AI and automa-
tion are potentially deskilling and disempowering, now?
but they are more likely to free people to do more
value-added, higher-skilled tasks and exercise more Current developments in the nature of work are the
discretion in decision-making.’ Their survey indi- growth of the gig economy and zero-hours con-
cated that while the greatest drivers for AI and tracts, the associated pressure by employers for in-
automation are business focused – in particular to creased flexibility in employment practices to offset
improve service quality, reduce costs and keep up the impact of ‘VUCA’ (volatility, uncertainty, com-
with competitors – they can also deliver real benefit plexity and ambiguity conditions), and the increase
for workers. in home and hybrid working arising from and fol-
The CIPD (2020: 15) suggested that, depending lowing the Covid-19 pandemic
on the scale of automation, the HR function might
have to:
1 Decide what to do with the employees whose
The gig economy
roles are being automated – for example, The gig economy is a labour market characterized
redesign their role, upskill or reskill. by the prevalence of short-term contracts or free-
2 Establish what skills are needed and decide lance work as opposed to permanent jobs. It is said
how to deal with any talent and skills gaps by, to get its name because each piece of work is akin to
for example, hiring new talent, upskilling the an individual ‘gig’ – a brief musical performance by
current workforce, borrowing or sharing a band or a group (‘gig’ is short for engagement).
talent and skills across the business. The CIPD (2017b) stated that the number of people
in the UK working in the gig economy was about
3 Manage job loss, redundancies and the
1.3 million.
behavioural and psychological aspects of the
Gig workers are treated as contractors with no
transformation programme (including
guarantee of pay and no employment rights. They
employee resistance).
are constantly being subjected to last-minute sched-
uling. Their employers say that this provides the
flexibility for people to work whenever they like but
Work intensification critics argue that not only do workers lack protec-
Work intensification is the process of raising the ex- tion and fair pay, the roles aren’t as flexible as they
pected workload of an employee by increasing the seem, as workers are pressured or incentivized to
number of tasks to be undertaken or shortening the work when their employers need them. To deal with
time allowed to complete those tasks. A Cardiff this problem, the Taylor Review suggested that the
University study in 2012 found that work intensifi- government should create a new category of worker
cation increased from 31.5 per cent of the working known as a ‘dependent contractor’ that sits between
population in 1992 to 45.3 per cent in 2012. The
contractors and those in full employment, and The CIPD (2022: 21) commented that
brings with it some benefits and wage protection.
Used in the right way, zero-hours contracts can
Research by the CIPD (2017b) found that a
provide benefits to both employers and workers.
higher proportion of gig workers are aged 18–29, Zero-hours contract workers are, overall, as
with nearly four in ten falling into this category, satisfied with their jobs and report better health
compared with just 21 per cent of other workers. and wellbeing and work–life balance than other
Gig economy workers are marginally more likely to workers. Students, people with fluctuating
be male (56 per cent) than other workers. The Royal health conditions, those with varying and
Society of Arts (2017) reported that gig working unpredictable caring responsibilities and older
has the potential to expand into sectors such as re- workers downshifting towards retirement are
tail and confirmed that this type of work is particu- among the groups that can benefit most from
larly attractive to young people. the flexibility provided by zero-hours contracts.
Used in the right way, they can provide workforce
flexibility to employers and employment
Zero-hours contracts opportunities to people who otherwise might
struggle to work at all.
A zero-hours contract is defined by the CIPD
(2022: 2) as: However, the downside, as observed by the CIPD
(2022: 22), is that zero-hours working arrange-
An agreement between two parties that one
ments don’t work for a sizeable minority of people
may be asked to perform work for the other but
where the flexibility is one-sided in favour of the
there is no set minimum number of hours. The
employer. Overall, zero-hours workers are less
contract will provide what pay the individual will
get if he or she does work and will deal with the likely to be satisfied with their contractual arrange-
circumstances in which work may be offered (and, ment than other workers, and are more likely to
possibly, turned down). want more hours. As argued by the Royal Society
for Arts (2017), employers often seek to transfer
Zero-hours contracts are most common in retail risk onto the shoulders of workers in ways that
and hospitality and in situations where work fluctu- make their lives much more insecure.
ates unexpectedly so that the employer cannot al- There is a strong case to be made for zero-hours
ways guarantee it. workers having the right to request a more stable
A survey by the CIPD in 2021 established that in contract or working arrangement after they have
the UK: been employed for, say, six months. The CIPD
(2022) has recommended this.
●● the proportion of employers using zero hours
was 18 per cent;
●● number of zero-hours workers was Home and hybrid working
approximately 1.3 million; Home working is defined as the situation when
●● the proportion of zero-hours contract someone works full or part time at home. Hybrid
employees whose jobs had secure working takes place when someone works for part
characteristics (permanent jobs where the of the week at home and the rest of the week in
number of hours worked and the weekly pay their normal place of work. More people have been
didn’t vary in practice) was only 16 per cent; working at home. A survey by the TUC (2022)
●● The most common reason for using zero- found that regular home working tripled during the
hours contracts was to manage fluctuations in Covid-19 pandemic, rising from 6.8 per cent of the
demand, with 64 per cent of employers working population in 2019 to 22.4 per cent in
reporting this. This was followed by 2021. A survey by PricewaterhouseCoopers (2021)
‘providing flexibility to individuals’, which found that 77 per cent of respondents prefer a mix
was cited by 46 per cent of organizations. of in-person and remote working. Approaches to
Only a sixth of employers who used zero- managing home and hybrid workers are covered in
hours contracts said it was to keep costs down Chapter 33.
This statement provides an overarching guide to the

What is going to happen to future of work. Specifically, it is possible to believe
work? that the future will simply be an extension of the
main trends noted earlier, namely: increased use of
The Taylor Review (2017) listed a number of fac- new technology, the pursuit of flexibility by employ-
tors that could lead to poorer outcomes for workers, the continued existence of the gig economy, the
ers. The key factor was an imbalance of power use of zero-hours contracts and a large proportion
between individuals and employers: ‘Where em-
of employees in some organizations working from
ployers hold more power than employees, this can home full or part time. The World Economic Forum
lead to poorer working conditions and lower wage (2021) report on the future of work forecasted a
levels’ (page 26). A submission by the Citizen’s rapid shift in jobs and levels of automation. It con-
Advice Bureau, Newham to the Review listed the cluded that half of all ‘work tasks’ will be capable of
following top three employment issues raised in en- being carried out by machines by 2025, displacing
quiries to them: more than 75 million jobs worldwide but creating
as many, if not more, new jobs.
1 Unauthorized deduction of wages While these trends are important, there are other
(26 per cent of enquiries) more fundamental issues concerning responsible
2 Unfair dismissal (19 per cent) business and social justice. These were emphasized
3 Terms and conditions, many in relation to by Peter Cheese (2021: 363). His theme was that in
bogus self-employment (13 per cent) an uncertain world it is necessary to adopt princi-
ples ‘from which we can develop clarity and cer-
Recent increases in the pernicious practice of ‘fire tainty as we progress.’ All of his eight principles are
and rehire’ (making workers redundant and then important but one stands out:
re-engaging them on worse terms and conditions of
Responsible business – acting not just within the
employment) have demonstrated the ruthless pur-
laws or rules but also ethically and morally, and
suit by some employers of profit at the expense of
guided by purpose and values Understanding
people.
responsibility and accountability to all stakeholders.
A powerful lead on what ought to happen to work
was provided by Peter Cheese, Chief Executive of the This theme was reinforced in the World Economic
Chartered Institute of Personnel and Development. Forum (2021: 4) report as follows:
He wrote in 2016:
In recent years, the COVID-19 pandemic and a
We need to make sure that the future of work is host of other converging factors have catalysed an
human, that we are designing workplaces that emerging momentum in companies to recognize
make the best use of people and not use the best and consider what they owe in their ecosystems,
of clever technology. Work forms such a major value chains and communities – and to whom they
part of our lives and human society, it should owe it. Addressing social justice issues through
contribute to our wellbeing, our growth and our greater inclusion of often marginalized and ignored
sense of purpose. stakeholders has been widely discussed as essential.
Key learning points
The nature of work the opportunity to use and develop capabilities,

companionship and the scope to exercise power.
Work is the exertion of effort and the application of
knowledge and skills to achieve a purpose. Most people
The meaning of work
work to earn a living – to make money. But they also
work because of the other satisfactions it brings, such The theories explaining the meaning of work examined
as doing something worthwhile, a sense of achievement, in this section consist of labour process theory,
agency theory and exchange theory. The concepts of the associated pressure by employers for increased
the pluralist and unitarist frames of reference, the flexibility in employment practices to offset the impact
insight on job satisfaction and design provided by the of ‘VUCA’ (volatility, uncertainty, complexity and
‘job demands-resources model’ and attitudes to ambiguity conditions), and the increase in home and
work are also considered. hybrid working arising from and following the Covid-19
pandemic
The factors affecting work
Work is affected by the impact of emerging
The future of work
technologies, the pressure for work intensification, The main trends are the increased use of new
relationships between employers and their employees technology, the pursuit of flexibility by employers, the
and, importantly, environmental changes – economic, continued existence of the gig economy, the use of
social and the impact of events such as the Covid-19 zero-hours contracts and a large proportion of
pandemic and, in the UK, Brexit. employees in some organizations working from home
full or part time.
What is happening to work But while these trends are important there are
other more fundamental issues concerning responsible
Current developments in the nature of work are the business and social justice.
growth of the gig economy and zero-hours contracts,
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35
05
HRM and organizational
performance
mance can be enhanced through performance man-
Introduction agement is dealt with in Part 10 of this Handbook.
In the initial section of this chapter consideration
The internal factors that shape short- and long-term is given to the foundation of any evidence-based
organizational and business performance are the performance improvement programme, namely, the
quality of the people working for the organization at measurement of organizational performance in fi-
every level, the capacity of the business to innovate nancial and non-financial terms as a basis for identi-
and compete, and the cost-effectiveness and effi- fying issues and possible courses of action. Guidance
ciency with which it plans and conducts operations. on any actions that HR might take is covered in the
The external factors are competition in the UK and next two sections of the chapter based on the evi-
globally, economic trends, government financial and dence provided by research on what impact HRM
business policies and legislation, international influ- can make on performance, and how it does this. The
ences and pressures, eg Brexit in the UK and Covid- chapter concludes with an analysis of what steps can
19, and the state of the labour market. be taken by HR to enhance performance in the
But to do well organizations depend largely on shape of developing a high-performance culture and
the quality, dedication, enthusiasm, expertise and introducing a high-performance work system.
skill of the people working in them. The message of
the resource-based view is that HRM delivers added
value and helps to gain ‘sustainable competitive ad-
vantage’ through the strategic development of the
Measuring organizational
organization’s rare, hard-to-imitate and hard-to- performance
substitute human resources. As Guest (1997: 269)
argued: ‘The distinctive feature of HRM is its as- Organizational performance can be measured in fi-
sumption that improved performance is achieved nancial and non-financial terms.
through the people in the organization.’ If, there-
fore, appropriate HR policies and practices are in-
troduced, it can also be assumed that HRM will Financial measures
impact on firm performance. ‘The way in which
human resource management (HRM) contributes ●● Shareholder value – the financial value
to business performance is at the heart of the field of delivered by a company to its shareholders.
strategic HRM’ (Boxall, 2013: 47). ●● Profit (in a business) – the amount by which
This chapter is concerned with how HR can the value of sales exceeds costs.
contribute to the improvement of organizational
●● Financial performance (in a not-for-profit
performance. Clearly, the level of organizational organization) – the surplus or deficit of
performance is strongly influenced by the level of income over expenditure; control of
individual performance and how individual perfor- expenditure.
Sales turnover – the value of the sales made

●●
by the business.
The impact of HR
●● Return on capital employed – the profits Much research has been carried out showing that
earned by the company as a percentage of its people practices can create value and that good
financial assets (profitability). HRM practice and firm performance are corre-
●● Earnings per share – profits divided by the lated. As Woodrow and Guest (2014: 51) com-
number of shares. mented: ‘One stream of previous research has
●● Productivity – the added value created by the placed employee responses at the heart of the anal-
company divided by the number of ysis and has shown that HR policy and practice can
employees (added value is the difference affect employee attitudes and behaviour, which in
between the value of sales and the cost of turn affects organisational performance.’ But they
labour and bought in parts). also observed that any impact is likely to be limited
if good HR policy and practice is poorly imple-
●● Cost per unit of output – cost of production
mented.
divided by the number of units produced.
Notable examples of UK research on the impact
of HRM are summarized in Table 5.1.
Non-financial measures Elsewhere, Huselid (1995) examined the rela-
tionship between high-performance work systems
●● Quality and execution of corporate strategy (HPWS) and organizational performance in a sam-
(extent to which goals have been achieved) ple of 1,000 US firms (the features of an HPWS are
described in the last section of this chapter). He
●● Market share found that HPWS reduce employee turnover and
●● Management expertise increase productivity, thus having a positive effect
●● Innovation and research leadership on corporate financial performance. Guthrie (2001)
replicated Huselid’s methodology in a sample of
●● Effectiveness of human capital management –
New Zealand firms and found a similar relationship
ability to attract, retain and develop talented
between HPWS and firm performance. Khatri
people
(2000) used a sample of 200 of the largest compa-
●● Quality of product or service nies representing all major industries in Singapore
●● Levels of customer service to examine the links between strategy and HR prac-
●● Ratio of number of employees to output, for tices, and HR practices and firm performance.
example units produced per person Results showed that overall strategy affects HR
practices, HR practices have a direct effect on or-
●● Exercise of corporate social responsibility
ganizational performance, and business strategy
especially in connection with environmental
moderates the relationship between HR practices
issues
and organizational performance.
●● Reputation as a business and as an employer It was suggested by Peccei (2004) that wellbe-
It can be argued that the focus of measurement ing had a key role in enhancing organizational per-
should be people rather than profits, as does Julian formance. Peccei et al (2013: 15) pleaded that any
Richer, the founder and chief executive of the analysis of the link between HRM and perfor-
highly successful business Richer Sounds. He wrote mance should be more employee-centred and look
(2017: 6): explicitly at the effect that HR practices have on
employee wellbeing. They noted that a considera-
Most businesses make the mistake of measuring ble amount of research had been carried out focus-
performance in terms of figures when they ing specifically on the positive relationships
ought to be measuring it in terms of people. The between HR practices, employee wellbeing and

primary measures of a business’s success should be organizational performance (Orlitzky and Frenkel,
customer and staff satisfaction, not profits. Profits
2005; Wright et al, 2005; Vanhala and Tuomi,
are simply an indication that you are getting
2006).
customer service right.
Chapter 5 | HRM and Organizational Performance 37
TA B L E 5.1 Research on the link between HRM and organizational performance

Researcher(s) Methodology Outcomes
Birdi et al (2008) A longitudinal research study by It was found that the impact of
the Institute of Work Psychology, empowerment (job enrichment) was to
University of Sheffield covering produce a gain of nearly 7 per cent of
308 companies over 22 years value added per employee, while the
designed to establish the impact gain for extensive training was nearly 6
of various HRM and operational per cent. But teamwork did not make a
practices on company significant impact, neither did total
productivity. quality management or just-in-time.
Guest et al An analysis of the 1998 WERS A strong association exists between

(2000a) survey which sampled some HRM and both employee attitudes and
2,000 workplaces and obtained workplace performance.
the views of about 28,000
employees.
Patterson et al The research examined the link HR practices explained significant

(1997) between business performance variations in profitability and productivity
and organization culture and the (19 per cent and 18 per cent
use of a number of HR practices. respectively). Two HR practices were
particularly 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 The most successful companies had ‘the
(2003) study of 12 companies to big idea’. They had a clear vision and a
establish how people set of integrated values. They were
management impacts on concerned with sustaining performance
organizational performance. and flexibility.
Thompson A study of the impact of high- The number of HR practices and the
(2002) performance work practices such proportion of the workforce covered
as teamworking, appraisal, job appeared to be the key differentiating
rotation, broad-banded grade factor between more and less
structures and sharing of successful firms.
business information in UK
aerospace establishments.
West et al Research conducted in 61 UK An association between certain HR

(2002) hospitals obtaining information practices and lower mortality rates was
on HR strategy, policy and identified. As noted by West: ‘If you have
procedures from chief executives HR practices that focus on effort and
and HR directors and mortality skill; develop people’s skills; encourage
rates. cooperation, collaboration, innovation
and synergy in teams for most, if not all
employees, the whole system functions
and performs better.’
The impact of rewards have to be properly implemented. As Guest (2011:

6) commented: ‘What this does is switch the focus
on performance to line management.’ Guest and Conway (2011:
Conceptually, financial rewards can improve indi- 1700) stressed that: ‘To make an impact HR prac-
vidual or team performance by encouraging people tices must be present, they must be effective and
to work smarter or harder – money can provide pos- they must be effectively implemented.’ And Nishii
itive motivation in the right circumstances not only et al (2008) argued that it is not just the presence of
because people need and want money but also be- practices that is important but ‘perceptions about
cause it serves as a highly tangible means of recogni- the intentions behind the practices.’
tion. But the ability of financial rewards to do this
has been questioned by commentators such as
Herzberg (1966), Kohn (1993) and Pink (2009) who
Uncertainties about the link
claimed that financial rewards ‘crowded out’ the in- between HRM and performance
trinsic motivation provided by rewarding work and
As noted earlier, much research has demonstrated
by recognizing achievements. But research by
an association between HRM and performance. But
Cameron et al (2001) and Cotton et al (2022) indi-
Guest et al (2000a) noted that it left uncertainties
cated that this was not necessarily the case. However,
about cause and effect. As Ulrich (1997: 304) stated
badly designed and managed pay systems can demo-
tivate rather than motivate people, and non-financial HR practices seem to matter; logic says it is so;
rewards can act as powerful motivators. survey findings confirm it. Direct relationships
between performance and attention to HR
practices are often fuzzy, however, and vary
How HRM makes an impact according to the population sampled and the
measures used.
Storey et al (2009: 4) observed that ‘The premise is Paauwe (2009) remarked that although progress has
that, in some shape or form, HR policies have an ef- been made on the link between HRM and perfor-
fect on HR practices and these in turn influence staff mance, significant methodological issues exist to the
attitudes and behaviours which will, in turn again, understanding of this relationship. He argued that
impact on service offerings and customer percep- while it may be possible to observe HRM inputs in
tions of value.’ The assumption is that good HRM the form of HR practices and to measure firm per-
practices will enhance performance and add value, ie formance outputs, it may be difficult to ascertain,
the benefits to the organization will exceed the cost through research, what happened in between – what
of developing and operating them. the HRM outcomes were that converted the input of
As Guest and Bos-Nehles (2013: 79) pointed out: HR practices into firm performance outputs. This is
An optimistic version [of the relationship between the so-called black box. Guest (2011: 11) concluded
HRM and performance] proposes that HRM has that ‘After hundreds of research studies we are still
a positive association with performance because in no position to assert with any confidence that
workers respond positively to it. An alternative, good HRM has an impact on organisation perfor-
more pessimistic view is that HR practices result in mance.’ He also asserted that the research is riddled
intensification of work and it is this that leads to with error both with respect to data on HRM and
performance gains. on outcomes.
There are three issues that affect the determina-
Ostroff and Bowen (2000) proposed that the link
tion of a link between HRM and firm performance:
between HRM and performance is likely to be
causal ambiguity, contingency factors and the ‘black
greater where what they describe as a ‘strong’ HR
box’ phenomenon.
system is in place. Core characteristics of their
‘strong’ system are high levels of distinctiveness,
consistency and consensus. Where these are present Causal ambiguity
there will be an organizational climate that sup- The term causal ambiguity refers to the numerous,
ports HR implementation. But they suggested that subtle and often hidden interconnections between
it is not enough just to have good practices; they
the factors influencing cause and effect. Boselie et al HR practices and organizational performance. The
(2005: 75) referred to the causal distance between phenomena are in a black box, only input and out-
an HRM input and an output such as financial per- put are registered and what is happening remains
formance: ‘Put simply, so many variables and events, clouded in the dark.’
both internal and external, affect organizations that
this direct linkage strains credibility.’
A basic reason for ambiguity is multiple causa- Explanations of how HRM makes
tion, which exists when there is more than one pos-
sible cause for an effect. HRM may have caused an
an impact
improvement in performance but there may be Guest (1997: 268) stated that ‘The assumption is
many other economic or business factors that did that “appropriate” HRM practices tap the motiva-
so, and it could be difficult to unravel them. tion and commitment of employees.’ His view on
Another factor is the possibility of reversed causal- how expectancy theory might help to explain the
ity (a situation where A might have caused B but B HR/performance link is given below.
might well have caused A). As Purcell et al (2003:
The expectancy theory of motivation provides
2) expressed it: ‘Although it is nice to believe that one possible basis for developing a more coherent
more HR practices leads to higher economic re- rationale about the link between HRM practices
turn, it is just as possible that it is successful firms and performance. Although expectancy theory
that can afford more extensive (and expensive) is concerned primarily with motivation, it is also
HRM practices.’ a theory about the link between motivation and
performance. Specifically, it proposes that high
Contextual factors performance at the individual level depends on
high motivation plus possession of the necessary
Causation will additionally be affected by the or- skills and abilities and an appropriate role and
ganization’s context, ie the internal and external understanding of that role. It is a short step to
environmental factors that influence what happens specify the HRM practices that encourage high
within the organization. skills and abilities, for example careful selection
and high investment in training; high motivation,
The black box phenomenon for example employee involvement and possibly
performance-related pay; and an appropriate role
The black box phenomenon, as illustrated in
structure and role perception, for example job
Figure 5.1, is the situation in which, while it may be design and extensive communication and feedback.
possible to observe HRM inputs in the form of HR (page 268)
practices and to measure firm performance outputs,
it may be difficult to ascertain through research There are three ways in which people practices add
what happened in between – what the HRM out- value and HRM impacts on organizational perfor-
comes were that converted the input of HR prac- mance: (1) HR practices can make a direct impact
tices into performance outputs. Alvesson (2009: 56) on employee characteristics such as engagement,
suggested that ‘Research does not proceed beyond commitment, motivation and skill; (2) if employ-
attempts to find an empirical association between ees have these characteristics it is probable that
F I G U R E 5.1 The black box phenomenon
Observable ? Measurable
HRM inputs HRM outcomes Firm performance

organizational performance in terms of added How the AMO model explains the
value, productivity, quality and the delivery of high
levels of customer service will improve; and (3) if impact of HRM
such aspects of organizational performance im- The AMO model (Boxall and Purcell, 2003) states
prove, the financial results achieved by the organi- that performance depends on the individual’s ability,
zation will improve. This can be described as the motivation and opportunity. The model provides val-
HR value chain. uable guidance on the HRM practices that should be
These propositions highlight the existence of an included in a high-performance work system (HPWS).
intermediate factor between HRM and financial A meta-analysis by Jiang et al (2012) established that
performance. This factor consists of the HRM out- the three dimensions of HR practices linked to the
comes in the shape of employee characteristics AMO formula – skills, motivation and opportunity
affected by HR practices. Therefore, HRM does enhancement – could lead to improved financial per-
not make a direct impact. A model of the impact of formance. As emphasized later by Delery and Roumpi
HRM (based on Paauwe, 2004) taking into ac- (2017: 3): ‘The systems approach that emerged sug-
count the considerations of reverse causality and gests that it is the appropriate combination of differ-
contingency effects mentioned earlier is shown in ent HRM practices rather than individual practices
Figure 5.2. that can ensure the enhancement of all three compo-
As explained by Guzzo and Noonan (1994) and nents of the AMO model and ultimately lead to high
by Rousseau (1995), HR practices communicate employee or workforce performance.’ They also com-
important goals and desired employee behaviours mented that ‘Despite the lack of consensus regarding
from the organization to the employee. They can be the HRM practices that are or should be included
seen as ‘signals’ and are interpreted as such by indi- under the umbrella term high performance work
vidual employees (Den Hartog et al, 2004). The practices (HPWPs), there is a common thread across
signals of the HR system are, however, often not the different proposed sets of practices: they address
interpreted similarly or reacted to in the same way the aspects of the AMO model. In other words, HRM
by each individual due to differences in experience, practices that combine as HPWPs can be viewed as
values or preferences. Wright and Nishii (2007) sug- ability-enhancing or skill-enhancing, motivation-en-
gested that it is not the HR practices as intended by hancing and opportunity-enhancing or empower-
policy makers, but rather how employees experiment-enhancing’ (page 6). As illustrated in Figure 5.3,
ence the HR practices that will affect employee out- the AMO model can provide a framework for perfor-
comes. This belief is reinforced by the AMO model mance-enhancing practices.
as described below.
F I G U R E 5.2 Impact of HRM on organizational performance

Reversed causality
HRM HRM Business Financial

practices outcomes outcomes performance
• Resourcing • Engagement • Productivity • Profit
• Performance • Commitment • Quality • Sales
Business management • Motivation • Customer • Market share
HRM strategy
strategy • Learning and • Skill satisfaction • Market value
development
• Reward
management
• Employee relations
Contingency variables: Internal context – size, sector, technology, employees, culture external context – competition, economic, social
F I G U R E 5.3 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
As Peter Boxall (2013: 57) commented: ‘Arguably, organizational context and strategy (which
the most sustainable HR systems serve investors should be based on environmental context).
well while also serving employees and their com- These practices, when bundled and implemented,
munities well.’ should then affect organizational climate as well
HR can contribute to the improvement of organ- as individual psychological climate—creating a
izational performance in five ways: first, by helping ‘climate for performance’ or ‘performance climate’.
to create ‘a climate for performance’; second, by Organizational climate can be defined as employees’
promoting high-performance working through a shared perceptions of and the meaning attached to
high-performance work system; third, by introduc- practices, policies, and procedures in the workplace
and the behaviours they observe being supported,
ing policies and practices to enhance motivation
expected, and rewarded, and the existence of a
and engagement; fourth, by developing HR prac-
performance climate would mean that employees
tices in the fields of resourcing and learning and de-
share the perception that firm-level performance is
velopment that will provide the skilled workforce important and that the organization’s policies are
the organization needs; and fifth, by developing per- devoted to achieving that goal.
formance management processes as described in
Part 10 of this Handbook. Research by Khilji and Wang (2006: 1174) estab-
lished that ‘It is the ability of HRM to motivate em-
ployees that proves to be a necessary condition for
Performance climate improved organisational performance.’ HR makes an
important contribution to enhancing organizational
As emphasized by DeNisi and Smith (2014: 143): performance by developing and implementing HR
The specific HR practices employed [to strategies that focus on high performance and by en-
improve performance] should be related to the suring that the HR system delivers the human capital
the organization needs. This can be done by fostering

high-performance working as described below.
High-performance work
systems
The development of high- High-performance work systems (HPWS) are bun-
performance working dles of HR practices that facilitate employee in-
volvement, skill enhancement and motivation. An
HPWS was described by Becker and Huselid
Organizations achieve sustained high performance
(1998: 55) as ‘An internally consistent and c oherent
through the systems of work they adopt, but these
HRM system that is focused on solving opera-
systems are managed and operated by people.
tional problems and implementing the firm’s com-
Ultimately, therefore, high-performance m anagement
petitive strategy.’
is about improving performance through people and
Bundling complementary practices as an inte-
developing a high-performance culture.
grated whole makes a much more powerful impact
High-performance cultures are ones in which the
on performance than if they were dealt with as sep-
achievement of high levels of performance is a way
arate entities. Appelbaum et al (2000) stated that
of life. The characteristics of such cultures are:
they facilitate employee involvement, skill enhance-
●● Management defines what it requires in the ment and motivation. Research conducted by Sung
shape of performance improvements, sets and Ashton (2005), Combs et al (2006) and Ericksen
goals for success and monitors performance (2007) indicated that an HPWS can significantly
to ensure that the goals are achieved. improve performance.
●● Alternative work practices are adopted such
as job redesign, autonomous work teams,
improvement groups, team briefing and Features of an HPWS
flexible working. There is no generally accepted definition of an
●● People know what is expected of them – they HPWS and there is no standard list of the features
understand their goals and accountabilities. or components of such a system. However, an at-
●● People feel that their job is worth doing, and tempt to describe the basic components of an HPWS
there is a strong fit between the job and their was made by Shih et al (2005) as follows:
capabilities. ●● Job infrastructure – workplace arrangements
●● There is a focus on promoting positive that equip workers with the proper abilities
attitudes that result in an engaged, to do their jobs, provide them with the
committed and motivated workforce. means to do their jobs, and give them the
●● Performance management processes are motivation to do their jobs. These practices
aligned to business goals to ensure that must be combined to produce their proper
people are engaged in achieving agreed effects.
objectives and standards. ●● Training programmes to enhance employee
●● Capacities of people are developed through skills – investment in increasing employee
learning at all levels to support performance skills, knowledge and ability.
improvement and they are provided with ●● Information sharing and worker involvement
opportunities to make full use of their skills mechanisms – to understand the available
and abilities. alternatives and make correct decisions.
●● A pool of talent ensures a continuous supply ●● Reward and promotion opportunities that
of high performers in key roles. provide motivation – to encourage skilled
employees to engage in effective
A high-performance culture can be developed
discretionary decision making in a variety of
through a high-performance work system as de-
environmental contingencies.
scribed below.
TA BLE 5.2 Components of an HPWS

US Department Appelbaum et al Sung and Ashton Thompson and
of Labor (1993) (2000) (2005) Heron (2005)
●● Careful and ●● Work is organized ●● High-involvement ●● Information

extensive to permit front- work practices – sharing.
systems for line workers to eg self-directed ●● Sophisticated
recruitment, participate in teams and recruitment.
selection and decisions that sharing/access to ●● Formal induction
training. alter company programme.
●● Formal systems organizational information. ●● Five or more days
for sharing routines. ●● Human resource of off-the-job
information with ●● Workers require practices – eg training in the last
employees. more skills to do sophisticated year.
●● Clear job design. their jobs recruitment ●● Semi- or totally
●● High-level successfully, and processes, autonomous work
participation many of these performance teams; continuous
processes. skills are firm- appraisals, work improvement
●● Monitoring of specific. redesign and teams; problem-
attitudes. ●● Workers mentoring. solving groups.
●● Performance experience ●● Reward and ●● Interpersonal skill
appraisals. greater autonomy commitment development.
●● Properly over their job practices – eg ●● Performance
functioning tasks and various financial feedback.
grievance methods of work. rewards, family- ●● Involvement –
procedures. ●● Incentive pay friendly policies, works council,
●● Promotion and motivates job rotation and suggestion
compensation workers to extend flexi hours. scheme, opinion
schemes that extra effort on survey.
provide for the developing skills. ●● Team-based
recognition and ●● Employment rewards,
reward of security provides employee share
high-performing front-line workers ownership
employees. with a long-term scheme, profit-
stake in the sharing scheme.
company and a
reason to invest
in its future.
Many descriptions of high-performance systems in- Godard (2004) suggested that such lists were no
clude lists of desirable features and therefore em- more than bundles of long-accepted good HRM
body the notion of ‘best practice’. But Gephart practices. This may be so and in any case these prac-
(1995) noted that research has not clearly identified tices will vary according to circumstances. But an es-
any single set of high-performance practices. Becker sential and defining ingredient in an HPWS is the
et al (1997) pointed out that high-performance notion of ‘bundling’ HR practices to make them mu-
work systems were idiosyncratic and had to fit the tually supportive and therefore more effective. A lon-
organization’s individual circumstances. The lists gitudinal study by De Menezes et al (2010) found
that have been compiled vary considerably, as is that British firms investing in Japanese-style lean
shown in the selection set out in Table 5.2. manufacturing systems such as integrated computer-
based technology and total quality management per- typical in the UK.’ A survey by UKCES (2014) found
form better when they integrate these costly changes that only 12 per cent of organizations have adopted
in production strategy with a more empowering style all or most of the HR practices that comprise an
of HRM and extensive employee training. HPWS.
But the CIPD (2017: 24) observed that ‘high per-
formance work systems remain more topical than
C A S E S T U DY
Performance strategy at Johnson and Johnson

The strategy was to develop an integrated performance effort and a dedication to developing people. It was also
and development process into the organization. To do this understood that from a business standpoint it was critical
it was appreciated that an enhanced process required a to build and develop the talent pipeline of the organization
cultural shift within the organization. It was accepted that to meet aggressive business goals and to operate
performance management should be a continuous profitably in a dynamically changing marketplace.
process and was not a one-time event; it takes time and
Key learning points
The impact of HRM How the AMO model explains the impact
Much research has been carried out showing that of HRM
good HRM practice and firm performance are The AMO model states that performance depends on
correlated; notable examples in the UK are Guest et al the individual’s ability, motivation and opportunity. It
(2000a), Patterson et al (1997), Purcell et al (2003), provides valuable guidance on the HRM practices that
Thompson (2002) and West et al (2002). should be included in a high-performance work system
(HPWS).
How HRM makes an impact
An explanation of the impact of HRM is based on three The contribution of HR
propositions: HR can contribute to enhancing organizational
1 that HR practices can make a direct impact on performance by providing insight on the performance
employee characteristics such as engagement, issues affecting the organization and its employees
commitment, motivation and skill; including the development of a high-performance work
system.
2 if employees have these characteristics it is
probable that organizational performance in terms
of productivity, quality and the delivery of high
High-performance work systems
levels of customer service will improve; and HPWS are bundles of HR practices that facilitate
employee involvement, skill enhancement and
3 if such aspects of organizational performance
motivation.
improve, the financial results achieved by the
organization will improve.
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47
06
The ethical
dimension of HRM
(1983: 1–2) suggested that they are different:
Introduction ‘Whereas morality is a social institution with a his-
tory and code of learnable rules, ethical theory
As Boxall et al (2007: 5) observed, ‘While HRM refers to the philosophical study of the nature of
does need to support commercial outcomes (often ethical principles, decisions and problems.’ Clearly,
called “the business case”), it also exists to serve or- ethics is concerned with matters of right and wrong
ganizational needs for social legitimacy.’ This is the and therefore involves moral judgements. Even if
ethical dimension of HR which means exercising ethics and morality are not the same, the two are
social responsibility, ie being concerned for the in- closely linked. As Clegg et al (2007: 111) put it: ‘We
terests (wellbeing) of employees and acting ethically understand ethics as the social organizing of moral-
with regard to the needs of people in the organiza- ity.’ Simplistically, ethics could be described as being
tion and in the community. about behaviour while morality is about beliefs.
To grasp this ethical dimension, it is necessary to Ethics is concerned with making decisions and
understand the nature and principles of ethics, the judgements about the right course of action to take.
ethical role of HR, the ethical guidelines that can be It can be described in terms of a framework that
used, the approaches to resolving ethical dilemmas sets out different approaches and can be extended
and what the organization and HR can do about to embrace particular concepts that affect and guide
promoting ethical behaviour. ethical behaviour, namely equity, justice and fair
dealing. These approaches and concepts are dis-
cussed below.
The meaning and concerns
of ethics The nature of ethical
Ethics is defined by the Compact Oxford Dictionary
as being ‘related to morals, treating of moral ques-
decisions and judgements
tions’, and ethical is defined as ‘relating to morality’. As defined by Jones (1991: 367), an ethical decision
Morality is defined as ‘having moral qualities or en- is one that is morally acceptable to the larger com-
dowments’ and moral is defined as ‘of or pertaining munity. He also noted that ‘A moral issue is present
to the distinction between right and wrong’. Petrick where a person’s actions, when freely performed,
and Quinn (1997: 42) wrote that ethics ‘is the study may harm or benefit others. In other words, the ac-
of individual and collective moral awareness, judge- tion or decision must have consequences for others
ment, character and conduct’. Hamlin et al (2001: and must involve choice, or volition, on the part of
98) noted that ethics is concerned with rules or prin- the actor or decision maker’ (page 367). Clegg et al
ciples that help us to distinguish right and wrong. (2007: 112) emphasized that ‘Ethical decisions
Ethics and morality are sometimes treated as emerge out of dilemmas that cannot be managed in
being synonymous, although Beauchamp and Bowie advance through rules.’ People have to make
choices. Foucault (1997: 284) asked: ‘What is e thics, Utilitarianism has been criticized first because it fails
if not the practice of freedom?’ Winstanley and to respect individual rights and second because, as
Woodall (2000a: 8–9) observed that Sandel pointed out, it implies that all moral judge-
ments can be translated into a single currency of
Ethics is not about taking statements of morality
value, but there is no such thing as a ‘util’.
at face value; it is a critical and challenging
tool. There are no universally agreed ethical
frameworks... Different situations require ethical
insight and flexibility to enable us to encapsulate Stakeholder theory
the grounds upon which competing claims can In accordance with the ideas of Freeman (1984),
be made. Decisions are judgements usually stakeholder theory states that the organization
involving choices between alternatives, but rarely should be managed on behalf of its stakeholders: its
is the choice between right and wrong... Moral owners, employees, customers, suppliers and local
disagreement and judgements are concerned with communities. As Legge (1998: 22) described it,
attitudes and feelings, not facts.
management must act in the interests of the stake-
The ethical concepts of deontology, utilitarianism, holders as their agent, and also act in the interests of
stakeholder theory and discourse theory, as de- the organization to ensure the survival of the firm,
scribed below, provide frameworks that can be used safeguarding the long-term stakes of each group.
to evaluate HRM policies and practices. Freeman (1994: 412) noted that ‘It is only by recog-
nizing the moral presuppositions of business theory,
refining them, testing them by living differently, and
Deontological theory revising them, that we can invent and reinvent bet-
ter ways to live.’
Deontological (from the Greek for ‘what is right’)
theory maintains that some actions are right or
wrong irrespective of their consequences. It is asso- Discourse ethics
ciated with Kant’s notion of the categorical impera-
tive, which contains two main propositions: (1) that Foucault (1972) defined discourse as the taken-
one should follow the principle that what is right for-granted ways that people are collectively able
for one person is right for everyone, and thus you to make sense of experience. Discourse ethics, as
must do to others as you would be done by; and (2) described by Winstanley and Woodall (2000a: 14)
in the words of Rawls (1973: 183), ‘We must treat is based on the belief that that ‘the role of ethics is
persons solely as ends and not in any way as means.’ not to provide solutions to ethical problems, but
rather to provide a practical process and p rocedure
which is both rational and consensus enhancing,
Utilitarianism through which issues can be debated and discourse
can take place.’
Utilitarianism is the belief that the highest principle
of morality is to maximize happiness, the overall bal-
ance of pleasure against pain. Actions are justified
when they result in the greatest good to the greatest
Fairness
number. Michael Sandel (2010: 33) explained that
Fairness is treating people in ways that recognize
utilitarianism says that ‘the morality of an action de-
what is due to them. It involves being even-handed,
pends solely on the consequences it brings about; the
just and consistent and acting with consideration
right thing to do will be whatever brings about the
and without bias. To be unfair to someone is to deal
best state of affairs.’ In other words, actions should
with them less favourably than others or to treat
be judged in terms of their results. This can be inter-
them arbitrarily without considering their needs.
preted as supporting the dubious principle that the
Fairness is associated with what is known as proce-
end justifies the means – torture is all right as long as
dural justice which is concerned with the percep-
it prevents terrorism (NB even if this argument were
tions employees have about how they are treated
accepted, the effectiveness of torture as a means
and the fairness with which company policies are
of preventing terrorism is highly questionable).
put into practice.
Chapter 6 | The Ethical Dimension of HRM 49
2 Personal bias towards employees is

Equity theory suppressed.
Equity theory, as formulated by Adams (1965), is 3 The criteria for decisions are applied
concerned with the perceptions people have about consistently to all employees.
how they are being treated as compared with oth- 4 Employees are provided with early feedback
ers. To be dealt with equitably is to be treated fairly about the outcome of decisions.
in comparison with another group of people (a ref- 5 Employees are provided with adequate
erence group) or a relevant other person. Equity in- explanations of why decisions have been
volves feelings and perceptions and it is always a made.
comparative process. It is not synonymous with
equality, which means treating everyone the same
and which would be inequitable if they deserve to Distributive justice
be treated differently.
Distributive justice (Adams, 1965; Leventhal, 1980)
means ensuring that people are rewarded equitably
Justice in comparison with others in the organization and
in accordance with their contribution, and that they
receive what was promised to them (management
Justice is the process of treating people in a way
‘delivers the deal’).
that is inherently fair, right and proper. The concept
of ‘justice as fairness’ proposed by Rawls (1973:
348) states that ‘natural duties and obligations arise
only in virtue of ethical principles.’ He observed
Social justice
(page 60) that: Social justice is based on the concepts of human
rights and equality. Rawls (1973: 3–4) rejected the
First: every person is to have the equal right to
the most extensive basic liberty comparable with principle of utilitarianism when he asserted that in
a similar liberty for others. Second: social and society ‘Each person possesses an inviolability
economic inequalities are to be arranged so that founded on justice that even the welfare of society
they are both (a) reasonably expected to be to as a whole cannot override. For this reason, justice
everyone’s advantage, and (b) attached to positions denies that the loss of freedom for some is made
and offices open to all. right by a greater good shared by others.’ In organi-
zations, social justice means relating to employees
There are four types of justice: procedural justice, generally in ways that recognize their natural rights
distributive justice, social justice and natural justice. to be treated justly, equitably and with respect.
Procedural justice Natural justice

Procedural justice (Adams, 1965; Leventhal, 1980) According to the principles of natural justice, em-
involves treating people in ways that are fair, con- ployees should know the standards they are
sistent, transparent and properly consider their expected to achieve, the rules to which they are
views and needs. In organizations, it is concerned expected to conform, and be treated without bias.
with the perceptions employees have about the fair- This is called due process. When disciplinary action
ness with which company procedures in such areas is being taken, employees should be given a clear
as performance appraisal, promotion and discipline indication of where they are failing or what rules
are being operated (fair process). have been broken, a fair hearing, the right to appeal
The five factors that affect perceptions of proce- and, except in cases of gross misconduct, they
dural justice were stated by Tyler and Bies (1990) as: should be given a chance to improve before discipli-
1 The viewpoint of employees is given proper nary action is taken.
consideration.
HRM ethical guidelines Recruitment and selection

●● Treat candidates with consideration –
The guidelines set out below relate to how employ- applications should be acknowledged,
ees are treated in general and in the HRM activities candidates should be kept informed without
of organization development, recruitment and se- undue delay of decisions made about their
lection, learning and development, performance application, and they should not be kept
management, reward management and employee waiting for the interview.
relations. They also relate to employment practices
●● Avoid intrusive or hectoring questioning in
concerning the work environment, equal opportu-
interviews.
nities, managing inclusion and diversity, handling
disciplinary matters and grievances, job security ●● Do not put candidates under undue stress in
and redundancy. interviews.
●● Do not criticize any aspect of the candidate’s
personality or experience.
General guidelines ●● Use relevant selection criteria based on a
1 Recognize that the strategic goals and values proper analysis of job requirements.
of the organization should embrace the ●● Give candidates reasonable opportunity to
rights and needs of employees as well as present their case and to ask questions.
those of the business. ●● Avoid jumping to conclusions about
2 Recognize that employees are entitled to be candidates on inadequate evidence or as a
treated as full human beings with personal result of prejudice.
needs, hopes and anxieties. ●● Give accurate and complete information to
3 Do not treat employees simply as means to candidates about the job, prospects, security
an end or mere factors of production. and terms and conditions of employment.
4 Relate to employees generally in ways that ●● Only use properly validated tests
recognize their natural rights to be treated administered by trained testers.
justly, equitably and with respect. ●● Do not use discriminating or biased tests.
●● Monitor tests for impact and unintended
Organization development (OD) bias.
●● Ensure that candidates are not unfairly
●● Agree in advance with clients and individuals
disadvantaged by testing processes.
the goals, content and risks of an OD
programme. ●● Give candidates feedback on test results
unless there are compelling reasons why
●● Make explicit any values or assumptions
feedback should not be given.
used in the programme.
●● Ensure that selection decisions are free of
●● Obtain the maximum involvement of all
discrimination or bias on the grounds of sex,
concerned in the programme so that they
sexual orientation, race, age or disability.
understand the processes involved and how
they can benefit from them. ●● Give unsuccessful candidates the reason for
the decision if they request it.
●● Work with clients to plan and implement
change to the benefit of all stakeholders.
●● Enable individuals to continue with their Learning and development
development on completing the programme.
●● Protect confidentiality. ●● Respect individual rights for dignity, self-
esteem, privacy and autonomy.
●● Recognize that it is necessary and legitimate Reward management

to provide individuals with learning
opportunities that enable them to gain the ●● Apply the principles of procedural and
knowledge and skills required to perform distributive justice.
well in their jobs and develop their potential. ●● Ensure that reward policies and practices are
But note that individuals should still be fair, equitable and transparent and that they
allowed autonomy to choose the extent to are applied consistently.
which they pursue learning and development
●● Reward people according to their
programmes beyond this basic requirement.
contribution.
●● Accept that while the organization has the
●● Ensure that people know in general the basis
right to conduct learning and development
upon which rewards are provided and in
activities that enhance performance,
particular how their own reward package is
individuals also have the right to be provided
determined.
with opportunities to develop their own
knowledge, skills and employability. ●● Maintain reasonable and defensible pay
differentials.
●● Ensure that people taking part in learning
events feel ‘psychologically safe’ in ●● Ensure that equal pay is provided for work
accordance with the view expressed by of equal value.
Schein (1993: 91) that ‘To make people feel ●● Base decisions about performance pay or
safe in learning, they must have a motive, a bonuses on fair and equitable criteria.
sense of direction, and the opportunity to try ●● Avoid bonus schemes that encourage
out new things without the fear of undesirable behaviour.
punishment.’
●● Do not pay less than the living wage.
●● Avoid manipulating people to accept
imposed organizational values.
Employment relations
Performance management ●● Deliver the deal.
●● Be open to employees’ input and responsive
Performance management ethical principles have
to justifiable questions and concerns about
been defined by Winstanley and Stuart-Smith (1996)
employment policies and practices.
as follows:
●● Provide genuine opportunities and channels
●● Respect for the individual – people should be for employees to express their views and
treated as ‘ends in themselves’ and not influence decisions on matters that affect
merely as ‘means to other ends’. them.
●● Mutual respect – the parties involved in ●● Negotiate in good faith.
performance management should respect
●● Recognize that the interests of management
each other’s needs and preoccupations.
and employees do not necessarily coincide
●● Procedural fairness – the procedures and develop and implement employment
incorporated in performance management relations policies accordingly.
should be operated fairly in accordance with
the principles of procedural justice.
●● Transparency – people affected by decisions Employment practices
emerging from performance management
●● Create a healthy, safe and fulfilling work
processes should have the opportunity to
environment. Pay particular attention to
scrutinize the basis upon which decisions
policies and practices affecting home or
were made.
hybrid workers.
●● Promote the wellbeing of employees by question we should always ask is: would a disinter-
improving the quality of working life provided ested observer, in full possession of the relevant
for them, enhancing work–life balance and facts, approve or disapprove of our actions?’ This
developing family-friendly policies. guidance is just as compelling and relevant today.
●● Take particular care to minimize the stress to Woodall and Winstanley (2000: 285) suggested
which employees may be subjected including that ‘being ethical is not so much about finding one
the stress of working from home or hybrid universal principle to govern all action, but more
working. about knowing how to recognize and mediate be-
tween often unacknowledged differences of view.’
●● Provide equal opportunities for all with
By definition, an ethical dilemma is one that will be
regard to recruitment and selection, learning
difficult to resolve. There may be all sorts of issues
and development, talent management, career
surrounding the situation, some of which will be
progression and promotion.
unclear or contentious. The extent to which people
●● Manage inclusion and diversity by creating react or behave rationally may be limited by their
an environment where different kinds of capacity to understand the complexities of the situ-
people can thrive and succeed and by ation they are in and affected by their emotional
recognizing and respecting their differences. reactions to it (the concept of bounded rationality).
●● Handle disciplinary matters according to the This was explained by Rosemary Harrison (2009:
principles of natural justice. 331) as follows:
●● Recognize that people may have legitimate Some of the factors that militate against a purely
grievances and respond to them promptly, ‘rational’ approach include confused, excessive,
fully and sympathetically. incomplete or unreliable data, incompetent
●● Preserve job security as far as possible and processing or communicating of information,
take alternative action to avoid compulsory pressures of time, human emotions, and differences
redundancies. in individuals’ cognitive processes, mental maps
and reasoning capacity.
●● If compulsory redundancy is unavoidable, do
whatever is possible to alleviate the distress Faced with factors such as these, the process of eth-
by, for example, helping people to find work. ical dilemma resolution can be hard going. There is
●● Do not allow whistle-blowers who expose no ‘one right way’ to deal with an ethical issue, but
wrongdoing to be penalized. an approach based on systematic questioning, anal-
ysis and diagnosis to get at the facts and establish
the issues involved is more likely to produce a rea-
Ethical dilemmas sonably satisfactory outcome than one relying
purely on ‘gut feeling’. The following checklist –
used judiciously and selectively according to the cir-
‘Ethics will be enacted in situations of ambiguity
cumstances – can provide a basis for such question-
where dilemmas and problems will be dealt with
ing and analysis.
without the comfort of consensus or certitude’
(Clegg et al, 2007: 109). Bauman, quoted in Bauman ●● What are the known facts about the situation
and Tester (2001: 44), commented that ‘Morality and is it possible that there are facts or
concerns choice first of all – it is the predicament circumstances that have not come to light,
human beings encounter when they must make a and if so, what can be done to uncover
selection amongst various possibilities.’ And Derrida them?
(1992) observed that ethical responsibility can ex- ●● In disciplinary or conduct cases, to what
ceed rational calculation. extent does the conduct contravene the
organization’s code of ethical conduct (if one
exists) or any other relevant organizational
Resolving ethical dilemmas policy guidelines and rules?
Adam Smith (1759) wrote in The Theory of Moral ●● In disciplinary cases, are there any mitigating
Sentiments that ‘When ethically perplexed, the circumstances?
●● Have different versions or interpretations of The CIPD drew particular attention to the need to
the facts and circumstances been offered and, focus on climate rather than culture, making the
if so, what steps can be taken to obtain the point that ethical climate is influenced by tangible
true and full picture? factors and is linked to a variety of outcomes. Their
●● Do the facts as established and confirmed explanation of the reason for this comment was
justify the proposed action? that
●● Is the proposed action in line with both the ‘Culture’ is often referred to as a factor that
letter and the spirit of the law? explains unethical behaviour, but the concept of
culture can be nebulous. Instead, organizations
●● Is the proposed action and any investigations
can focus on understanding and shaping their
leading to it consistent with the principles of
ethical climate, which is influenced by tangible
natural, procedural or distributive justice?
factors such as practices and procedures. Ethical
●● Will the proposed action benefit the climate is also linked to other outcomes such as
organization and if so how? job satisfaction and employee well-being: when
●● Will the proposed action benefit the the norm is to act in self-interest and neglect the
individual or individuals and if so how? interests of the wider community, colleagues suffer
as well as ethical standards.
●● Does the proposed action conflict with any
of the fundamental values of the The CIPD went on to advise that it is necessary to
organization? understand what type of ethical climate the organi-
●● Will the proposed action be harmful to the zation has – for example, egoistic, benevolent or
individual affected or to employees generally principled – and then reflect on how the organiza-
in any way and if so how? tion’s systems, procedures and informal practices
shape ethical climate and culture.
What organizations can do about

ethical behaviour
The ethical role of HR
Research by the CIPD (2020) identified nine main Legge (1998: 20–21) commented that ‘In very gen-
actions that employers can take which, based on the eral terms I would suggest that the experience of
best available evidence, are most likely to make a HRM is more likely (but not necessarily) to be
positive impact on workplace ethics: viewed positively if its underlying principles are
ethical.’ HR professionals have a special responsi-
1 Consistently enforce codes of conduct. bility for guarding and promoting core values in the
2 Communicate carefully about unethical organization on how people should be managed
behaviour and ethical standards. and treated. They need to take action to achieve fair
3 Focus on ethical climate and the dealing. This means treating people according to
organizational practices that shape it. the principles of procedural, distributive, social
and natural justice, and seeing that decisions or
4 Promote organizational fairness and
policies that affect them are transparent in the sense
challenge political behaviour.
that they are known, understood, clear and applied
5 Understand and manage the impact of consistently.
personality and mood. Kochan (2007: 600) suggested that ‘HR derives
6 Manage the risk factors related to job design. its social legitimacy from its ability to serve as an
7 Ensure targets are realistic and reward is effective steward of a social contract in employment
linked to multiple complementary outcomes. relationships capable of balancing and integrating
the interests and needs of employers, employees
8 Create accountability and introduce checks
and the society in which these relationships are em-
and balances in decision making.
bedded.’ But he also noted that most HR profes-
9 Empower employees to speak up and provide sionals have ‘lost any semblance of credibility as
safe whistleblowing channels. stewards of the social contract because most HR
professionals have lost their ability to seriously good ethical behaviour. As a respondent to
challenge or offer an independent perspective on the survey conducted by Parkes and Davis
the policies and practices of the firm’ (page 604). (2013: 2426) commented: ‘If HR does not
And Parkes and Davis (2013: 2427) referred to the act ethically, how can it expect employees to
risk that the HR role can become ‘rather passive, do so?’
favouring communicating standards rather than 4 Challenge unethical behaviour on the part of
actively promoting ethical behaviour’. management. This is the hardest approach.
To overcome this problem and thus fulfill an Such behaviour can take many forms,
ethical role, Winstanley and Woodall (2000b: 7) including management tolerance for
remarked that ‘HR professionals have to raise exploitation, harassment and bullying; the
awareness of ethical issues, promote ethical behav- lack of a whistle-blowing policy which
iour, disseminate ethical practices widely among provides routes for reporting malpractice, the
line managers, communicate codes of ethical con- unjust treatment of whistleblowers, brutal
duct, ensure people learn about what constitutes decisions on redundancy, the use of fire and
ethical behaviours, manage compliance and moni- rehire tactics and performance management
tor arrangements.’ criteria that emphasize organizational gain
There are four approaches that HR can adopt. over all else. It can take courage to challenge
1 Ensure that HR policies and the actions and it is more difficult in organizations
taken to implement them meet acceptable where the culture is one of command and
ethical standards. HR can press management control and where obedience is expected to
to take action in line with the whatever is dictated by management. Power,
recommendations of the CIPD listed earlier politics and culture shape norms of
in this chapter. behaviour and, as Herb Kelleher (the CEO of
Southwest Airlines) put it, culture is ‘what
2 Promote the production of a value
people do when no one is looking’ (reported
statement that indicates how the
by Lee, 1994). One respondent to the Parkes
organization intends to treat its employees.
and Davis survey (2013: 2425) commented:
Value statements may be set out under such
‘It can be difficult on a personal level to be
headings as care and consideration for
speaking out – HR do not have the power.’
people, belief that people should be treated
Another said: ‘Speaking out can be career
justly, equitably and with respect, and belief
suicide.’ It is too easy in these circumstances
that the views of employees about matters
for HR to be mere bystanders.
that concern them should be listened to. To
get this done requires the use of advocacy An HR director who is a member of an executive
skills to persuade management to adopt and board can question decisions from an ethical view-
act on these policies and the courage and point but if the comments are not heeded then the
determination to make out the ethical case director will either have to accept the decision or
even when management favours a resign. It is important to challenge – and the cour-
conflicting business case. But value age to do so is listed by the CIPD as one of the
statements are meaningless until the values qualities required by an HR professional. But it is
are put into practice (‘values in use’); the difficult, and there may be limits to what HR can
ethical role of HR involves helping to do. If HR professionals cannot directly influence the
ensure that this takes place. way their organization does things they either have
3 HR practitioners can act as role models, to carry on and do whatever they can in other less
leading by example and living and breathing confrontational ways, or they must leave.
Key learning points
Ethics and morality defined Ethical guidelines

Ethics is defined by the Compact Oxford Dictionary as Ethical guidelines set out how employees are treated
being ‘related to morals, treating of moral questions’, in general, and to the major HRM activities of
and ethical is defined as ‘relating to morality’. Morality organization development, recruitment and selection,
is defined as ‘having moral qualities or endowments’ learning and development, performance management,
and moral is defined as ‘of or pertaining to the reward management, employee relations and
distinction between right and wrong’. Simplistically, employment practices concerning the work
ethics could be described as being about behaviour environment, equal opportunities, managing diversity,
while morality is about beliefs. handling disciplinary matters and grievances, job
Ethics is concerned with making ethical decisions security and redundancy.
and judgements. It can be described in terms of an
ethical framework that sets out different approaches Handling ethical dilemmas
and can be extended to embrace particular concepts
that affect and guide ethical behaviour, namely equity, There is no ‘one right way’ to deal with an ethical
justice and fair dealing. An ethical decision is one that dilemma but an approach based on systematic
is morally acceptable to the larger community. questioning, analysis and diagnosis to get at the facts
and establish the issues involved is more likely to
produce a reasonably satisfactory outcome than one
Ethical concepts relying purely on ‘gut feeling’. An ethical dilemma is
The ethical concepts of deontology, utilitarianism, one that will be difficult to resolve. There may be all
stakeholder theory and discourse theory provide sorts of issues surrounding the situation, some of
frameworks that can be used to evaluate HRM policies which will be unclear or contentious.
and practices.
An important role for HR professionals is to do The role of HR
whatever they can to embed the consistent application
of ethical values in the organization so that they can HR professionals have a special responsibility for
become values in use rather than simply professed guarding and promoting core values in the
values in a code of practice or values statement. organization on how people should be managed and
treated generally. They are particularly concerned
with values relating to just and fair treatment. They
can act as role models and challenge unethical
practices. But challenging can be difficult.
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57
07
Corporate social
responsibility
makes on society, the environment and the econ-
Introduction omy. Having an effective CR programme contrib-
utes positively to all stakeholders as well as adding
The notion that businesses should act in a socially value for the organisation itself, and ensures it oper-
responsible way has been around for some time. ates in a sustainable way.’
This is what John Maynard Keynes wrote in 1923: Corporate social responsibility (CSR) is exercised
The business man is only tolerable so long as his by organizations when they conduct their business
gains can be held to bear some relation to what, in an ethical way, taking account of the social, envi-
roughly and in some sense, his activities have ronmental and economic impact of how they oper-
contributed to society. ate, going beyond compliance. Environmental issues
are particularly important. The concept of sustaina-
Social responsibility is an ethical framework which
bility, which emphasizes the importance of taking
indicates that individuals and organizations should
into account the future effect of any business policy
work and cooperate with each other for the benefit
or on humans, ecosystems and the wider economy, is
of society at large. It is concerned with sustainability –
important.
the need to develop environmental, social and eco-
Wood (1991: 695) observed that ‘The basic idea
nomic policies that take into account their future
of corporate social responsibility is that business
impact and provide for this impact to be main-
and society are interwoven rather than distinct enti-
tained. The World Commission on Economic
ties; therefore, society has certain expectations for
Development (1987: 43) stated that sustainable de-
appropriate business behaviour and outcomes.’ As
velopment is in place ‘if companies’ present needs
Baron (2001: 11) noted, CSR involves ‘providing to
can be met without compromising the ability of fu-
others benefits beyond those generated by economic
ture generations to meet their own needs.’ The con-
transactions with the firm or required by law.’
cept is in accord with the belief that without major
McWilliams et al (2006:1) stated that CSR refers
changes to the way the planet is run, it will suffer
to the actions taken by businesses ‘that further some
irreparable degradation.
social good beyond the interests of the firm and that
The aim of this chapter is to explore what it
which is required by law’. CSR has also been de-
means to act responsibly. This involves the exercise
scribed by Husted and Salazar (2006: 76) as being
of corporate social responsibility (CSR).
concerned with ‘the impact of business behaviour
on society’ and by Porter and Kramer (2006: 83) as
Corporate social a process of integrating business and society. The
latter argued that to advance CSR ‘We must root it
responsibility defined in a broad understanding of the interrelationship
between a corporation and society while at the
The CIPD (2022) stated that ‘Corporate responsi- same time anchoring it in the strategies and activi-
bility (CR) is about the impact an organisation ties of specific companies.’
CSR is concerned generally with how companies noted: ‘It is through strategic CSR that the company
function and this includes how they manage their will make the greatest social impact and reap the
people. The CIPD (2003: 5) emphasized that ‘the greatest business benefits.’ They also observed that
way a company treats its employees will contribute strategy is always about choice – organizations that
directly to the picture of a company that is willing ‘make the right choices and build focused, proactive
to accept its wider responsibilities.’ and integrated social initiatives in concert with their
CSR policy may be expressed in a value state- core strategies will increasingly distance themselves
ment that sets out the organization’s core values from the pack’ (page 91).
under such headings as: CSR strategy needs to be integrated with the
business or corporate strategy but it is also closely
●● care and consideration for people;
associated with HR strategy. This is because it is
●● care for the community; concerned with socially responsible behaviour
●● care for the environment; which respects the interests of both external and in-
●● competence; ternal stakeholders. In the former case this means
exercising care over the interests of the organiza-
●● competitiveness;
tion’s customers, clients and suppliers as well as the
●● customer service; community. In the latter case this involves creating
●● innovation; a working environment where personal and em-
●● performance; ployment rights are upheld and HR policies and
practices provide for the fair and ethical treatment
●● quality; of employees.
●● sustainability;
●● teamwork.
CSR activities
Strategic CSR defined CSR activities as listed by McWilliams et al (2006)
include incorporating social characteristics or fea-
Strategic CSR is about deciding initially the degree tures into products and manufacturing processes,
to which the organization should be involved in so- achieving higher levels of environmental perfor-
cial issues and then creating a corporate social mance through recycling and pollution abatement,
agenda – considering what social issues to focus on adopting progressive HRM practices and support-
and to what extent. As Porter and Kramer (2006: 85) ing community organizations.
C A S E S T U DY
The Lloyds Banking Group
The Lloyds Banking Group was recognized by Business in helping people to save for their future, supporting
the Community as the Responsible Business of the Year start-ups and tackling disadvantage through four
in 2018. The Group’s Helping Britain Prosper Plan sets out independent charitable foundations. In 2016, the company
22 specific targets designed to tackle some of the social set up a £1 billion Green Loan initiative to incentivize
and economic issues that matter most to Britain and commercial real estate to become more energy efficient.
its people, businesses and communities. It includes As a result, more than 5 million square feet of Britain’s
targets attached to addressing Britain’s housing needs, real estate became more energy efficient in 2017.
Chapter 7 | Corporate Social Responsibility 59
Moran and Ghoshal (1996: 45) contended that

The rationale for CSR ‘what is good for society does not necessarily have
to be bad for the firm, and what is good for the firm
Stakeholder theory, as first propounded by Freeman does not necessarily have to come at a cost to soci-
(1984), suggests that managers must satisfy a variety ety. Value creation, rather than value appropriation,
of constituents (eg workers, customers, suppliers, lies at the heart of effective firm strategies.’
local community organizations) who can influence
firm outcomes. According to this view, it is not suf-
ficient for managers to focus exclusively on the
needs of shareholders or the owners of the business.
The opposing view
Stakeholder theory implies that it can be beneficial
The opposing view is that businesses are there to
for the firm to engage in certain CSR activities that
make a profit, not to exercise social responsibility.
non-financial stakeholders perceive to be important.
The marketing expert Theodore Levitt (1958: 41),
The rationale for CSR, as defined by Hillman
in a notorious article in the Harvard Business
and Keim (2001), is based on two propositions.
Review on the dangers of social responsibility,
First, there is a moral imperative for businesses to
posed the questions: ‘Are top executives being
‘do the right thing’ without regard to how such de-
taken in by pretty words and soft ideas? Are they
cisions affect firm performance (the social issues
letting the country in for a nightmare return to feu-
argument); second, firms can achieve competitive
dalism by forgetting that they must be businessmen
advantage by tying CSR activities to primary stake-
first, last and almost always?’ He did write that
holders (the stakeholders argument). Their research
CSR can be used as ‘a way of maximizing the life-
in 500 firms implied that investing in stakeholder
time of capitalism by taking the wind out of its
management may be complementary to shareholder
critics’ sails’ (page 43). But, writing as an unre-
value creation and could indeed provide a basis for
structured capitalist, he suggested that ‘The essence
competitive advantage as important resources and
of free enterprise is to go after profit in any way
capabilities are created that differentiate a firm
that is consistent with its own survival as an eco-
from its competitors.
nomic system’ (page 44).
The following powerful arguments for CSR were
The Chicago monetarist Milton Friedman (1962:
presented by Porter and Kramer (2006):
133–34) questioned the ability of business manag-
●● The moral appeal – the argument that ers to pursue the social interest. He asked:
companies have a duty to be good citizens.
If businessmen do have a social responsibility
The US business association Business for other than making maximum profits for
Social Responsibility (2007) asks its stockholders, how are they to know what it is?
members ‘to achieve commercial success in Can self-selected private individuals decide what
ways that honour ethical values and respect the social interest is? Can they decide how great a
people, communities and the natural burden they are justified in placing on themselves
environment.’ or their stockholders to serve that social interest?
●● Sustainability – an emphasis on
In 1970 Friedman argued that the social responsi-
environmental and community stewardship.
bility of business is to maximize profits within the
This involves meeting the needs of the
bounds of the law. He maintained that the mere ex-
present without compromising the ability of
istence of CSR was an agency problem within the
future generations to meet their own needs.
firm in that it was a misuse of the resources entrusted
●● Licence to operate – every company needs to managers by owners, which could be better used
tacit or explicit permission from government, on value-added internal projects or returned to the
communities and other stakeholders to do shareholders.
business. These outspoken views may no longer be sup-
●● Reputation – CSR initiatives can be justified ported so openly but they still exist and are still
because they improve a company’s image, acted on. There is much evidence that CSR is not on
strengthen its brand, enliven morale and even the agenda – for example, UK banks that made
raise the value of its stock. money by selling worthless investments or insur-
ance policies and then failed to respond adequately
to complaints. And, less egregiously, a glance at the related to primary stakeholders, then investments
‘Your Problems’ column in the Observer reveals may benefit not only stakeholders but also result in
plenty of instances of businesses indulging in anti- increased shareholder wealth. However, participa-
social behaviour. It is necessary, therefore, to have a tion in social issues beyond the direct stakeholders
convincing case for the benefits of CSR. may adversely affect a firm’s ability to create such
However, as noted below, investors are increas- wealth.
ingly using social responsibility criteria to inform
investment decisions.
The basis for developing
Social responsibility a CSR strategy
investment criteria The basis for developing a CSR strategy is provided
by the following competency framework of the
Social responsibility criteria for investment refer to CSR Academy (2006), which is made up of six
three aspects of sustainability: environmental, social characteristics:
and governance (ESG). Environmental criteria may
●● Understanding society – understanding how
include a company’s energy use, waste, pollution
business operates in the broader context and
and natural resource conservation. The criteria can
knowing the social and environmental
also be used in evaluating any environmental risks a
impact that the business has on society.
company might face and how the company is man-
aging those risks. Social criteria look at the compa- ●● Building capacity – building the capacity of
ny’s external and internal relationships and seek others to help manage the business
answers to questions like these: Does it only work effectively. For example, suppliers understand
with suppliers that treat their employees responsi- the business’s approach to the environment
bly? Does the company donate a percentage of its and employees can apply social and
profits to the local community or encourage em- environmental concerns in their day-to-day
ployees to perform volunteer work there? Do the roles.
company’s working conditions show high regard for ●● Questioning business as usual – individuals
its employees’ health and safety? Are other stake- continually questioning the business in
holders’ interests taken into account? Governance relation to a more sustainable future and
criteria cover such factors as using accurate and being open to improving the quality of life
transparent accounting methods and providing for and the environment.
stockholders allowed to vote on important issues. ●● Stakeholder relations – understanding who
the key stakeholders are and the risks and
opportunities they present. Working with
Benefits of CSR them through consultation and taking their
views into account.
Benefits from CSR listed by the CIPD (2003: 4) in-
●● Strategic view – ensuring that social and
clude ‘offering distinctive positioning in the market
environmental views are included in the
place, protecting reputation, building credibility
business strategy so that they are integral to
and trust with customers and employees, redefining
the way the business operates.
corporate purpose or mission and securing the com-
pany’s license to operate’. ●● Harnessing diversity – respecting that people
Research into the relationship between CSR and are different, which is reflected in fair and
firm performance conducted by Russo and Fouts transparent business practices.
(1997) found that there was a positive relationship To develop a CSR strategy based on these principles
between environmental performance and financial it is necessary first to investigate the business and so-
performance. Hillman and Keim (2001) established cial environment in which the firm operates and then
that if the socially responsible activity were directly to consider the interests and needs of its stakeholders.
Chapter 7 | Corporate Social Responsibility 61
The next step is to identify and prioritize the areas in success. HR already works at communicating
which CSR activities should take place in accordance and implementing ideas, policies, cultural and
with their relative significance in the business context behavioural change across organizations. Its
of the organization. The case for pursuing specified role in influencing attitudes and links with line
CSR objectives can then be made to management managers and the top team means it is ideally
and key stakeholders. Finally, plans are made on how placed to do the same with CSR.
the objectives will be achieved. De Stefano et al (2018: 560) argued that ‘Taking on
a strategic role in sustainability can become an
opportunity to transition HR toward a multi-stake-
The role of HR holder perspective. This could have positive spillo-
vers on the overall credibility and status of the HR
Because of the ethical dimension of their function, function beyond sustainability.’
HR professionals have an important role to play in HR professionals need to marshal the arguments
furthering CSR. The CIPD (2022: 1) stated that: in favour of CSR, as set out in this chapter, to over-
CSR needs to be embedded in an organization’s come any overt or covert resistance. They must be
culture to make a change to actions and attitudes, able to advise on CSR strategies and how they can
and the support of the top team is critical to be implemented.
Key learning points
The meaning of CSR Developing a CSR strategy

CSR activities include incorporating social ●● Identify the areas in which CSR activities might
characteristics or features into products and take place by reference to their relevance in the
manufacturing processes, adopting progressive HRM business context of the organization and an
practices, achieving higher levels of environmental evaluation of their significance to stakeholders.
performance through recycling and pollution
●● Prioritize as necessary on the basis of an
abatement, and advancing the goals of community
assessment of the relevance and significance of
organizations.
CSR to the organization and its stakeholders and the
practicalities of introducing the activity or practice.
The rationale for CSR
●● Draw up the strategy and make the case for it to
There are two arguments for CSR (Hillman and Keim, top management and the stakeholders to obtain
2001): first, there is a moral imperative for businesses their approval.
to ‘do the right thing’ without regard to how such
decisions affect firm performance (the social issues ●● Communicate information on the strategy,
argument); second, firms can achieve competitive comprehensively and regularly.
advantage by tying CSR activities to primary ●● Provide training to employees on the skills they
stakeholders (the stakeholders argument). need to use in implementing the CSR strategy.
References
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and integrated strategy, Journal of Economics and seriously: maximizing profits and social
Management Strategy, 10 (1), pp 7–45 performance, Journal of Management Studies,
Business for Social Responsibility (2007) Annual 43 (1), pp 75–91
Report. [email protected] Keynes, J M (1923) A Tract on Monetary Reform,
Chartered Institute for Personnel and Development London, Macmillan
(2003) Corporate Social Responsibility and HR’s Levitt, T (1958) The dangers of social responsibility,
Role, London, CIPD Harvard Business Review, September–October,
Chartered Institute for Personnel and Development pp 41–50
(2022) Corporate Social Responsibility, London, McWilliams, A, Siegal, D S and Wright, P M (2006)
CIPD Corporate social responsibility: strategic
CSR Academy (2006) The CSR Competency implications, Journal of Management Studies,
Framework, Norwich, Stationery Office 43 (1), pp 1–12
De Stefano, F, Bagdadli, S and Carnuffo, A (2018) Moran, P and Ghoshal, S (1996) Value creation by
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pp 549–66 society: the link between competitive advantage
Freeman, R E (1984) Strategic Management: A and corporate social responsibility, Harvard
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Friedman, M (1962) Capitalism and Freedom, perspective on corporate environmental
Chicago, IL, University of Chicago Press performance and profitability, Academy of
Friedman, M (1970) The social responsibility of Management Review, 40 (3), pp 534–59
business is to increase its profits, New York Times Wood, D J (1991) Corporate social performance
Magazine, September, p 13 revisited, Academy of Management Review, 16 (4),
Hillman, A and Keim, G (2001) Shareholder value, pp 691–718
stakeholder management and social issues: what’s The World Commission on Economic Development
the bottom line? Strategic Management Journal, 22 (1987) Our Common Future, New York: Oxford
(2), pp 125–39 University Press
63
PART II
The strategic approach to
HRM
PA R T I I CO N T E N T S
08 Stategic HRM
09 HR strategy
of strategic HRM emphasizes the need for ‘strategic

Introduction fit’. This means achieving ‘vertical fit’ – the vertical in-
tegration of HR strategy with the business or corpo-
A strategic approach to HRM as discussed in this rate strategy so that the HR strategy supports the
part means making decisions on the intentions of the achievement of business or corporate goals. It also
organization about how its people should be man- aims to obtain ‘horizontal fit’ (linking different HR
aged. These decisions adopt a broad and longer-term strategies together so that they are mutually support-
view of where the organization should be taking its ive and therefore complement and reinforce each
human resource management policies and practices. other). HR strategy takes account of this concept of
The approach will involve defining the strategic strategic fit when charting the future direction of HR/
thrust required to ensure that the organization’s peo- people activities. Three basic approaches can be dis-
ple management activities support the achievement tinguished: (1) developing an overarching purpose
of its objectives and what needs to be done to ensure and set of organizational principles; (2) creating a sys-
that this strategic thrust is maintained. tem of complementary people management practices;
Strategic human resource management (Chapter 8) and (3) giving priority to specific (functional) aspects
provides the framework for the development and im- of people management.
plementation of HR strategy (Chapter 9). The concept
64

65
08
Strategic HRM
Introduction Strategic human resource management (SHRM)
was described by Boxall (1996) as the interface be-
tween HRM and strategic management. Schuler
Strategic human resource management (strategic
and Jackson (2007: 5) stated that SHRM is funda-
HRM or SHRM) is about taking a broad and
mentally about ‘systematically linking people with
longer-term view of what needs to be done about
the firm.’ It was defined by Wright and McMahan
people management and ensuring that HR strategies
(1992: 298) as ‘The pattern of planned human re-
are integrated with business or corporate strategies
source deployments and activities intended to ena-
and with each other, ie that ‘strategic fit’ is obtained.
ble an organisation to achieve its goals.’ Kaufman
This chapter starts with an analysis of the nature
(2015: 404) later placed more emphasis on the con-
of SHRM and how it is linked to the processes of
cept of strategic fit, noting that SHRM involves ‘The
strategic management and human resource manage-
choice, alignment, and integration of an organisa-
ment. The philosophy of SHRM is largely based on
tion’s HRM system so that its human capital
what is called the resource-based view and this is
resources most effectively contribute to strategic

considered next. However, against the backdrop of
business objectives.’ And Cascio (2015: 423) took a
that philosophy, the most important feature of
similar line when he wrote that ‘SHRM is the choice,
SHRM is the emphasis it places on strategic fit – a
alignment, and integration of an organization's
concept covered in the penultimate section of the
HRM system so that its human capital resources
chapter. A critical evaluation of the SHRM concept
most effectively contribute to strategic business
is set out in the final section.
objectives.’
SHRM is also about how members of the HR
The nature of strategic function adopt a strategic approach on a day-to-
day basis by ensuring that HR activities support the
human resource achievement of corporate strategies.
management
Strategic HRM and HRM
An early description of the nature of strategic
One of the characteristics of HRM is that it is stra-
human resource management (SHRM) was made
tegic, so what’s the difference between HRM and
by Schuler (1992: 18) as follows:
strategic HRM? An answer to this question was
SHRM is largely about integration and adaptation. provided by Truss and Gratton (1994: 666) who
Its concern is to ensure that: (1) human resources wrote that ‘We should perhaps regard SHRM as an
(HR) management is fully integrated with the overarching concept that links the management and
strategy and strategic needs of the firm (vertical development of people within the organization to
fit); (2) HR policies cohere both across policy the business as a whole and its environment, while
areas and across hierarchies (horizontal fit); and HRM could be viewed as an organizing activity
(3) HR practices are adjusted, accepted and used that takes place under this umbrella.’
by line managers and employees as part of their
everyday work.
66 Part 2 | The Strategic Approach to HRM
Strategic HRM and strategic oped by Barney (1991: 102), who stated that ‘a firm
is said to have a competitive advantage when it is
management implementing a value-creating strategy not simulta-
Strategic HRM takes the notion of HRM as a stra- neously being implemented by any current or poten-
tegic, integrated and coherent process and associ- tial competitors and when these other firms are
ates it with the process of strategic management. unable to duplicate the benefits of this strategy.’ He
This is an approach to management that takes a noted later (Barney 1995: 49) that an environmen-
broad and long-term view of where the organiza- tal analysis of strengths, weaknesses, opportunities
tion is going and manages it in ways that ensure and threats (SWOT analysis) was only half the
that this strategic thrust is maintained. story: ‘A complete understanding of sources of a
As stated by Boxall and Purcell (2003: 44): firm’s competitive advantage requires the analysis
‘Strategic management is best defined as a process. of a firm’s internal strengths and weaknesses as
It is a process of strategy making, of forming and, well.’ Delery and Roumpi (2017: 1) stated that:
if the firm survives, reforming its strategy over ‘HRM practices, when viewed as systems of ‘inter-
time.’ The purpose of strategic management was related and internally consistent’ practices, can be
expressed by Kanter (1984: 288) as being to ‘elicit unique, causally ambiguous, synergistic and difficult
the present actions for the future and [ensure that to imitate.’
they] become action vehicles – integrating and in- Resource-based SHRM can produce what Boxall
stitutionalizing mechanisms for change.’ Truss et and Purcell (2016) referred to as ‘human resource
al (2014: 49) also emphasized the action-oriented advantage’, which takes place when firms have
nature of strategic management. They defined it as more skilled, intelligent and effective staff than their
‘the process that enables organizations to turn competitors. The aim is to develop strategic capabil-
strategic intent into action.’ ity. This means strategic fit between resources and
opportunities, obtaining added value from the ef-
fective deployment of resources and developing
The resource-based view managers who can think and plan strategically in
the sense that they understand the key strategic is-
of SHRM sues and ensure that what they do enables the stra-
tegic goals of the business to be achieved. In line
To a very large extent, the philosophy of SHRM is with human capital theory, the RBV emphasizes
underpinned by the resource-based view (RBV). that investment in people increases their value to
This states that it is the range of resources in an the firm. It proposes that sustainable competitive
organization, including its human resources, that advantage is attained when the firm has a human
produces its unique character and creates competi- resource pool that cannot be imitated or substituted
tive advantage – defined by Porter (1985) as the by its rivals.
ability to out-perform competitors thus achieving Boxall (1996: 66) suggested that ‘the resource-
and sustaining better results than business rivals based view of the firm provides a conceptual basis, if
and placing the firm in a competitive position. This we needed one, for asserting that key human re-
is most likely to happen when the resources are sources are sources of competitive advantage.’ He
valuable, rare, inimitable and non-substitutable. noted that human resource advantage is achieved by
The resource-based view is founded on the ideas a combination of ‘human capital advantage’, which
of Penrose (1959: 24–25), who wrote that the firm results from employing people with competitively
is ‘an administrative organization and a collection valuable knowledge and skills, and ‘human process
of productive resources’ and saw resources as ‘a advantage’, which follows from the establishment of
bundle of potential services.’ It was expanded by ‘difficult to imitate, highly evolved processes within
Wernerfelt (1984: 172), who explained that strategy the firm, such as cross-departmental cooperation
‘is a balance between the exploitation of existing re- and executive development.’ Accordingly, ‘human
sources and the development of new ones.’ Resources resource advantage’, the superiority of one firm’s la-
were defined by Hunt (1991: 322) as ‘anything that bour management over another’s, can be thought of
has an enabling capacity.’ The concept was devel- as the product of its human capital and human pro-
cess advantages. He also observed (page 66) that the
Chapter 8 | Strategic Human Resource Management 67
strategic goal emerging from the resource-based planning, which included involving employees in
view was to ‘create firms which are more intelligent the planning process.
and flexible than their competitors’ by hiring and In the first two sections of this part consideration
developing more talented staff and by extending is given to how vertical and horizontal fit can be
their skills base. Resource-based strategy is therefore achieved. An overall description of what is involved
concerned with the enhancement of the human or in making these choices is provided by the perspec-
intellectual capital of the firm. As Ulrich (1998: 126) tives on strategic HRM set out by Delery and Doty
commented: ‘Knowledge has become a direct com- (1996) as summarized in the next section. These
petitive advantage for companies selling ideas and perspectives provide the basis for an analysis in the
relationships. The challenge to organizations is to final sections of the relative merits of adopting a
ensure that they have the capability to find, assimi- ‘best practice’ or ‘best fit’ approach in making the
late, compensate and retain the talented individuals choice.
they need.’
This is the basis of resource dependence theory
(Pfeffer and Davis-Blake, 1992) which suggests that Achieving vertical fit
HR strategies such as those concerned with reward
Vertical fit or integration involves linking HR strat-
are strongly influenced by the need to attract, retain
egy to the business strategy. In accordance with con-
and energize high-quality people.
tingency theory HR strategies are related to the
context and circumstances of the organization. The
following models exist as the basis for achieving it:
Critical evaluation of the resource-
Competitive strategies model – HR strategy
based view ●●
should match the preferred strategy of the
The resource-based view has had considerable in- firm in seeking sustainable competitive
fluence on thinking about strategic human resource advantage. Porter (1985) listed the drivers of
management. It provides a justification for attach- competitive advantage as innovation, quality
ing importance to resourcing activities, especially and cost leadership.
those concerned with talent management. It can ●● Life-cycle model – as the organization
also be used to enhance the value of the HR contri- changes through the four stages of start-up,
bution in achieving competitive advantage. But it growth, maturity and decline, HR strategy
may be difficult to find resources that satisfy all the must change to meet its needs (Baird and
criteria, external factors such as product market Meshoulam, 1988).
pressures are ignored and it provides only general-
●● Strategic configuration model – HR strategy
ized guidance on what resources are suitable.
should match the characteristics of the
organization as defined by Miles and Snow
Strategic fit (1978) who identified three types of ‘ideal’
organizations: prospectors, defenders and
analysers.
The notion of strategic fit is fundamental to the
concept of SHRM. It states that when developing
HR strategies it is necessary (1) to integrate them
with the organization’s corporate or business strate-
Achieving horizontal fit (bundling)
gies in order to ensure that they contribute to the The notion of vertical fit was expanded by Baird
achievement of the organization’s goals (vertical and Meshoulam (1988) to embrace horizontal fit or
fit), and (2) to integrate them with one another in integration. This involves the integration of a num-
order to provide mutual reinforcement (horizontal ber of people management practices. The aim is to
fit). Research in a successful international furniture develop and implement several of them together so
firm in Holland by Paauwe et al (2013) established that they are interrelated and therefore complement
that an important contributory factor to the com- and reinforce each other. Thus the sum becomes
pany’s success was its pursuit of fit in strategic HR greater than the parts. The significance of horizon-
tal fit as a means of achieving high employee
erformance also emerged in the writings of Wright

p v ariety of uses, for e xample to specify recruitment
and McMahan (1992) and MacDuffie (1995). This standards, to provide a framework for structured
is known as ‘bundling’ and is an important feature interviews, to help identify learning and develop-
of SHRM which is concerned with the organization ment needs and to indicate the standards of behav-
as a total system or entity and addresses what needs iour or performance required.
to be done across the organization as a whole. It is
not about isolated programmes and techniques or
in the ad hoc development of HR strategies and Perspectives on the achievement
practices.
Dyer and Reeves (1995: 656–57) pointed out
of strategic fit
that: ‘The logic in favour of bundling is straightfor- Delery and Doty (1996) identified three perspec-
ward... Since employee performance is a function of tives that illuminated the notion of strategic fit:
both ability and motivation, it makes sense to have
1 The universalistic perspective – some HR
practices aimed at enhancing both.’ Their study of
practices are better than others and all
various models listing HR practices that create a
organizations should adopt these best
link between HRM and business performance found
practices. There is a universal relationship
that the activities appearing in most of the models
between these practices and firm
were involvement, careful selection, extensive train-
performance.
ing and contingent pay. Richardson and Thompson
(1999) concluded that a firm with bundles of associ- 2 The contingency perspective – to be effective
ated HR practices should have a higher level of per- an organization’s HR policies must be
formance, provided it also achieves high levels of fit consistent with the situation in which they
with its competitive strategy. Research in American are practised – the features and
automotive assembly plants by MacDuffie (1995) circumstances of the organization.
established that innovative HR practices affect per- 3 The configurational perspective – this is a
formance not individually but as interrelated ele- holistic approach that emphasizes the
ments in an internally consistent HR bundle. He importance of the pattern of HR practices
observed (page 197) that: and the greater impact on organizational
performance if they are associated with one
Implicit in the notion of a ‘bundle’ is the idea
another. It suggests that an organization
that practices within bundles are interrelated and
internally consistent, and that ‘more is better’ with must develop HR as a system so that both
respect to the impact on performance, because of horizontal and vertical fit can be achieved.
the overlapping and mutually reinforcing effect of Michie and Sheehan (2005) tested these perspectives
multiple practices on a sample of UK manufacturing and service-sector
Bundling can take place in a number of ways. High- firms. They found that the relationship between HR
performance systems are in effect based on the policies and practices and performance is dependent
principle of bundling because they group a number upon business strategy (the contingency perspective)
of HR practices together to produce synergy and and that companies pursuing an integrated ap-
thus increase their impact. Grade structures can de- proach to HR perform best.
fine career ladders in terms of competency require- The typology produced by Delery and Doty pro-
ments (career family structures) and thus provide vided the basis for what has become the most com-
the basis for learning and development pro- monly used categorization of approaches, which is to
grammes. Job evaluation can be used to clarify and adopt the terms ‘best practice’ and ‘best fit’ for the
define levels in an organization. Total reward ap- universalistic and contingency perspectives, and
proaches ‘bundle’ financial and non-financial re- ‘bundling’ for the configurational approach. This fol-
wards together. Competency frameworks (a set of lows the classification made by Guest (1997) of fit as
definitions of the competencies that describe the an ideal set of practices, fit as contingency and fit as
types of behaviour required for the successful per- bundles. There has been much debate about the rela-
formance of a role) can be devised that have a tive merits of the best practice and best fit approaches.
1. The best practice approach 2. The best fit approach

The best practice or ‘universalist’ approach is based The best fit approach emphasizes that HR strategies
on the assumption that there is a set of best HRM should be related to the context, circumstances of
practices and that adopting them will lead to supe- the organization and its type. It is in line with con-
rior organizational performance. They are universal tingency theory. This model seems to be more real-
in the sense that they are best in any situation. The istic than the best practice model. As Dyer and
following well-known list of best practices was pro- Holder (1988: 31) observed: ‘The inescapable con-
duced by Pfeffer (1998): clusion is that what is best depends.’
But there are limitations to the concept of best
1 Employment security
fit. Paawue (2004: 37) argued that ‘It is necessary to
2 Selective hiring avoid falling into the trap of contingent determin-
3 Self-managed teams ism [ie acting as if the context absolutely determines
4 High compensation contingent on the strategy]. There is, or should be, room for mak-
performance ing strategic choices.’
There is a danger of attempting mechanistically
5 Training to provide a skilled and motivated
to match HR policies and practices with strategy. It
workforce
is not credible to claim that there are single contex-
6 Reduction of status differentials tual factors that determine HR strategy, and inter-
7 Sharing information nal fit cannot therefore be complete. Boxall (2007:
61) contended that ‘It is clearly impossible to make
The ‘best practice’ rubric was attacked by Cappelli all HR policies reflective of a chosen competitive or
and Crocker-Hefter (1996: 7) who commented that economic mission.’
the notion of a single set of best practices has been Purcell (1999: 35) referred to the notion of ‘idi-
over-stated: ‘There are examples in virtually every osyncratic contingency’ which ‘shows that each firm
industry of highly successful firms that have very dis- has to make choices not just on business and opera-
tinctive management practices. We argue that these tional strategies but on what type of HR system is
distinctive human resource practices help to create best for its purposes.’ He commented that ‘The
unique competencies that differentiate products and search for a contingency or matching model of
services and, in turn, drive competitiveness.’ HRM is also limited by the impossibility of model-
In accordance with contingency theory, which ling all the contingent variables, the difficulty of
emphasizes the importance of interactions between showing their interconnection, and the way in
organizations and their environments so that what which changes in one variable have an impact on
organizations do is dependent on the context in others, let alone the need to model idiosyncratic and
which they operate, it is difficult to accept that there path dependent contingencies’ (page 37).
is any such thing as universal best practice. What
works well in one organization will not necessarily
work well in another because it may not fit its strat- Conclusions on the best practice
egy, culture, management style, technology or work-
ing practices. However, a knowledge of what is v best fit debate
assumed to be best practice can be used to inform It is often claimed that best fit is better than best
decisions on what practices are most likely to fit the practice but Stavrou et al (2010: 952) and his
needs of the organization, as long as it is under- colleagues argued differently:
stood why a particular practice should be regarded
as a best practice and what needs to be done to en- There may be merit in both approaches [best fit and
sure that it will work in the context of the organiza- best practice] where the debate is between general
tion. Perhaps it is best to think of ‘good practice’ principles/bundles (training and development,
rather than ‘best practice’. staffing, compensation and benefits, communication
and participation, and planning) and the manner
in which they are carried out... It seems that the of stakeholders – meeting the needs of the
‘best fit’ and ‘best practice’ approaches of the shareholders and business leaders – and has been
HR-performance relationship are not necessarily much less concerned with the interests of the other
mutually exclusive. On the contrary, they may be stakeholders, especially employees. This issue was
combined to provide a more holistic picture. raised by Kaye (1999) who asked the question ‘Does
It can also be argued that there are some HR tech- SHRM benefit employees as well as their organiza-
niques such as structured interviewing that at least tions?’ He observed that virtually all SHRM research
can be regarded as good practice, although how takes the managerial/organizational perspective with
they are used may depend on the circumstances. an emphasis on the consequences for organizational
performance. This, he wrote, suggests that SHRM
may be improving the bottom line of companies, but
Critical evaluation of the may also be hurting employees – especially when
workers are viewed as commodities.
concept of SHRM Cascio (2015: 424) argued that ‘In SHRM re-
search, organizational performance is sometimes
The rationale for SHRM is the perceived advantage viewed only in terms of operational outcomes (pro-
of having an agreed and understood basis for devel- ductivity, quality, service, innovation) and financial
oping and implementing approaches to people man- outcomes (return on assets, return on equity, sales
agement which takes into account the corporate growth, overall financial performance). Yet as Beer
plans and priorities of the organization and the et al (1984) emphasized in their seminal work, per-
changing context in which it operates. As Dyer and formance has to be framed more broadly to include
Holder (1988: 13) remarked, SHRM should pro- meeting corporate ethical and social responsibilities,
vide ‘unifying frameworks which are at once broad, including job satisfaction, industrial democracy and
contingency based and integrative.’ distributive justice. They advocated a multi-stake-
This is compelling stuff. But a literature review holder approach to HRM, commenting as follows:
of SHRM by the writer and Duncan Brown in 2019 HRM policies are and indeed should
left the impression that SHRM is more of a con- be influenced by the interests of various
struct (in the sense of a subjective theory containing stakeholders: shareholders, management,
various conceptual elements) than a description of employees, community and government. Unless
the reality of strategy formulation and implementa- these policies are influenced by all stakeholders,
tion in organizations. As Brown et al (2019: 43) the enterprise will fail to meet the needs of these
commented following their research for the Institute stakeholders in the long run and it will fail as an
for Employment Studies (IES): ‘Maybe the propo- institution. (page 15)
nents of strategic HRM had some very pertinent
In 2015 Michael Beer, Paul Boselie and Chris Brewster
ideas but used jargon which got in the way of peo-
reviewed the state of this perspective after 30 years.
ple management becoming genuinely more strate-
They stated that ‘we need to take a wider, more con-
gic.’ The IES researchers were struck by the absence
textual, more multi-layered approach founded on the
in current HR language of the term strategic human
long-term needs of all relevant stakeholders’ (page
resource management. It is interesting to note that
427). They also argued that ‘Fundamental to a multi-
the CIPD’s new Profession Map setting out its pro-
stakeholder approach must be the creation, mainte-
fessional standards does not mention it.
nance, and development of a culture of trust among
Strategic HRM is fundamentally conceptual. It
the different stakeholders. Considering HRM as a
only becomes real when people management profes-
social system, in contrast to the dominant individual
sionals and line managers jointly practise strategic
perspective, puts the relationships between stakehold-
management and together develop and implement
ers at the centre of our studies’ (page 432).
people strategies which address the people and busi-
Echoing this and earlier points, the most important
ness issues facing their organization.
conclusion reached by Armstrong and Brown (2019)
As emphasized by Armstrong and Brown (2019),
in their SHRM literature review was that there was a
another fundamental problem with SHRM is that it
requirement for a more action- and evidence-focused,
has been over-concerned with the interests of one set
multi-stakeholder perspective to strategic HRM.
Key learning points
Strategic human resource management and reinforce each other. It is generally known as
bundling and is an important feature of SHRM.
defined
Strategic human resource management (strategic Perspectives on the achievement of strategic fit
HRM or SHRM) is concerned with ensuring that key Delery and Doty (1996) identified three perspectives
issues of human resource management (HRM) are that illuminated the notion of strategic fit:
dealt with strategically in order to support the
achievement of organizational goals. 1 The universalistic perspective – some HR practices
are better than others and all organizations should
adopt these best practices. There is a universal
The conceptual basis of strategic HRM
relationship between these practices and firm
Strategic HRM is the ‘interface between HRM and performance.
strategic management’ (Boxall, 1996). It takes the
2 The contingency perspective – to be effective an
notion of HRM as a strategic, integrated and coherent
organization’s HR policies must be consistent with
approach and develops that in line with the concept of
the situation in which they are practised – the
strategic management.
features and circumstances of the organization.
Strategic management 3 The configurational perspective – this is a holistic

approach which suggests that an organization
Strategic management is an approach to management must develop HR as a system so that both
that takes a broad and long-term view of where the horizontal and vertical fit can be achieved.
business is going and manages it in ways that ensure
that this strategic thrust is maintained.
Best practice
Critical evaluation of the concept of SHRM This is the notion that there is a set of best HRM
practices which are universal in the sense that they
Strategic fit are best in any situation and adopting them will lead to
The concept of strategic fit states that when developing superior organizational performance. The notion of
HR strategies it is necessary (1) to integrate them with best practice incorrectly assumes that there are
the organization’s corporate or business strategies in universally effective HR practices that can readily be
order to ensure that they contribute to the achievement transferred.
of the organization’s goals (vertical fit), and (2) to
integrate them with one another in order to provide
Best fit
mutual reinforcement (horizontal fit).
The notion that HR strategies should be congruent
Achieving vertical fit with the context and circumstances of the
Vertical fit or integration involves relating HR organization. More realistic than best practice, but
strategies in accordance with contingency theory to there is a danger of mechanistically matching HR
the context and circumstances of the organization. policies and practices with strategy.
Achieving horizontal fit (bundling) Best fit v best practice

Horizontal fit or integration involves the development
It is often claimed that best fit is better than best
and implementation of several HR practices together
practice but it can be argued that both approaches
so that they are interrelated and therefore complement
have their uses if this is done judiciously.
The resource-based view of SHRM resources in an organization, including its human

resources, that produces its unique character and
The philosophy of SHRM is underpinned by the creates competitive advantage
resource-based view. This states that it is the range of
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74
09
HR strategy
HR strategy looks forward to what needs to be
Introduction done in the future. This may cover a bundle of inter-
related HRM or people activities or the develop-
HR strategy is a declaration of intent that sets out ment of a number of activities within one area of
what the organization proposes to do about its HR HRM. For example, a review of resourcing prac-
or people management policies and practices in gen- tices may lead to strategies for developing different
eral or in particular areas. It should be distinguished aspects of resourcing such as recruitment, talent
from strategic HRM, which provides a conceptual management or flexible working. Alternatively, an
background that refers to the achievement of strate- organization may decide that there is an immediate
gic fit; HR strategy is an ‘action vehicle’ for getting need to introduce a new practice or change an exist-
things done against this background. ing one which may not be incorporated in any
A distinction can also made between HR strat- longer-term strategy (the development of people
egy and HR policy. HR strategy is purposeful and practices is considered in Chapter 1). However, in
dynamic. It provides a sense of direction and con- the latter case an approach based on that described
stantly adjusts to meet changed circumstances. HR later in this chapter for strategy formulation might
policy is more about the here and now. It defines be appropriate.
‘the way things are done around here’. It may evolve A strategy is not the same as a plan. A strategy
but this is not necessarily the result of a strategic incorporates a pattern of decisions. It looks at each
choice. It is when a deliberate decision is made to influencing factor and is concerned with the whole
change a policy that a strategy for achieving this situation – the big picture – not just one end result.
change may have to be formulated. In contrast, a plan is a programme or scheme that is
limited to the achievement of a definite purpose al-
though this may be part of a strategy. Thus it might
The nature of HR strategy be decided to adopt a functional strategy for reward
based on the concept of ‘total reward’ (the combi-
HR strategy takes a broad and long-term view of nation of financial and non-financial rewards to
what the organization should be doing about its become an integrated and coherent whole). To sup-
people management practices individually or collec- port this strategy a plan could be made for the
tively. It is a description of a proposed stream of introduction of a formal recognition scheme.
action over time designed to achieve change and in- The case for HR strategy can be put very simply:
volves making critical choices about ends and ‘If you don’t know where you’re going you’ll never
means. As Abell (1993:1) expressed it, strategy ena- get there’. The issue is not the self-evident need to
bles organizations to adapt by ‘mastering the pre- have a sense of direction. It is rather the importance
sent and pre-empting the future’. Dyer and Reeves of thinking systematically about how to make this
(1995: 656) described HR strategies as ‘internally happen.
consistent bundles of human resource practices,’ Peter Cheese (2021: 255) distinguishes between
while it was defined by Boxall and Purcell (2003: HR and people and organization strategy. He sug-
26) as ‘the critical set of economic and socio-politi- gests that HR strategy is what HR needs to figure
cal choices that managers make in building and out the best way best to run the function. This will
managing a workforce.’ include the capabilities it needs, how to structure
Chapter 9 | HR Strategy 75
and organize, and how to interact with the business. Overarching purpose
People and organization strategy is concerned with
general people management matters, especially An approach devoted to developing an overarching
those related to skills and capabilities and leader- purpose and set of organizational values will be
ship, and with overall organizational issues, namely concerned with indicating the overall direction for
organization and culture. His illustration of the in- managing people in which the organization intends
ter-relationships between these two aspects of peo- to go. It provides a framework for the development
ple/HR strategy and business strategy is shown in of more specific strategies.
Figure 9.1. This approach is in line with the notion of ‘the
big idea’ that emerged from the longitudinal re-
search conducted in 12 companies by Professor John
Approaches to HR strategy Purcell and his colleagues from Bath University
(Purcell et al, 2003: ix). This was perhaps the most
Because all organizations are different, all people notable feature of some of the organizations. The
strategies are different. Research into HR strategy big idea is a clear sense of mission underpinned
conducted by Armstrong and Long (1994) and by values and a culture expressing what the firm
Armstrong and Baron (2002) revealed many varia- is and its relationship with its employees and
tions. Some articulated strategies are simply very customers.
general declarations of intent or statements of the Organizations with a big idea displayed five
values that the organization has adopted for man- common characteristics – the idea was embedded,
aging people. Others go into much more detail. connected, enduring, collective and ‘measured and
Although HR strategies may come in all sorts of managed’. The big idea therefore means more than
shapes and sizes, three basic approaches can be dis- just having a formal mission statement. It means
tinguished: (1) developing an overarching purpose that the values are spread throughout the organiza-
and set of organizational principles; (2) creating a tion so that they are embedded in policies and prac-
system of complementary people management practices. These values interconnect the relationships
tices; and (3) giving priority to specific (functional) with customers (both internal and external), culture
aspects of people management. These approaches and behaviour, and provide the basis upon which
can be combined in various ways. employees should be managed.
F I G U R E 9.1 The different strategy domains
• Business priorities
Business strategy
• Business needs
Drives
Enables
• Skills and capabilities
People and organization strategy • Leadership
• Organization and operating model
• Culture
Drives
Enables
• HR capabilities
HR strategy • HR structure and operating model
• Practices, policies and processes
SOURCE Cheese (2021: 256)

The big ideas in five of the organizations studied ●● A retail stores group: ‘The biggest challenge
were summarized as: will be to maintain [our] competitive
advantage and to do that we need to
●● AIT – make the workplace a good place to
maintain and continue to attract very
work;
high-calibre people. The key differentiator on
●● Jaguar Cars – quality management in terms anything any company does is fundamentally
of outcomes, process and routines; the people. Money is easy to get hold of,
●● Nationwide Building Society – mutuality as a good people are not. All we do in terms of
key value; HR practice is directly linked to business
●● Selfridges – turning values into value; improvement’ (managing director).
●● Tesco – focus on people and customer issues.
The research conducted by Brown et al (2019) iden- Complementary HRM practices
tified the following key issues (ie big ideas) in the A strategy for introducing an overall system or
HR strategies of the organizations they investigated: bundle of complementary HRM practices will in-
●● Keep the workforce at the ‘front and centre’ volve the development and implementation of sev-
of everyone’s thinking (Anchor Homes). eral of them together so that they are interrelated
●● Support LSE to deliver success through its and therefore reinforce each other. Ways of doing
most critical asset: its people (London School this include high-performance management (see
of Economics). Chapter 4), high-commitment management (taking
steps to increase employee commitment as ex-
●● Recognize that our people provide the plained in Chapter 23) and high-involvement man-
outstanding customer experience that is at agement (defined by Benson et al (2006: 519) as a
the heart of our strategy (Revolution Bars). specific set of human resource practices that focus
Here are some more examples of big idea approaches: on employee decision making, power and access to
information.
●● Ministry of Housing, Communities and A complementary approach to HR strategy at
Local Government: ensure that we have a the Ministry of Housing, Communities and Local
tailored, excellent, clearly signalled support Government (MHCLG) – The Five Strategic
and development offer which will attract and Pillars – is shown in Figure 9.2.
retain talent, and is amongst the best across
the Civil Service.
●● A local authority: As expressed by the chief Specific HR strategies
executive of this borough council, its HR
Specific HR strategies set out what the organization
strategy is about ‘having a very strong focus
intends to do about particular aspects of HR as de-
on the overall effectiveness of the
scribed in Chapter 1. These broadly cover organiza-
organization, its direction and how it’s
tion, resourcing, employment issues such as diversity
performing; there is commitment to, and
and inclusion, learning and development, perfor-
belief in, and respect for individuals, and I
mance management, reward management, employ-
think that these are very important factors.’
ment relations and employee wellbeing.
●● A public utility: ‘The only HR strategy you The following are some examples of specific HR
really need is the tangible expression of values strategies.
and the implementation of values... unless you
get the human resource values right you can
forget all the rest’ (managing director). The Children’s Society
●● A manufacturing company: ‘The HR strategy ●● Implement the rewards strategy of the
is to stimulate changes on a broad front aimed Society to support the corporate plan and
ultimately at achieving competitive advantage secure the recruitment, retention and
through the efforts of our people. In an motivation of staff to deliver its business
industry of fast followers, those who learn objectives.
quickest will be the winners’ (HR director).
F I G U R E 9.2 The Five Strategic Pillars at MHCLG
Our goal is to have skilled, talented, diverse and high-performing people, who are proud to work for
MHCLG and are supported and trusted by empowering and inclusive leaders
We have the right people in

We have confident managers
We are one MHCLG the right roles, at the We offer great careers We are diverse and inclusive
and empowering leaders
right time
Improved cross-site working First-year induction Supporting your career Comprehensive D&l strategy Building managerial
programme journey capability
Early careers offer, including Performance management

Regional resourcing plans ‘Agile Resourcing’ strategy ‘Advance’ Health and wellbeing offer
review
Success Profiles, improved job Core Curriculum, developing Employee Assistance, specialist SCS leadership offer, inclusive
Supporting the MHCLG Group
design, attraction strategy professions, accelerating talent training and support leadership for G6/7
77
●● Manage the development of the human ●● The reward system – in developing reward
resources information system to secure strategies, taking into account that this is a
productivity improvements in administrative very hard-driven business.
processes.
●● Introduce improved performance A local authority
management processes for managers and The focus is on the organization of excellence. The
staff of the society. strategy is broken down into eight sections: em-
●● Implement training and development that ployee relations, recruitment and retention, train-
supports the business objectives of the ing, performance management, pay and benefits,
society and improves the quality of work health and safety, absence management and equal
with children and young people. opportunities.
Diageo
There are three broad strands to the Organization
Developing HR strategy
and People Strategy:
As Peter Cheese (2021: 9) emphasized, ‘The essence
●● Reward and recognition: use recognition and of strategy and forward planning is to be able to
reward programmes to stimulate outstanding think through different possible scenarios, to find
team and individual performance the common threads, and to build from there.’
contributions.
●● Talent management: drive the attraction,
retention and professional growth of a deep The approach to development
pool of diverse, talented employees. Research by the Institute for Employment Studies
●● Organizational effectiveness: ensure that the (Brown et al, 2019: 4–5) established that people
business adapts its organization to maximize strategy has to balance explicit business alignment
employee contribution and deliver with the need in uncertain circumstances to keep
performance goals. flexible. They noted that
The strategy provides direction to the company’s Prioritization seems to be the clear goal and
talent, operational effectiveness and performance requirement of people management strategies
and reward agendas. The company’s underlying today. One HR director told us that extremely
thinking is that the people strategy is not for the lengthy and over-ambitious HR strategies have
human resource function to own but is the respon- bedevilled the function and given HR a bad
sibility of the whole organization, hence the title reputation in the past for over-promising and
‘Organization and People Strategy’. under-delivering. Focus and delivery seem to be
the new watchwords for people management.
A government agency The process of formulating HR strategy involves

generating strategic options and then making ap-
The key components of the HR strategy are:
propriate strategic choices. It was observed by
●● Investing in people – improving the level of Cappelli (1999: 8) that ‘The choice of practices that
intellectual capital. an employer pursues is heavily contingent on a
●● Performance management – integrating the number of factors at the organisational level, in-
values contained in the HR strategy into cluding their own business and production strate-
performance management processes and gies, support of HR policies, and cooperative labour
ensuring that reviews concentrate on how relations.’ It is necessary to adopt a contingent ap-
well people are performing those values. proach in generating strategic HRM options and
then making appropriate strategic choices. There is
●● Job design – a key component concerned
seldom, if ever, one right way forward.
with how jobs are designed and how they
HR strategy should be evidence-based and this
relate to the whole business.
evidence should be provided by a diagnostic review.
The aims of the strategy should be set out with a done about HR strategy by collecting and analysing
statement of how it will support the achievement of relevant information on what is happening in the
organizational goals and promote the interests of internal and external environment and the impact it
stakeholders. As much consultation as possible makes on the organization.
should take place with interested parties – top man- The analysis of the internal environment covers
agement, line managers and employees generally – organizational performance. For a business, the
in order to solicit their contribution and win their measures used include financial results, shareholder
support. Detailed proposals should be prepared on value, competitive position (the achievement of sus-
how the strategy will be implemented. tained competitive advantage), productivity, and
HR strategy may be created by means of a delib- employee quality and engagement. For a public or
erate process of analysis, discussion and choice. But voluntary organization, the measures include the
it may come into existence through an emergent, degree to which the purpose of the organization as
evolutionary and possibly unarticulated process in- expressed in its strategic goals has been attained,
fluenced by the business strategy as it develops and the levels of service achieved, cost-effectiveness and,
by changes in the internal and external environ- again, employee quality and engagement. The aim is
ment. Pettigrew and Whipp (1991: 30) stated that to identify strategic business or operational issues
strategy ‘… far from being a straightforward, ra- and to pinpoint the HR concerns that are critical to
tional phenomenon, is in fact interpreted by manag- organizational success.
ers according to their own frame of reference, their Two established diagnostics can be used for en-
particular motivations and information.’ vironmental scanning. The first is SWOT – an inter-
But there are still strong arguments for using for- nal and external analysis of the organization’s
mal and systematic methods to identify strategic strengths, weaknesses, opportunities and threats.
priorities and directions and thus provide the basis The second is PESTLE – a primarily external scan
for decision making and action. For this purpose, an of the political, economic, sociological, technologi-
analytical and evidence-based approach is required. cal, legal and environmental issues affecting the
organization.
Diagnostic reviews HR arrangements

Diagnostic reviews examine the organization’s cir- A diagnostic review should examine each of the
cumstances and its present HR arrangements to es- major aspects of people management and evalu-
tablish the issues that need to be addressed by the ate its effectiveness. It was suggested by Wright
development of new or amended HR strategies. et al (2004: 45) that such a review should begin
They cover an analysis of the organization’s internal with the assumption that everything the current
and external environment (environmental scan- HR function is doing is either wrong or does not
ning) and a review of the existing HR arrangements. exist. This may be going too far but the whole
range of HR activities does need to be challenged
Environmental scanning by obtaining answers to the questions set out in
Figure 9.3.
Environmental scanning involves providing the evi-
dence required for a diagnosis of what needs to be
F I G U R E 9.3 HR effectiveness checklist
Do the people management policies and practices of the organization:

●● Provide proper support for the achievement of business or corporate goals and for dealing with any
relevant issues?
●● Contribute adequately to the improvement of organizational and individual performance?
●● Enable the organization to recruit, retain and develop the skilled and engaged people it needs?
●● Ensure that employees are rewarded according to their contribution?
●● Contribute to the creation of a positive employment relations climate?
●● Promote the wellbeing of employees?
Stakeholder analysis egy. This is conducted by means of a stakeholder

analysis in order to identify the organization’s stake-
Stakeholders are the people or bodies who have a le- holders and establish their legitimate interests and
gitimate interest in an organization. They can include likely concerns about any aspect of HR strategy
shareholders, (owners), management, employees, under consideration. A stakeholder matrix as illus-
suppliers, customers and the community or public at trated in Figure 9.4 can be used for this purpose.
large. Account should be taken of their various inter- An example of another approach to stakeholder
ests when formulating and implementing HR strat- analysis is given in Figure 9.5.
F I G U R E 9.4 Stakeholder analysis matrix
HR strategy area:
Stakeholder Interests/concerns Potential impact Action
Senior management
Line management
Employees
Trade union(s)
Shareholders (owners)
Customers
Suppliers
The community
F I G U R E 9.5 The Selfridge stakeholder value model

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

C A S E S T U DY
Developing HR strategy
This is how the chief executive of The Peabody Trust the strategy we want. When you have answered those
explained the organization’s approach to the development questions, then you can start to decide what the
of HR strategy: strategy is. The key to this is that all our directors have
to contribute. The most important thing is the corporate
First of all you have your business strategy, which
understanding and responsibility for HR strategy.
includes at management team level a review of what
A good HR strategy is one which actually makes
we expect our HR to deliver. We define what the
people feel valued. It makes them knowledgeable
strategy means in terms of its implications for us as
about the organization, and makes them feel clear
individuals and for our employees. We decide what
about where they sit as a group, a team, or individual.
changes we have to effect and how we are going to
It must show that what they do either together or
communicate with and motivate the staff group to
individually fits into the strategy. Importantly, it should
achieve those changes. The management team needs
indicate how people are going to be rewarded for their
to be clear on what our vision for our people is, what
contribution and how they might be developed and
we see our people doing, what we think they have to
grow in the organization
learn and what practices they need to change to effect
or ambiguous initiatives that may not be understood

Implementing HR strategy by employees or are perceived differently by them.
But there are a number of other explanations for
The ultimate challenge of HR strategy is putting it to
this problem, including failure to plan implementa-
work. As Gratton (2000: 30) commented: ‘There is no
tion properly, lack of interest on the part of top
great strategy, only great execution.’ Strategies cannot
management, insufficient cooperation and support
be left as generalized aspirations or abstractions. But
from line managers, hostility from employees and,
implementing strategy is not easy: intent does not al-
sometimes, inattention to the development of the
ways lead to action. Too often, strategists act like
required new skills and inadequate planning and
Charles Dickens’s character Mr Pecksmith, who was
execution by HR.
compared by Dickens (Martin Chuzzlewit, Penguin
Implementation is likely to be more effective if
Classics, 2004: 23) to ‘a direction-post which is al-
the strategy is practical, uncomplicated and can be
ways telling the way to a place and never goes there.’
put into effect without too much difficulty. It helps
It is necessary to avoid saying, in effect, ‘We need to
if there has been adequate consultation during the
get from here to there but we don’t know how.’
course of its formulation. The aims should be to (1)
Linda Gratton (1999: 202) observed that ‘… the
keep it simple; (2) spell out how the strategy is to be
disjunction between rhetoric and reality in the area
implemented as well as what is to be implemented;
of human resource management, between HRM
and (3) ensure that support is given to line manag-
theory and HRM practice, between what the HR
ers in the shape of advice, guidance and training.
function says it is doing and how that practice is per-
To a large extent, HR strategy is implemented by
ceived by employees, and between what senior man-
line managers. But HR professionals play a major
agement believes to be the role of the HR function,
part in presenting and justifying the strategy, con-
and the role it actually plays.’ She suggested that this
sulting stakeholders, helping to manage the change
gap can frequently result from complex, non-routine
programme and providing support and guidance to a project in line with the requirements of effective
managers. project management (see Chapter 82); the project
plan may involve pilot schemes and staged implemen-
tation. Particular care should be taken in briefing and
Implementation programme involving line managers and identifying and satisfying
their training needs and those of other employees.
The implementation programme should use change
It is also essential to evaluate the success of the
management techniques (see Chapter 75), particu-
programme stage by stage and on completion. A
larly those involving communication and involvement
good strategy is one that works.
and, possibly, nudge theory. It should be conducted as
Key learning points
HR strategy defined Formulating HR strategy

HR strategy specifies what the organization intends to HR strategy may be created by means of a deliberate
do about people management generally or in particular process of analysis, discussion and choice. But it
areas to support the achievement of corporate goals may come into existence through an emergent,
and meet its obligations to its stakeholders, especially evolutionary and possibly unarticulated process
its employees. It sets out how its people management influenced by the business strategy as it develops and
policies and practices should be integrated with the changes in the internal and external environment.
business strategy and with each other. There are, however, advantages in adopting a
systematic approach, including a diagnostic review
Approaches to HR strategy and stakeholder analysis.
HR strategies come in all sorts of shapes and sizes but

three approaches can be distinguished: developing an
Implementing HR strategy
overarching purpose and set of organizational The ultimate challenge of people strategy is putting it
principles, creating a system of complementary people to work. Implementation is likely to be more effective if
management practices, and giving priority to specific practical strategies are formulated that can be put into
aspects of people management. These approaches effect without too much difficulty and if line managers
can be combined in various ways. and other employees are involved in the formulation
of the strategy.
References
Abell, D F (1993) Managing with Dual Strategies: Benson, G S, Young, S M and Lawler, E E (2006)
Mastering the present, pre-empting the future, High involvement work practices and analysts’
New York, The Free Press forecasts of corporate performance, Human
Armstrong, M and Baron, A (2002) Strategic HRM: Resource Management, 45 (4), pp 519–27
The route to improved business performance, Boxall, P F and Purcell, J (2003) Strategy and Human
London, CIPD Resource Management, Basingstoke, Palgrave
Armstrong, M and Long, P (1994) The Reality of Macmillan
Strategic HRM, London, IPD Brown, D, Hirsh, W and Reilly, P (2019) Strategic
Human Resource Management: Case Studies and
Conclusions: from HR Strategy to Strategic People Gratton, L A (1999) People processes as a source of
Management. https://www.employment-studies. competitive advantage, in (ed) L A Gratton, V H
co.uk/resource/strategic-human-resource- Hailey, P Stiles and C Truss, Strategic Human
management-practice-case-studies-and-conclusions Resource Management, Oxford, Oxford University
(archived at https://perma.cc/A5VV-Y93Y) Press
Cappelli, P (1999) Employment Practices and Gratton, L A (2000) Real step change, People
Business Strategy, New York, Oxford University Management, 16 March, pp 27–30
Press Pettigrew, A and Whipp, R (1991) Managing Change
Cheese, P (2021) The New World of Work, London, for Competitive Success, Oxford, Blackwell
Kogan Page Purcell, J, Kinnie, K, Hutchinson, R, Rayton, B and
Dickens, C (1843) Martin Chuzzlewit, London, Swart, J (2003) People and Performance: How
Chapman & Hall (Penguin Classics, 2004) people management impacts on organizational
Dyer, L and Reeves, T (1995) Human resource performance, London, CIPD
strategies and firm performance: what do we know Wright, P M, Snell, S A and Jacobsen, H H (2004)
and where do we need to go? International Journal Current approaches to HR strategies: inside-out
of Human Resource Management, 6 (3), versus outside-in, Human Resource Planning,
pp 656–70 27 (4), pp 36–46
84

85
PART III
Delivering HR
PA R T I I I CO N T E N T S
10 The role of HR
11 The HRM role of line managers
Introduction the HR model it adopts – the HR function in

which HR professionals provide advice and ser-
HR is delivered within the framework provided vices working in conjunction with line manage-
by the HR architecture of the organization, which ment. The role of the latter in implementing HRM
consists of the HR system and HR practices and is crucial.
86

87
10
The role of HR
be defined at the development stage, whether the
Introduction development is strategic or more concerned with
day-to-day activities. This can be done through
The HR or people management function is c oncerned discussions with those concerned and by conduct-
with the employment, management, development ing special surveys. Careful attention needs to be
and performance of people in organizations. The paid to how well the practice works by reference to
‘clients’ of the function are not just the management these criteria. As necessary, action should be taken
of the organization; they also consist of line manag- to amend the practice and/or provide additional
ers, employees generally and outside suppliers. guidance or training to the line managers and others
This chapter is divided into two parts. The first who are responsible for implementing it.
part is devoted to a description of the HR function The activities of HR can be divided into three
itself. The second part deals with the role of the HR areas: transformational, transactional, and concerns
or people professionals who work in the function. for employees, social responsibility and the organiza-
tion’s values.
The HR function
Transformational
In this part of the chapter consideration is given to Transformational activities are those that make a
the role, contribution, organization and evaluation significant difference for the organization or for its
of the HR function including the approach adopted employees. HR provides expertise and insight to ex-
to outsourcing work. plore new ways of meeting current and future chal-
lenges. It enables the organization to achieve its
goals by developing HR strategies and delivering
Role of the HR function advice and services in accordance with good prac-
tice in each aspect of HRM. It contributes to the
Peter Cheese, the chief executive of the Chartered
formulation and implementation of corporate strat-
Institute of Personnel and Development (2021:
egy and helps the organization to succeed in ways
256–57), summed up the role of the HR function as
that lay the foundations for future, sustainable suc-
follows:
cess by taking steps that will improve individual
HR don’t manage the people (apart from within and therefore organizational performance.
the function), but they are there to understand the As Lawler and Mohrman (2003: 16) commented:
needs of the people and the business, to provide the ‘HR can play an important role in the formulation
insight and the changes and interventions that need of strategy by making explicit the human capital re-
to happen, and to enable, to guide, to support, and sources required to support various strategies and
to ensure compliance where it is needed. strategic initiatives, by playing a leadership role in
The HR function is concerned with the develop- helping the organization develop the necessary ca-
ment and application of good people practice as pabilities to enact the strategy, and by playing a
described in Chapter 1. The purpose of the practice strong role in implementation and change manage-
and the criteria for testing its effectiveness should ment.’ In the words of Ulrich (1998: 125), HR
should be ‘an agent of continuous transformation.’
88 Part 3 | Delivering HR
Transactional of employee wellbeing in its own right. In the opin-

ion of Ulrich and Brockbank (2005: 201) ‘caring,
Transactional activities consist of the basic services
listening to, and responding to employees remains a
that HR is there to deliver effectively and efficiently.
centrepiece of HR work.’ The HR function and its
The main areas of HR service delivery are recruit-
members have to be aware of the ethical dimensions
ment, talent management, learning and develop-
of their role. They have to be business oriented but
ment, reward management, employment relations,
they have to be people oriented too.
employee wellbeing and employee records. It ad-
vises on employment issues and ensures compliance
with the provisions of employment law.
The HR operating model
The operating model for the organization of HR
Concerns of the HR function varies depending on the context of the organiza-
The HR function: tion – its size, the extent to which operations are
●● enhances the employee experience by decentralized, the type of work carried out, the kind
ensuring as far as possible that everything of people employed and the role assigned to the
people encounter, observe and feel during the function. As Peter Cheese (2021: 256) observed:
course of their employment is satisfying and ‘The operating model for HR should be whatever
rewarding; best fits the business.’
Hope-Hailey et al (1997: 17) suggested that HR
●● helps to improve the quality of the work
could be regarded as a ‘chameleon function’ in the
environment, covering how people are
sense that the diversity of practice identified by their
treated at work and their experiences in such
research suggests that ‘contextual variables dictate
areas as health and safety, working
different roles for the function and different prac-
conditions, reduction of stress, work–life
tices of people management.’
balance, bullying and harassment;
A chief executive’s view on the HR agenda
●● encourages socially responsible behaviour on quoted by Hesketh and Hird (2010: 105) was that
the part of the organization, covering its it operates on three levels: ‘There’s the foundation
treatment of employees and dealing with level, which we used to call personnel, it’s just pay
environmental issues; and rations, recruitment, all that sort of stuff that
●● formulates HR policies on such issues as makes the world go round, transactional work.
equal opportunity, the management of Level two to me is tools, it could be engagement,
diversity and inclusion and flexible working, reward, development, those sort of things. Level
and ensures that they are implemented; three is the strategic engagement.’
●● acts as the guardian of the organization’s A survey by IDS found that the overall median
values – pointing out when behaviour number of HR staff in the responding organizations
conflicts with those values or where was 14; in companies with up to 499 employees
proposed actions will be inconsistent with staff the median number was 3.5; and in companies
them. with 500 or more employees it was 20. While, as
would be expected, large organizations employed
It is often argued that the role of HR is to be busi- more staff than small and medium-sized companies
ness-oriented – contributing to the achievement of they had on average fewer HR staff per employee.
sustained competitive advantage. Becker and For smaller companies the median ratio of employ-
Huselid (1998: 97) stated that HR should be ‘a re- ees to HR staff was 62:1; in large employers it was
source that solves real business problems.’ Boxall 95:1. The overall ratio was 80:1.
(2007: 63) suggested that ‘The mission of HRM is The organization of HR could consist of a people
to support the viability of the firm.’ But one of the director responsible directly to the chief executive,
issues explored by Francis and Keegan (2006) in with a number of functional heads in areas such as
their research is the tendency for a focus on business talent management and recruitment, learning and
performance outcomes to obscure the importance
Chapter 10 | The Role of HR 89
development, reward management and employment segmented nature of the structure gives rise to
relations. But this should not be regarded as typical. ‘boundary management’ difficulties, for example
Organizations differ according to the circumstances when it comes to separating out transactional
in which they exist. Alternatively, the ‘three-legged tasks from the work of centres of expertise. The
stool’ model as described below might be adopted. model can also hamper communication between
those engaged in different HR activities. Other im-
pediments were technological failure, inadequate
The three-legged stool HR model resources in HR and skills gaps.
However, some benefits were reported by re-
The notion of delivering HRM through three major
spondents to the CIPD (2007) survey. Centres of
areas (the so-called three-legged stool model)
expertise can provide higher-quality advice. Business
emerged from the HR delivery model produced by
partners can focus more on business needs, line
Ulrich (1997, 1998), although Ulrich has stated that
managers can become more engaged, and the pro-
the three-part structure was not his idea but an in-
file of HR is raised. Also, the introduction of shared
terpretation of his writing. The areas are:
services results in improved customer service and
Centres of expertise – these specialize in the pro-
allows other parts of HR to spend more time on
vision of high-level advice and services on key HR
value-adding activities. It can cut costs by reducing
activities. The CIPD survey on the changing HR
the number of HR staff required.
function (CIPD, 2007) found that they existed in 28
By segmenting activities, the three-legged stool
per cent of respondents’ organizations. The most
model indicates to line managers where they should
common expertise areas were learning and devel-
contact HR and for what. But it introduces multiple
opment (79 per cent), recruitment (67 per cent),
channels rather than a one-stop shop. There has
reward (60 per cent) and employment relations
been some evidence that attempts to create new
(55 per cent).
structures can be frustrated by line managers con-
Business partners, sometimes called strategic
tinuing to use their ‘old‘ generalist HR contacts on
business partners – these work closely with line
a personal basis.
managers and can be involved in strategic activities
as well as providing immediate help and advice.
HR shared service centres – these handle all the Dealing with the issues
routine ‘transactional’ services across the business, The following approach incorporating recommen-
which include such activities as recruitment, absence dations by Holley (2009: 8–9) can be used to deal
monitoring and advice on dealing with employee is- with HR structuring issues:
sues like discipline and absenteeism.
●● ensure that top management are behind the
changes and involve line managers and the
Critical evaluation of the three- whole of HR in planning and
legged stool model implementation;
This model has attracted a great deal of attention ●● work out exactly who will do what in each
but there are difficulties with the notion. Gratton area – HR and the line – avoid overlaps and
(2003: 18) pointed out that ‘this fragmentation of ambiguities, taking particular care in defining
the HR function is causing all sorts of unintended the respective responsibilities of business
problems. Senior managers look at the fragments partners and members of shared services
and are not clear how the function as a whole adds centres and centres of expertise;
value.’ And as Reilly (2015) commented, respond- ●● define the skills required by both HR staff
ents to a CIPD survey mentioned other problems and line managers and help in their
in introducing the new model. These included dif- development;
ficulties in defining roles and accountabilities, es-
●● plan the implementation, phasing it as
pecially those of business partners, who risk being
required to avoid any disruption and monitor
‘hung, drawn and quartered by all sides’, accord-
it to ensure that it is going according to plan.
ing to one HR director. At the same time, the
Evaluating the HR function Typical measures to assess HR effectiveness in

order of popularity include:
The contribution of the HR function should be
evaluated. The prime criteria are its ability to oper- ●● absence management data;
ate strategically, its capacity to deliver the levels of ●● staff turnover data;
services required and the quality of advice it pro- ●● exit interview feedback;
vides on matters concerning people and the social ●● discipline and grievance data;
responsibilities of the organization. The importance
of the strategic role of HR has been correctly em- ●● results of employee surveys;
phasized by the CIPD. But HR is also there to de- ●● anecdotal/informal feedback;
liver essential people management services. If it ●● number of tribunal cases;
does not get these right, HR can be as strategic as it
●● benchmarking;
likes but will be rightly dismissed as useless by its
clients – management, line managers and employees ●● spending against budget;
generally. ●● time-to-fill vacancies data;
Research conducted by the Institute for ●● cost per hire.
Employment Studies (Hirsh, 2008) discovered that
the factors that correlated most strongly with line The contribution of HR to improving organiza-
managers’ satisfaction with HR were being well tional performance is less frequently used, perhaps
supported in times of change and when dealing because of measurement difficulties. But it is
with difficult people or situations, and getting the certainly relevant.
basic service delivery activities right.
C A S E S T U DY
HR organization at the National Australia Bank Group
HR at the National Australia Bank Group has a number of They tend to work in the areas of talent, performance,
centres of expertise, business partners, solutions leadership, diversity and culture and their job is to facilitate
consultants, project managers, a shared services centre the implementation of corporate people initiatives with the
and 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
Centres of expertise cover areas such as reward, projects escalate and extra help is required.
employment policy, talent management, culture manage- Solutions consultants deal with operational queries
ment, diversity and performance. The staff in the centres are referred to them from the people advisory helpline – mainly
specialists in their respective fields, while the other parts of issues of case management and other more complex
HR can be found in the HR service centre, with the exception enquiries. They are a key point of contact for people
of recruitment, which is conducted by line managers. leaders on matters of policy and procedure, although they
Business partners attend business unit leadership team do participate in some transaction work as well.
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.
C A S E S T U DY
Reorganizing HR in the Greater Manchester Fire Service
Following major changes in operations, it was decided by ●● to introduce a more transparent promotions process;
senior management that the role of the fire service’s HR
●● to work on the organizational climate and leadership –
function was to provide high-level, strategic advice from
a series of away-days 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 ●● the recruitment process was also modernized by
relations – and specialists to cover areas such as putting together a resourcing team, building a
occupational health, equality and diversity, reward, pensions microsite and developing an applicant tracking system;
and recruitment. Finding candidates with sufficient gravitas to
●● to reorganize training;
act as top-level strategic advisers was difficult. There weren’t
many true business partners about. A lot of people calling ●● a departmental competency framework was put in
themselves 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.
C A S E S T U DY
The HR shared services model at PricewaterhouseCoopers (PwC)
The HR shared services model at PwC consists of centre, but for the annual budgeting process all are
transactional and professional areas. Transactional functions looked at together as part of the HR shared services
include payroll, benefits administration and the joiners/ function.
leavers process department. The transactional functions also The result of introducing the centres of expertise has
provide services for their professional counterparts. In been that specialist knowledge is now organized into
contrast, professional areas organized into centres of discrete units enabling know-how and experience to be
expertise include functions such as recruitment, learning and more easily shared. The new structure means there is less
development, reward, diversity, and legal and advisory. duplication and the improved efficiencies allow more time
The centres of expertise sit within the central human to be dedicated to strategic issues. Additionally, a decrease
capital services centre but there are definite lines in costs has been achieved via a combination of reductions
between them. Every centre of expertise is a cost in headcount, economies of scale and related efficiencies.
Outsourcing HR work Partnerships set up with other organizations to

provide joint services should be based on clear
HR functions, especially in larger organizations, terms and conditions defining the role and range of
may outsource work, especially transactional activi- responsibilities of both parties and the procedure
ties, to outside suppliers, including management for termination. Managing operations jointly can
consultants, or they set up partnerships with other be tricky and care needs to be taken in reviewing
organizations to share the work. The advantages of how things are going and identifying any improve-
doing this are that: ments required.
●● members of the HR function can focus on
the key tasks that add value;
●● know-how, experience and facilities that the
The role of the HR
organization does not possess are obtained; professional
●● an ‘extra pair of hands’ is made available
when required; HR or people management professionals provide
●● cost savings can be achieved as long as the advice, guidance and services on all matters concern-
supplier or partner is selected and managed ing the employment of people. The CIPD (2013: 9)
carefully. defined the HR profession as ‘an applied business
discipline with a people and organization special-
The services that can be provided by outside sup- ism.’ The CIPD’s Profession Map (2021) states that:
pliers include recruitment, executive search, train-
The fundamental purpose of the people profession
ing, occupational health and safety, employee
is to champion better work and working lives.
wellbeing including counselling, childcare and
Creating roles, opportunities, organisations and
payroll administration. HR functions that have
working environments that help get the best out of
been given responsibility for other miscellaneous people, delivering great organisational outcomes,
activities such as catering, car fleet management, in turn driving our economies, and making good,
facilities management and security because there fair and inclusive work a societal outcome.
is nowhere else to put them may gladly outsource
them to specialist firms or go in for some form of HR professionals undertake a wide range of activi-
partnership. ties and require an equally wide range of skills to do
Close consideration should be given to the case so. But they ought to focus on doing the right thing
for outsourcing. The questions that need to be an- rather than simply doing things right. They have to
swered are: Is the service one that can easily be be values-driven.
separated from other HR activities? Do we really A survey by People Management (2018) found
want to lose direct control over this activity? Will that, on average, the HR professionals who re-
the benefits exceed the costs? sponded spent their workday as follows:
Before selecting a supplier, it is necessary to ●● Working on strategy/long-term projects 17%
check with other firms on which suppliers they use
and how satisfied they are with them. Then draw up ●● Dealing with grievances and queries 14%
a shortlist of three or four providers, brief them and ●● In meetings 22%
ask them to bid for the contract, spelling out how ●● Having informal conversations in the
they would meet the brief in terms of deliverables – business15%
the level of service they would guarantee – and how ●● On emails 32%
much it would cost. Select the best tender but ob-
tain references before making the choice. The roles of HR professionals vary according to the
Service providers need to be managed just as extent to which they are generalist (eg HR director,
carefully – if not more so – than internal services in HR manager, HR business partner, HR officer), or
order to ensure that the agreed service standards specialist (eg head of learning and development,
and costs are being achieved. Standards and budg- head of talent management, head of reward), the
ets should be reviewed regularly and revised as nec- level at which they work (strategic, executive or ad-
essary. Swift corrective action should be taken if ministrative), the needs of the organization, the
things go wrong and the contract terminated if view of senior management about their contribu-
there is a serious shortcoming. tion, the context within which they work, and their
own capabilities. They can act as strategists, busi- paid to the notion of the strategic nature of HR work
ness partners, innovators or internal consultants. and the concept of the strategic business partner.
The ways in which they deliver HR have been de-
fined in the Ulrich model as described below.
The strategic role of the HR
The Ulrich model professional
As Sparrow et al (2010: 88) argued:
Dave Ulrich (1998:124) made the following impor-
tant point in his influential Harvard Business Review HR must be fully responsive to the strategy and
article: business model of the business. HR is not a rule to
itself. It is not “HR for HR”, but HR (as broadly
HR should not be defined by what it does but defined across the competing stakeholders whom
by what it delivers – results that enrich the HR has to satisfy) for the business.
organization’s value to customers, investors, and
employees. Hardman and Mookherjee (2015) pointed out
that to be successful, HR needs to be involved in
He suggested that HR can function in four ways: as
strategic conversations right from the start, and
a strategic partner, an administrative expert, an em-
right at the top. To earn a place in those conversa-
ployee champion and a change agent. This first
tions, HR professionals must have credibility
model was later modified by Ulrich and Brockbank
within their organization. They can achieve this by
(2005) who defined the five roles as:
developing their ability to think and work strategi-
1 Employee advocate – focuses on the needs of cally, to understand how the organization works
employees through listening, understanding and the issues that affect its effectiveness and being
and emphasizing. able to ask the right questions. The case study re-
2 Human capital developer – focuses on search conducted for the Institute for Employment
preparing employees to be successful in the Studies by Brown et al (2019: 55) led to the
future. following conclusion:
3 Functional expert – concerned with the HR If HR wants more strategic impact, it needs to
practices that are central to HR value on the engage business leaders in the identification,
basis of the body of knowledge they possess. understanding and solution of key people issues.
This is not about having an HR presence on the
4 Strategic partner – combines the multiple
Board, but rather about senior players in HR
dimensions of business expert, change agent, being able to facilitate the right level of discussion,
strategic HR planner, knowledge manager whether in top team meetings or elsewhere.
and consultant to align HR systems to help
accomplish the organization’s vision and As described below, HR professionals have a strate-
mission, helping managers to get things done gic role when they are involved in transformational
and disseminating learning across the activities at a senior level (eg HR directors and
organization. heads of HR centres of expertise or main HR func-
5 Leader – leading the HR function, tions) or as strategic business partners.
collaborating with other functions and
providing leadership to them, setting and The strategic role of senior HR
enhancing the standards for strategic professionals
thinking and ensuring corporate governance.
The strategic role of senior HR or people professionals
They commented on the importance of the employee is to promote the achievement of the organization’s
advocate role, noting that HR professionals spend goals and values by developing and implementing HR
about one-fifth of their time on employee relations strategies that are integrated with the business or cor-
issues and that caring for, listening to and responding porate strategy, are coherent and mutually s upportive,
to employees remains a centerpiece of HR work. and are based on a multi-stakeholder approach that
Their model draws attention to the multifaceted na- recognizes the interests of employees as well as those
ture of the role although most attention has been of the business, suppliers and the general public.
To carry out this role senior HR professionals The role of HR business partners can vary widely
need to understand the big picture. They must be from one organization to another. In some cases it
familiar with the strategic goals of the organization may involve an entirely new approach to HR. At the
and appreciate the operational and business imper- opposite extreme the title may simply be a re-badg-
atives and performance drivers relative to these ing of a traditional generalist HR role. Following
goals. In a commercial firm they must know what her research, Pritchard (2010: 176) noted that the
the business model of the organization is (how it strategic partner role ‘appears to be something of a
makes money) and in a public sector or not-for- moving target, rather loosely defined and precari-
profit organization they must be aware of its pur- ously positioned with respect to changing relation-
pose and how this purpose is achieved. They must ships both internal and external to the HR f unction’,
know how HR practices can increase the capacity and that being a business partner can be a ‘frag-
of the organization to perform well. These include mented experience.’ However, as Keegan and
the obvious, frequently transactional, activities in- Francis (2010: 236) observed: ‘The business partner
volved in resourcing, learning and development, re- term seems to have become the title of choice for
ward management and employment relations. But ambitious HR practitioners.’
they extend to less obvious transformational ones Research into business partnerships conducted
such as organization development and knowledge by Hirsh (2008) found that the word strategic itself
management that strategically can make a signifi- was hardly used by the line manager participants.
cant difference to organizational effectiveness. They talked much more about HR helping them to
Taking into account these considerations, they have solve the key people problems they faced. And this
to think in the long term of where HR should go is essentially what business partners are there to do.
and how to get there. The following advice on carrying out the role
was given by two strategic business partners in a
The strategic role of the HR London-based US investment bank interviewed by
Pritchard (2010: 182, 184):
business partner
●● ‘I think the way you change their [the
The strategic role of HR business partners is to help to
business clients’] behaviours in the longer
achieve the strategic goals of their line manager col-
term is by getting to be a trusted advisor, and
leagues. They do this by advising on and dealing with
the way to become a trusted advisor is to
major and longer-term issues concerning the utiliza-
know your individual, to know your client
tion, development, reward and performance of the
and to know how to hook the individual.’
people in their departments. Ulrich and Beatty (2001:
294) stated that the strategic business partner ‘repre- ●● ‘If you don’t know the little things, they’ll [the
sented a “player” whose aim is to add value through business leaders] never trust you with the
acting as a “coach, architect, builder, facilitator, leader bigger things… you survive by doing the little
and conscience”.’ things and doing them right; and then building
up that trust and that relationship with them.’
C A S E S T U DY
Business partnering at the Automobile Association (AA)
The key competencies required by the AA for its business ●● understand and interpret financial data;
partners are concerned with commercial decision making, ●● understand the connectivity between functional areas
commerciality, influencing people and facilitating change. of the business;
They have to:
●● understand the impact of actions on cash flow and
●● understand the key factors affecting overall costs and profitability.
profits;
HR professionals: role HR professional behaviours CIPD

requirements The CIPD Profession Map states that members of
the ‘people profession’ should be ‘principles-led,
Research by the Institute for Employment Studies
evidence-based, outcomes-driven’. The map sets out
(Brown et al, 2019: 56) concluded that the capabili-
the following core behaviours expected of people
ties of HR professionals include:
professionals:
… a real understanding of the business and
ability to work closely with senior leaders; the ●● Ethical practice – Building trust by role-
ability to identify and prioritise people issues; modelling ethical behaviour, and applying
understand the timeframes on which they need to principles consistently in decision making.
be addressed; and help managers to see practical HR professionals should be value-driven.
solutions. This sometimes means challenging the The ethical role of HR is discussed in
views of senior people and reminding them of the Chapter 6.
importance of taking a customer and employee ●● Professional courage and influence –
perspective, not just seeing the business from their Showing courage to speak up and skilfully
own point of view. influencing others to gain buy-in; taking a
Research conducted by Brockbank et al (1999) led stand with colleagues when it is the right
to a definition of the key HR competency ‘domains’ thing to do despite significant opposition or
and their components, as set out in Table 10.1. challenge. Approaches to doing this are also
A competency framework for the strategic part- discussed in Chapter 6.
ner role in an investment bank as reported by ●● Valuing people – Creating a shared purpose
Pritchard (2010) emphasized three key areas: or- and enabling people development, voice and
ganizational effectiveness, personal impact and wellbeing.
business insight. The competencies included trusted ●● Working inclusively – Working and
advisor, leading change, critical thinking, financial collaborating across boundaries, effectively
acumen and strategy formulation. and inclusively, to achieve positive outcomes.
TA BLE 10.1 Key HR specialist competency areas

Competency Definition
1 Personal credibility Live the firm’s values, maintain relationships founded on trust, act with
an ‘attitude’ (a point of view about how the business can win, backing
up opinion with evidence).
2 Ability to manage change Drive change: ability to diagnose problems, build relationships with
clients, articulate a vision, set a leadership agenda, solve problems and
implement goals.
3 Ability to manage culture Act as ‘keepers of the culture’, identify the culture required to meet the
firm’s business strategy, frame culture in a way that excites employees,
translate desired culture into specific behaviours, encourage executives
to behave consistently with the desired culture.
4 Delivery of human resource Expert in the speciality, able to deliver state-of-the-art innovative HR
practices practices in such areas as recruitment, employee development,
compensation and communication.
5 Understanding of the business Strategy, organization, competitors, finance, marketing, sales,
operations and IT.
●● Commercial drive – Using a commercial Keegan and Francis (2010: 878) came to the follow-
mindset, demonstrating drive and enabling ing conclusions on the basis of their research:
change to create value.
Bearing in mind the history of HR practitioners’
●● Passion for learning – Demonstrating struggles for acceptance as key organizational
curiosity and making the most of players it is hardly surprising that a way of
opportunities to learn, improve and innovate. discursively modelling the concept of HR as ‘hard’
●● Insights-focused – Asking questions and and relating it to others concepts such as ‘business
evaluating evidence and ideas to create driven agendas’ and ‘strategic management’, has
insight and understand the whole. become so popular. It offers perhaps a way out
of the dualism when they seek to claim a share
●● Situational decision making – Making of strategic decision making while at the same
effective and pragmatic decisions or choices time struggling to attend to the employee centred
based on the specific situation or context. and administrative aspects of the role.
Carrying out the role of the HR What it means to be an HR

professional professional
How HR professionals carry out their roles depends Professionalism in HR as in other fields can be de-
on the context in which they work (the size and cul- fined generally as the conduct exhibited by people
ture of the organization, the types of activities it who are providing advice and services that require
carries out and the requirements of senior manage- expertise and who meet defined or generally ac-
ment), their skills and disposition and, importantly, cepted standards of behaviour. Work done by a pro-
the values they adopt. They will be affected by am- fessional is usually distinguished by its reference to
biguity and questions on the status of the profession a framework of fundamental concepts that reflect
and what is involved in being a professional. It can the skillful application of specialized education,
be a difficult job to do well and the criteria for suc- training and experience. It is accompanied by a
cess are demanding. sense of responsibility and an acceptance of recog-
The activities and roles of HR specialists and the nized standards. HR professionals who are mem-
demands made upon them as described above ap- bers of the Chartered Institute of Personnel and
pear to be quite clear cut but Thurley (1981) pointed Development (the CIPD) are required to uphold the
out that HR practitioners can be specialists in ambi- standards laid down by that body. More loosely,
guity. Their situation has not changed significantly people can be described as behaving ‘professionally’
since then. when they do their work well and act with integrity.
The difficulties that HR professionals face in The CIPD (2015: 12) advocates the following
dealing with ambiguity were well described by approach to professionalism:
Guest and King (2004: 421):
Rather than focusing on the activities it delivers,
Much management activity is typically messy and the (HR) profession should build its credibility
ambiguous. This appears to apply more strongly to and trust by showing its capability and courage
people management than to most other activities. to challenge accepted practice and offer business
By implication, the challenge lies not in removing leaders a range of critical perspectives on how to
or resolving the ambiguities in the role [of HR create sustainable organisational value through
professionals] but in learning to live with them. people, underpinned by a body of fundamental
To succeed in this requires skills in influencing, and internationally relevant knowledge rather
negotiating and learning when to compromise. than anecdotal ‘best practice’. We propose that
For those with a high tolerance of ambiguity, a principles-based approach to HR practice can
the role of HR specialist, with its distinctive elevate the definition of ‘good’ from practice to the
opportunity to contribute to the management of systems level, while giving freedom to individual
people in organizations, offers unique challenges; people management professionals to apply their
for those only comfortable if they can resolve professional judgement in designing bespoke
the ambiguities, the role may become a form of ‘good’ practices in real-life scenarios.
purgatory.
Key learning points
The HR function with basic HR matters such as recruitment and

selection, or largely transformational, operating
The HR or people management function is concerned strategically in order to make significant changes in
with the employment, management, development how the organization functions or how its
and performance of people in organizations. employees are treated.
HR activities The Ulrich model

The activities of HR can be divided into three areas: The most celebrated delivery model was produced by
transformational, transactional and concern for social Dave Ulrich. He wrote that ‘HR should not be defined
responsibility and the organization’s values. by what it does but by what it delivers – results that
enrich the organization’s value to customers, investors,
The HR operating model and employees.’ More specifically he suggested that
HR can deliver in four ways: as a strategic partner, an
The organization of HR could consist of a people
administrative expert, an employee champion and a
director responsible directly to the chief executive,
change agent. This first model was later modified by
with a number of functional heads in areas such as
Ulrich and Brockbank (2005) who defined five roles as
talent management and recruitment, learning and
follows:
development, reward management, employment
relations and HR administration depending on the 1 Employee advocate
circumstances and needs of the organization.
2 Human capital
The ‘three-legged stool’ model 3 Functional expert
The notion of delivering HRM through three major 4 Strategic partner

areas (the so-called three-legged stool model) is an 5 Leader
alternative. The areas are centres of expertise,
strategic business partners and HR shared service
The strategic role
centres.
HR professionals have a strategic role when they are
Evaluating the HR function operating at a transformational level as HR directors,
heads of HR centres of expertise or main HR functions
It is necessary to evaluate the contribution of the HR or strategic business partners.
function to establish how effective it is at both the
strategic level and in terms of service delivery and
The HR business partner role
support.
The prime criteria for evaluating the work of the HR business partners work alongside their line
function are its ability to operate strategically and its management colleagues in order to develop and
capacity to deliver the levels of services required. implement an HR agenda which contributes to
achieving the business goals of the organization or
HR professionals function. They share responsibility with their line
management colleagues for the success of the
HR professionals provide advice, guidance and enterprise and get involved with them in implementing
services on all matters concerning the employment of business strategy and running the business.
people. The role can be mainly transactional, dealing
Carrying out the role of the HR involved in being a professional. It can be a difficult job
to do well and the criteria for success are demanding.
professional
How HR professionals carry out their roles depends on What it means to be an HR professional
the context in which they work (the size and culture of
the organization, the types of activities it carries out Professionalism in HR is defined as the conduct
and the requirements of senior management), their exhibited by HR specialists who are providing advice
skills and disposition and, importantly, the values they and services that require expertise and who meet
adopt. They will be affected by ambiguity and defined or generally accepted standards of
questions on the status of the profession and what is behaviour.
References
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100
11
The HRM role of line
managers
Introduction The people management
‘Line managers bring HR policies to life.’ This was role of line managers
the succinct statement made by Purcell et al (2003:
58) following their extensive longitudinal research. Line managers are there to get results. But they can
They commented that ‘Time and again in our case only do this by seeing that their team members
studies, whether interviewing senior executives or make an effective contribution. The analysis con-
employees, the way line managers implement and ducted by Purcell et al (2003) identified four main
enact policies, show leadership in dealing with em- people management roles:
ployees and in e xercising control came through as a 1 Implementing HR policies – putting HR
major issue, and was often something of a concern’ policies into operation.
(page 59). They also observed that ‘Employees are
2 Enacting – how they apply the policies to
likely to be influenced both by the HR practices they
make them effective.
experience and by their managers’ leadership behav-
iour. Such responses can be positive or negative. 3 Day-to-day leadership – using interpersonal
Poorly designed or inadequate policies can be “res- skills to get their team into action, handling
cued” by good management behaviour in much the operational issues involving people, treating
same way as “good” HR practices can be negated by employees fairly and with consideration,
poor management behaviour or weak leadership’ communicating information, providing
(page 4). feedback on performance, coaching
Ulrich and Allen (2014) refer to line managers as employees, responding to suggestions and
the ‘owners of talent’ which means that they should dealing with problems involving individuals
be given the encouragement, scope and responsibil- and teams. How and when these activities
ity to do what they can to help the people in their are done cannot be captured in a policy
teams develop their capabilities. handbook.
The role line managers play in implementing HR 4 Controlling the work of employees –
policies is crucial and in this chapter it is examined supervising employees, monitoring the
under the following headings: quality of their work, trusting people to get
on with their job and allowing them to
●● the people management role of line
exercise influence over how the job is done.
managers;
●● the explanations for any failures on the part
of line managers to carry out that role;
●● the actions that can be taken to overcome
any problems.
Chapter 11 | The HRM Role of Line Managers 101
The quality of the support available was

How well does devolution to important. Purcell and his colleagues
line managers of HR suggested that line managers should seek
‘proper’ advice from experienced HR
responsibilities work? colleagues, not simply a course on
interpersonal skills. Managers are sometimes
Questions have been raised about how well this de- concerned about accepting responsibility for
volution to line managers of HR responsibilities, people management issues if they feel
however desirable, works and how well line manag- exposed through inexperience or lack of
ers fulfil their people management duties, especially knowledge or capability.
with regard to their contribution to the implemen- ●● Guest and King (2004), in their study of
tation of HR policies. Examples are given below of senior managers’ perceptions of the HR
the steady stream of studies on aspects of the line function, highlighted a number of examples
manager’s role in HRM like appraisal, involvement of exasperated managers who offered clear
and incentive pay. These have noted the distinction explanations of why they give low priority to
that frequently occurs between espoused and en- initiatives emanating from the HR
acted HR practices and have often explained that department, including the bureaucratic
the gap has been caused by the line managers’ lack requirements and the transience of the
of training, lack of interest, work overload, and initiatives as fads.
conflicting priorities.
●● Khilji and Wang (2005) in their study in
●● McGovern et al (1997: 21) asked line Pakistani banks noted a gap between
managers in the seven companies they intention and implementation, with some
studied to ‘rank in order what motivates you managers choosing not to implement HR
to be involved in personnel activities’. The practices.
first ranked answer in each case was ●● Vermeeren (2010) conducted research in a
‘personal motivation’, as opposed to targets, Dutch municipality and found that the HRM
company values, career advancement and activities perceived or experienced by
other possible factors. The researchers noted employees will be those enacted by their
that ‘people management, either in the form supervisors. She concluded that ‘There is no
of carrying out HR policies or in general, did significant influence of actual HRM on
not emerge in the list of unwritten rule or perceived HRM. This means that employees
measurement priorities within any of the within a division do not perceive the same
organizations’ (page 230). HRM activities as managers pretend to
●● Truss (2001) observed that managers may implement’ (page 14). She noted the
well not transmit the articulated values of important influence of line managers’
top management but reflect instead the leadership behaviour and observed that ‘Line
‘informal’ culture of the firm. managers have the task of executing
●● Purcell et al (2003: 58) reported that organizational policies by translating them
‘Problems of espoused policies not being into situation-specific action directives during
enacted are quite common while questions of their interactions with employees’ (page 5).
what priority line managers can give to ●● A research project carried out in 2014 by
people management given numerous other Dilys Robinson of the Institute for
demands on their time remains a difficulty.’ Employment Studies investigated how
They found through their research that line ‘engaging managers’ – people who inspire
managers were frequently uncertain about and motivate people to perform well –
their skills in dealing with people, behave in their dealings with the people in
particularly in terms of managing employee their teams. The following comment made by
behaviour or having ‘difficult conversations’. one of these engaging managers on her
approach to managing performance

illustrates the approach a line manager might
Factors affecting the quality
make to an HR policy: of the implementation of
This organization has a very structured HRM by line managers
performance management framework, as
you would imagine from a big company. Five main factors affecting the quality of the imple-
I try and avoid using it unless I have to, I mentation of HRM by line managers were identi-
would rather try and develop the personal fied by Guest and Bos-Nehles (2013: 91–92):
relationship with someone, to understand
their issue and try and improve their 1 Line managers do not have the desire to
performance by working with them, rather perform HR responsibilities. They will
than going through procedural ways of therefore prioritize operational issues over
managing performance. HR issues.
2 They do not have sufficient capacity to spend
●● Woodrow and Guest (2014) showed how time on both operational and HR issues.
sophisticated policies and practices to reduce
3 They lack sufficient HR-related competences.
bullying and harassment of staff in hospitals
They may only have limited people
were ignored by some line managers who
management skills or not have specialist
chose to give priority to other aspects of
knowledge of, for example, legal
their jobs rather than deal with this
requirements.
challenging issue. Individuals perceived that
managers lacked the skills, motivation or 4 HR professionals do not always provide line
time to implement policy effectively. managers with the services they need (Bond
and Wise, 2003) partly because they are
●● A study by Brewster et al (2015) of line
reluctant to abandon their hold over HR
managers’ HRM responsibilities in a number
responsibilities and play a new role in
of European countries found large variations
supporting line managers (Gennard and
in the extent to which responsibility for HR
Kelly, 1997).
decisions was assigned to line managers.
More than half the organizations gave line 5 HR departments tend to worry that line
managers primary responsibility for managers might manage people in an
workforce expansion or reduction and for inconsistent way so they try to prevent them
recruitment and selection. from interpreting and adjusting HR practices
to address what the managers perceive to be
●● On the basis of his research in a major UK
local requirements. (Harris, 2001; Bond and
fashion retailer, Juan López-Cotarelo (2018:
Wise, 2003).
255) suggested that ‘line managers make an
important contribution to the As Hope-Hailey et al (1997) pointed out, line man-
implementation of HRM systems through agers need content-related advice on how to per-
exerting their cognitive and political abilities form HR activities but they do not always get it.
to bring about decisions that are well-suited The quality of the support available was important.
to their local situations.’ He noted that They suggested that line managers should seek
researchers have found that the main barrier ‘proper’ advice from experienced HR colleagues,
to the devolution of HR responsibilities to not simply a course on interpersonal skills.
line managers is their failure to engage fully Managers are sometimes concerned about accept-
in their HRM duties due to a lack of desire ing responsibility for people management issues if
or ability, conflicting priorities or time they feel exposed through inexperience or lack of
pressures – especially because organizations knowledge or capability.
do not always support them adequately in Research by Evans (2017) in three retail firms
their HRM activities such as formal training established that HR policies were not carried out
or incentives.
effectively if they were perceived to be optional. ●● Select them carefully with much more
Where line managers had in-store HR colleagues, attention being paid to the behavioural
less ambiguity was reported. Evans commented that competencies required.
this highlighted the importance of HR professionals ●● Support them with strong organizational
in championing and supporting the delivery of HR values concerning leadership and people
strategy. She also noted that HR was one of many management.
roles for the managers – they were also responsible
●● Encourage the development of a good
for store management, general line management
working relationship with their own
and customer service. The complex nature of their
managers.
roles led to a high workload. As a result of this, HR
was deprioritized in some cases, especially when ●● Ensure they receive sufficient skills training
HR outcomes weren’t measured. to enable them to perform their people
management activities such as performance
management, not just because this will help
Dealing with the factors them to get better results but because it is a
good in itself.
As Purcell et al (2003: 106) emphasized: Purcell and Hutchinson (2007: 3) commented that:
It is not just about getting good managers but Front line managers need well designed HR
about establishing the context in which they can practices to use in their people management
be good managers, and providing them with the activities in order to help motivate and reward
policy tools to do the job well. employees and deal with performance issues.
The most intractable factor is the tendency of line The other actions that can be taken are first to in-
managers to prioritize operational matters at the volve line managers in the development of HR
expense of their HR responsibilities. This is natural. policy so that they have their say on matters that
Line managers are under pressure to achieve results. concern them; second, to give them thorough train-
To deal with this problem, attention should be given ing and guidance so that they develop the skills re-
to job design so that allowance is made for carrying quired; third, as pointed out by Bowen and Ostroff
out HR duties as well as operational ones. It is no (2004), to supply them with clear policies and pro-
use encouraging managers to take more responsibil- cedures concerning their HR responsibilities and
ity for people management if the pressures they are how to apply them; and finally, to get HR profes-
subjected to make it impossible. Overcoming this sionals to provide them with adequate support and
problem also requires leadership and education. encouragement (possibly by appointing HR strate-
The leadership should be provided by more senior gic business partners to work alongside line manag-
management who can set an example with their ers in formulating and implementing HR strategies
own implementation of HR practices. They can and practices). A recommendation by the CIPD
communicate to line managers the people manage- (2017: 25) on the need for management develop-
ment values of the organization and the importance ment is set out below:
of taking those values and specific HR matters seri-
ously, not only because this will help them to get Both academic and practitioner literature are clear
better results but because it is a good in itself. HR on two points: first, that employee engagement,
health and are key for the productivity,
professionals can help with encouragement, sup-
performance and success of organisations; and
port and advice.
second, that the way that employees are managed
Hutchinson and Purcell (2003) made the follow-
is a vital determinant of their engagement, health
ing recommendations on how to improve the qual-
and wellbeing. This means that managers need
ity of the contribution line managers make to p eople to be equipped with the skills and behaviours
management: both to engage and to protect the health and
●● Provide them with time to carry out their of their teams. To achieve this, organisations
people management duties, which are often need to provide the most effective management
superseded by other management duties. development possible.
Key learning points
The people management role of line 1 Line managers do not have the desire to perform
HR responsibilities. They will therefore prioritize
managers operational issues over HR issues.
‘Line managers bring HR policies to life’ (Purcell
2 They do not have sufficient capacity to spend time
et al, 2003: 58).
on both operational and HR issues.
Line managers are there to get results. But they
can only do this by seeing that their team members 3 They lack sufficient HR-related competences.
make an effective contribution. The analysis
4 HR professionals do not always provide line
conducted by Purcell et al (2003) identified four
managers with the services they need
main people management roles:
5 HR departments tend to worry that line managers
1 Implementing HR policies
might manage people in an inconsistent way.
2 Enacting
3 Day-to-day leadership Dealing with the issues

4 Controlling the work of employees Hutchinson and Purcell (2003) made the following
recommendations on how to improve the quality of the
But line managers in practice may also have contribution line managers make to people
significant HR responsibilities devolved to them. management:
●● Provide them with time to carry out their people
How well does devolution to line management duties, which are often superseded
managers of HR responsibilities work? by other management duties.
Questions have been raised about how well this ●● Select them carefully with much more attention
devolution to line managers of HR responsibilities, being paid to the behavioural competencies
however desirable, works and how well line required.
managers fulfil their people management duties,
especially with regard to their contribution to the ●● Support them with strong organizational values
implementation of HR policies. concerning leadership and people management.
●● Encourage the development of a good working
Factors affecting the quality of the relationship with their own managers.
implementation of HRM by line ●● Ensure they receive sufficient skills training to
managers enable them to perform their people
management activities such as performance
Five main factors affecting the quality of the
management.
implementation of HRM by line managers were
identified by Guest and Bos-Nehles (2013: 91–92):
References
Bond, S and Wise S (2003) Family leave policies and Khilji, S E and Wang, X (2005) ‘Intended’ and
devolution to the line, Personnel Review, 32 (1), ‘implemented’ HRM: the missing linchpin in
pp 58–72 strategic human resource management research,
Bowen, D E and Ostroff, C (2004) Understanding International Journal of Human Resource
HRM-firm performance linkages: the role of the Management, 17 (7), 1171–89
‘strength’ of the HRM system, Academy of López-Cotarelo, J (2018) Line managers and HRM: a
Management Review, 29 (2), pp 202–21 managerial discretion perspective, Human
Brewster, C, Brookes, M and Gollan, P J (2015) The Resource Management Journal, 28 (2), pp 255–71
institutional antecedents of the assignment of McGovern, F, Gratton, L, Hope-Hailey, V, Stiles, P
HRM responsibilities to line managers, Human and Truss, C (1997) Human resource management
Resource Management, 54 (4) pp 577–97 on the line? Human Resource Management
Chartered Institute of Personnel and Development Journal, 7 (4), pp 12–29
(2017) Developing Managers to Manage Purcell, J and Hutchinson, S (2007) Front-line
Sustainable Employee Engagement, Health and managers as agents in the HRM performance
Wellbeing, London, CIPD 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, Rayton, B and
Human Resource Management, 28 (22), Swart, J (2003) Understanding the People and
pp 3128–48 Performance Link: Unlocking the Black Box,
Gennard, J and Kelly, J (1997) The unimportance of London, CIPD
labels: the diffusion of the personnel/HR function, Robinson, D (2014) The engaging manager and sticky
Industrial Relations Journal, 28 (1), pp 27–42 situations. http://www.employment-studies.co.uk/
Guest, D E and Bos-Nehles, A (2013) HRM and system/files/resources/files/493.pdf (archived at
performance: The role of effective implementation, https://perma.cc/999F-42K9)
in (eds) J Paauwe, D E Guest, P M Wright, HRM Truss, K (2001) Complexities and controversies in
and Performance, Chichester, Wiley, pp 79–96 linking HRM with organisational outcomes,
Guest, D E and King, Z (2004) Power, innovation and Journal of Management Studies, 38 (8),
problem-solving: the personnel managers’ three pp 1121–49.
steps to heaven? Journal of Management Studies, Ulrich, D and Allen, J (2014) Talent accelerator:
41 (3), pp 401–23 understanding how talent delivers performance for
Harris, L (2001) Rewarding employee performance: Asian firms, South Asian Journal of Human
line managers’ values, beliefs and perspectives, Resources Management, 1 (1), pp 1–23
International Journal of Human Resource Vermeeren, B (2010) Diversity in HRM
Management, 12 (7), pp 1182–92 implementation and its effect on performance,
Hope-Hailey, V, Gratton, L, McGovern, P, Stiles, P Paper presented at the EGPA conference,
and Truss, C (1997) A chameleon function? HRM September 8–10, Toulouse
in the ‘90s, Human Resource Management Journal, Woodrow, C and Guest, D E (2014) When ‘good’ HR
7 (3), pp 5–18 gets bad results: a case of failure to implement
Hutchinson, S and Purcell, J (2003) Bringing Policies policies to prevent bullying and harassment,
to Life: The vital role of front line managers in Human Resource Management Journal, 24, (1),
people management, London, CIPD pp 38–56
106

107
PART IV
Human resource
management processes
PA R T I V CO N T E N T S
12 Evidence-based HRM
13 HR analytics
14 Digital HRM
15 Knowledge management
16 Competency-based HRM
operates generally such as the use of evidence-based

Introduction management rather than the practices such as em-
ployee resourcing and learning and development
The HR processes covered in this part are those that are concerned with particular HR activities.
which deal with aspects of HRM that affect how it
108

109
12
Evidence-based HRM
such decisions are made by reference to the best
Introduction available information. The CIPD (2021: 1) defined
evidence-based practice as being ‘about making bet-
It has been said (Rousseau and Barends, 2011: 221) ter decisions, informing action that has the desired
that ‘Blind faith has no place in professional prac- impact.’ As observed by Reay et al (2009:13), the
tice.’ Increasingly, it is being emphasized that people watchwords are ‘evidence before action’.
professionals should adopt an evidence-based man- Evidence-based HRM uses the techniques of evi-
agement approach to the development of HR strat- dence-based management as described below.
egies, policies and practices.
The CIPD’s Profession Map states that profes-
sional judgement should be driven by the best avail-
able evidence. Houghton (2016: 1) commented that
Evidence-based
It looks as if the movement towards more evidence management
in the [HR] profession is now picking up pace –
and with the growing availability of data, and Evidence-based management is the process of en-
rising investment in analytics capability in the suring that conclusions are reached and decisions
function, it may now be the time to build evidence- are made by means of the critical evaluation of the
based management into the foundation of the best available evidence from multiple sources.
profession, and finally put to bed any criticism Pfeffer and Sutton (2006: 70) stated that
that HR is driven by gut alone.
Evidence-based management features a willingness
This chapter starts with definitions of evidence- to put aside belief and conventional wisdom – the
based HRM and the basic process of evidence-based dangerous half-truths that many embrace – and
management. It then describes the approach to evi- replace these with an unrelenting commitment to
dence-based HRM. gather the necessary facts to make more intelligent
and informed decisions.
Briner et al (2009: 19) explained that evidence-
Evidence-based HRM based management is:
defined ●● about the practice of management;
●● a family of related approaches to decision
Evidence-based HRM uses the information ob- making;
tained from the analysis and evaluation of data
●● a way of thinking about how to make
about people and HR practices in the organization
decisions;
and the information produced by benchmarking
and research to inform decisions on HR strategies, ●● about using different types of information;
innovations and practices. The aim is to ensure that
110 Part 4 | HRM Processes
●● about using a wide range of different kinds Decisions are reached by weighing up the e vidence
of research evidence depending on the and answering the following questions:
problem;
●● What does the evidence reveal about possible
●● about using research evidence as just one of courses of action in the form of a new or
several sources of information; revised policy or practice?
●● a means of getting existing management ●● Does the evidence provide guidance on what
research out to practitioners; is likely to be the best or at least the
●● likely to help both the process and outcome optimum course of action?
of practitioner decision making; ●● What are the costs of implementing the
●● about questioning ideas such as ‘best policy or practice and what are the benefits
practice’. to stakeholders?
They also (page 22) commented that ●● How will the policy or practice be
introduced?
Evidence-based management is about making
●● What is likely to happen if the policy or
decisions through the conscientious, explicit and
judicious use of four sources of information: practice is introduced?
practitioner expertise and judgment, evidence from
the local context, a critical evaluation of the best
research evidence, and the perspectives of those The approach to evidence-
people who might be affected by the decision.
based HRM
Barends et al (2014: 2) recommended that evidence
should be obtained from these four sources by: Evidence-based HRM is driven by a spirit of enquiry;
an open-minded but critical approach. It involves:
1 Asking: translating a practical issue or
problem into an answerable question ●● setting HR strategy goals and defining
2 Acquiring: systematically searching for and success criteria;
retrieving the evidence ●● conducting a review of current HR policies
3 Appraising: critically judging the and practices against these criteria, using both
trustworthiness and relevance of the evidence situation-specific evidence in the organization
and information from external benchmarking
4 Aggregating: weighing and pulling together
and research to identify key issues;
the evidence
●● using HR analytics to measure the impact of
5 Applying: incorporating the evidence into the
those policies and practices and evaluating
decision-making process
their effectiveness by reference to the measures
6 Assessing: evaluating the outcome of the and success criteria (see Chapter 13);
decision taken
●● reviewing developments and applications of
The evidence needs to be subjected to critical evalua- HR through benchmarking practices in other
tion to establish the extent to which it is valid, relevant organizations and the study of research
and supported by the facts. What appears to be valid findings;
evidence can simply be a matter of opinion and it is ●● considering the issues that have been
necessary to scrutinize facts and arguments and com- identified and the messages from
pare them to other sources of evidence to establish if benchmarking and research and developing
opinions are justified or biased. Critical thinking is and testing new or improved HR practices;
necessary. This means reflecting on and interpreting
●● implementing the HR changes and
data, drawing warranted conclusions and recognizing
establishing a policy of continuous
unjustified or ill-defined assumptions. The analytical
improvement involving measurement, review
and critical skills used in evidence-based management
and evaluation.
are described in Chapter 68.
Chapter 12 | Evidence-based HRM 111
A model of how these activities are interrelated is can be used to establish what the situation within
shown in Figure 12.1. the organization is, what needs to be done about
The model illustrates how evidence-based HRM it and what information is required to inform
can work. It represents a sequential progress in the decisions:
form of a continuous cycle from goal setting,
●● What are we trying to do here, what’s
through review, measurement, evaluation and de-
important to this organization, how do we
velopment activities to implementation and further
measure that?
review. This is the ideal approach but in reality the
activities will not be necessarily specified, defined or ●● How are current practices helping or
managed in such an orderly sequence. They are hindering what we are trying to do and what
closely interlinked and they may overlap. Goal set- evidence do we have of this?
ting affects all the other activities. Similarly, those ●● How might changes improve the delivery of
concerned with review, measurement and evalua- desired outcomes?
tion can take place at any time (or all at once) and ●● How can we best implement improvements
all of them directly influence the subsequent activi- and how can we show ourselves that they are
ties of development and implementation. working?
Using the components of the model appropri-
●● What information do we need to help us
ately means applying and linking them in ways that
make the right decision on what to do?
fit the demands of the situation. It becomes a way of
thinking that HR practitioners can apply to any ●● Where will that information come from and
situation or issue. Questions such as the following how will we obtain it?
FIGURE 12.1 Interrelationships between the components of evidence-based management
Review
Set HR goals and

Implement Measure
success criteria
Develop Evaluate
Key learning points
Evidence-based management made by reference to the best available evidence. It

involves:
Evidence-based management is the process of
ensuring that conclusions are reached and decisions
●● setting HR strategy goals and defining success criteria;
are made by means of the critical evaluation of the ●● conducting a review of current HR policies and
best available evidence from multiple sources. It uses practices against these criteria;
four sources of information: practitioner expertise and
judgment, evidence from the local context, a critical
●● using HR analytics to measure the impact of those
evaluation of the best research evidence, and the policies and practices;
perspectives of those people who might be affected by ●● reviewing developments and applications of HR
the decision. through benchmarking and the study of research
findings;
Evidence-based HRM ●● considering the issues that have been identified
Evidence-based HRM uses the information obtained and the messages from benchmarking and
from the analysis and evaluation of data about people research and developing and testing new or
and HR practices in the organization and the improved HR practices;
information produced by benchmarking and research ●● implementing the HR changes and establishing a
to inform decisions on HR strategies, innovations and
policy of continuous improvement involving
practices. The aim is to ensure that such decisions are
measurement, review and evaluation.
References
Barends, E, Rousseau, D M and Briner, R B (2014) Houghton, E (2016) Where is evidence in the HR
Evidence-based management: The basic principles, profession? [blog] CIPD, 25 April 2016
Amsterdam, Center for Evidence-based Pfeffer, J and Sutton, R I (2006) Evidence-based
Management. https://www.cebma.org/wp-content/ management, Harvard Business Review, January,
uploads/Evidence-Based-Practice-The-Basic- pp 62–74
Principles.pdf (archived at https://perma.cc/ Reay, T, Berta, W and Kohn, M K (2009) What’s the
AZ9Y-MQTX) evidence on evidence-based management?
Briner, R B, Denyer, D and Rousseau, D M (2009) Academy of Management Perspectives, November,
Evidence-based management: concept clean-up pp 5–18
time? Academy of Management Perspectives, Rousseau, D M and Barends, E G R (2011) Becoming
23 (4), pp 19–32 an evidence-based practitioner, Human Resource
Chartered Institute of Personnel and Development Management Journal, 21 (3), pp 221–35
(2021) Evidence-based Practice for Effective
Decision-making, London, CIPD
113
13
HR analytics
Introduction The purpose of HR analytics
The effectiveness of evidence-based HRM is largely As Huselid (2014) observed:
dependent on information about what is happening
HR analytics present a tremendous opportunity
and what is likely to happen to people and the pro-
to help organizations understand what they don’t
cess of people management in the organization. As yet know… By identifying trends and patterns, HR
Dave Ulrich (1997: 7) emphasized: ‘If HR matters it professionals and management teams can make
must be measured’. HRM needs to develop as a de- better strategic decisions about the workforce
cision science based on relevant data. Providing this challenges they may soon face.
data and using it to make predictions is the role of
HR analytics as defined in the first two sections of HR analytics provide a basis for people manage-
this chapter. In the next section the process of HR ment decision making. The process of identifying
analytics is examined in terms of gathering data and measures or metrics and collecting and analysing
using measures. The chapter is completed with de- data relating to them focuses the attention of the
scriptions of the three levels of HR analytics – organization on what needs to be done to find,
descriptive, multidimensional and predictive. keep, develop and make the best use of its human
capital. Predictions can be made to provide guid-
ance on the development of HR strategy and
HR analytics defined progress in achieving strategic HR goals can be

monitored. In accordance with the principle that
As defined by Marler and Boudreau (2017:15), HR ‘you cannot manage what you cannot measure’, the
analytics is ‘A HR practice enabled by information effectiveness and impact of HR practices can be
technology that uses descriptive, visual, and statisti- calculated.
cal analyses of data related to HR processes, human In particular, HR analytics can help to:
capital, organizational performance, and external ●● measure levels of engagement to assess
economic benchmarks to establish business impact progress in improving levels;
and enable data-driven decision-making.’
●● analyse the incidence and reasons for
HR or people analytics applies measures or met-
employee turnover;
rics (these terms are generally used interchangeably
although strictly speaking, metrics are decimalized ●● investigate the extent and causes of
measures) to assess such things as employee turno- absenteeism;
ver, levels of engagement and the impact of HRM ●● assess the effectiveness of different sources of
practices. It is about ‘data mining’ – getting as much recruits;
out of HR data as possible and then going on to find ●● evaluate the impact of learning and
links, correlations and, ideally, causation. The ana- development activities;
lytical process may involve the handling of ‘big
data’ characterized by volume and variety
review the effectiveness of performance

●●
management or performance-related pay in
The process of HR analytics
improving performance;
HR analytics should use the ‘triple-A’ approach:
●● measure the impact of organizational Analysis, Assessment and Action. The process of
development interventions; using data and measures was explained in more de-
●● investigate accident rates. tail by Boudreau and Jesuthasan (2011) through
their ‘LAMP’ (logic, analytics, measurement, pro-
In each area the analysis would investigate trends
cess) model. The starting point is a strategic goal or
and, whenever possible, the interrelationships be-
problem. The first task is to develop a logically
tween different types of data and between the data
based intuitive answer about what the best way of
and performance. This evidence could be used to
achieving this goal or solving this problem might
reach conclusions about any action required or to
be. This is followed by the ‘analytics’ phase of turn-
evaluate the effectiveness of action already taken.
ing the intuition into research questions or hypoth-
eses, and coming up with a research design to
The content of HR analytics answer the question or test the hypotheses. Measures
are then developed in the context of the research
design in order to answer the question. Once the
HR analytics involves the analysis and application
question has been answered, the management pro-
of data, measures, information and knowledge as
cess to turn the insight into action may involve the
defined below:
regular monitoring and management of specific
●● data consists of the basic facts – which as metrics that have been shown by the analysis to be
interpreted through measures contribute to important for performance. The overriding point is
information and knowledge; that metrics follow from analysis rather than fol-
●● measures or metrics are means of recording, lowing a standard template. Metrics and analytics
analysing and interpreting data; are a tool for uncovering how people affect organi-
zational performance rather than providing sum-
●● information is data which have been
mary measures of the contribution of people to the
processed in a meaningful way; as Drucker
bottom line.
(1988) wrote, ‘information is data endowed
with meaning and purpose’;
●● knowledge is information put to productive Types of HR analytics
use; it is often intangible and it can be
elusive – the task of tying it down, encoding There are three types of HR analytics as described
and distributing it through knowledge below.
management activities can be tricky.
Data is raw material; measures or metrics assemble
and analyse that raw material so that conclusions Descriptive analytics
can be reached on its value and significance. Thus Descriptive analytics is the use of data to record a
data may be available on the number of people particular aspect of HR and provide information on
leaving in a period but this will be interpreted as a what has been happening to, for example, labour
measure of employee turnover – the number leaving turnover or absence rates. It covers the following
as a percentage of the number employed. Data types of data:
comes first but establishing the need for a certain
measure may indicate what data is required to ●● Basic workforce data – demographic data
enable the measurement to take place. (numbers by job category, sex, ethnicity, age,
disability), working arrangements, absence
and sickness, employee turnover, health and
safety, pay.
Chapter 13 | HR Analytics 115
●● People development and performance To generate good-quality HR data, start by col-

data – learning and development lecting basic data, ensuring that it is accurate, relia-
programmes, performance management/ ble and relevant. Next, analyse the data to identify
potential assessments, skills and trends and patterns so that their meaning and sig-
qualifications. nificance is understood. This provides a description
●● Employee engagement data – engagement of the situation but also the basis for multidimen-
surveys. sional and predictive analysis as described below.
●● Perceptual data – opinion surveys, focus
groups, exit interviews.
Multidimensional analytics
●● Performance data – financial, operational
and customer. Multidimensional analytics is a form of descriptive
analytics in which different sets of data or ‘varia-
A summary of HR data and their possible uses is bles’ are compared to show the extent to which
given in Table 13.1.
TA B L E 13.1 HR data and their possible uses

Data Possible use: analysis leading to action
Workforce composition – gender, ethnicity, Analyse the extent of diversity

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

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

professionally/technically qualified, skilled Indicate where steps have to be taken to deal with
workers shortfalls
Attrition – employee turnover rates for Indicate areas where steps have to be taken to increase
different categories of management and retention rates
employees Provide a basis for assessing levels of commitment
Attrition – cost of Support business case for taking steps to reduce

attrition
Absenteeism/sickness rates Identify problems and need for more effective

attendance management policies
Average number of vacancies as a percentage Identify potential shortfall problem areas

of total workforce
Total payroll costs (pay and benefits) Provide data for productivity analysis
(continued)
TA B L E 13.1 (Continued)
Compa-ratio – actual rates of pay as a Enable control to be exercised over management of pay
percentage of policy rates structure
Percentage of employees in different Demonstrate the extent to which the organization

categories of contingent pay or payment-by- believes that pay should be related to contribution
result schemes
Total pay review increases for different Compare actual with budgeted payroll increase costs
categories of employees as a percentage of pay Benchmark pay increases
Average bonuses or contingent pay awards as Analyse cost of contingent pay

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

progammes and indicate direction of future plans
Outcome of equal pay reviews Reveal pay gap between male and female employees
Personal development plans completed as a Indicate level of learning and development activity
percentage of employees
Training hours per employee Indicate actual amount of training activity (note that this
does not reveal the quality of training achieved or its
impact)
Evaluations of learning events and Assess effectiveness of learning events and

programmes, ideally covering at least the first programmes
three levels of the Kirkpatrick learning
evaluation system: (1) reaction to the training
event; (2) the amount of learning that takes
place, (3) the extent to which that learning
affects behaviour on return to work.
Return-on-investment (RoI) on L&D activities, Assess effectiveness of learning events and

overall or individually programmes and of L&G activities and the L&G
function in general
Internal promotion rate (percentage of Indicate extent to which talent management

promotions filled from within) programmes are successful
Succession planning coverage (percentage of Indicate extent to which talent management

managerial jobs for which successors have programmes are successful
been identified)
Percentage of employees taking part in formal Indicate level of performance management activity
performance reviews
(continued)
Chapter 13 | HR Analytics 117
Distribution of performance ratings by Indicate inconsistencies, questionable distributions and

category of staff and department trends 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
there is any relationship between them. A ‘depend- Predictive analytics

ent variable’ is one that may be affected by changes
in an ‘independent variable’. In effect, when plan- Predictive HR analytics involves the projection or
ning the analysis a hypothesis is made that one or prediction of a future situation on the basis of a
more of the independent variables will impact in study of present trends. As explained by Marr (2018:
some way on the dependent variable. In an example 78): ‘By understanding as much as we possibly can
given by Edwards and Edwards (2016), a depend- about the past, it is possible to identify patterns and
ent variable might be the customer satisfaction build models for what will happen in the future.’
score achieved by sales assistants and the independ- Edwards and Edwards (2016: 2) defined predic-
ent variable might be the hypothesis that this is im- tive analytics in more detail as follows:
proved by attending a customer service training Predictive analytics is the systematic evaluation
course. Regression analysis as described in of predictive modelling using inferential statistics
Chapter 70 is used to examine the relationship be- to existing people-related data in order to inform
tween the variables and indicate how changes in the judgements about possible causal factors driving
level of the independent variable relate to changes key HR-related performance indicators. These
in the level of the dependent variable. predictive models can then be applied ‘to make
The analysis may show that the independent tangible predictions about particular results
variable has a positive effect on the dependent vari- or outcomes (eg employee or organizational
able. In the example given above, this would mean behaviour) that we might expect to find given
that following attendance at a training course, cus- certain conditions.
tomer satisfaction levels go up. But this does not
A predictive HR analytics exercise makes use of
mean that the conclusion can be that course attend-
multiple regression or multivariate analysis (see
ance causes higher levels of customer satisfaction.
Chapter 70) to predict the value of a dependent
There may be other factors such as price reductions
variable or variables based on the value of one or
or better merchandising.
more independent variables.
However, even if causation cannot be established
The following examples of the use of predictive
with confidence, the existence of correlation can be
analytics were given by Edwards and Edwards
revealing. At least it can indicate that a positive re-
(2016: 74):
lationship exists between an HR initiative and
desirable outcomes. This can be used to justify the ●● Diversity – prediction of ethnic diversity
investment and point the way to further develop- across teams from base location function,
ments. It may be decided when making the hypoth- group size, team leader gender and team
esis prior to the analysis that there are two or more gender breakdown.
independent variables that might affect the depend- ●● Engagement – predict team level engagement.
ent variable. In this case multi-regression analysis
●● Employee turnover – predict team level
can be used (see Chapter 70).
turnover.
Performance – use performance appraisal

●●
data and pulse survey data (pulse surveys
Keeping people informed
take place several times a year) to predict
individual performance. Clearly, HR analytics are pointless unless the people
who use them are kept informed. They must have
●● Recruitment and selection – identify the easy access to the data which should be presented to
factors associated with recruitment, selection them in a way that can be easily assimilated. Data
and induction that predict the retention of visualization techniques (see Chapter 70) will help
new joiners. to do this. Graphs to convey key performance meas-
●● Graduates – predict graduate performance ures can be displayed on an organization’s intranet
from demographic, assessment centre and system to a wide audience so that they can be acted
induction data. upon easily and swiftly.
Key learning points
HR analytics defined ●● Multidimensional analytics: combines different sets

of data to establish any relationships (correlations)
HR analytics use statistical analyses of data to provide between them.
the basis for assessing the impact of HRM practices
and the contribution made by people to organizational ●● Predictive analytics: analyses data to predict future
performance to provide a basis for people trends.
management decision making.
Keeping people informed
What is involved HR analytics are pointless unless the people who use
HR analytics involves the analysis and application of them are kept informed. They must have easy access
data, measures, information and knowledge. to the data which should be presented to them in a
way that can be easily assimilated.
HR analytics levels
There are three levels of HR analytics:
●● Descriptive analytics: uses factual data to illustrate
particular aspects of HR such as recording
employee turnover rates.
References
Boudreau, J W and Jesuthasan, R (2011) Huselid, M A (2014) The Corporate Mirror, Boston,
Transformative HR: How great companies use MA, D’Amore-Mckinsey School of Business
evidence-based change for sustainable advantage, Marler, J H and Boudreau, J W (2017) An evidence-
San Francisco, Jossey Bass based review of HR analytics, International
Drucker, P (1988) The coming of the new Journal of Human Resource Management, 28 (1),
organization, Harvard Business Review, January– pp 3–26
February, pp 45–53 Marr, B (2018) Data-driven HR, London, Kogan Page
Edwards, M R and Edwards, K (2016) Predictive HR Ulrich, D (1997) Judge me by my future not my past,
Analytics: Mastering the HR metric, London, Human Resource Management, 36 (1), pp 5–8
Kogan Page
119
14
Digital HRM
Introduction The purpose of digital HRM
This chapter deals with the use of digital technolo- The basic purpose of digital HRM is to maintain
gies in HRM. It starts with a definition of digital the organization’s employee database using a
HRM followed by descriptions of its overall pur- Human Resource Information System (HRIS). This
pose and its specific uses for HR administration, is much more than simply reducing the administra-
processing people data, communications and learn- tive burden on the HR department. It means swiftly
ing and development. It continues with a discussion providing helpful information about people to line
of the meaning and significance of the recently managers as well as the HR function. It contributes
emerged notion of digital transformation. Consi to the formulation of HR strategy through the pro-
deration is then given to the following operational vision of data (HR analytics) for evidence-based
aspects of digital HRM: HRM. Importantly, digital HRM also aids commu-
nications with and between employees and plays a
1 The human resource information system
useful part in learning and development activities.
(HRIS)
Marler and Fisher (2013: 20) stated that the
2 Cloud computing, which has largely replaced purposes of digital HRM included ‘cost reduction
traditional approaches in an HRIS through streamlining HRM operations, improved
3 Managing digital HRM effectiveness through providing better delivery of
HRM services and transformation of the HRM
function to a strategic business partner.’ Dave
Digital HRM defined Ulrich (2019: xvi) focused on the provision of
information:
Digital HRM is the use of digital technologies in the Every organization requires a digital agenda to
form of web-based applications including human use information to win in the financial, customer,
resource information systems, cloud technologies and employee marketplaces. This digital business
and various other technologies such as artificial in- agenda enables the organization to source
telligence (AI), chatbots, social media and smart information that help the business win in their
phones. chosen financial and customer markets.
‘Digital’ is strictly defined as the representation
of values as discrete numbers (1 and 0) rather than He broadened the agenda when he suggested (page
as a continuous spectrum. More generally, the term xix) that ‘Currently in most firms, technology is
covers anything to do with computers (and smart- used to deliver administrative efficiency (phase 1),
phones in that they work as computers), how they upgrade and innovate HR practices (phase 2), and
function and how they are used. Digital technology deliver information (phase 3). Increasingly, technol-
is concerned with computer-based applications and ogy should encourage belonging through social and
solutions. It involves converting information from a emotional connections among employees in an or-
physical form into a digital one (digitization) and ganization and among employees and stakeholders
using that to facilitate business and HRM processes outside an organization.’
(digitalization).
The second type of people data are information

The uses of digital HRM about individual employees that managers or em-
ployees themselves can obtain or input from the
The main uses of digital HRM (its ‘functionalities’) database by means of self-service procedures. But
are HR administration, processing people data, great care has to be taken to ensure compliance with
communications, and as an aid to learning and de- the General Data Protection Regulation (GDPR).
velopment.
HR administration Communications
Digital HRM enables organizations to communicate
HR administration is fundamentally about main- with their employees and employees to communicate
taining a database containing the personal details of with their employers and each other, thus e ncouraging
individual employees and their employment, pay collaboration. This is done through social media,
and benefits, attendance, holiday, performance ap- chatbots and, to a very limited extent, blockchain.
praisal, training and disciplinary records. Adminis Social media uses digital technologies that allow
trative practices relating to personal data have to people to connect with each other to create and share
conform to the requirements of data protection leg- information. It involves an online digital platform or
islation as explained in Chapter 60. website (a social networking site) that enables people
One of the most important functions is to auto- to interact via ‘instant messaging’ (real-time, direct
mate payroll administration. This is associated with text-based communication between two or more
the administration of employee benefits such as people using smartphones, personal computers, lap-
pensions, healthcare, sick pay, insurance, concierge tops or tablets). Organizations can operate an enter-
services, loans, and flexible benefit schemes giving prise social network (ESN), also known as an internal
employees a choice within limits of the type or scale social network, that functions in the same way as so-
of benefits offered to them by their employers. cial networks such as Facebook
The administrative services offered by digital Chatbot A chatbot, short for chatterbot, is a
HRM can support HR activities such as recruit- two-way messaging device that simulates human
ment, talent management and learning and develop- conversation through text chats. Chatbots can be
ment. Applicant Tracking Systems track candidate designed to convincingly simulate how a human
information and administer recruitment pro- would behave as a conversational partner. They are
grammes. Talent management systems facilitate the typically an artificial intelligence (AI) feature that
administration of talent management programmes can be embedded in a messaging application. In
by collecting, storing and processing information digital HRM they can be used to answer queries by
about the individuals who are included in them. employees on such matters as holiday and mater-
Learning and development (L&D) activities can be nity leave entitlement, or to provide help with prob-
administered with the help of a learning platform lems such as those arising from computer systems.
(see Chapter 39). Chatbots are either accessed through virtual assis-
tants such as Google Assistant and Amazon Alexa,
or via messaging apps such as Facebook Messenger
Processing people data or WeChat.
Two sorts of people data are processed by digital Blockchain A blockchain is a distributed data-
HRM. The first are data for HR analytics to provide base, shared across a network. Every piece of in-
information on the effectiveness of HR practices formation is mathematically encrypted and added
and the evidence needed to develop HR strategies, as a new ‘block’ to the chain of historical records.
This could mean, for example, measuring levels of A blockchain enables direct, secure conversations
engagement, analysing the incidence of and reasons to take place between people. The most familiar
for employee turnover or absenteeism, evaluating use of blockchains is bitcoin currency. But as noted
learning and development activities or reviewing by Iansiti and Lakhani (2017) they can potentially
the effectiveness of performance management or become the system of record for all transactions.
performance-related pay in improving performance. As a digital HRM process it can provide a medium
Chapter 14 | Digital HRM 121
for employee communications and help to deal 3 Enable a productive and engaging work
with employee problems by, for example, provid- experience for oneself and for others.
ing a confidential channel to report harassment or 4 Promote and foster creativity and
bullying. innovation.
5 Understand the role that people will play in
an automated world.
Learning and development
6 Initiate intelligent automation to free staff
Digital learning, as described more fully in to perform more strategic work.
Chapter 39, involves the use of e-learning and learn-
7 Leverage digital technology, for example
ing platforms and the development of virtual learn-
for analytical, evaluation and decision-
ing environments. Digital resources and techniques
making purposes.
include the use of smart phones and learning apps,
social media, enterprise social networks, web 8 Examine the boundaries of work between
searches for knowledge acquisition, virtual and humans and machines and design human
augmented reality and online courses. It is a major work accordingly.
aspect of digital HRM. 9 Enable new forms of collaboration between
people and technology.
10 Engage in continuous learning.
Digital transformation
Digital transformation is what happens when or-
ganizations successfully take advantage of the op-
Human resource
portunities offered by digital technology. The aim is information system (HRIS)
to achieve digital maturity – the integration of digi-
tal technology into all areas of the business and its An HRIS is a computer-based system for adminis-
acceptance as a way of life. It is not just about its tering HR processes and procedures (‘functionali-
development and introduction. It is also about the ties’). It enables the management of HR information
ability of people to adapt to the new circumstances. by providing for the storage, processing and analy-
As Kane et al (2019) noted, this means changing sis of people data. A traditional or ‘legacy’ HRIS
their mindset and ensuring that they have the un- system uses software packages but may include
derstanding and skills required. applications such as enterprise resource planning
Digital transformation will not be achieved un- systems (ERPs), an intranet, internal social networks
less innovations meet the needs of both the organi- and provisions for self-service (the arrangement
zation and the people working in it. The reasons for that allows managers and employees access to in-
and the implications of proposed new digital tech- formation and the facility to interact with the sys-
nology should be communicated to and discussed tem to input information). An HRIS can either run
with those affected by it. Those directly involved on the company’s own technical infrastructure, or,
should be given the opportunity in good time to more commonly nowadays, be cloud-based. This
learn the necessary skills. HR has a crucial role in means that the HR software is running outside of
ensuring that people issues are considered, that the the company’s premises, making it easier to update.
change is managed effectively and that learning
programmes are planned and delivered. Research
by Wagner (2020) suggested that organizations Cloud computing
need people who contribute as follows:
1 Devise and operate in agile, network-based Cloud computing is a web-based platform that pro-
structures instead of traditional hierarchical vides on-demand shared computing resources and
organizations. information. Unlimited data is stored and processed
in separate data centres. Services such as servers,
2 Empower and support teamwork and storage and applications are delivered to an organi-
knowledge sharing. zation’s computers and devices through the internet.
Cloud users can access data and software applica- The components of AI
tions anywhere in the world on demand using lap-
tops or smart phones. Multiple consumers can be Artificial intelligence has four components:
served simultaneously without being concerned
1 Machine learning – providing computers
about the underlying software, data storage and
with the ability to learn without being
concurrent users.
explicitly programmed. Machine learning
Cloud computing can be provided by a SaaS
uses algorithms (sets of rules to be followed
(software-as-a-service) system – an on-demand soft-
in calculations or other problem-solving
ware delivery model in which users are charged for
operations) to spot patterns and associations
accessing and managing cloud services via a net-
in data sets and predict what will happen
work. The system stores and processes data in a
next or initiate an action.
standardized form which can then be configured for
use in the organization. Alternatively, consumers 2 Natural language processing – understanding
can develop a customized cloud service for them- human language and processing and
selves, a process called PaaS (Platform-as-a-Service). analysing large amounts of natural language
Most organizations choose cloud solutions from data.
software vendors. 3 Deep learning (hierarchical learning) –
The advantages of cloud computing are high making a series of machine learning decisions
computing power – the ability to store and process where outputs from one decision inform the
masses of data – accessibility and, potentially, lower analysis of the next. Iterations continue until
costs. It can replace local arrangements for bought- the output reaches an acceptable level of
in software packages. Cloud is highly adaptive and accuracy.
changes can be made very quickly, although they 4 Neural networks which process information
may be costly. It can facilitate group collaboration in a similar way to the human brain. They
by enabling information and ideas to be shared learn by example and cannot be programmed
easily. to perform a specific task. Examples of the
use of neural networks are facial and
handwriting recognition.
Artificial intelligence
Artificial intelligence (AI) is the use of computers to Uses of artificial intelligence
engage in human-like thought processes, such as
learning and self-correction. It enables things to be The uses of artificial intelligence in human resource
done through what has been learned. AI systems management include:
function without being programmed. They are ●● HR analytics – gathering and analysing data
based on the data they collect and how the systems and information on people and HRM
are used. AI can analyse data (‘data mining’) and processes to guide decision making.
handle questions by looking up an answer in a data ●● Recruitment and selection – matching
set. As the CIPD (2019: 10) commented: candidates located in a database to job/
Current emerging technology centres on artificial person specifications and using natural
intelligence (AI), including both machine learning language processing to predict which words
and set automated algorithms, and robotics. This in job advertisements will make the most
latest era is changing the nature of work in new impact on applicants. At Unilever the time to
ways, where the technology not only assists in hire has been cut by 75 per cent with the
basic physical tasks, but also tasks that require help of AI.
higher cognitive functions. In addition, AI and
●● Talent management – identifying eligibility
automation can result in new integrations and
for inclusion in a talent development
co-operation possibilities and challenges, which
programme (a talent pipeline) by providing
also can create new types of jobs and services.
information on performance histories.
●● Learning and development – developing and r elevant and limited to what is necessary in relation
operating performance support systems that to the purposes for which those data are processed.’
provide on-the-job access to learning Individuals have the right not to be subject to a de-
material in the shape of information about cision based solely on automated processing includ-
techniques, procedures and knowledge and ing profiling, which is defined in Article 22 of the
skill requirements with examples and advice regulations as ‘any form of automated processing of
on how they should be developed and personal data consisting of the use of personal data
applied. This includes coaching. For example, to evaluate certain personal aspects relating to a
an AI-powered coaching platform, uses a mix natural person, in particular to analyse or predict
of data points to monitor employees to aspects concerning that natural person’s perfor-
identify micro-behaviour changes which mance at work, economic situation, health, per-
require interventions such as 1-on-1 coaching sonal preferences, interests, reliability, behaviour,
sessions. location or movements.’
●● Retention management – using data-mining AI can introduce bias and new forms of discrimi-
algorithms to identify potential leavers so nation, especially if the data used in its development
that action can be taken as required to retain only represent partial segments of the population or
them. reflect existing societal bias. An Institute for
Employment Studies report (Reilly, 2018) noted
●● Employee sentiment analysis – analysing
that algorithms may be racist or sexist because their
large amounts of text, for example emails, to
construction reflects the reality of the employment
identify employee attitudes, moods or
situation rather than the ideal. This report listed a
sentiments.
number of other risks in using AI. With machine
●● Probabilistic matches – machine learning can learning, it can be difficult to establish what the ma-
identify data that is likely to be associated chine has learned and how it reached its conclu-
with the same person but that appears in sions. Algorithms can mislead people (like sat navs
slightly different databases. This could sometimes) – this may happen when in recruitment
feature at the individual level either as a selection the system gives unimportant features too
positive thirst for information or as a much weight or where the system uses ‘kill’ ques-
worrisome set of concerns. tions that reject candidates on the basis of a single
●● Workforce scheduling – scheduling workers data item, eg a criminal record. Finally, AI cannot
onto shifts and indicating where it is best to replicate human intuition and may not capture the
allocate workers with specific skills. subtle connections between people that drive human
●● Payroll – AI algorithms can be used to check behaviour.
initial payroll entries and calculations.
●● Employee queries and self-service problems –
setting up chatbots (bots) to answer queries
Managing digital HRM
from employees.
Managing digital HRM generally means ensuring
However, research by the CIPD (2021a) found that that the system meets the organization’s needs and
just 14 per cent of employers who had invested in that it is operated efficiently. In particular, it in-
AI and automation had applied them to HR pro- volves introducing new systems, managing the data-
cesses, compared to almost half to operations and base, integrating new or existing systems, providing
one-quarter to IT processes. for self-service and dealing with data protection is-
sues. But recent research by Deloitte (2017) found
that managers rejected excessive automation.
AI concerns
In using AI it is necessary to be aware of General
Data Protection Regulations (GDPR). The principle
Introducing a new HRIS
of data minimization applies in these regulations to When introducing a new HRIS, end-users, other
the effect that ‘Personal data must be adequate, stakeholders and someone with IT expertise should
be included in the planning and decision-making Database management

team. It is essential to be certain about what is re-
quired now and in the near future so that precise Database management involves acquiring, validating,
guidance can be given to the software or cloud com- storing, protecting and processing the required data
puting provider. An over-elaborate system which concerning people to provide the accessibility, relia-
may be difficult to introduce and manage should bility, and timeliness of the data for its users. It
not be specified. An evaluation should take place of involves people data modelling – the creation of dia-
the range of systems on offer in terms of how they grams showing the flow of data – and is the basis for
function, how readily they can be maintained and operating an HRIS and for HR analytics.
modified, and how easy and quick it is to produce
the types of report that will be needed. A check
should be undertaken on how clearly the reports Integration
will be presented and whether they can be manipu- In a traditional in-house arrangement, enterprise
lated easily on an Excel spreadsheet. There is a resource planning (ERP) systems can be used to inte-
choice between buying a ‘vanilla system’ (ie an ‘off- grate all data processing processes of an organization
the-shelf’ system without any upgrades) or custom- into a unified system with the same database. HR
izing the supplier’s system to meet specified business systems are not often integrated to this extent al-
requirements. Extensive customization can make though they may link payroll administration with
future upgrades problematic and expensive, so it is other HR functions. Integration of the HR system
important to limit it to what is absolutely necessary. with IT systems in the wider organization so that
Research by the CIPD (2021b, 2021c) obtained they can ‘talk to one another’ will enable the more
the following recommendations on introducing an effective management of HR data. However, many
HRIS from managers with recent experience of HR functions retain stand-alone systems because
doing so: they believe integration would compromise their
●● Get buy-in from key stakeholders. own system and are concerned about the potential
●● Prioritize requirements. Identify the must- lack of confidentiality and the cost and perceived
haves and nice-to-haves, bearing in mind the risks involved.
organization’s budget and its ability to Employee service platforms can integrate various
maintain the system. applications such as employee database manage-
ment, payroll management, recruitment manage-
●● In large projects, give internal people who ment and talent management.
are assigned to the project team the time to
contribute.
●● Have a plan for embedding the change. Self-service
There is always something unexpected that
A human resource self-service system (HRSS) al-
needs to be managed, so programme a period
lows managers and employees access to informa-
of assisted running where the project team
tion and the facility to interact with the system to
works closely with the business-as-usual
input information or make choices of their own.
team to resolve any technical or people-
This can operate through an HR portal (a site that
related problems.
functions as a point of access to information). This
●● Test the system. Obtain a trial copy from the is sometimes referred to as a business-to-employees
vendor to demonstrate how the system (B2E) portal.
works in a dummy company For managers, self-service means that they can
●● To get the best uptake of self-service, ensure access information immediately. This might be HR
that employees find it helpful and easy to use metrics (human capital reporting measures) in such
and provide alternative ways for people to areas as personal details, attendance records, per-
access and update their data through their formance management data, learning and develop-
smartphones, tablets or laptops. ment progress, and pay (as a basis for pay reviews).
They can also input data on their staff. This facili- organization. It provides a means of communicating
tates the devolution of responsibility to line manag- with employees. It can also support self-service, func-
ers and reduces the administrative burden on HR. tioning as a portal and enabling employees to access
information of interest to them, share documents and
other data, communicate and collaborate with one
Intranet another.
An intranet functions as a private, secure network
that can only be accessed by people from within the
Key learning points
Digital HRM defined Cloud computing

Digital HRM is the use of digital technologies in the Cloud computing is a web-based platform that
form of web-based applications including human provides on-demand shared computing resources and
resource information systems, cloud technologies and information.
various other technologies including artificial
intelligence (AI) and chatbots. Artificial intelligence
Artificial intelligence (AI) is the use of computers to
The purpose of digital HRM
engage in human-like thought processes, such as
The basic purpose of digital HRM is to maintain the learning, reasoning and self-correction.
organization’s employee database using a Human
Resource Information System (HRIS). Managing digital HRM
Managing digital HRM means ensuring that the system
The uses of digital HRM
meets the organization’s needs and that it is operated
The main uses of digital HRM (its ‘functionalities’) are efficiently. It involves maintaining the database,
HR administration, generating people data, introducing new systems, integrating new or existing
communications and as an aid to learning and systems and providing for self-service.
development.
The GDPR
Digital transformation
This is a regulation on data protection and privacy for
Digital transformation is what happens when individual employees. Employers have to gain the assent
organizations successfully take advantage of the of employees to the use of their personal data and
opportunities offered by digital technology. employees have the right to be informed about its use.
Human resource information system

(HRIS)
An HRIS is a computer-based system for administering
HR processes and procedures.
References
Chartered Institute of Personnel and Development Kane, G C, Phillips, A N, Copulsky, J R and Andrus,
(2019) People and Machines: From hype to reality. G R (2019) The Technology Fallacy: How people
https://www.cipd.co.uk/knowledge/work/ are the real key to digital transformation,
technology/people-machines-report (archived at Cambridge, MA, MIT Press
https://perma.cc/CUZ6-85NE) Marler, J H and Fisher, S L (2013) An evidence-based
Chartered Institute of Personnel and Development review of e-HRM and strategic human resource
(2021a) Technology and the Future of Work, management, Human Resource Management
London, CIPD Review, 23 (1), pp 18–36
Chartered Institute of Personnel and Development Reilly, P (2018) IES Perspectives on HR: HR
(2021b) Operating Efficiently: Implementing HR Network Paper 142, Brighton, Institute for
information systems in large organizations, Employment Studies
London, CIPD Ulrich, D (2019) Foreword and forward thinking on
Chartered Institute of Personnel and Development digital HR, in (ed) M Thite, e-HRM: Digital
(2021c) Operating Efficiently: Implementing HR approaches, directions & applications, Abingdon,
information systems in CMEs, London, CIPD Routledge, pp xvi–xix
Deloitte (2017) Mobile Consumer Survey, London, Wagner, D N (2020) Augmented human-centred
Deloitte management: human resource development for
Iansiti, M and Lakhami, K R (2017) The truth about highly automated business environments, Journal
blockchain, Harvard Business Review, January/ of Human Resource Management, 23 (1), pp
February, pp 118–27 13–27
127
15
Knowledge management
The aim of knowledge management is to turn in-
Introduction formation into knowledge. It identifies relevant in-
formation and then disseminates it so that learning
The ability of an organization to operate effectively can take place.
largely depends on the extent to which those who There is nothing new about knowledge manage-
work there appreciate what needs to be done and ment. Hansen et al (1999: 106) observed that ‘For
know how it should be done and share that under- hundreds of years, owners of family businesses have
standing with everyone else concerned – suppliers passed on their commercial wisdom to children,
and outside contractors as well as colleagues. The master craftsmen have painstakingly taught their
purpose of knowledge management is to see that trades to apprentices, and workers have exchanged
this happens. ideas and know-how on the job.’ But they also com-
This chapter starts with a definition of knowl- mented that ‘As the foundation of industrialized
edge management and its aims. To appreciate how economies has shifted from natural resources to in-
knowledge can best be managed it is necessary to tellectual assets, executives have been compelled to
understand what it is, and that is considered in the examine the knowledge underlying their business
next section of the chapter. Approaches to knowl- and how that knowledge is used’ (page 106). The
edge management and issues in applying these ap- acquisition and application of knowledge cannot be
proaches are described in the following sections. left to chance.
The chapter ends with recommendations on how Knowledge management is more concerned with
knowledge management programmes should be people and how they acquire, exchange and spread
implemented. knowledge than it is about information technology.
That is why it has become an important area for
HR practitioners, who are in a strong position to
Knowledge management exert influence in this aspect of people management.
defined It is associated with intellectual capital theory (see
Chapter 2), in that it refers to the notions of human,
social and organizational capital. It is also closely
Knowledge management is about storing and shar-
linked to organizational learning (see Chapter 35).
ing the wisdom, understanding and expertise
accumulated in an enterprise about its processes,
techniques and operations. It treats knowledge as a
key resource and furthers organizational learning. It The meaning of knowledge
was defined by Tan (2000: 10) as ‘The process of
systematically and actively managing and leverag- Knowledge is defined as what people understand
ing the stores of knowledge in an organization.’ As about things, concepts, ideas, theories, procedures
Ulrich (1998: 126) remarked: ‘Knowledge has be- and practices. It can be described as know-how or,
come a direct competitive advantage for companies when it is specific, expertise. A distinction was made
selling ideas and relationships.’ by Ryle (1949) between ‘knowing how’ and
‘knowing that’. ‘Knowing how’ is the ability of a

person to perform tasks, and ‘knowing that’ is hold-
Approaches to knowledge
ing pieces of knowledge in one’s mind. According to
Blackler (1995: 1023): ‘Rather than regarding
management
knowledge as something that people have, it is sug- Two approaches to knowledge management have
gested that knowing is better regarded as something been identified by Hansen et al (1999): codification
that they do.’ He also noted that ‘Knowledge is mul- and personalization.
tifaceted and complex, being both situated and
abstract, implicit and explicit, distributed and indi-
vidual, physical and mental, developing and static, The codification approach
verbal and encoded’ (pages 1032–33). Grant (1996:
109) observed that ‘Knowledge is the most critical In this approach, knowledge is codified and stored
competitive asset that a firm possesses.’ in databases where it can be accessed and used by
Nonaka (1991) pointed out that knowledge is anyone in the organization. Knowledge is explicit
held either by individuals or collectively. Scarbo and is codified using a ‘people-to-document’ ap-
rough and Carter (2000) commented that knowl- proach. The approach is therefore document-driven.
edge emerges from the collective experience of work Knowledge is extracted from the person who devel-
and is shared between members of a particular oped it, made independent of that person and re-
group or community. used for various purposes. It is stored in a ‘data
warehouse’ – an electronic repository for people to
use, and allows people to search for and retrieve
Explicit and tacit knowledge codified knowledge without having to contact the
person who originally developed it. This approach
Nonaka (1991) and Nonaka and Takeuchi (1995) relies largely on information technology to manage
stated that knowledge is either explicit or tacit. databases and also on the use of the intranet.
Explicit knowledge can be codified – it is recorded
and available and is held in databases, in corpo-
rate intranets and intellectual property portfolios. The personalization approach
Tacit knowledge exists in people’s minds. It may
be hard to articulate in writing and is acquired In this approach, knowledge is closely tied to the
through personal experience. Hansen et al (1999) people who have developed it and is shared mainly
suggested that knowledge includes scientific or through direct person-to-person contacts and net-
technological expertise, operational know-how, works. This enables tacit knowledge to be passed
insights about an industry and business judge- on. The exchange is achieved by creating networks
ment. The main challenge in knowledge manage- and encouraging face-to-face communication be-
ment is how to turn tacit knowledge into explicit tween people by informal conferences, workshops
knowledge. and communities of practice.
Knowledge is possessed by organizations and Hansen et al (1999) proposed that the approach
people in organizations. Organizational opera- should be contingent on the organization: what it
tional, technical and procedural knowledge can be does and how it does it. Thus consultancies such as
stored in databanks and found in reports, libraries, Ernst & Young, which use knowledge to deal with
policy documents, manuals and presentations. It recurring problems, may rely on codification so that
can also be moved around the organization through recorded solutions to similar problems are easily
information systems and by meetings, workshops, retrievable. Strategy consultancy firms such as

courses, ‘master classes’, written publications and McKinsey or Bains, however, rely on a personaliza-
‘communities of practice’, defined by Wenger and tion strategy to help them to tackle the high-level
Snyder (2000: 139) as ‘groups of people informally strategic problems they are presented with that de-
bound together by shared expertise and a passion mand the provision of creative, analytically rigorous
for joint enterprise’. The intranet provides an addi- advice. They need to channel individual expertise
tional and very effective medium. and they find and develop people who are able to use
a person-to-person knowledge-sharing approach.
Chapter 15 | Knowledge Management 129
Experts can be identified who can be approached by Ghoshal, 1998: 243). Social networks can be par-
email, telephone or personal contact. ticularly important in ensuring that knowledge is
The research conducted by Hansen et al (1999) shared. Trust is also required – people are not will-
established that companies that use knowledge well ing to share knowledge with those they do not trust.
adopt either the codification or the personalization The culture of the company may inhibit knowl-
strategy predominantly and use the other strategy to edge sharing. The norm may be for people to keep
support their first choice. They pointed out that those knowledge to themselves as much as they can be-
who try to excel at both strategies risk failing at both. cause ‘knowledge is power’. An open culture will en-
courage people to share their ideas and knowledge.
Knowledge management
Implementing knowledge
issues
management
The approaches referred to above do not provide
easy answers. One of the main issues in knowledge The choice of approach and ensuring that knowledge
management is how to keep up with the pace of management works is the responsibility of senior
change and identify what knowledge needs to be management. But HR can play a significant role in
captured and shared. Another is the risk that a pre- generally encouraging management to take it seri-
occupation with technology may mean that insuffi- ously, in advising on what approach should be
cient attention is paid to process – how things are adopted and helping to introduce any steps that man-
done through interactions between people. This is agement has decided to take. Specifically, HR can set
the social capital of an organization – ‘the network up and facilitate communities of practice and work
of relationships [that] constitute a valuable resource with IT to develop systems for capturing and, as far as
for the conduct of social affairs’ (Nahpiet and possible, codifying explicit and tacit knowledge.
Key learning points
The purpose and significance of through direct person-to-person contacts. This is a

‘person-to-person’ approach that involves
knowledge management ensuring that tacit knowledge is passed on.
Knowledge management is about getting knowledge
from those who have it to those who need it in order to Knowledge management issues
improve organizational effectiveness.
One of the main issues in knowledge management is
how to keep up with the pace of change and identify
The meaning of knowledge what knowledge needs to be captured and shared.
Knowledge is defined as what people understand Another is the risk that a preoccupation with
about things, concepts, ideas, theories, procedures technology may mean that insufficient attention is paid
and practices. It can be described as know-how or, to process.
when it is specific, expertise.
Implementing knowledge management
Knowledge management approaches Senior management is responsible for choosing the
Codification – knowledge is carefully codified and stored approach and ensuring that knowledge management
in databases where it can be accessed and used easily works.
by anyone in the organization. Knowledge is explicit and HR can encourage management to take it seriously,
is codified using a ‘people-to-document’ approach. advise on what approach should be adopted, set up
Personalization – knowledge is closely tied to the and facilitate communities of practice and work with
person who has developed it and is shared mainly IT to develop systems for capturing knowledge.
References
Blackler, F (1995) Knowledge, knowledge work and Nonaka, I and Takeuchi, H (1995) The Knowledge
experience, Organization Studies, 16 (6), pp 16–36 Creating Company, New York, Oxford University
Grant, R M (1996) Towards a knowledge-based Press
theory of the firm, Strategic Management Journal, Ryle, G (1949) The Concept of Mind, Oxford,
17 (special issue), pp 109–22. Oxford University Press
Hansen, M T, Nohria, N and Tierney, T (1999) Scarborough, H and Carter, C (2000) Investigating
What’s your strategy for managing knowledge?, Knowledge Management, London, CIPD
Harvard Business Review, March–April, Tan, J (2000) Knowledge management – just more
pp 106–16 buzzwords? British Journal of Administrative
Nahpiet, J and Ghoshal, S (1998) Social capital, Management, March–April, pp 10–11
intellectual capital and the organizational Ulrich, D (1998) A new mandate for human
advantage, Academy of Management Review, resources, Harvard Business Review, January–
23 (2), pp 242–66 February, pp 124–34
Nonaka, I (1991) The knowledge creating company, Wenger, E and Snyder, W M (2000) Communities of
Harvard Business Review, November–December, practice: the organizational frontier, Harvard
pp 96–104 Business Review, January–February, pp 33–41
131
16
Competency-based
HRM
clear definition, there has been and still is some con-
Introduction fusion about the difference between competences
and competencies. The CIPD (2021) noted that the
The terms ‘competency’ and ‘competencies’ focus terms have become virtually interchangeable and
on someone’s personal attributes or inputs. They has adopted ‘competency’ as the single one to cover
can be defined as the behaviours, knowledge and both of them. But a worthwhile distinction can still
skills that individuals need to perform effectively at be made within this overarching term between be-
work. havioural and technical competencies as described
Competency-based HRM is about using compe- below. Guidelines for defining competencies (com-
tencies, competency frameworks and the results of petency modelling) are provided in Chapter 72.
competency analysis to inform and improve HR It should also be noted that ‘competence’ was the
processes, especially those concerned with recruit- term used when developing NVQs, now part of the
ment and selection, learning and development, and Regulated Qualifications Framework (RQF). An el-
performance and reward management. The chapter ement of competence was defined as a description
starts with definitions of the concept of competency of something that people in a work area should be
and of the KSA model associated with that concept. able to do.
It continues with a description of competency
frameworks and how competencies are used.
Behavioural competencies
Competency defined Behavioural competencies define the behaviours re-
quired to achieve success in a job under such head-
The term ‘competency’ refers to a characteristic of a ings as teamworking, communication, leadership
person that results in effective or superior perfor- and decision making. These are sometimes refers to
mance. The leading figure in defining and popular- as ‘soft skills’ – a skill is a learned aptitude or ability
izing the concept of competency was Boyatzis needed to perform a specified job or task. Skills are
(1982). He conducted research that established that developed through experience and training.
there was no single factor but a range of factors in Organizations may decide what sort of generic
the form of personal qualities, including behavioural competencies would be appropriate and set them
characteristics, that differentiated successful from out in a ‘competency framework’.
less successful performance. Woodruffe (1991) later
distinguished between areas of competence (compe-
tences), defined as aspects of the job which an indi- Technical competencies
vidual can perform, and competency (competencies), Technical competencies, also known as compe-
referring to aspects of a person’s behaviour under- tences, define what people have to know and be
pinning competent performance. In spite of this able to do in order to complete specific tasks satis-
factorily. They can be regarded as ‘hard skills’ and
are related to either generic roles (groups of similar ●● Abilities are the qualities needed to do
jobs), or to individual roles (‘role-specific compe- something. Very broadly, they encompass
tencies’). Technical competencies can be used in behavioural competencies.
conjunction with behavioural competencies to pro-
In some ways the KSA model is a simpler concept
vide a comprehensive definition of the abilities re-
to grasp and apply than that of competencies. This
quired for effective role performance.
is why the model is used extensively in preparing
role profiles, person specifications and learning
specifications.
Knowledge, skills and
abilities (KSAs)
Competency frameworks
The KSA model defines what people need to know
and be able to do and how they are expected to Competency frameworks set out the competencies
behave to be able to perform a role effectively. It required by individuals working in an organization
therefore incorporates the notions of both behav- or part of an organization. They provide the basis
ioural and technical competencies. for the use of competencies in areas such as recruit-
ment and selection (competency-based interviews),
●● Knowledge is the theoretical or practical learning and development, and performance man-
understanding of a subject. agement. A framework for behavioural competen-
●● Skills are the proficiencies developed through cies will include definitions of each competency
training or experience. Skills are usually area as in the example given in Table 16.1 which
things that have been learned. They can be includes the more popular headings. According to
developed through the transfer of the CIPD (2021), competency frameworks origi-
knowledge. Skills together with knowledge nally consisted mainly of behavioural elements – an
broadly correspond to technical expression of the softer skills involved in effective
competencies.
TA B L E 16.1 Example of a basic competency framework
Achievement/results orientation. The desire to get things done well and the ability to set and meet
challenging goals, create own measures of excellence and constantly seek ways of improving
performance.
Business awareness. The capacity continually to identify and explore business opportunities,
understand the business opportunities and priorities of the organization and constantly to seek
methods of ensuring that the organization becomes more businesslike.
Communication. The ability to communicate clearly and persuasively, orally or in writing.
Customer focus. The exercise of unceasing care in looking after the interests of external and internal
customers to ensure that their wants, needs and expectations are met or exceeded.
Developing others. The desire and capacity to foster the development of members of his or her team,
providing feedback, support, encouragement and coaching.
Flexibility. The ability to adapt to and work effectively in different situations and to carry out a variety of
tasks.
Leadership. The capacity to inspire individuals to give of their best to achieve a desired result and to
maintain effective relationships with individuals and the team as a whole.
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.
Chapter 16 | Competency-based HRM 133
performance – they have since become broader in Developing a behavioural competency frame-
scope to include more technical competencies. work that fits the culture and purpose of the or-
Some frameworks illustrate these definitions ganization and provides a sound basis for a number
with descriptions of acceptable behaviour, which of key HR processes is not to be undertaken lightly.
may be expressed as positive or negative indicators It requires a lot of hard work, much of it concerned
as shown in Table 16.2. with involving staff and communicating with them
to achieve understanding and buy-in. The develop-
ment process uses competency modelling techniques
Developing a competency as described in Chapter 72.
framework
Approaches to using
A competency framework should be as simple to un-
derstand and use as possible. The language should competencies
be clear and jargon-free. Without clear language and
examples, it can be difficult to assess the level of There are a number of approaches to using compe-
competency achieved. When defining competencies, tencies as described below.
especially if they are used for performance manage-
ment or competency-related pay, it is essential to en-
sure that they can be assessed. They must not be The ‘menu’ approach
vague or overlap with other competencies and they
A ‘menu’ approach selects competencies that are
must specify clearly the sort of behaviour that is ex-
relevant to generic or individual roles. Some or-
pected and the level of technical or functional skills
ganizations provide guidelines on the number of
(competencies) required to meet acceptable stand-
competencies to be selected (eg four to eight) and
ards. It is helpful to address the user directly (‘you
others combine their core framework with a menu
will...’) and to give clear and brief examples of how
so that users are required to select the organiza-
the competency needs to be performed.
tion-wide core competencies but can add a number
of optional ones.
TA B L E 16.2 Example of competency framework definition with positive and negative

indicators
Competency heading Manage continuous improvement.
Competency definition Constantly seeking ways of improving the quality of services, the
relevance and appeal of those services to the needs of customers and
clients, and their effectiveness.
Competency requirement Set targets for improvement.
Develop and implement programmes for managing change.
Contribute to the development of quality assurance and control processes
and ensure that they are implemented.
Positive indicators Encourage the development of new ideas and methods, especially those
concerned with the provision of quality.
Conscious of the factors that enable change to take place smoothly.
Discuss ideas with colleagues and customers and formulate views on how
to improve services and processes.
Negative indicators Doesn’t try anything that hasn’t been done before.
Complacent, believes that there is no room for improvement.
Follows previous practices without considering whether there is any need
to change.
Role-specific competencies Competencies are also used in development cen-

tres, which help participants build up their under-
Role-specific competencies are also used by some standing of the competencies they require now and
organizations for generic or individual roles. These in the future so that they can plan their own self-
may be incorporated in a role profile in addition to directed learning programmes.
a statement of key result areas. This approach is
adopted in performance management processes, in
recruitment person specifications and in the prepa- Performance management
ration of individual learning programmes.
Competencies in performance management define
the criteria used for performance assessments. They
Graded competencies ensure that performance reviews focus on the be-
havioural aspects of how the work is carried out as
The successive levels in a job family are defined as a well as the results obtained, ie on the ‘how’ as well
hierarchy of competencies as well as in terms of the as the ‘what’. Performance reviews conducted on
key activities carried out at each level. A job family this basis are used to inform personal improvement
consists of jobs in a function or occupation such as and development plans and learning programmes.
marketing or HR that are related through the ac-
tivities carried out and the basic knowledge and
skills required, but in which the levels of responsi- Reward management
bility, knowledge, skill or competency needed differ.
Competency-related pay relates additional awards
to assessments of competency but it has never be-
Applications of competency- come popular. However, more frequent use is made
of contribution-related pay, which provides for peo-
based HRM ple to be rewarded according to both the results
they achieve and their level of competence.
The main areas in which competencies are used are
described below.
Keys to success in using
Recruitment and selection competencies
Competencies are used in many organizations as a ●● The competencies should reflect the
basis for person specifications set out under compe- organization’s values and its needs, as
tency headings developed through role analysis. The established by analysis.
competencies defined for a role are used as the ●● The competencies should refer to behaviours,
framework for recruitment and selection, and com- knowledge and skills that will lead to high
petency-based interviews are structured around the performance.
competencies listed in the specification.
●● Competency frameworks should not be
overcomplex.
Learning and development ●● There should not be too many headings in a
framework – seven or eight will often suffice.
Role profiles, which are either individual (role-spe-
cific) or generic (covering a range of similar jobs), ●● The language used should be clear and
can usefully include statements of the competencies jargon-free.
required. These are used to assess the levels of com- ●● Competencies must be selected and defined
petency achieved by individuals and so identify in ways that ensure that they can be assessed
their learning and development needs. Learning by managers – the use of ‘behavioural
events can be based on competency analysis related indicators’ is helpful.
to an organization’s competency framework. ●● Frameworks should be regularly updated.
Chapter 16 | Competency-based HRM 135
Key learning points
Competency-based HRM Uses of competencies

Competency-based HRM is about using the notion of ●● Recruitment and selection
competency and the results of competency analysis to
●● Learning and development
inform and improve HR processes, especially those
concerned with recruitment and selection, learning ●● Performance management
and development, and performance and reward
●● Reward
management.
Keys to success in using competencies

Competency defined
●● The competencies should reflect the organization’s
The term ‘competency’ refers to an underlying
values and its needs, as established by analysis, to
characteristic of a person that results in effective or
determine the behaviours that will lead to high
superior performance. The different types of
performance.
competencies are:
●● Frameworks should not be overcomplex.
●● Behavioural competencies define behavioural
expectations, ie the type of behaviour required to ●● There should not be too many headings in a
deliver results under such headings as framework – seven or eight will often suffice.
teamworking, communication, leadership and
●● The language used should be clear and jargon-
decision making.
free.
●● Technical competencies define what people have
●● Competencies must be selected and defined in
to know and be able to do (knowledge and skills) to
ways that ensure they can be assessed by
carry out their roles effectively.
managers – the use of ‘behavioural indicators’ is
helpful.
Competency frameworks
●● Frameworks should be regularly updated.
Competency frameworks set out the competencies
required by individuals working in an organization or
part of that organization.
References
Boyatzis, R (1982) The Competent Manager, Woodruffe, C (1991) Competent by any other name,
New York, Wiley Personnel Management, September, pp 30–33
Chartered Institute of Personnel and Development
(2021) Competence and Competency Frameworks,
London, CIPD
136

137
PART V
Organization
PA R T V CO N T E N T S
17 Organizational behaviour
18 Organization design
19 Work design
20 Job design
21 Organization development
People management policies and practices there-

Introduction fore need to be based on an understanding of how
organizations function (organizational behaviour)
Human resource management is concerned with the and an appreciation of the processes associated with
behaviour of people who work in organizations. It is organization, work system and job design. These
involved in the design and development of those or- processes combine with organization development
ganizations and in the design of work systems and programmes (Chapter 21) to enhance organiza-
jobs that can maximize organizational performance tional effectiveness.
levels and provide a satisfying employee experience.
138

139
17
Organizational
behaviour
Introduction This chapter covers:
●● What is meant by organizational behaviour
Organizational behaviour is the term used to de-
scribe how organizations function with regard to ●● The sources and applications of
their people, structure, processes and culture. It is organizational behaviour theory
concerned with the characteristics of people and ●● How organizations function
how they act in organizations, individually or in ●● Organizational culture
groups. Organizational behaviour theory is based
on the main behavioural science theories, which ●● Organizational climate
have been proved by research. Like all proven theo- ●● Organizational processes
ries it provides insights into good practice. Thus it ●● Characteristics of people
produces guidance on the design of organizations, ●● The factors that affect individual behaviour
work systems, and jobs and the process of organiza-
tion development. It also provides the conceptual ●● Implications for HR specialists
framework for approaches to achieving the motiva-
tion, commitment and engagement of people.
An understanding of how organizations function Organizational behaviour
and how people behave in them is important to HR
professionals, indeed to all managers, as was em-
defined
phasized by Nadler and Tushman (1980: 30):
Organizational behaviour was defined by Huczynski
Managers perform their jobs within complex and Buchanan (2007: 843) as the term used to de-
social systems called organizations. In many senses, scribe ‘the study of the structure, functioning, and
the task of the manager is to influence behaviour performance of organizations and the behaviour of
in a desired direction, usually towards the groups and individuals within them.’
accomplishment of a specific task or performance Ivancevich et al (2008: 11) identified the follow-
goal. Given this definition of the managerial role, ing characteristics of organizational behaviour:
skills in the diagnosis of patterns of organizational
behaviour become vital. Specifically, the manager ●● It is a way of thinking – about individuals,
needs to understand the patterns of behaviour that groups and organizations.
are observed, predict in what direction behaviour ●● It is multidisciplinary – it uses principles,
will move (particularly in the light of managerial models, theories and methods from other
action), and to use this knowledge to control disciplines.
behaviour over the course of time.
●● There is a distinctly humanistic orientation –
people and their attitudes, perceptions,
learning capacities, feelings and goals are of
major importance.
140 Part 5 | Organization
●● It is performance-oriented – it deals with the chology and sociology. These are defined as the fields
factors affecting performance and how it can of enquiry dedicated to the study of human behaviour
be improved. through sophisticated and rigorous methods. The var-
●● The use of scientific method is important in ious models of organizational behaviour, the ways in
studying variables and relationships. which they contribute to different aspects of organiza-
tional behaviour theory and how they in turn influ-
●● It is applications-oriented in the sense of
ence HRM practices are illustrated in Figure 17.1.
being concerned with providing useful
Key theories about human behaviour at work
answers to questions that arise when
are summarized below.
managing organizations.
The sources and applications Motivation theory

Motivation theory explains the factors that affect
of organizational behaviour how people take action to get things done – the di-
rection in which they are going, how hard they are
theory trying and how long they keep trying (Arnold et al,
1991). As described in Chapter 22, content theories
Organizational behaviour theory is based on the be- explain motivation in terms of the satisfaction of
havioural science disciplines of psychology, social psy-
F I G U R E 17.1 Sources and applications of organization behaviour theory

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

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

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

• power development
• politics • organization
• conflict design
Sociology • organization • job design
culture • leadership
• leadership development
• employee
relations
Chapter 17 | Organizational Behaviour 141
needs and process theories focus on the psychologi-

cal or mental processes and forces that affect
How organizations function

motivation.
An organization is an entity that exists to achieve a
purpose through the collective efforts of the people
Self-determination theory who work in or for it. Organizing is the process of
making arrangements in the form of defined or under-
Self-determination is a combination of attitudes stood responsibilities and relationships to enable peo-
and abilities that lead people to set goals for them- ple to work cooperatively together. Organizations are
selves and take the initiative to reach these goals. systems that, as affected by their environment, have a
Self-determination theory suggests that people are structure that has both formal and informal elements.
motivated to grow and change by three innate and Organizations operate through a process of gov-
universal psychological needs – for competence, ernance, which involves the exercise of authority,
connection and autonomy. People become self- decision making and accountability at the top for
determined when these needs are fulfilled. performance and behaviour, in order to improve or-
ganizational effectiveness. As Alfred J Sloan (1972)
remarked: ‘An organization does not make deci-
Decision-making theory sions; its role is to provide a framework, based on
Decision-making theory as developed by Simon established criteria, within which decisions can be
(1979) explains that a rational approach to making fashioned in an orderly fashion.’
a decision requires a logical sequence of steps: (1) Organization structures are indeed frameworks
analysing the situation, (2) developing possible for getting things done. Traditional formal struc-
courses of action, (3) exercising choice and (4) as- tures were based on laid-down hierarchies (lines of
sessing the outcome of the choice. But in accord- command) represented in organization charts, and
ance with Simon’s concept of ‘bounded rationality’, use was made of closely defined job descriptions.
people do not always have complete information But to varying extents, organizations operate infor-
and the ability to make an optimal choice is there- mally as well as formally by means of a network of
fore limited. roles and relationships that cut across formal or-
ganizational boundaries and lines of command.
Organization structures can evolve almost sponta-
Social identity theory neously as circumstances change and new activities
have to be carried out.
As described by Stets and Burke (2014), social The operating model of an organization is the
identity theory proposes that having a particular combination of roles, skills, structures, processes,
social identity means being at one with the mem- assets and technologies that enable it to provide its
bers of a particular group or category, being like services or products. As described by the CIPD
the others and seeing things from the group’s per- (2018) It consists of five categories:
spective
1 Process: effective delivery of process-based
activity according to productivity,
Nudge theory performance and efficiency.
2 Information systems: the quality and
Nudge theory as formulated by Thaler and Sunstein
effectiveness of the information systems for
(2009) is based on the proposition that it is easier
delivering value to the organization.
for people to take a series of small steps rather than
one large one. They should therefore only be ex- 3 Location and buildings: the geography and
pected to absorb and act on proposals for small dimensions of the buildings and sites used by
changes in their behaviour at any one time. the organization.
4 Human capital: the collective capability,
knowledge and skills of the people employed
by an organization.
5 Suppliers and partners: effectiveness of ehaviour, the exercise of power and the use of poli-
b
activity throughout the supply chain, tics – may well have much more effect on how or-
including performance on price, total cost, ganizations function than can be shown in a defined
service, timelessness, efficiency and organization chart supported by elaborate job de-
responsiveness. scriptions and an organization manual. Moreover, the
way in which an organization functions will be largely
contingent on its purpose, technology, methods of
Factors affecting how working and external environment. A number of the-
ories have been developed, as summarized in Table
organizations function 17.1, to explain how organizations function, culmi-
The processes that take place in organizations – nating in the contingency and process schools that
interaction and networking, leadership, group
now predominate.
TA B L E 17.1 Schools of organization theory

Leading
School exponents Summary of theory
The classical Taylor (1911), Organizations need control, measurement, order and
school Fayol (1916), formality to function well. They have to minimize the
Urwick (1947) 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 Roethlisberger organization – the network of informal roles and
school and Dickson relationships that, for better or worse, strongly influences
(1939) 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.
The Argyris (1957), A humanistic point of view is adopted that is concerned

behavioural Herzberg et al with what people can contribute and how they can best
science school (1957), McGregor be motivated.
(1960), Likert
(1961), Schein
(1965)
The Weber (1908) Max Weber coined the term ‘bureaucracy’ as a label for a
bureaucratic translated in 1947 type of formal organization in which impersonality and
model 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.
(continued )
TA BLE 17.1 (Continued)

Leading
School exponents Summary of theory
The socio- Emery (1959), In any system of organization, technical or task aspects
technical Trist et al (1963) are interrelated with the human or social aspects. The
model 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 Organizations should be treated as open systems that are
school (1967) continually dependent upon and influenced by their
Bertalanffy (1968) 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 Burns and Stalker Members of the contingency school analysed a variety of
contingency (1961), Woodward organizations and concluded that their structures and
school (1965), Lawrence methods of operation are a function of the circumstances
and 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), Rather than seeing organizations as a hierarchy of static
school Ghoshal and jobs, members of the process school think of them as a
Bartlett (1995) portfolio of dynamic processes that overlay and often
dominate the vertical, authority-based processes of the
hierarchical structure. The emphasis is on ‘horizontal
tasks’, collaboration and networking across units rather
than on ‘vertical tasks’ within functional units. Hence the
concept of the ‘boundaryless organization’.
Types of organization structures ●● Line and staff – a traditional organization

based on the military model in which a
The main types of organization structures are: hierarchy of ‘line managers’ carry out the
●● Unitary – there is one structure covering all fundamental operations such as
activities. manufacturing, sales or customer service
while the ‘staff’ functions such as finance and
●● Divisionalized – the organization’s main personnel provide them with services, advice
activities are divided into different units and support.
based upon the product, the markets served,
the skills involved or in geographical areas. ●● Mechanistic – a formal organization that is
hierarchical with rigid chains of command
and control, distinct departments and tightly tions that may not have been articulated but shape
defined and specialized jobs (usually a the ways in which people in organizations behave
characteristic of a line and staff and things get done. ‘Values’ refer to what is be-
organization). lieved to be important about how people and or-
●● Organic – a relatively informal organization ganizations behave. ‘Norms’ are the unwritten
with a non-hierarchical, flat structure where rules of behaviour.
the emphasis is on horizontal processes, the This definition emphasizes that organizational
elimination of boundaries between functions, culture is concerned with the subjective aspect of
teamwork, networking and flexible roles what goes on in organizations. It refers to abstrac-
(also known as a lattice organization). tions such as values and norms that pervade the
whole or part of a business, which may not be
●● Matrix organization – an organization that
defined, discussed or even noticed. Nevertheless,
consists of a functional structure with a
culture can have a significant influence on people’s
number of different disciplines and a project
behaviour. The following are some other defini-
structure consisting of project teams drawn
tions of organizational culture:
from the disciplines. Also known as a lattice
organization. ●● A strong culture is a system of informal
●● Network organization – a collection of rules that spells out how people are to
interrelated organizations that extends behave most of the time. (Deal and
beyond the boundaries of any single Kennedy, 2000: 15)
organization. ●● The culture of an organization refers to the
●● Virtual organization – an organization that unique configuration of norms, values, beliefs
mainly uses electronic means for its members and ways of behaving that characterize the
to interact with one another thus minimizing manner in which groups and individuals
face-to-face contacts. combine to get things done. (Eldridge and
Crombie, 1974: 89)
●● Organizational culture offers a shared system
Organizational culture of meanings that is the basis for
communications and mutual understanding.
The culture of an organization was described by (Furnham and Gunter, 1993: 70–71)
Deal and Kennedy (2000: 4) as ‘the way we do ●● Culture is a pattern of basic assumptions –
things around here.’ It is more complex than that, as invented, discovered or developed by a given
other definitions given below indicate. But this sim- group as it learns to cope with the problems
plistic definition at least demonstrates that it is an of external adaptation and internal
all-pervading notion that affects the way in which integration – that has worked well enough to
people behave and has to be taken into account as a be considered valid and, therefore, to be
contingency factor in any programme for develop- taught to new members as the correct way to
ing organizations and HR policies and practices. perceive, think and feel in relation to these
Organizational culture offers a shared system of problems. (Schein, 1990: 110)
meanings which is the basis for communications
and mutual understanding. If these functions are
not fulfilled in a satisfactory way, culture may sig- How organizational culture
nificantly reduce the effectiveness of an organiza-
tion. This is why it is important for HR specialists develops
to understand the concept of organizational culture. The values and norms that are the basis of culture are
formed in four ways. First, by the leaders in the or-
ganization, especially those who have shaped it in the
Organizational culture defined past. Schein (1990) indicates that people identify
Organizational or corporate culture is the pattern with visionary leaders – how they behave and what
of values, norms, beliefs, attitudes and assump- they expect. They note what such leaders pay atten-
tion to and treat them as role models. Second, as Values

Schein also points out, culture is formed around crit-
Values are beliefs in what is best or good for the
ical incidents – important events from which lessons
organization and what should or ought to happen.
are learnt about desirable or undesirable behaviour.
The ‘value set’ of an organization may only be rec-
Third, culture develops from the need to maintain
ognized at top level, or it may be shared throughout
effective working relationships among organization
the business, in which case the business could be
members that establishes values and expectations.
described as value-driven.
Finally, culture is influenced by the organization’s en-
The stronger the values the more they will influ-
vironment, which may tend to be dynamic or un-
ence behaviour. This does not depend upon their
changing.
having been articulated. Implicit values that are
deeply embedded in the culture of an organization
and are reinforced by the behaviour of management
Culture and change can be influential, while espoused values that are
Culture evolves over time and responds to the im- mere rhetoric and are not reflected in managerial
pact of change as a result of shared experiences fol- behaviour may have little or no effect. When values
lowing the change. Schein (1984) suggested that are acted on they are called ‘values in use’. Examples
this is a learning process which takes place through are listed below.
the trauma model, in which members of the organi-
●● Care and consideration for people
zation learn to cope with a threat originating from
change, for example by the erection of defence ●● Competence
mechanisms. Things that seem to work in dealing ●● Competitiveness
with the problem then become embedded and en- ●● Concern about the environment
trenched as a way of life. Learning takes place as
people adapt to and cope with external pressures, ●● Customer service
including those involving change, and as they de- ●● Innovation
velop successful approaches and mechanisms to ●● Performance
handle new internal challenges, processes and tech- ●● Quality
nologies in their organization. Where culture has
developed over long periods of time and has be- ●● Teamwork
come firmly embedded it may be difficult to change Values may be expressed through norms and arte-
quickly, if at all, unless a traumatic event occurs. facts, as described below. They may also be expressed
through the media of language (organizational jar-
gon), rituals, stories and myths.
The diversity of culture
The development process described above may re- Norms
sult in a culture that characterizes the whole or- Norms are the unwritten rules of behaviour, the
ganization. But there may be different cultures ‘rules of the game’ that provide informal guidelines
within organizations. For example, the culture of on how to behave. Norms tell people what they are
an outward-looking marketing department may be supposed to be doing, saying, believing, even wear-
substantially different from that of an internally ing. They are never expressed in writing – if they
focused manufacturing function. There may be were, they would be policies or procedures. They
some common organizational values or norms, but are passed on by word of mouth or behaviour and
in some respects, these will vary between different can be enforced by the reactions of people if they
work environments. are violated. They can exert very powerful pressure
on behaviour because of these reactions – we con-
trol others by the way we react to them. Typical
The components of culture norms are:
Organizational culture can be described in terms of ●● How managers treat the members of their
values, norms, artefacts and management or leader- teams (management style) and how the latter
ship style.
relate to their managers. The prevailing work which receptionists deal with outside calls.
ethic, eg ‘work hard, play hard’, ‘come in Artefacts can be very revealing.
early, stay late’, ‘if you cannot finish your
work during business hours you are Management style
obviously inefficient’, ‘look busy at all times’,
‘look relaxed at all times’. The approach managers use to deal with people –
their management or leadership style – is a signifi-
●● Status – how much importance is attached to cant part of the culture of an organization.
it; the existence or lack of obvious status Management style can be described in terms of the
symbols. following extremes:
●● Ambition – naked ambition is expected and
approved of, or a more subtle approach is charismatic ↔ non-charismatic
the norm. autocratic ↔ democratic
●● Performance – exacting performance
controller ↔ enabler
standards are general; the highest praise that
can be given in the organization is to be transactional ↔ transformational
referred to as ‘very professional’.
Most managers adopt an approach somewhere be-
●● Power – recognized as a way of life; executed tween the extremes. Some will vary it according to
by political means, dependent on expertise the situation or their feelings at the time; others will
and ability rather than position; concentrated stick to the same style whatever happens. Every
at the top; shared at different levels in manager has his or her own style but this will be
different parts of the organization. influenced by the organizational culture which may
●● Politics – rife throughout the organization produce a prevailing management style that repre-
and treated as normal behaviour; not sents a behavioural norm for managers that is gen-
accepted as overt behaviour. erally expected and adopted.
●● Loyalty – expected, a cradle-to-grave
approach to careers; discounted, the
emphasis is on results and contribution in Classifying organizational culture
the short term. There have been many attempts to classify or catego-
●● Anger – openly expressed; hidden, but rize organizational cultures as a basis for analysis and
expressed through other, possibly political, for taking action to support or change them. Most of
means. these classifications are expressed in four dimensions;
●● Approachability – managers are expected to three of the best-known ones are summarized below.
be approachable and visible; everything Note that following the lead of Harrison, there is
happens behind closed doors. much common ground between them.
●● Formality – a cool, formal approach is the
norm; forenames are/are not used at all
levels; there are unwritten but clearly
understood rules about dress.
Source review
Organization ideologies
Artefacts
Artefacts are the visible and tangible aspects of an ●● Power-oriented – competitive, responsive to
organization that people hear, see or feel and personality rather than expertise.
which contribute to their understanding of the or- ●● People-oriented – consensual, management
ganization’s culture. Artefacts can include such
control rejected.
things as the working environment, the tone and
language used in emails, letters or memoranda, the ●● Task-oriented – focus on competency, dynamic.
manner in which people address each other at
●● Role-oriented – focus on legality, legitimacy and
meetings or over the telephone, the welcome (or
bureaucracy.
lack of welcome) given to visitors and the way in
Harrison (1972)
Appropriate cultures
Source review It is not possible to say categorically that one culture
is better than another although a culture may be re-
Culture typology garded as good or bad to differing degrees. What can
be said is that a culture is to a greater or lesser extent
●● The power culture is one with a central power appropriate in the sense that it is relevant to the
source that exercises control. There are few needs and circumstances of the organization and
rules or procedures and the atmosphere is helps rather than hinders its performance. Embedded
competitive, power-oriented and political. cultures can exert considerable influence on organi-
zational behaviour so if there is an appropriate and
●● The role culture in which work is controlled by
effective culture it would therefore be desirable to
procedures and rules and the role, or job
take steps to support or reinforce it. If the culture is
description, is more important than the person
inappropriate, attempts should be made to determine
who fills it. Power is associated with positions
what needs to be changed and to develop and imple-
not people.
ment plans for change. A culture will be more effec-
●● The task culture in which the aim is to bring tive if it is consistent in its components and shared
together the right people and let them get on amongst organizational members, and if it makes the
with it. Influence is based more on expert power organization unique, thus differentiating it from
than on position or personal power. The culture other organizations.
is adaptable and teamwork is important.
●● The person culture in which the individual is the Organizational climate
central point. The organization exists only to
serve and assist the individuals in it. As defined by Harrison and Shirom (1999: 263), or-
Handy (1981) ganizational climate refers to the perceptions of an
organization’s members of organizational features
such as decision making, leadership and norms
about work. Bowen and Ostroff (2004) observed
that an important element in organizational climate
Source review is the group or bundle of people management prac-
tices as perceived by employees. Ivancevich et al
(2008: 528) described organizational climate as ‘A
Classification of cultures set of properties of the work environment, per-
●● Power culture in which leadership resides in a ceived directly or indirectly by the employees, that
few and rests on their ability and tends to be is assumed to be a major force in influencing em-
entrepreneurial. ployee behaviour.’
The term ‘organizational climate’ is sometimes
●● Role culture in which power is balanced confused with ‘organizational culture’ and there
between the leader and the bureaucratic has been much debate on what distinguishes one
structure. The environment is likely to be stable from the other. In Denison’s (1996) analysis of this
and roles and rules are clearly defined. issue, he suggested that ‘culture’ refers to the deep
structure of organizations, which is rooted in the
●● Achievement culture in which personal
values, beliefs and assumptions held by organiza-
motivation and commitment are stressed and
tional members. In contrast, ‘climate’ refers to those
action, excitement and impact are valued.
aspects of the environment that are consciously per-
●● Support culture in which people contribute out ceived by organizational members. Rousseau
of a sense of commitment and solidarity. (1988) stated that climate is a perception and is de-
Schein (1984) scriptive. Perceptions are sensations or realizations
experienced by an individual. Descriptions are what
a person reports of these sensations.
The debate about the meanings of these terms and Smith (1993) as a small number of people with
can become academic. It is easiest to regard organi- complementary skills who are committed to a com-
zational climate as how people perceive (see and mon purpose, performance goals and approach for
feel about) the culture existing in their organiza- which they hold themselves mutually accountable.
tion. French et al (1985) distinguish between the Formal teams or groups are created by organiza-
actual situation (ie culture) and the perception of it tions to achieve a defined purpose. People are
(ie climate). brought together with the necessary skills to carry
out the tasks and a system exists for directing, coor-
dinating and controlling the team’s activities.
Organizational processes Informal groups are set up by people in organiza-
tions who have some affinity for one another. It
A number of social processes take place in organi- could be said that formal groups satisfy the needs of
zations that affect how they function. These are in- the organization while informal groups satisfy the
teraction and networking, communication, group needs of their members. A team or group can be a
behaviour (team work), role behaviour, leadership, permanent or a temporary feature in an organiza-
power, politics and conflict. tion. Interactions take place within and between
teams and groups and the degree to which these
processes are formalized varies according to the or-
Interaction and networking ganizational context.
Teams and groups develop an ideology that af-
Interactions between people criss-cross the organi-
fects the attitudes and actions of their members and
zation, creating networks for getting things done
the degree of satisfaction they feel. If the group ide-
and exchanging information that is not catered for
ology is strong and individual members identify
in the formal structure. ‘Networking’ is an increas-
closely with the group, it will become increasingly
ingly important process in flexible and delayered
cohesive. Group norms or implicit rules will be
organizations where more fluid interactions across
evolved that define what is acceptable behaviour
the structure are required between individuals and
and what is not. This is described as a ‘reference
teams. Networking means that people canvass
group’, which consists of the group of people with
opinion and enlist support to promote their projects
whom an individual identifies. The individual ac-
or ideas. In this way they may get more done than
cepts the group’s norms and, if in doubt about what
by going through formal channels. People also get
to do or say, reference is made to these norms or to
things done in organizations by creating alliances –
other group members before action is taken. Most
getting agreement on a course of action with other
people in organizations belong to a reference group
people and joining forces to put the proposed ac-
and this can significantly affect the ways in which
tion into effect.
they behave.
Four stages of group development were identi-
fied by Tuckman (1965):
Communications
1 Forming, when there is anxiety, dependence
The communications processes used in organizations
on the leader and testing to find out the
have a marked effect on how they function, espe-
nature of the situation and the task, and
cially if they take place through the network, which
what behaviour is acceptable.
can then turn into the ‘grapevine’. Emails, texts and
WhatsApp messages encourage the instant flow of 2 Storming, where there is conflict, emotional
information (and sometimes produce information resistance to the demands of the task,
overload) but may inhibit face-to-face interactions, resistance to control and even rebellion
which are often the best ways of doing things. against the leader.
3 Norming, when group cohesion is
developed, norms emerge, views are
Group behaviour (team work) exchanged openly, mutual support and
cooperation increase and the group acquires
Organizations consist of groups or teams of people
a sense of its identity.
working together. A team was defined by Katzenbach
4 Performing, when interpersonal problems are Role theory, as formulated by Katz and Kahn
resolved, roles are flexible and functional, (1966) states that the roles people play at work
there are constructive attempts to complete exist in relation to other people – their role set. The
tasks and energy is available for effective members of the role set have expectations about the
work. roles their fellow members should play, who, if they
live up to these expectations, will have successfully
The term group dynamics was coined originally by
performed the role. Performance in a role is a func-
Kurt Lewin (1947) to mean the improvement of
tion of the situation individuals are in (the organiza-
group processes in organization development pro-
tional context and the direction or influence
grammes through various forms of training, eg
exercised from above or by other people). Stress and
team building, interactive skills training, T-groups.
inadequate performance result when roles are am-
The term is now often used to describe the ways in
biguous, when they are incompatible with what in-
which groups are formed and group or team mem-
dividuals believe is expected of them and what other
bers interact.
people, eg line managers, expect, and when conflict
A model of team effectiveness was produced by
arises between the different roles an individual
Hackman (2002). This describes enabling condi-
might have to carry out, eg at work and at home.
tions that consist of being a genuine team that is
interdependent, clearly delineated and stable, not a
nominal one. Other factors are a compelling direc-
tion, structure and processes that support team-
Leadership
work, a supportive climate and effective coaching. Organizations largely function by means of manag-
The Goals, Roles, Processes and Interpersonal ers and team leaders who exercise leadership in
Relationships (GRPI) model as described by Gifford order to get their teams into action and ensure that
and Wietrak (2022: 14) was developed in the 1970s they achieve the results expected of them. Goleman
and is used in management consultancy as a diag- (2000) reported that a study by Hay McBer of
nostic and in team building. It proposes that to be 3,871 executives, selected from a database of more
effective, a team requires clarity, agreement and than 20,000 executives worldwide, established that
support in four areas: leadership had a direct impact on organizational
climate, and that climate in turn accounted for
1 Goals: the team’s purpose, targets, desired
nearly one-third of the financial results of organiza-
results and progress toward these outcomes
tions. The conclusion from research conducted by
2 Roles: clear distribution of the task and Higgs (2006) was that leadership behaviour ac-
responsibilities within the team counts for almost 50 per cent of the difference be-
3 Processes: information sharing, decision tween change success and failure. Research by
making and problem solving Northouse (2006) into 167 US firms in 13 indus-
4 Interpersonal relationships: the quality of tries established that over a 20-year period leader-
relationships between team members and the ship accounted for more variations in performance
general atmosphere within the team. than any other variable. Leadership skills are de-
scribed in Chapter 77.
Role behaviour
Power
When faced with any situation such as carrying out
a job, people enact a role in order to manage that Organizations exist to get things done; in the pro-
situation. The concept of a role indicates that in a cess of doing this, people or groups exercise power.
sense, people at work are always acting a part; they Directly or indirectly, the use of power in influenc-
are not simply reciting the lines but instead are ining behaviour is a pervading feature of organiza-
terpreting them in relation to the context in which tions, whether it is exerted by managers, specialists,
they work. informal groups or trade union officials. It is a way
of achieving results, but it can be misused.
Politics ●● Values – what people believe is important.

●● Self-regulatory plans – the goals people set
Political behaviour is an inevitable feature of or- themselves and the plans they make to
ganizational life. The aim of organizational politi- achieve them.
cians is to get their own way by influencing people
to accept their point of view without going through These characteristics are affected by environmental
the usual channels or relying on their authority. or situational variables, which include the type of
Some individuals genuinely believe that the best work individuals carry out, the culture, climate and
way to get something done is by using political management style in the organization, the social
means, especially when they are frustrated by the group within which they work, and the ‘reference
normal decision processes. Others unashamedly groups’ individuals use for comparative purposes
pursue their own ends. Political behaviour can be (eg comparing conditions of work or pay between
harmful when it is underhand and devious, but it one category of employee and another).
can sometimes help to enlist support and overcome The personal characteristics that affect people’s
obstacles to getting results. All managers need po- behaviour at work, as discussed below, are their
litical skills, as described in Chapter 81, but, be- ability, attributions, intelligence, personality, atti-
cause of the nature of their role, such skills are par- tudes, emotions and emotional intelligence.
ticularly important for HR specialists.
Ability
Conflict Ability is the quality possessed by people that makes
Conflict is also inevitable in organizations because an action possible. Abilities have been analysed by
they function by means of adjustments and com- Burt (1954) and Vernon (1961). They classified
promises among competitive elements in their struc- them into two major groups: V:ed – verbal, numeri-
ture and membership. Conflict also arises when cal, memory and reasoning abilities; and K:m – spa-
there is change, because it may be seen as a threat to tial and mechanical abilities, as well as perceptual
be challenged or resisted, or when there is frustra- (memory) and motor skills relating to physical op-
tion. Conflict is not always deplorable. It can be a erations such as eye/hand coordination and mental
result of progress and change and it can be used dexterity.
constructively. They also suggested that overriding these abili-
ties there is general mental ability (GMA), which
accounts for most variations in performance.
Characteristics of people Following a meta-analysis of 85 years of research
findings, Schmidt and Hunter (1998) established
The development of HR processes and the design of that GMA was the most valid predictor of future
organizations are often predicated on the belief that performance and learning for selecting people with-
everyone is the same and that they will behave ra- out previous experience.
tionally when faced with change or other demands. Cognitive ability is the capacity of an individual
But the behaviour of people differs because of their to perform the various mental activities most closely
characteristics and individual differences and it is associated with learning and problem solving.
not always rational.
As classified by Mischel (1968) personal charac-
teristics can vary as follows: Attribution theory
●● Competencies – abilities and skills. Attribution is the process by which individuals ex-
plain the causes of behaviour and events. The way
●● Constructs – the conceptual frameworks
people make attributions affects their behaviour.
which govern how people perceive their
Kelley’s (1973) attribution theory details the pro-
environment.
cess for making attributions not only to other peo-
●● Expectations – what people have learnt to ple but to situational factors as well. According to
expect about their own and others’ his covariation model, an individual can make
behaviour.
confident attributions about cause-effect relation- ities that influence an individual’s characteristic
ships in situations depending on: behaviour patterns in a stable and distinctive man-
ner.’ Personality is organized into patterns that are,
●● the degree of distinctiveness – the event-
to some degree, observable and measurable and
effect is highly observable;
involves both common and unique characteris-
●● consistency – the event-effect presents itself tics – every person is different from every other
the same across time and modality (the person in some respects but similar to other people
attitude adopted to a situation); and in other respects. Personality is a product of both
●● consensus – there is agreement among nature (hereditary) and nurture (the pattern of life
individuals’ views of the event-effect experience). Personality can be described in terms
relationship. of traits or types.
Traits
Intelligence
Traits are predispositions to behave in certain ways
Intelligence has been variously defined as: in a variety of different situations. The leading
●● The capacity to solve problems, apply model of personality traits is the following ‘big five’
principles, make inferences and perceive classification (Costa and McRae, 1992; Digman,
relationships. (Argyle, 1989: 53) 1990):
●● The capacity for abstract thinking and 1 Openness – inventive/curious or consistent/

reasoning with a range of different contents cautious.
and media. (Toplis et al, 2004: 20) 2 Conscientiousness – efficient/organized or
●● What is measured by intelligence tests. easy-going/careless.
(Wright and Taylor, 1970: 31) 3 Extraversion – outgoing/energetic or solitary/
The last, apparently tautological definition is not reserved.
facetious. As an operational definition, it can be re- 4 Agreeableness – friendly/compassionate or
lated to the specific aspects of reasoning, inference, cold/unkind.
cognition (ie knowing, conceiving) and perception 5 Neuroticism – sensitive/nervous or secure/
(ie understanding, recognition), that intelligence confident.
and cognitive ability tests attempt to measure.
General intelligence (GI) consists of a number of The assumption that people are consistent in the
mental abilities that enable a person to succeed at a ways they express these traits is the basis for mak-
wide variety of intellectual tasks that use the facul- ing predictions about their future behaviour. We all
ties of knowing and reasoning. It can be measured attribute traits to people in an attempt to under-
by an intelligence test and is sometimes expressed as stand why they behave in the way they do. But peo-
an intelligence quotient (IQ), which is the ratio of ple do not necessarily express the same trait across
an individual’s mental age to the individual’s actual different situations or even the same trait in the
age as measured by an intelligence test. same situation. Different people may exhibit con-
The concept of emotional intelligence (as de- sistency in some traits and exhibit considerable
scribed later) stresses that emotional maturity – in variability in others.
the sense of the ability to identify, assess and man-
age the emotions of one’s self and others – is also Types
important. Type theories of personality identify a number of
types of personality that can be used to categorize
people and may form the basis of a personality
Personality test. The types may be linked to descriptions of
Personality has been defined by Huczynski and various traits. One of the most widely used type
Buchanan (2007: 138) as ‘The psychological qual-
theories is that of Jung (1923). He identified four sadness, joy, anticipation and acceptance. The mild-
major preferences: est forms of emotions are called ‘moods’, which are
low-intensity, long-lasting emotional states.
●● relating to other people – extraversion or
introversion;
●● gathering information – sensing (dealing Emotional intelligence
with facts that can be objectively verified), or
intuitive (generating information through The notion of emotional intelligence was first de-
insight); fined by Salovey and Mayer (1990), who proposed
that it involves the capacity to perceive emotion,
●● using information – thinking (emphasizing
integrate emotion in thought, understand emotion
logical analysis as the basis for decision-
and manage emotions effectively. Goleman (1995)
making), or feeling (making decisions based
popularized the concept. He defined emotional in-
on internal values and beliefs);
telligence as ‘The capacity for recognizing our own
●● making decisions – perceiving (collecting all feelings and that of others, for motivating ourselves,
the relevant information before making a for managing emotions well in ourselves as well as
decision), or judging (resolving the issue others.’ He suggested that its four components are:
without waiting for a large quantity of data).
1 Self-management – the ability to control or
This is the basis of personality tests such as the redirect disruptive impulses and moods and
Myers-Briggs Types Indicator. regulate own behaviour coupled with a
Types should be distinguished from traits. As propensity to pursue goals with energy and
Huczynski and Buchanan (2007: 142) put it: ‘Type persistence. The six competencies associated
approaches fit people into categories possessing with this component are self-control,
common behaviour patterns. A personality trait, on trustworthiness and integrity, initiative,
the other hand, is an enduring behaviour that oc- adaptability – comfort with ambiguity –
curs in a variety of settings. While individuals be- openness to change and strong desire to achieve.
long to types, traits belong to individuals.’
2 Self-awareness – the ability to recognize and
understand your moods, emotions and drives
as well as their effect on others. This is linked
Attitudes to three competencies: self-confidence,
An attitude can broadly be defined as a settled mode realistic self-assessment and emotional
of thinking. Attitudes are evaluative. They are de- self-awareness.
veloped through experience but they are less stable 3 Social awareness – the ability to understand
than traits and can change as new experiences are the emotional make-up of other people, and
gained or influences absorbed. Within organizations skill in treating people according to their
they are affected by cultural factors (values and emotional reactions. This is linked to six
norms); the behaviour of management (manage- competencies: empathy, expertise in building
ment style); policies such as those concerned with and retaining talent, organizational
pay, recognition, promotion and the quality of awareness, cross-cultural sensitivity, valuing
working life; and the influence of the ‘reference diversity, and service to clients and customers.
group’ (the group with whom people identify).
4 Social skills – proficiency in managing
Sometimes there may be a discrepancy between at-
relationships and building networks to get
titudes and behaviour, ie someone may believe in
the desired result from others and reach
one thing – such as being fair to people – but act
personal goals, and the ability to find
differently. This is called ‘cognitive dissonance’.
common ground and build rapport. The five
competencies associated with this component
are: leadership, effectiveness in leading
Emotions change, conflict management, influence/
Emotions are feelings that arouse people and there- communication, and expertise in building
fore influence their behaviour, such as anger, fear, and leading teams.
According to Goleman, it is not enough to have a detailed analysis of how the elements attributed to
high IQ; emotional intelligence is also required. emotional intelligence overlap with the typical behav-
Since Goleman’s contribution, three major models ioural competencies included in competency frame-
of emotional intelligence, as summarized by Clarke works such as sensitivity, flexibility and adaptability.
(2007), have dominated thinking in this area:
1 Personality models have become the most
popular theory of emotional intelligence
Implications for HR
following Goleman. Here, emotional specialists
intelligence is viewed as comprising emotional
dispositions as well as competencies. These The main implications of organizational behaviour
dispositions range from individual traits to a theory for HR specialists are summarized below.
number of learnt capabilities and are contained
within the components of emotional
intelligence listed above. How organizations function
2 Ability models view emotional intelligence
When involved in organization design bear in mind
more narrowly as a set of cognitive abilities
that, while the highly structured classical model
that involve the capacity to identify, reason
with clearly defined roles and lines of control and
with and utilize emotions effectively.
communication may appear to be the ideal solution,
3 Mixed models comprise aspects of in practice organizations function differently. It is
personality as well as abilities to reveal necessary to take into account the process school
emotional intelligence and manage emotions. and think of the organization as an operating model
As Clarke acknowledges, the ability and mixed consisting of a portfolio of dynamic processes that
models have been criticized as being ambiguous. overlay and often dominate the vertical, authority-
The ability model has been regarded as having based processes of the hierarchical structure.
greater validity. Similarly, organizational development activities
The notion that there is more to being effective should be based on an analysis and understanding
as a manager or working with people than having a of these dynamic processes.
high IQ is persuasive. What matters is how that in-
telligence is used, especially when relating to people.
The term ‘emotional intelligence’ has become a con- Organizational culture
venient and recognizable label for this requirement: While it may not be possible to define an ideal cul-
someone who is poor at dealing with people is de- ture or to prescribe how it should be developed, it
scribed as lacking in emotional intelligence. can at least be stated confidently that embedded
But doubts have been expressed about the notion. cultures exert considerable influence on organiza-
Edwin Locke (2005: 426), a distinguished occupational behaviour and therefore performance. If
tional psychologist and researcher, observed that: there is an appropriate and effective culture it is de-
The concept of emotional intelligence has now sirable to take steps to support or reinforce it. If the
become so broad and the components so variegated culture is inappropriate, attempts should be made
that no one concept could possibly encompass or to determine what needs to be changed and to de-
integrate all of them, no matter what the concept velop and implement plans for change (approaches
was called; it is no longer even an intelligible to culture management are described in Chapter 21).
concept. What is the common or integrating HR innovations need to take account of the culture
element in a concept that includes: introspection in which they will operate. They are likely to fail if
about emotions, emotional expression, non- they are countercultural.
verbal communication with others, empathy,
self-regulation, planning, creative thinking and the
direction of attention? There is none. Organizational climate
Mayer et al (2008) described it as mere ‘pop psychol- The perceptions of employees about the organization
ogy’. Dulewicz and Higgs (1999) have produced a and their experiences in it, which form the organization
climate, need to be assessed and understood so that grievances and disciplinary problems, it should be
action can be taken to deal with negative factors. remembered that all people are different. What ful-
Diagnostics (diagnostic tools), as described in fils or motivates one person may not fulfil or moti-
Chapter 21, can be used for this purpose. vate another. Abilities, aptitudes and intelligence
differ widely and it is necessary to take particular
care in fitting the right people in the right jobs and
Organizational processes giving them the right training. Personalities, atti-
tudes and emotions also differ. It is important to
The social processes of interaction and networking,
focus on how to manage diversity. This should take
communication, group behaviour, leadership,
account of individual differences, which will in-
power, politics and conflict need to be understood
clude any issues arising from the employment of
and considered when considering ways of improv-
women, people from different ethnic groups, those
ing organizational effectiveness (the ability of an
with disabilities and older people.
organization to achieve its goals by making effec-
tive use of the resources available to it). Social and
political factors can affect how HR decisions are
made and how well they are implemented.
Judgements on personality
Personality should not be judged or measured sim-
plistically in terms of stereotyped traits. People are
Individual characteristics complex, they change, and account has to be taken
of this. The problem for HR specialists and manag-
To manage people effectively, it is necessary to ap-
ers in general is that, while they have to accept and
preciate the factors that affect how they behave at
understand these differences and act accordingly,
work and act accordingly. These characteristics are
they have ultimately to proceed on the basis of fit-
their ability, attributions, intelligence, personality,
ting them to the requirements of the situation,
attitudes, emotions and emotional intelligence. It is
which are essentially what the organization needs to
also necessary when developing and implementing
achieve. There is a limit to the extent to which an
HR policies and practices to bear in mind the ways
organization that relies on collective effort to
in which people are motivated, the factors that af-
achieve its goals can adjust itself to the specific
fect commitment and engagement, and decision
needs of individuals. But the organization has to ap-
making, nudge and self-determination theories.
preciate that individuals have rights as well as du-
When designing jobs, preparing learning and de-
ties, and understand that the pressures it places on
velopment programmes, assessing and counselling
people can result in stress and can therefore be
staff, developing reward systems and dealing with
counterproductive.
Key learning points

People perform their roles within complex systems The sources and applications of
called organizations. The study of organizational
behaviour focuses on how this happens.
organizational behaviour theory
Organizational behaviour theory is based on the main
Organizational behaviour defined behavioural science disciplines. These are defined as
the fields of enquiry dedicated to the study of human
Organizational behaviour was defined by Huczynski behaviour through sophisticated and rigorous methods.
and Buchanan (2007) as the term used to describe ‘the
study of the structure, functioning, and performance of
organizations and the behaviour of groups and
How organizations function
individuals within them’. An organization is an entity that exists to achieve a
purpose through the collective efforts of the people
who work in or for it.
Organizing is the process of making arrangements The components of culture

in the form of defined or understood responsibilities
Organizational culture can be described in terms of
and relationships to enable those people to work
values, norms, artefacts and management style.
cooperatively together.
Organizations can be described as systems that, as
affected by their environment, have a structure that Classifying organizational culture
has both formal and informal elements. (Harrison, 1972):
Organization structures are frameworks for getting
●● Power-oriented – competitive, responsive to
things done.
personality rather than expertise.
Traditional formal structures were based on
laid-down hierarchies (lines of command) represented ●● People-oriented – consensual, management
in organization charts, and use was made of closely control rejected.
defined job descriptions. But to varying extents
●● Task-oriented – focus on competency, dynamic.
organizations operate informally as well as formally by
means of a network of roles and relationships that cut ●● Role-oriented – focus on legality, legitimacy and
across formal organizational boundaries and lines of bureaucracy.
command.
Appropriate cultures
Organizational culture
It is not possible to say that one culture is better than
The culture of an organization has been described by another, only that a culture is to a greater or lesser
Deal and Kennedy (2000: 4) as ‘the way we do things extent appropriate in the sense that it is relevant to the
around here’. Organizational or corporate culture is needs and circumstances of the organization and
the pattern of values, norms, beliefs, attitudes and helps rather than hinders its performance.
assumptions that may not have been articulated but
shape the ways in which people in organizations Organizational climate
behave and the ways in which things get done.
As defined by Harrison and Shirom (1999),
organizational climate refers to ‘members’ perceptions
How organizational culture develops
of organizational features such as decision making,
The values and norms that are the basis of culture are leadership and norms about work’.
formed in four ways:
●● By the leaders in the organization, especially those Organizational processes
who have shaped it in the past. A number of social processes take place in
●● Around critical incidents – important events from organizations that affect how they function. These are:
which lessons are learnt about desirable or interaction and networking, communication, group
undesirable behaviour. behaviour, role behaviour, leadership, power, politics
and conflict.
●● From the need to maintain effective working
relationships among organization members; this
establishes values and expectations.
Personal characteristics
The personal characteristics that affect people’s
●● Influenced by the organization’s environment. The
behaviour at work are their ability, intelligence,
external environment may be relatively dynamic or
personality, attitudes, emotions and emotional
unchanging.
intelligence.
and sensitivity to the feelings of others. Someone with

Emotional intelligence
high levels of emotional intelligence should be able to
Emotional intelligence is a combination of skills and relate to people effectively.
abilities such as self-awareness, self-control, empathy
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organizational culture and organizational climate? Diagnosis and Assessment, Thousand Oaks, CA,
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18
Organization design
sometimes assumed, an approach based on accepted
Introduction principles that produces an inevitable ‘best’ result,
although, as listed in the second section, there are a
Organization design requires decisions on how the number of guidelines that can be taken into account
work carried out in the organization should be di- even if they are not followed rigidly. And, as ex-
vided between individuals and groups of people and plained in the third section of the chapter, there is
how the relationships between them should take always organizational choice. Ultimately, the ways
place. The aim is to ensure that people work effec- in which an organization functions and therefore its
tively together to achieve the overall purpose of the structure (or sometimes its lack of structure) are
organization. contingent on its context. This consists of its busi-
The basic question of ‘Who does what?’ is an- ness model, the people who work in the organiza-
swered by management and line managers but HR tion, the interests of the other stakeholders and the
specialists are also involved because they are there to systems and techniques it uses to achieve its pur-
help the business to make the best use of its people. pose. However, it is useful to adopt a logical and
HR professionals contribute to organization design systematic approach to organizational design in the
or redesign activities by using their understanding of light of an awareness of the conditions required for
the factors affecting organizational behaviour and success, as considered in the last two sections of the
their knowledge of the business as a whole. chapter.
The design or redesign of organizations happens
all the time in response to changes in work arrange-
ment and systems, the introduction of new
technologies and the launch of new activities. But
Organization design
organization design is also affected by macro trends theories
including those concerned with technology, the
availability of people, the effect of political changes Organization design theories propose that:
such as Brexit and the impact of the Covid-19 pan-
demic on home and hybrid working. And it is diffi- ●● Organizations are open systems consisting of
cult to get it right, as was pointed out by Charles a number of interrelated parts and
Handy (1985: 13): transferring inputs into outputs (systems
theory, Miller and Rice, 1967; Bertalanffy,
The multiplicity of variables impinging on any one 1968).
organizational situation is so great that data on all
of them sufficient to predict the precise outcome of ●● There are usually a number of ways to
that multiple relationship would never in practice achieve an objective and there are therefore
be forthcoming. usually a number of ways in which to
structure an organization (the principle of
There is a considerable body of organization design equifinality, Bertalanffy, 1968).
theory and some prominent views are summarized
●● An organization’s structure will be dependent
in the first section of this chapter. Much of the the-
on the circumstances in which it exists such
ory refers to the complex nature of organizations
as its purpose, technology, size and
and suggests that organization design is not, as is
environment – this means that ideal
Chapter 18 | Organization Design 159
structures do not exist and it is most sequences of activities that convert inputs into out-
important to achieve ‘best fit’ (contingency puts. Thus, ‘order fulfilment’ is a process that starts
theory, Lawrence and Lorsch, 1969). with an order as its input and results in an ‘output’:
●● Organizations consist of a portfolio of the delivery of the ordered goods. The organization
dynamic processes that overlay the authority- design should ensure that the flow of such processes
based processes of the hierarchical can proceed smoothly, efficiently and effectively.
structure – the emphasis is on ‘horizontal The work that needs to be done and accountabil-
tasks’, collaboration and networking across ities for results should be defined and agreed with
units rather than on ‘vertical tasks’ within teams and individual jobholders.
functional units (process theory, Ghoshal and Matters requiring a decision should be dealt with
Bartlett, 1995). as near to the point of action as possible by indi-
viduals or self-managing teams. Managers should
not try to do too much themselves, nor should they
Organization design supervise too closely.
guidelines
Levels in the structure
Organization design is always an empirical and Too many levels of management and supervision
evolutionary process for which absolute principles inhibit communication and teamwork and create
cannot be laid down. But there are a number of extra work (and unnecessary jobs). The aim should
broad guidelines that can be taken into account be to reduce the number of levels to a minimum.
even if they are not followed slavishly. However, the elimination of middle managers and
wider spans of control mean that more attention
has to be paid to improving teamwork, delegation
Allocation of work and methods of integrating activities.
In a traditional structured, ‘mechanistic’ organiza-
tion, related activities are grouped logically to-
gether into functions and departments. Unnecessary Span of control
overlap and duplication of work, either horizon- There are limits to the number of people anyone
tally or vertically within a hierarchy, are avoided. can manage or supervise well, but these vary con-
However, in an ‘organic’ organization where the siderably between different jobs. Most people can
emphasis is on horizontal processes, the elimina- work with a far greater span of control than they
tion of boundaries between functions, teamwork imagine, as long as they are prepared to delegate
and flexible roles, a fluid approach is appropriate more effectively, to avoid becoming involved in too
with scope for rearranging work as required. The much detail, and to develop good teamwork among
latter type of organization is becoming more com- the individuals reporting to them. In fact, wide
mon, especially in firms mainly involved in research spans of control are beneficial in that they can en-
and development and businesses which have to be hance delegation and better teamwork and free the
agile in the face of customer demands and rapidly higher-level manager to spend more time on policy-
changing circumstances. 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 be
members of those teams are responsible on a con- 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 able only to one boss for the results they achieve,
to avoid confusion on operational matters. But in a or organizational units will vary widely according to
project-based or matrix organization, individuals what they are there to do and the activities they have
might be responsible to their project leader for to carry out. That is why there are no absolute prin-
contributing to the outcome of the project while ciples. It all depends.
also being responsible to their departmental man- Burns and Stalker (1961) established in their study
ager or the head of their discipline for the continu- of electronic companies in Scotland that in stable con-
ing requirements ditions a highly structured or ‘mechanistic’ organiza-
Individuals in functional roles such as finance or tion will emerge that has specialized functions, clearly
HR may be directly responsible to a line manager but defined jobs, strict administrative routines and a hier-
may also have a ‘dotted line’ relationship of responsi- archical system of exercising control. However, when
bility to the head of their function on policy matters. the environment is volatile, a rigid system of ranks
and routine will inhibit the organization’s speed and
sensitivity of response. In these circumstances the
Decentralization structure is, or should be, ‘organic’ in the sense that it
is a function of the situation in which the enterprise
Authority to make decisions should be delegated as
finds itself rather than conforming to any predeter-
close to the action as possible.
mined and rigid view of how it should operate.
Child (1972) explained that in making such
choices the leadership group (the ‘dominant coali-
Optimize the structure tion’) has to be persuaded to influence the organiza-
Try to develop an ideal organization by all means, but tion structure through an essentially political process.
also remember that it may have to be modified to fit He called this process ‘strategic choice’. Choice anal-
in the particular skills and abilities of key individuals. ysis regards debate and negotiation in the social
networks existing in organizations as integral to

decision making on organizational structures.
Relevance to purpose and context As noted by Parker et al (2001: 418):
‘Organizations... differ from the rather static and
The organization has to be developed to meet the
inflexible enterprises of earlier times. Greater flexi-
needs of its situation. In today’s conditions of tur-
bility is required to enable the rapid delivery of low-
bulence and change, this inevitably means a ten-
cost, high-quality and customized products, and to
dency towards more decentralized and flexible
provide increasingly powerful and demanding cus-
structures, with greater responsibility given to in-
tomers with seamless service.’ They also commented
dividuals and an extension of the use of task
that the use of teamworking and other flexible
forces and project teams to deal with opportuni-
forms of working continues to grow, distinctions
ties or threats. This implies an informal, non-
between departments are disappearing as organiza-
bureaucratic, organic approach to organization
tions become more integrated, and IT has changed
design – the form of the organization will follow
and is changing the way in which work is con-
its function, not the other way around.
ducted. These considerations may indicate that a
The organization may be largely based on multi-
hierarchical and rigid structure is inappropriate and
disciplinary project teams, as in a matrix organiza-
a more flexible approach is required. As stated by
tion, networking may be a way of life, or greater
Cummings and Worley (2005: 516), this means that
emphasis will be placed on ensuring that flows of
the traditional ‘mechanistic’ approach to organiza-
work involved in the key business processes are
tion design may be replaced by an ‘organic’ ap-
properly catered for rather than the creation of a
proach as shown in Table 18.1.
traditional formal and hierarchical structure.
In accordance with systems theory and the prin-
ciple of equifinality (the premise that multiple or-
Organizational choice ganizational forms are equally effective), Huczynski
and Buchanan (2007: 89) suggested that:
There is never one best way of organizing anything. It is not necessary to specify in detail the
There is always a choice. It is necessary to bear in organization structure and the duties of each
mind that structural requirements in organizations member. If an organization can develop its
TA B L E 18.1 Mechanistic and organic design
Mechanistic design Organic design

Structure Formal Informal
Hierarchical (command and control) Flat, lean and flexible – horizontal processes
Distinct functional units Lattice structure
Work Tightly defined jobs Flexible roles
Minimal scope in jobs for decision Enriched roles with more autonomy
making Self-managed teams
Closely controlled work groups
own method of operating and change that as 2 Structural analysis to determine how
circumstances require, then it will be necessary activities are grouped together; the number
only to detail the basic and most significant of levels in the hierarchy; the extent to which
aspects. This approach to organization design is authority is decentralized to divisions and
called ‘minimum critical specification’. strategic business units (SBUs); where
functions such as finance, HR, IT and
research and development are placed in the
The approach to structure (eg as central functions or
integrated into divisions or SBUs); the
organization design relationships that exist between different
units and functions (with particular attention
In exercising organizational choice an organiza- being given to the way in which they
tional review, as described below, will help in the communicate and cooperate with one
evaluation of the alternatives, but the law of the another). Attention would be paid to such
situation, as described originally by Mary Parker issues as:
Follett (1924), should prevail. This states that the ❍❍ the logic of the way in which activities are
work that people are required to do depends on the grouped (this may be in accordance with
objective requirements of the situation. The final function, product, market or location) and
choice will depend upon the context and circum- decentralized;
stances of the organization – as Lupton (1975) ❍❍ the span of control of managers (the
pointed out, it is important to achieve best fit. number of separate functions or people
Organizations may evolve organically without any they are directly responsible for);
conscious attempt to design them. But if a deliberate
design programme is planned this should be based on ❍❍ any overlap between functions or gaps
the evidence that can be produced by an organization leading to the neglect of certain activities
review which may cover the whole organization or or duplication;
part of it (a strategic business unit, a function or a ❍❍ the existence of unnecessary departments,
department). A review of the whole organization can units, functions or layers of management;
be conducted in the following stages: ❍❍ the clarity with which individual
1 Activity analysis to establish what work is responsibilities and accountabilities are
done and what needs to be done. Two defined.
questions need to be answered: (i) are all the 3 Diagnosis to identify (on the basis of the
activities required properly catered for? (ii) activities and structural analyses) the reasons
are any unnecessary activities being carried for any structural or system problems facing
out? the organization or function.
4 The choice in the light of the analyses and which elements of structure can be added and
diagnosis of how the business or part of it deleted at will, a sort of organizational bazaar.
should be designed or revised.
The worst sin that organization designers can com-
5 A plan to implement any revisions to the mit is that of imposing their own ideology on the
structure, possibly in phases. organization. Their job is to be eclectic in their
A review of part of an organization would take knowledge, sensitive in their analysis of the situa-
place in broadly similar stages. tion and deliberate in their approach to the evalua-
tion of alternatives. And they need to remember the
point made by Cyert and Marsh (1963) that
Successful organization ‘Organizational decisions depend on information,
estimates and expectations that ordinarily differ ap-
design preciably from reality.’
Research conducted by Whittington and Molloy
Organizations are not static things. Changes are (2005) indicated that to achieve success in organi-
constantly taking place in the business itself, in the zation design it is necessary to:
environment in which the business operates and in ●● obtain top management support, especially
the people who work in the business. There is no personal commitment and political support;
such thing as an ideal organization. The most that
can be done is to optimize the processes involved, ●● avoid piecemeal, uncoordinated change
remembering that whatever structure evolves it will initiatives by making a strategic business case
be contingent on the circumstances. An important that anticipates implications across the entire
point to bear in mind is that organizations consist organization;
of people working more or less cooperatively to- ●● achieve substantive, rather than tokenistic,
gether. Inevitably, and especially at managerial lev- employee involvement in the change process,
els, the organization may have to be adjusted to fit moving beyond communication to active
the particular strengths and attributes of the people engagement;
available. The result may not conform to the ideal, ●● invest in communications with external
but it is more likely to work than a structure that stakeholders, including customers, suppliers
ignores the human element. It may be desirable to and financial stakeholders;
have an ideal structure in mind, but it is also desir- ●● involve HR professionals closely, right from
able to modify it to meet particular circumstances, the start – involving HR has been proven to
as long as there is awareness of any potential prob- positively impact on a range of performance
lems that may arise. Henry Minzberg (1991: 332) outcomes;
warned that
●● maintain effective project management
A great many problems in organizational design disciplines;
stem from the assumption that organizations are
●● build skilled change management teams –
all alike; mere collections of component parts to
with the right mix of experience and
abilities – that can work together.
Key learning points
Organization design theories Organization design guidelines

The main organization design theories are systems There are a number of organization design guidelines
theory, the principle of equifininity, contingency theory that should be taken into account although they should
and process theory. not be followed slavishly.
Aims of organization design Organization diagnosis

The overall aim of organization design is to optimize The aim of the diagnosis is to establish, on the basis
the arrangements for conducting the affairs of the of the analysis, the reasons for any structural
business or function and thus achieve the ‘best fit’ problems facing the organization or function.
between the structure and what the business or
function is there to do. Successful organization design
Organizations are not static things. Changes are
Organizational choice constantly taking place in the business itself, in the
There is never one best way of organizing anything. environment in which the business operates and in the
There is always a choice. people who work in the business. There is no such
thing as an ‘ideal’ organization. The most that can be
Organization analysis done is to optimize the processes involved,
remembering that whatever structure evolves it
The starting point for an organization review is an will be contingent on the circumstances of the
analysis of the existing circumstances, structure and organization.
processes of the organization and an assessment of
the strategic issues that might affect it in the future.
References
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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
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OH, South Western Minzberg, H (1991) Organization design: fashion or
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164
19
Work design
More recently, the concept of ‘smart working’
Introduction has emerged. This was followed by that of ‘agile
working’. Essentially, these mean developing and
Work design is concerned with developing the managing a flexible and quickly responsive work
systems of work carried out in the organization – environment in order to release employees’ energy
the processes, practices and technology used to get and drive business performance. There have also
things done by people. Work design is closely asso- been major developments in automation and the
ciated with job design in that the latter is conducted use of artificial intelligence.
within the context of the system of work. However, before describing these developments
This chapter starts with a short history of how it is first necessary to examine overall approaches to
the approach to work design has developed. The work system design.
next two sections describe work design and how it
is carried out.
Work system design
Work design – a short Work system design is concerned with how the var-
history ious processes required to make a product or pro-
vide a service should operate together. It deals with
Work design began with the concept of the division the set of related activities that combine to give a
of labour originated by Adam Smith (1776). Much result that customers want. The structure of the sys-
later came ‘Taylorism’, the scientific management tem describes the relations between different opera-
movement pioneered by Taylor (1911), which was tions. Importantly, work system design must take
based on the belief that the most efficient way to do account of what needs to be done to maximize the
tasks was to remove the responsibility for how to contribution and meet the needs of the people who
do the work from the individual employee to engi- will be working in the system. This is the focus of
neers or managers. The next step was ‘Fordism’, the the concepts of smart and agile working.
moving assembly line introduced by Henry Ford in A work system may be centred on activities such
1914. Thereafter, the practice of work simplification as manufacturing, chemical processing, information
became embedded in organizations and to a large processing, supply, distribution, transport, the pro-
extent still exists. vision of public services or customer service. There
The first move away from this situation was pro- is usually a choice between different processes
vided by the concept of job enrichment popularized within the work system which will include automa-
by Herzberg (1968), who referred to it as ‘vertical tion. Work system design is affected by the extent to
job loading’. This was reinforced by job design the- which the organization is process-centred and it
ory (Hackman and Oldham, 1974) as discussed in will involve the technique of process planning as
Chapter 22. described below.
Chapter 19 | Work Design 165
Process-centred organizations factory ergonomic conditions exist, and eliminating

as far as possible the stress that working require-
Process-centred organizations avoid rigid work sys- ments may generate. So far as possible jobs should
tems and instead concentrate on the stream of prod- be designed to provide scope for variety, challenge
ucts or services required and the processes required and autonomy.
to ensure that work flows smoothly to the ultimate
satisfaction of the customer or client. The focus will
be on horizontal processes that cut across organiza- Approaches to work design
tional boundaries. Roles will be flexible and team-
work encouraged. There are a number of approaches to work system
as described below.
Process planning
Work system design covers the planning of pro- Smart working
cesses such as flexible manufacturing systems (com- As defined by the CIPD (2008: 4), smart working is
puter numerical control machines controlled by a ‘An approach to organizing work that aims to drive
central computer that allows fast and easy changes greater efficiency and effectiveness in achieving job
between products), and supply chain management outcomes through a combination of flexibility, au-
(the control of products from the original suppliers tonomy and collaboration, in parallel with optimiz-
of materials through to the final customers). It may ing tools and working environments for employees.’
involve facility layout – the physical arrangement The CIPD (2014a) reported that their survey re-
of equipment, offices, rooms, work stations (in- vealed that smart working was named as one of the
cluding ‘hot-desks’ – individual desks shared be- top tactics to improve productivity by 56 per cent
tween several people) and other resources. It will of organizations in the UK, including 60 per cent of
also consider the use of automation and artificial organizations in the public sector.
intelligence. The characteristics of smart working as estab-
Process planning may determine how manufac- lished by the CIPD research were:
turing or the provision of a service should be di-
vided into a series of stages such as machines in a ●● flexibility in work locations and hours
production line, each of which uses resources and ●● self-management – a high degree of
adds value. autonomy and a philosophy of
empowerment;
●● the use of virtual teams (work groups that
Requirements to be met in work mainly uses electronic means for members to
system design interact with one another);
●● focus on outcome-based indicators of
When designing a work system it is necessary to see
performance;
that it will fit work requirements for efficiency by
providing for the smooth flow of processes or ac- ●● high-performance working;
tivities and facilitating the effective use of resources. ●● use of more advanced communications
It should also respect environmental requirements. technology;
The system should encourage cooperative effort ●● hot-desking and working from home;
through teamworking and take account of the needs
●● ways of working that are underpinned by or
of employees for good working conditions and a
drive high-trust working relationships;
healthy and safe system of work. This means paying
close attention to health and safety requirements: ●● alignment of smart working with business
minimizing the risk of accidents, ensuring that satis- objectives.
C A S E S T U DY
Smarter working in the UK Civil Service
The smarter working programme in the UK Civil Service ●● Be fair and considerate about using space in the office.
was initiated under the heading of ‘The Way We Work’ ●● Support each other to succeed together.
(TW3 for short). It was designed to help realize the Civil
Service Reform Plan’s aim of ‘Creating a decent
Agile working
working environment for all staff, with modern
workplaces enabling flexible working, substantially The concept of agile working is closely related to that of
improving IT tools and streamlining security smart working but with a greater emphasis on the need to
requirements to be less burdensome to staff.’ It was respond quickly to the new demands made on
emphasized that for managers ‘This means moving organizations in today’s turbulent conditions. It was
away from managing by presence to managing by defined by the CIPD (2014b: 5) as follows:
outcome and using different ways of keeping in contact
Agile working is the ability to stay open to new directions
with the team, assessing workloads and monitoring
and be continually proactive, helping to assess the limits
performance.’ For the team, it was stated that ‘This
or indeed risks of existing approaches and ensuring that
means greater sharing of schedules with colleagues
leaders and followers have an agile and change-ready
and managers, filing information so that it can be
mindset to enable them and ultimately the organization
accessed by others and updating each other on work in
to keep moving, changing, adapting.
progress.’
The top tips for smart working were given as: The characteristics of the ‘agile’ business include a
high-performance culture, flexibility of management
●● Let others know where and when you are working.
practices and resources, and organizational structures
●● Make sure the reporting structure is clear. that support collaboration, rapid decision making and
execution. The CIPD noted that ‘agile manufacturing’ has
●● Share calendars and schedules.
developed as a production technology that enhances
●● Use electronic document management rigorously to ‘lean’ manufacturing by a greater emphasis on adaptability
make sure work is easily accessible to everyone. of change, for example, through its potential for fast
customization of products, as opposed to mass
●● Be flexible about flexible working so no one is
manufacturing. ‘Agile’ does not exist in isolation and uses
disadvantaged by the choices of others.
many principles of lean (such as continuous improvement),
●● Develop an etiquette for online communications and but applies those to the process and the way of working as
virtual meetings. a whole, rather than to the product. Agile teams rely on
self-organization, iterations, customer centricity,
●● Signpost availability for phone contact or online discussion.
knowledge-sharing, collaboration and mutual trust.
C A S E S T U DY
The work agility programme at Deloitte
The aim of this programme at Deloitte, the business advisory Deloitte recognized the need to create a culture where
firm, is to increase the agility around how its people output matters more than ‘presenteeism’, and where its
organize their working lives. It includes a range of options people feel trusted to work in a way that suits both them
around when and where its people work, and includes ‘Time and the business.
Out’ – the right to request a block of four weeks’ unsalaried
leave each year, without reason or justification.
Lean manufacturing
Lean manufacturing or lean production, often known with the letter ‘S’ (sorting, straightening, systematic
simply as ‘Lean’, is a process improvement methodol- cleaning, standardizing and sustaining). Reference to
ogy developed by Toyota in Japan. Lean focuses on these enables a dialogue to take place with employees
reducing waste and ensuring the flow of production on how work should be done and continuous im-
in order to deliver value to customers. It concentrates provement achieved.
initially on the design of the process so that waste can But as noted by the CIPD (2008: 11), the success
be minimized during manufacture. It then examines of Lean depends not so much on the tools but on its
operations in order to identify opportunities to im- approach to work. Lean is implemented by com-
prove the flow of production, remove wasteful prac- munities of people who carry out and supervise the
tices and engage in continuous improvement or work and may include stakeholders such as custom-
Kaizen (an important feature of Lean). Various tools ers. Lean team members are encouraged to think
are available, such as ‘FiveS’, which is a workplace flexibly and be adaptable to change. They have a
methodology that uses a list of five words starting sense of ownership of what they do and achieve.
C A S E S T U DY
Work organization: W L Gore
W L Gore, which is best known for its GORE-TEX® fabrics, areas or projects. Provided the core responsibilities within
has a non-hierarchical, flat organization structure (a their role are carried out, associates can then stretch and
‘lattice’ structure). There are no traditional organization build on their role to suit their interests, aspirations and the
charts, no ranks or job titles and no chains of command nor business needs. Gore’s ‘lattice’ structure gives associates
predetermined channels of communication. What is the opportunity to use their own judgement, take ownership
important when recruiting new people is that they have the of work areas and access the resources they need for
right fit with Gore’s culture. There are no rigid job projects to be successful. Gore’s core values and ways of
specifications. Instead, associates make a commitment to working are built on the principles of ‘smart working’. Its
contribute individually and collectively to work areas or unique culture, which fosters creativity, self-motivation,
projects according to their skills. Individuals are participation and equality, has proved to be a key
encouraged to take an interest in a wide variety of job contributor to associate satisfaction and retention.
Flexible working mation acquisition, information analysis, decision

and action selection and implementation.
Flexible working is a pattern of working practice or According to McKinsey (2019), today’s technol-
working hours that deviates from the standard or ogy means that 45 per cent of activities people are
normal arrangement. The aim is to provide for paid to do could be automated, and 60 per cent of
greater operational flexibility, improve the use of jobs could have 30 per cent or more of their activi-
employees’ skills and capacities, increase productiv- ties automated.
ity and reduce employment costs. It is also a way of A survey by the CIPD (2019) in association with
adjusting work patterns to fit personal needs and is PA Consultants established that the most com-
therefore an aspect of employee wellbeing. Flexible monly cited reasons for introducing automation
working has become increasingly important as a were:
means of enhancing operational effectiveness. It is
examined in detail in Chapter 32. ●● to improve the quality of goods and services
(38 per cent);
●● to deliver goods or services more cheaply
High-performance working (33 per cent) or to reduce overall costs
(32 per cent);
High-performance working was defined by Combs
et al (2006) as the sum of the processes, practices ●● to keep up with competitors (32 per cent) or
and policies put in place by employers to enable em- the wider industry (32 per cent).
ployees to perform to their full potential. They
referred to employee participation and flexible

working arrangements as examples of such systems The role of HR in work
that have a direct impact on ways of working and
therefore flow through to job design. design
High-performance work design requires man-
agement to define what it needs in the form of effec- HR professionals should be able to make an impor-
tive methods of production and the results expected tant contribution to work design based on their un-
from its introduction. It involves introducing a derstanding of the ways in which people can best be
high-performance work system (see Chapter 5) and used in work systems to their own benefit as well as
multiskilling – job demarcation lines are eliminated that of the organization. But as the CIPD (2019: 13)
as far as possible and encouragement and training observed, this doesn’t always happen.
are provided for employees to acquire new skills. Of the departments we listed in our survey, HR
Self-managed teams are set up with full responsibil- is the least likely to be involved in investment deci-
ity for planning, controlling and monitoring the sions on AI and automation (being involved in 55
work. per cent of cases). HR is especially unlikely to be
involved when the technology is being used for cog-
nitive tasks (50 per cent), which is interesting given
Automation that these changes may have greater implications
for skill sets required in organizations. There is a
Automation has been with us for some time but
strong argument to be made that HR should be in-
with the development of artificial intelligence tech-
volved in decisions that affect roles and therefore
niques it is becoming increasingly important. It is
should be an instrumental part of decision making
defined as the performance of tasks or activities by
on applications of AI and automation. For this rea-
machines, including robots and computers, rather
son, HR should look to develop the skills and
than humans. This means not only that physical
abilities to advise on where AI or automation could
tasks can be carried out better and more cheaply
provide skills augmentation. Their role should en-
than humans, but also that tasks can be performed
sure that the implementation of these technologies
involving cognitive activity, especially by means of
enables the design of new organizational structures
artificial intelligence. These tasks can include infor-
that deliver a more satisfying employee experience.
Key learning points
Work design of management practices and resources, and

organizational structures that support collaboration,
Work design is the creation of systems of work and a rapid decision making and execution.
working environment that enhance organizational
effectiveness and productivity, ensure that the
Lean manufacturing
organization becomes ‘a great place in which to work’
and are conducive to the health, safety and A process improvement methodology developed by
wellbeing of employees. Toyota. ‘Lean’ focuses on minimizing waste and
ensuring the flow of production in order to deliver
Work system design value to customers.
Work system design is concerned with how the

Flexible working
processes required to make a product or provide a
service should operate. It deals with the set of related Flexible working is a pattern of working practice or
activities that combine to give a result that customers working hours that deviates from the standard or
want. The structure of the system describes the normal arrangement.
relations between different operations.
High-performance working
Smart working High-performance working is the sum of the
The CIPD (2008: 4) defined smart working as ‘An processes, practices and policies put in place by
approach to organizing work that aims to drive greater employers to enable employees to perform to their full
efficiency and effectiveness in achieving job outcomes potential.
through a combination of flexibility, autonomy and
collaboration, in parallel with optimizing tools and Automation
working environments for employees.’
Automation has been with us for some time but with
the development of artificial intelligence techniques it
Agile working is becoming increasingly important. It is defined as the
The characteristics of the ‘agile’ business as noted by performance of tasks or activities by machines,
the CIPD include a high-performance culture, flexibility including robots and computers, rather than humans.
References
Chartered Institute of Personnel and Development Chartered Institute of Personnel and Development
(2008) Smart Working: How smart is UK PLC? (2014b) Getting Smart About Agile Working,
Findings from organizational practice, London, London, CIPD
CIPD Chartered Institute of Personnel and Development
Chartered Institute of Personnel and Development (2019) People and Machines: From hype to reality.
(2014a) Labour Market Outlook, London, CIPD, https://www.cipd.co.uk/knowledge/work/
Summer technology/people-machines-report (archived at
https://perma.cc/H6K4-MYD3)
Combs, J, Liu, Y and Hall, A (2006) How much do Herzberg, F (1968) One more time: how do you
high-performance work practices matter? A motivate employees? Harvard Business Review,
meta-analysis of their effects on organizational January–February, pp 109–20
performance, Personnel Psychology, 59 (3), pp McKinsey (2019) Insights on Organization, London,
501–28 McKinsey & Co
Hackman, J R and Oldham, G R (1974) Motivation Smith, A (1776) The Wealth of Nations,
through the design of work: test of a theory, Management, Harmondsworth, Penguin Books,
Organizational Behaviour and Human 1986
Performance, 16 (2), pp 250–79 Taylor, F W (1911) Principles of Scientific
Management, New York, Harper
171
20
Job design
The concept of job quality was featured in the
Introduction Taylor Review of Modern Working practices (2017)
in which Matthew Taylor called for policy to sup-
Frederick Herzberg was quoted by Dowling (1971) port the much wider issue of creating quality jobs
as saying ‘If you want someone to do a good job for all – his grand aspiration was that policy and
give them a good job to do’. Herzberg’s aphorism is practice should ensure that ‘all work should be fair
well known. But what is ‘a good job’? The purpose and decent with realistic scope for development and
of this chapter is to answer this question by examin- fulfilment’ (page 82). This was not just because it
ing the process of job design as a way to create would improve social welfare and ease some of the
‘good’ jobs. This is achieved by taking an initial deep divisions in British society, but because he saw
look at the concept of job quality, then defining it as central to addressing some of the deep-rooted
what is meant by ‘a good job’, next describing the economic challenges facing the UK. He referred to
principles and process of job design and finally by good work which is ‘shaped by working practices
considering the ways in which workers in effect de- that benefit employees through good reward
sign their own jobs, through ‘job crafting’. schemes and terms and conditions, having a secure
position, better training and development, good
communication and ways of working that support
Job quality task discretion and involve employees in securing
business improvements’ (page 7).
The term job quality refers to the characteristics of The European Foundation for the Improvement
jobs that meet the needs of workers. It is concerned of Living and Working Conditions (Eurofound)
with the factors that influence the creation of ‘good model showing the dimensions and outcomes of job
jobs’ and thus lead to job satisfaction, feelings of quality is shown in Figure 20.1.
wellbeing and enhanced levels of motivation, The CIPD (2018: 18) stated that ‘Good-quality
engagement and performance. The concept is a de- jobs allow individuals to develop and deploy their
velopment of the earlier notions of the quality of skills and offer some degree of challenge commen-
working life (QWL) and meaningful work. The surate to the demands of the job and the capabilities
QWL movement (Wilson, 1973) advocated making of the individual. Similarly, good-quality jobs, in
work ‘meaningful’ through the design of jobs that terms of both tasks and work organization, offer
would incorporate sufficient flexibility, breadth and opportunities for task discretion and control.
challenge to ensure individuals are motivated, ex- Another crucial element of job quality is the extent
cessive and prolonged stress is minimized, and to which individuals can have their voice heard and
wherever possible job security is assured to sustain represented and can participate in relevant decision-
good-quality work for employees. As defined by making.’ Six key dimensions of job quality were
Fairlie (2011: 509) meaningful work involves ‘hav- identified by the CIPD:
ing a purpose or goals, autonomy, control, chal-
lenge, achievement, competence, mastery, commit- 1 Pay and other rewards: including objective
ment, engagement, generativity, service to others, aspects such as wage level, type of payment
self-realization, growth and fulfilment.’ (for example, fixed salary, performance pay)
F I G U R E 20.1 Model of job quality
Working conditions:
• Emotional and physical
demands
• Working environment
• Social relationships at work
Worker outcomes:
Employment conditions: • Physical and
• Pay mental wellbeing
• Working time
• Good work–life
• Security
balance
Employment relations: • Job satisfaction
• Representation
• Motivation
• Voice
• Communications • Engagement
Job design: • A fulfilling

• Autonomy employee
• Opportunities for skill utilization experience
and development
• Meaningful work
SOURCE Adapted from Eurofound (2013: 7)
and non-wage fringe benefits (such as The various dimensions of job quality can be en-
employer-provided pension and health cover) hanced by actions in the areas of organization and
and subjective aspects (such as satisfaction work design, employment practices, learning and
with pay) development, reward management, employment re-
2 Intrinsic characteristics of work: including lations and employee wellbeing as described in
objective aspects (such as skills, autonomy, other parts of this handbook. But it is also a matter
control, variety, work effort) and subjective of creating good jobs through job design as consid-
aspects (such as meaningfulness, fulfilment, ered below.
social support and powerfulness)
3 Terms of employment: including objective
aspects (such as contractual stability and
What is a good job?
opportunities for training, development and
A good job is one that has the six dimensions listed
progression) and subjective aspects (such as
by the CIPD. Clark (2015: 4) wrote that ‘A good
perception of job security)
job, like a good life, consists of multiple dimensions
4 Health and safety: including physical and that an individual values. The relative importance
psycho-social risks of these dimensions is not necessarily the same for
5 Work–life balance: including working time everyone or even for the same person at different
arrangementssuch as duration, scheduling times.’ Findlay et al (2013: 444) commented that
and flexibility, as well as work intensity
Whether a job is considered to be good or bad
6 Representation and voice: including depends on a large number of characteristics of
employee consultation, trade union one’s work and working conditions, including:
representation and employee involvement in how much money and fringe benefits one receives
decision-making. from the job; the degree of job security; the extent
Chapter 20 | Job Design 173
to which jobs enable a person to use her skills and The factors affecting the principles and practice
to develop further skills; the amount of flexibility of job design are:
allowed in working hours and schedules; and the
degree to which workers are able to participate in ●● the distinction between jobs and roles;
decisions and to exercise autonomy and control ●● the characteristics of jobs;
over their work activities. ●● task structure;
●● method of working;
The practice of job design ●● intrinsic motivation;
●● ethical issues.
Job design creates good jobs. It specifies the content
of jobs in terms of what job holders are expected to
do and how they are expected to do it in order to Jobs and roles
meet work requirements for productivity, efficiency
Although the terms jobs and roles are often used
and quality. It is concerned not only with job con-
interchangeably, a distinction can be made between
tent but also the personal needs of job holders for
them. A job is an organizational unit consisting of a
job satisfaction, the opportunity to use and develop
group of defined tasks or activities to be carried out
their skills and autonomy. Job design is an aspect of
or duties to be performed. A role is the part played
work design as considered in Chapter 19. It some-
by individuals and the patterns of behaviour ex-
thing that managers do but in practice employees
pected of them in fulfilling their work requirements.
can and should be able to influence what they do
Jobs are mainly about tasks; roles are mainly about
and how they do it as far as possible. This process
people. This distinction means that while jobs may
has been described as ‘job crafting’ and is examined
be designed to fit work and people requirements,
in the concluding section of the chapter.
roles may be developed informally as people carry
Job design can be conducted formally when reor-
out their work. It can also be said that roles develop
ganization, the development of a new work system
according to the strengths and limitations of the
or the introduction of a new activity takes place. It
people who fill them.
also happens informally whenever line managers
It is interesting to note that the use of the term
make on-the-spot decisions on how work should be
role rather than job is becoming increasingly com-
carried out. But the principles of job design as set
mon, especially for managers, knowledge workers
out below still apply in the latter case. Even though
and professionals. Perhaps because ‘role’ sounds
job standardization is inevitable in certain jobs,
better than ‘job’ (more interesting, fulfilling, less re-
such as manufacturing lines or call centre operator
strictive?). Perhaps to reflect a belief that what peo-
roles, it is still necessary to take account of these
ple do should be more about who they are and what
principles.
they are capable of doing rather than being re-
Specifying the content of a job starts from work
stricted in a tightly designed job.
requirements because that is why the job exists.
When the tasks to be done have been determined,
preferably through systematic job analysis (see
Chapter 72), it is necessary to consider how the jobs
The characteristics of jobs
can be set up to provide the maximum degree of There are three fundamental characteristics shared
intrinsic motivation for those who have to carry by all jobs:
them out (intrinsic motivation takes place when
1 Job range – the number and variety of
people’s behaviour is affected by the work itself).
activities of operations a job holder carries
This involves considering the factors that contrib-
out.
ute to job quality and make jobs ‘meaningful’ as
discussed earlier in this chapter. It also means fulfill- 2 Job depth – the amount of discretion a job
ing the social responsibilities of the organization to holder has to decide job activities and job
the people who work in it by improving the quality outcomes.
of their working life. 3 Job relationships – the interpersonal
relationships between job holders and their
managers and co-workers. Jobs should never are often entirely responsible for planning and
be considered in isolation. All job holders control, leaving the worker responsible for execu-
belong to formal or informal groups and the tion. To a degree, this is inevitable, but one of the
interrelationships that exist in such groups aims of job design should be to extend the respon-
should be considered when looking at the sibility of workers into the functions of planning
content of an individual job. and control. This can involve empowerment –
giving individuals and teams more responsibility
for decision making and ensuring that they have
Task structure the training, support and guidance to exercise that
responsibility properly.
Job design requires the assembly of a number of
tasks into a job or a group of jobs. An individual
may carry out one main task that consists of a num-
ber of interrelated elements or functions. Or task
Method of working
functions may be allocated to a team working Job design needs to consider the method of working
closely together in a manufacturing ‘cell’ or cus- in the sense of how the dimensions of the job will be
tomer service unit, or strung along an assembly line. defined. There are two approaches. The first and
In more complex jobs, individuals may carry out a most common is fixed-time working in which the
variety of connected tasks (multitasking), each with amount of time the employee is normally expected
a number of functions, or these tasks may be allo- to work (ie excluding overtime) is defined. The sec-
cated to a team of workers or be divided between ond approach is output-based working which re-
them. In the latter case, the tasks may require a va- quires the employee to work towards an agreed
riety of skills that have to be possessed by all mem- output. A survey by the CIPD (2014) found that
bers of the team (multiskilling) in order to work only 5 per cent of respondents adopted the latter
flexibly. Complexity in a job may be a reflection of approach.
the number and variety of tasks to be carried out,
the different skills or competencies to be used, the
range and scope of the decisions that have to be Intrinsic motivation
made or the difficulty of predicting the outcome of
The case for using job design techniques is enhanced
decisions.
by the fact, as proved by research, eg Deci and Ryan
The internal structure of each task consists of
(1985), that effective performance and job satisfac-
three elements: planning (deciding on the course of
tion follow mainly from the intrinsic content of the
action, its timing and the resources required),
job. This is related to the fundamental concept that
executing (carrying out the plan) and controlling
people are motivated when they are provided with
(monitoring performance and progress and taking
the means to achieve their goals. Work enables peo-
corrective action when required). A completely inte-
ple to earn money, which as an extrinsic reward,
grated job includes all these elements for each of the
satisfies basic needs and is instrumental in provid-
tasks involved. The worker, or group of workers,
ing ways of satisfying higher-level needs. But work
having been given objectives such as output, quality
also provides intrinsic rewards related to achieve-
and cost targets, decides on how to do the work
ment, responsibility and the opportunity to use and
(although this may be limited in some jobs), assem-
develop skills that are more under the control of the
bles the resources, performs the work and monitors
worker. As Walton (1974: 12) commented:
progress and the achievement of targets.
Responsibility in a job is measured by the amount To varying degrees work has become fractionated,
of authority that someone has to do these things. deskilled, and tightly controlled; planning the
The ideal arrangement from the point of view work is often separated from implementing it. So
of motivation and engagement is to provide for jobs differ in how much they enable workers to
fully integrated jobs containing all three task ele- use and develop their skills and knowledge, which
ments. In practice, management and team leaders affects their involvement, self-esteem, and the
challenge obtained from the work itself.
and Oldham (1974). They identified five core job

Principles of job design characteristics:
The basic principles of job design were set out by 1 Skill variety: the degree to which a job
Gallie (2007) who identified five core dimensions of requires an employee to perform activities
job quality: skill level, the degree of task discretion that challenge his or her skills and abilities.
or autonomy, the opportunities for skill develop- 2 Task identity: the degree to which the job
ment, job security, and the extent to which jobs are requires completion of an identifiable piece
compatible with work–family balance. Autonomy is of work.
important. The theory of self-determination devel-
3 Task significance: the degree to which the job
oped by Deci and Ryan (2000) argues that human
outcome has a substantial impact on others.
beings have inherent needs to decide for themselves
what they are going to do (along with needs for 4 Autonomy: the degree to which the job gives
competence and relatedness to other people). Earlier an employee discretion in scheduling work
theories consisted of the concept of job enrichment and determining how it is performed. The
and the job characteristics model. More recently the concept of ‘supported autonomy’ refers to
job demands-resources model has been proposed as the provision of freedom for employees to
a means of classifying key job attributes as a basis manage their work within certain boundaries
for job design. (policies and expected behaviours) but with
support available as required.
5 Feedback: the degree to which an employee
Job enrichment gets information about the effectiveness of
his or her efforts – with particular emphasis
Job enrichment aims to maximize the interest and
on feedback directly related to the work
challenge of work by providing the employee with a
itself rather than from a third party (for
job that
example, a manager).
●● is a complete piece of work in the sense that
Hackman and Oldham explained that if the design
the worker can identify a series of tasks or
of a job satisfied the core job characteristics the em-
activities that end in a recognizable and
ployee would perceive that the work was worth-
definable product;
while, would feel responsible for the work and
●● affords the employee as much variety, would know if the work had been completed satis-
decision-making responsibility and control as factorily. The outcome of this would be high-quality
possible in carrying out the work; work performance and high job satisfaction as a
●● provides direct feedback through the work result of intrinsic motivation.
itself on how well the employee is doing his
or her job.
As described by Herzberg (1968), job enrichment is
The job demands-resources model
not just increasing the number or variety of tasks The job demands-resources model based on re-
(job enlargement), nor is it the provision of oppor- search by Demerouti et al (2001) and Crawford
tunities for job rotation (moving between different et al (2010) classifies job attributes and other re-
jobs). These approaches may relieve boredom, but lated work experiences into two broad categories.
they do not result in positive increases in motiva- These are: (1) job demands that can be challeng-
tion. He emphasized (page 59) that job enrichment ing (eg complexity, responsibility, workload) or a
‘provides the opportunity for the employee’s per- hindrance (eg role ambiguity, conflict and over-
sonal growth.’ load), and (2) job resources (eg autonomy, super-
visory support, feedback, access to information,
development opportunities). Challenging demands
The job characteristics model and job resources are positively related to engage-
ment levels and hindrance demands are negatively
The most influential model for job design has been
related.
the job characteristics model developed by Hackman
Any line manager or specialist who is involved in

Approaches to job design deciding what work needs to be done and what
work system should be adopted – and this means
The approaches to job design emerging from these pretty well all managers – is responsible for design-
concepts are: ing jobs. But wherever possible the process should
1 Combine tasks to create natural work units be shared with the employees concerned, who after
for which there is an identifiable end result. all will have to carry out the work and may in any
2 Provide as much variety as possible. case be more knowledgeable about what needs to
be done. Managers and indeed employees need to
3 Enhance autonomy by giving employees as be aware of the principles of good job design and
much freedom as possible to make decisions, how to put these into practice. The role of HR – an
determine their own methods of work and important one – is to provide advice and guidance
exercise control over what they do. on this whenever the need arises. The learning and
4 Enable employees to obtain direct feedback development function can play a part by including
on how well they are doing from the work job design in its management and leadership devel-
itself. opment programmes.
5 Design jobs to minimize the risk of errors
and to impose a degree of self-checking by
employees to ensure highest possible Job crafting
quality standards.
6 Provide opportunities to enhance existing Employees should be involved with their managers
skills and learn new ones. in designing their jobs wherever possible but in
practice they also do it for themselves in the natural
7 Provide the resources required to do a good flow of work. This process has been called ‘job
job, including supervisory support. crafting’ and it was defined by Wrzesniewski and
8 Ensure that job responsibilities are clearly Dutton (2001: 180) as follows:
defined and understood to avoid role
ambiguity. We use the term ‘job crafting’ to capture the
actions individuals take to shape, mould and
9 Review job demands to ensure that they are modify their jobs. Job crafters are individuals who
not excessive and therefore negatively affect actively compose both what their job is physically,
work–life balance and lead to undue stress by changing a job’s task boundaries, what their
and even burnout. job is cognitively, by changing the way they think
10 Review working conditions and ergonomic about relationships among job tasks, and what
factors to ensure that they provide for the their job is relationally, by the interactions and
physical wellbeing of employees. relationships they have with others at work.
Wrzesniewski and Dutton suggested that the motiva-
tion for job crafting arises from the needs of people
Responsibility for job design to shape the meaning of their work by (1) asserting
some control over it (ie increase their job satisfaction
Wall and Clegg (1998: 265) observed that by achieving more autonomy), (2) improving their
self-image, and (3) extending and improving their re-
Jobs are created by people for people. Whether lationships with others. Job crafting can be beneficial
deliberately or by default, choices are made about both for the individual and the organization but it
which tasks to group together to form a job, can be harmful for the business if it results in too
the extent to which job holders should follow much deviation from the tasks that are an inherent
prescribed procedures in completing those tasks, and essential part of the job. Managers need to rec-
how closely the job incumbent will be supervised,
ognize that it happens and this can be a good thing
and numerous other aspects of the work. Such
but they must not allow it to get out of hand.
choices are the essence of job design.
Key learning points
Job quality ●● it affords the employee as much variety, decision-

making responsibility and control as possible in
The concept of job quality refers to the characteristics carrying out the work;
of jobs within their work environment that contribute
to feelings of employee satisfaction and lead to ●● it provides direct feedback through the work itself
enhanced levels of motivation and engagement. on how well the employee is doing his or her job.
Job design The job characteristics model

Job design specifies the contents of jobs in order to The job characteristics model was developed by
satisfy work requirements and meet the personal Hackman and Oldham (1974). They identified five core
needs of the job holder, thus increasing levels of job characteristics: skill variety, task identity, task
employee engagement. significance, autonomy and feedback.
Job design principles The job demands-resources model

The basic principles of job design were set out by The job demands-resources model classifies job
Gallie (2007) who identified five core dimensions of job attributes and other related work experiences into two
quality: skill level, the degree of task discretion or broad categories. These are (1) job demands (eg
autonomy, the opportunities for skill development, job complexity, responsibility, workload) and (2) job
security, and the extent to which jobs are compatible resources (eg autonomy, supervisory support,
with work–family balance. feedback, access to information, development
opportunities).
Jobs and roles

Responsibility for job design
A job is an organizational unit consisting of a group of
defined tasks or activities to be carried out or duties to Any line manager or specialist who is involved in
be performed. A role is the part played by individuals deciding what work needs to be done and what work
and the patterns of behaviour expected of them in system should be adopted is responsible for designing
fulfilling their work requirements. Jobs are about jobs. The role of HR is to provide advice and guidance
tasks; roles are about people. whenever the need and the opportunity arise.
Job enrichment Job crafting

Job enrichment aims to maximize the interest and Employees can and should be involved in designing
challenge of work by providing the employee with a their jobs wherever possible but in practice they can
job that has these characteristics: also do it for themselves. This process has been called
‘job crafting’.
●● it is a complete piece of work in the sense that the
worker can identify a series of tasks or activities
that end in a recognizable and definable product;
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179
21
Organization
development
Introduction The nature of organization
The purpose of organization development is to im- development
prove the ways in which an organization functions.
In this chapter, organization development is Organization development in its original version
defined and its somewhat chequered history is de- was based on behavioural science concepts. It used
scribed, from its origins as ‘OD’ to the more focused to be the province of specialized consultants who
and business-like approaches adopted today. This tended to practise it as a mystery, with HR playing
leads to a discussion of organization development a supporting role if it played any role at all. But this
strategy and a description of organization develop- is how the close relationship between HR and or-
ment programmes. ganization development was spelt out in HR
Magazine (2007: 1):
To remain competitive in today’s global
Organization development marketplace, organizations must change. One
of the most effective tools to promote successful
defined change is organization development (OD). As HR
increasingly focuses on building organizational
Organization development (OD as it is often learning, skills and workforce productivity, the
known) is an approach to improving organizational effective use of OD to help achieve company
capability which is concerned with process – how business goals and strategies is becoming a broad
things get done. As expressed by Beer (1980: 10), HR competency as well as a key strategic HR tool.
OD operates as ‘A system wide process of data col- While there are variations regarding the definition
lection, diagnosis, action planning, intervention and of OD, the basic purpose of organization
evaluation.’ Organization development in its tradi- development is to increase an organization’s
tional form was later defined by Rowlandson (1984: effectiveness through planned interventions related
90) as ‘an intervention strategy that uses group pro- to the organization’s processes (often company-
cesses to focus on the whole culture of an organiza- wide), resulting in improvements in productivity,
tion in order to bring about planned change.’ More return on investment and employee satisfaction.
recently, the CIPD (2020: 1) defined it as a ‘planned The CIPD (2020) described the aims and character-
and systematic approach to enabling sustained or- istics of organization development as follows:
ganization performance through the involvement of
its people.’ 1 Organization development focuses on
maximizing the value gained from the
organization’s resources.
2 Organizational development focuses on an managed from the top, a strong emphasis on

organization’s strategy, goals and core action research and a focus on creating change in
purpose. collaboration with managers.
3 Where an organization’s main competitive As originally conceived, the aim of OD programmes
advantage is delivered through their people, was to increase the effectiveness of the various pro-
organization development will involve cesses that take place in organizations, especially
applying behavioural science knowledge and those relating to the ways in which people work to-
practice, such as leadership, group dynamics gether. OD was also concerned with improving the
and work design. quality of people’s working lives. The original phi-
4 Organization development is related to losophy was that of humanism – the belief that
change management in the sense that many human factors are paramount in the study of or-
developments are implemented using change ganizational behaviour. This had its roots in the
management practices, but also OD is a kind conclusions reached from the Hawthorne studies of
of planned, ongoing, systematic change 1924 to 1932 (Mayo, 1933; Roethlisberger and
activity that aims to institutionalize continual Dickson, 1939) that the productivity of workers in-
improvement within organizations. creases when someone they respect takes an interest
in them. The focus then turned to the needs of peo-
ple as individuals and in groups with an emphasis
on process – how people worked together and how
The story of organization this could be improved.
development A number of behavioural scientists contributed
to the philosophy of OD. Lewin (1947, 1951) devel-
oped his concept of group dynamics (the improve-
There are three chapters in the story of organiza-
ment of group processes through various forms of
tional development: the original version of the
training), and change management. Maslow (1954)
1960s and 70s, the extensions and modifications
produced his needs theory of motivation, Herzberg
to the original approach in the 1980s and 90s, and
et al (1957) wrote about the motivation to work,
the new look at organization development of the
and Argyris (1957) emphasized the need to plan for
2000s.
integration and involvement. McGregor (1960)
produced his ‘Theory Y’, which advocated the rec-
ognition of the needs of both the organization and
The first chapter – the original the individual on the basis that, given the chance,
version people will not only accept but seek responsibility.
Likert (1961) added his theory of supportive rela-
The organization development movement emerged
tionships, which stated that organization members
in the 1960s. It was based on the strong humanistic
should, in the light of their values and expectations,
values of its early proponents, who wanted to
view their work as supportive and as contributing
improve the conditions of people’s lives in

to the building and maintenance of their sense of
organizations by applying behavioural science

personal worth and importance.
knowledge. Its two founders were Beckhard (1969)
The assumptions and values of OD as influenced
who probably coined the term, and Bennis (1969)
by these writers were that:
who, according to Buchanan and Huczynski (2007:
575), described OD as a ‘truth, trust, love and col- ●● Most individuals are driven by the need for
laboration approach.’ Ruona and Gibson (2004: personal growth and development as long as
53) summarized early versions of OD as follows: their environment is both supportive and
Early OD interventions can be categorized challenging.
as primarily focusing on individuals and ●● The work team, especially at the informal
interpersonal relations. OD was established as a level, has great significance for feelings of
social philosophy that emphasized a long-term satisfaction, and the dynamics of such teams
orientation, the applied behavioural sciences, have a powerful effect on the behaviour of
external and process-oriented consultation, change their members.
Chapter 21 | Organization Development 181
●● Organizations can be more effective if they ●● Group dynamics – improving the ways in
learn to diagnose their own strengths and which people work together by means of
weaknesses. programmes that aim to increase the
●● Managers often do not know what is wrong effectiveness of groups through various
and need special help in diagnosing forms of training which aim to increase
problems, although the outside ‘process sensitivity, diagnostic ability and action
consultant’ ensures that decision making skills.
remains in the hands of the client. ●● Personal interventions – developing
interpersonal skills through such processes as
OD during this time was practised predominantly
T-groups (groups of people in programmes
by external consultants working with senior manag-
aiming to increase sensitivity, diagnostic
ers. Personnel specialists were not involved to any
ability and action skills), transactional
great extent. OD was practised through ‘interven-
analysis (an approach to understanding how
tions’, so called because OD practitioners interceded
people behave and express themselves
in the processes with which they were concerned in
through transactions with others), behaviour
order to change them for the better. The traditional
modelling (the use of positive reinforcement
OD interventions were:
and corrective feedback to change behaviour)
●● Process consultation – helping clients to and neurolinguistic programming or NLP
generate and analyse information that they (teaching people to programme their
can understand and, following a thorough reactions to others and develop unconscious
diagnosis, act upon. The information relates strategies for interacting with them). Some of
to organizational processes such as inter- these activities still feature in current
group relations, interpersonal relations and programmes.
communications.
●● Change management – often using the
techniques advocated by Lewin (1951), The second chapter – criticisms of
which consisted of processes of managing
change by unfreezing, changing and freezing, the original version of OD and new
and force-field analysis (analysing and approaches
dealing with the driving forces that affect
transition to a future state). The OD movement as originally conceived and
practised was characterized by what Buchanan and
●● Action research – seeking transformative Huczynski (2007: 559) called ‘quasi-religious val-
change through the simultaneous processes ues’. It had, they claimed, some of the features of a
of taking action and doing research, which religious movement, which is one reason why it has
are linked together by critical reflection. survived as a concept in spite of the criticisms that
●● Survey feedback – a variety of action began to be levelled at it in the 1980s. Weidner
research in which data is systematically (2004: 39) wrote that ‘OD was something that
collected about the system through attitude practitioners felt and lived as much as they believed’
surveys and workshops leading to action (original emphasis).
plans. One of the earliest critics of OD was McLean
●● Appreciative enquiry – a methodology that (1981: 4) who noted ‘the moral and ethical misgiv-
does not focus entirely on finding out what is ings concerned with the development of what might
wrong in order to solve problems. Instead, it be regarded as a sophisticated science of manipula-
adopts the more positive approach of tion’, and observed that
identifying ‘best practices’ – what is working It is becoming increasingly apparent that there
well – and using that information as a basis exists a considerable discrepancy between OD
for planning change. It can be associated as practised and the prescriptive stances taken
with action research. by many OD writers... The theory of change and
change management which is the foundation it was ‘Oriented to process and tools rather than
of most OD programmes is based on over- results... where techniques are considered to be ends
simplistic generalizations which offer little specific in themselves rather than a means to deliver organi-
guidance to practitioners faced with the confusing zational performance.’
complexity of a real change situation. (page 13)
He cited a remark by Strauss (1976) that at times
OD is little more than abstract moralization. The third chapter – culture
Armstrong (1984: 113) commented that ‘Organi management
zation development has lost a degree of credibility in
recent years because the messianic zeal displayed by During the 1980s and 90s an alternative approach
some practitioners has been at variance with the cir- emerged, that of culture management, which aimed
cumstances and real needs of the organization.’ at achieving cultural change as a means of enhancing
Burke (1995: 8) stated that ‘in the mid-1970s, OD organizational capability. Culture change or culture
was still associated with T-groups, participative management programmes started with an analysis of
management and consensus, Theory Y, and self-actu- the existing culture, which may have included the use
alization – the soft human, touchy-feely kinds of of a diagnostic such as the ‘Organizational Culture
activities.’ Inventory’ devised by Cooke and Lafferty (1989).
An even more powerful critic was Legge (1995: The desired culture was then defined – one that ena-
212), who observed that the OD rhetoric fitted the bles the organization to function effectively and
era of ‘flower power’ and that ‘OD was seen, on the achieve its strategic objectives. As a result, a ‘culture
one hand as a form of devious manipulation, and gap’ could have been identified, which needed to be
on the other as “wishy-washy” and ineffectual.’ She filled. This analysis of culture identified behavioural
noted ‘the relative lack of success of OD initiatives expectations so that HR processes could be used to
in effecting major and lasting cultural change, with develop and reinforce them.
the aim of generating commitment to new values in This sounds easier than it really is. Culture is a
the relatively small number of organizations in complex and often hard-to-define notion and it is
which it was tried’ (page 213), and produced the usually strongly embedded and therefore difficult to
following devastating critique: change. Anthony (1990: 4) argued that ‘The man-
agement of culture... purports to define the meaning
In order to cope with an increasingly complex of people’s lives so that they become concomitant
and changing environment, many of the [OD] with the organization’s view of itself. [It is] the ad-
initiatives were, in retrospect, surprisingly inward justment of human meaning for organizational
looking, involving schemes of management ends.’ He also observed that ‘Published cases do
development, work system design, attempts at exist of organizations within which major changes
participation, almost as a good in their own right, in culture have been successfully accomplished and
without close attention as to how they were to
shown to persist but they are rare’ (page 5).
deliver against market-driven organizational
However, culture management became a process in
success criteria. The long-term nature of OD
its own right and OD consultants jumped on the
activities, together with difficulties to clearly
establishing to sceptics their contribution to
bandwagon.
organizational success criteria (and within a UK Culture management involved change manage-
culture of financial short-termism) rendered the ment, the formal organization of which is an impor-
initiatives at best marginal... and at worst to tant item in the OD toolkit. But, as discussed in
be treated with a cynical contempt. (page 213) Chapter 75, change management models support
the illusion that change is easy to manage simply by
Weidner (2004: 37) commented that ‘Unfortunately, adopting a rational approach. Change is largely an
after sixty years – despite the best efforts and inten- emotional and political process rather than a ra-
tions of many talented people – OD finds itself in- tional one.
creasingly at the margins of business, academe, and Other movements in this period that could be
practice. The field continues to affirm its values, yet described as organization development activities
has no identifiable voice.’ The main criticisms of but exist as distinct entities included total quality
OD, as noted by Marsh et al (2010: 143), were that management (TQM), the Japanese approach of
continuous improvement, Six Sigma, and quality sign and organization development need to be
circles. TQM aims to ensure that all activities merged into one HR capability, with organization
within an organization happen in the way they design taking precedence. They considered that this
have been planned in order to meet the defined should all be brought in-house as a necessary part of
needs of customers. Its approach is holistic – the business model innovation process of developing
quality management is not a separate function to the nature of their busines. But they observed that
be treated in isolation, but is an integral part of all ‘We do not believe that the field of organization de-
operations. Continuous improvement, or in velopment has passed its sell-by date. Far from it. It
Japanese, Kaizen, refers to activities that continu- just needs to be repositioned as an HR capability’
ously improve all functions and involve all em- (page 143).
ployees from the CEO to the assembly line work- However, Weidner (2004: 37) made the following
ers. Six Sigma is a set of techniques and tools for more pessimistic comment about OD: ‘Unfortunately,
process improvement. Quality circles are groups of after sixty years – despite the best efforts and inten-
volunteers engaged in related work who meet reg- tions of many talented people – OD finds itself in-
ularly to discuss and propose ways of improving creasingly at the margins of business, academe, and
working methods under a trained leader. practice. The field continues to affirm its values, yet
Another approach more closely related to OD has no identifiable voice.’ However, OD ‘interven-
and culture management that emerged at this time tions’ still have a role to play in improving perfor-
was organizational transformation. This was de- mance but not as a stand-alone activity. Instead, they
fined by Cummings and Worley (2005: 752) as ‘A should be part of an integrated business and HR
process of radically altering the organization’s stra- strategy planned and implemented by HR in con-
tegic direction, including fundamental changes in junction with senior management, with or without
structures, processes and behaviours.’ outside help.
The fourth chapter – changing the Organization development

focus strategy
Organization-wide approaches to improving over-
all capability emerged in the 1990s that were not Organization development strategy is founded on
part of what was conventionally known as OD. the aspiration to improve organizational capability,
These included high-performance working, high- which is broadly the capacity of an organization to
commitment management, high-involvement man- function effectively in order to achieve desired re-
agement and performance management. The devel- sults. It has been defined more specifically by Ulrich
opment of these processes in the 2000s led to a and Lake (1990: 40) as ‘the ability to manage people
radically changed view of what constituted organi- for competitive advantage’. It is concerned with
zation development. mapping out intentions on how the work system
Another significant change in the 2000s was the should be developed in line with the concepts of
shift to a strategic perspective. As noted by Cummings smart and agile working, on how the organization
and Worley (2005: 12): ‘Change agents have pro- should be structured to meet new demands, on sys-
posed a variety of large-scale or strategic-change tem-wide change in fields such as reward and perfor-
models; each of these models recognizes that strate- mance management, on how change should be man-
gic change involves multiple layers of the organiza- aged, on what needs to be done to improve
tion and a change in its culture, is driven from the organizational processes involving people such as job
top by powerful executives, and has important ef- design, teamwork, communications and participa-
fects on performance.’ They commented that the tion, on the role of learning and development (L&D),
practice of organization development therefore went and how the organization can acquire, retain, de-
far beyond its humanistic origins. velop and engage the talent it needs. These intentions
There was also more emphasis on associating or- will be converted into actions on work systems devel-
ganization design with organization development. opment, structure design, the redesign of jobs, L&D
Marsh et al (2010) suggested that organization de- activities and, possibly, OD-type interventions. The
latter could take the form of action research, survey 1 Initiation

feedback and programmes for improving group pro- ❍❍ Discussion with management (the client)
cesses and interpersonal skills. The strategy can in- to identify issues that need to be
volve processes of integrated strategic change, as de- addressed
scribed below, and it can lead to an organization
❍❍ Initial diagnosis of any problems
development programme, as considered in the fol-
lowing section. ❍❍ Definition and agreement of objectives
and deliverables
❍❍ Project planning
Integrated strategic change 2 Diagnosis
The process of integrated strategic change as con- ❍❍ Choice of diagnostic tools
ceived by Worley et al (1996) can be used to formulate ❍❍ Conduct diagnosis
and implement organization development strategies.
The steps required are: ❍❍ Analyse results
3 Project planning
●● Strategic analysis, a review of the
organization’s strategic orientation (its ❍❍ Decide on type of intervention(s)
strategic intentions within its competitive ❍❍ Prepare project programme
environment) and a diagnosis of the ❍❍ Allocate resources
organization’s readiness for change. 4 Conduct programme
●● Develop strategic capability – the ability to ❍❍ Carry out interventions
implement the strategic plan quickly and
effectively. ❍❍ Draw up and agree proposals on any
further action required
●● Integrate individuals and groups throughout
the organization into the processes of 5 Implement
analysis, planning and implementation to ❍❍ Implement agreed actions
maintain the firm’s strategic focus, direct ❍❍ Evaluate effectiveness and if necessary
attention and resources to the organization’s propose further action
key competencies, improve coordination and
The key activity in the consulting cycle is organiza-
integration within the organization, and
tional diagnosis, supported by the use of various
create higher levels of shared ownership and
analytical tools
commitment.
●● Create the strategy, gain commitment and
support for it and plan its implementation. Organizational diagnosis
●● Implement the strategic change plan,
drawing on knowledge of motivation, group The practice of organization development is based
dynamics and change processes, dealing on a diagnosis of the circumstances of the organiza-
with issues such as alignment, adaptability, tion, the strategic, operational or process issues that
teamwork and organizational and individual are affecting its ability to perform well. As defined
learning. by Manzini (1988: ix): ‘An organizational diagnosis
is a systematic process of gathering data about a
business organization – its problems, challenges,
strengths and limitations – and analysing how such
Organization development factors influence its ability to interact effectively
programmes and profitably with its business environment.’ This
requires the use of the diagnostic cycle with associ-
The framework for organization development is ated diagnostics and other analytical tools, which
provided by the consulting cycle, which has five enable those concerned with development to iden-
stages: tify areas of concern that can be dealt with in an
organization development programme.
The diagnostic cycle ●● the basis of task assignment is the personal

needs and judgements of those in
The diagnostic cycle as described by Manzini (1988: authority;
11) consists of: ●● decisions are made by people with the most
●● data gathering knowledge and expertise about the problem.
●● analysis
●● feedback Organizational culture inventory
action planning
●●
(Cooke and Lafferty, 1989)
●● implementation
This instrument assesses organizational culture
●● evaluation
under 12 headings:
Diagnostics as described below play a major part.
1 Humanistic-helpful – organizations
managed in a participative and person-
centred way.
Diagnostics
2 Affiliative – organizations that place a high
Diagnostics are tools such as questionnaires or priority on constructive relationships.
checklists that gather information about how the
3 Approval – organizations in which conflicts
organization is functioning and analyse the opin-
are avoided and interpersonal relationships
ions and attitudes of employees in order to identify
are pleasant – at least superficially.
issues and problems that can be dealt with in an
organization development programme. They enable 4 Conventional – conservative, traditional
those concerned with organization development to and bureaucratically controlled
understand what is happening and why it is hap- organizations.
pening so that they can do something about it. 5 Dependent – hierarchically controlled and
Diagnostics can be used to assess overall organiza- non-participative organizations.
tional effectiveness in the shape of general strategic, 6 Avoidance – organizations that fail to
business and operational issues. They can also be reward success but punish mistakes.
concerned with more specific areas such as the or-
7 Oppositional – organizations in which
ganization’s ideology, culture or climate, as in the
confrontation prevails and negativism is
following examples.
rewarded.
8 Power – organizations structured on the
Organizational ideology basis of the authority inherent in members’
positions.
questionnaire (Harrison, 1972)
9 Competitive – a culture in which winning is
This questionnaire deals with the four orientations valued and members are rewarded for
defined by Harrison (power, role, task and self). The out-performing one another.
questionnaire is completed by ranking statements 10 Competence/perfectionist – organizations in
according to views on what is closest to the organi- which perfectionism, persistence and hard
zation’s actual position. The following are examples work are valued.
of statements:
11 Achievement – organizations that do things
●● a good boss is strong, decisive and firm but well and value members who set and
fair; accomplish challenging but realistic goals.
●● a good subordinate is compliant, hard- 12 Self-actualization – organizations that value
working and loyal; creativity, quality over quantity, and both
●● people who do well in the organization are task accomplishment and individual
shrewd and competitive, with a strong need growth.
for power;
Dimensions of organizational annually but with the help of AI, ‘pulse surveys’
(health checks that happen frequently throughout
climate questionnaire (Koys and De the year) are increasingly being used.
Cotiis, 1991)
●● Autonomy – the perception of self-
Analytical tools
determination with respect to work Analytical tools examine the major internal and ex-
procedures, goals and priorities. ternal factors that are affecting the performance of
●● Cohesion – the perception of togetherness or the organization. The three most familiar tools are
sharing within the organization setting. SWOT, PESTLE and STEEPLE analyses. SWOT
analysis is a ‘looking in’ and ‘looking out’ approach
●● Trust – the perception of freedom to
that covers the internal factors of strengths and
communicate openly with members at higher
weaknesses and the external factors of opportuni-
organizational levels about sensitive or
ties and threats. PESTLE analysis is an environmen-
personal issues with the expectation that the
tal scanning tool that covers the following factors:
integrity of such communications will not be
political, economic, social, technological, legal and
violated.
environmental. STEEPLE analysis covers social,
●● Resource – the perception of time demands technological, environmental, economical, political,
with respect to task completion and legal and ethics factors.
performance standards. Other analytical tools include:
●● Support – the perception of the degree to
●● strategic review – to identify new value-
which superiors tolerate members’ behaviour,
creating opportunities;
including willingness to let members learn
from their mistakes without fear of reprisal. ●● future state analysis – an investigation of
where the organization wants to be in the
●● Recognition – the perception that members’
future and what it needs to do to get there;
contributions to the organization are
acknowledged. ●● target operating model – a definition of how
the organization believes it has to function in
●● Fairness – the perception that organizational
the future: it requires ‘as is’ and ‘to be’
policies are non-arbitrary or capricious.
analyses.
●● Innovation – the perception that change and
creativity are encouraged, including risk-
taking into new areas where the member has Who conducts the programme?
little or no prior experience.
The CIPD (2020) has emphasized the importance of
the contribution of organization development spe-
Employee surveys cialists supported by line managers and HR:
Employee surveys, also known as attitude or opin- Organisation development specialists play a
ion surveys, can be used as a diagnostic tool. They critical role in working with line leaders and
are a formal method of obtaining the views of em- HR practitioners to develop the organisation to
ployees on such matters as their work, their pay, achieve its goals. The specialists have expertise
how they are treated, their views about the com- in navigating complexity to unpick what the
organisation is trying to achieve; diagnose
pany and their managers, how well they are kept
underlying issues, challenges, opportunities;
informed, the opportunities for learning and career
and to select the best approaches to develop the
development, and their working environment and
organisation moving forward. Employees are
facilities. often at the centre of changes to the organisation
Surveys can be conducted by external providers, that follow and HR practitioners need to have a
for example the IES engagement survey, the Gallup solid understanding of the relationship between
engagement survey and the Saratoga engagement organisation development, organisational strategy
and commitment matrix. They are often conducted and the HR agenda. They should leverage their
HR expertise and knowledge of the organisation These activities can be combined in many ways
to question assumptions, help surface non-obvious so that they become mutually supporting. Culture
problems/issues; diagnose barriers/enablers to change and team building can include traditional
execution; and manage change effectively. OD interventions such as action learning, survey
feedback and group dynamics. It can be argued that
change management is not a separate organization
Organization development development activity but is a fundamental part of
activities all such activities. Each of those listed above in-
volves change, which has to be managed using the
A traditional OD programme was behavioural sci- change management skills described in Chapter 75.
ence-based and almost entirely devoted to interper-
sonal relationships, organizational processes and
culture change in the broadest sense. There may still Examples of OD interventions
be a need for such interventions today but organiza-
tion development is a more eclectic affair – anything The following are examples of interventions drawn
can be included under the organization development from research conducted by the CIPD (2011):
heading as long as it contributes to good g overnance – Arts Council England Interventions focused on
organizational effectiveness. Table 21.1 provides a the organizational structure, embedding the
choice of activities or interventions. new values and demonstrating leadership
commitment for the culture change.
TA B L E 21.1 Organization development activities

Organization
development
activity Brief description Objective
Business model The process followed by an To obtain insight into the business
innovation organization to develop a new business issues facing the organization, leading to
model or change an existing one. plans for practical interventions that
address those issues.
Change management The process of planning and To achieve the smooth implementation
introducing change systematically, of change.
taking into account the likelihood of it
being resisted.
Culture change The process of changing the To improve organizational effectiveness –
organization’s culture in the shape of its the ability of an organization to achieve
values, norms and beliefs. its goals by making effective use of the
resources available to it.
Engagement, The development of improved levels of To ensure that people are committed to
enhancement of job and organizational engagement. their work and the organization and
motivated to achieve high levels of
performance.
High-performance Developing work system processes, To impact on the performance of the
working practices and policies to enable organization through its people in such
employees to perform to their full areas as productivity, quality, levels of
potential. This may include the customer service, growth and profits.
development of a high-performance
work system (HPWS).
(continued)
Organization
development
activity Brief description Objective
Knowledge Storing and sharing the wisdom, To get knowledge from those who have
management understanding and expertise it to those who need it in order to
accumulated in an organization about improve organizational effectiveness.
its processes and operations.
Lean A process improvement methodology To deliver value to customers.
that focuses on continuous
improvement, reducing waste and
ensuring the flow of production.
Organizational learning The acquisition and development of To facilitate performance improvement
knowledge, understanding, insights, and major changes in strategic direction.
techniques and practices.
Organization design The process of deciding how To ensure that people work effectively
organizations should be structured in together to achieve the overall purpose
terms of the ways in which the of the organization.
responsibility for carrying out the
overall task is allocated to individuals
and groups of people and how the
relationships between them function.
Performance A systematic process involving the To improve organizational performance
management agreement of performance by developing the performance of
expectations and the review of how individuals and teams.
those expectations have been met.
Smart working An approach to organizing work To drive greater efficiency and
through a combination of flexibility, effectiveness in achieving job outcomes.
autonomy and collaboration, in parallel
with optimizing tools and working
environments for employees.
Team building Using interactive skills training To increase group cohesion, mutual
techniques to improve the ways in support and cooperation.
which people in teams work together.
Total rewards The combination of financial and To blend the financial and non-financial
non-financial rewards available to elements of reward into a cohesive
employees. It involves integrating the whole so that together they make a
various aspects of reward. more powerful and longer-lasting impact
on job satisfaction and performance.
Children’s Trust Southampton Interventions identifying what’s wrong with the service and
focused on the organization’s structure, how things could be improved.
developing values to support the strategy and National Police Improvements Agency activities
structure. include a restructuring of the top
London Borough of Barnet Interventions management team, a review of existing
centred on establishing a Lean team to drive processes, the involvement of stakeholders
the project. Front-line staff were at the heart and a focus on retaining respect for past
of the process, which involves them ways of working.
NP Paribas focused activities on the tory frequently inhabited by business-oriented peo-

organization’s structure, processes, values ple based in the organization and acting, in effect, as
and the importance of leadership. internal consultants. They include HR and L&D
Visa Europe established a culture change professionals who are there not just because of their
programme that was called ‘peak specialist knowledge but because they are familiar
performance’. The process focused on the with how organizations operate, where people
individual and helping each individual to management fits in and the factors that affect em-
recognize how their own values and ployee commitment, engagement and performance.
aspirations could be connected with those of The organization development processes with
the organization in a mutually beneficial way. which internal specialists and their colleagues are
concerned will be determined by the outcome of di-
agnostic reviews. Because these outcomes will always
Conclusions on organization be different, organizational development pro-
grammes will always be different. There is no such
development thing as a standard ‘OD’ programme, as was for-
merly the case. A number of approaches are availa-
Organization development is no longer solely the ble, but which to use and how to use is a matter of
preserve of external process consultants with be- choice depending on the facts of the situation. This is
havioural science backgrounds. Instead, it is a terri- why the initial analysis and diagnosis is so important.
Key learning points
Organization development defined ●● Most individuals are driven by the need for
personal growth and development as long as their
Organization development in its traditional form as ‘OD’ environment is both supportive and challenging.
was defined by Rowlandson (1984: 90) as ‘an
intervention strategy that uses group processes to ●● The work team, especially at the informal level, has
focus on the whole culture of an organization in order great significance for feelings of satisfaction and
to bring about planned change’. The CIPD (2020: 1) the dynamics of such teams have a powerful effect
defined organization development as a ‘planned and on the behaviour of their members.
systematic approach to enabling sustained ●● OD programmes aim to improve the quality of
organization performance through the involvement of working life of all members of the organization.
its people.’
●● Organizations can be more effective if they learn to
diagnose their own strengths and weaknesses.
Strategic nature of organization
development ●● Managers often do not know what is wrong and
need special help in diagnosing problems, although
The strategic nature of organization development as the outside ‘process consultant’ ensures that
an integral part of HRM arises because it can play a decision making remains in the hands of the client.
significant role in the implementation of business
strategy.
OD interventions
Assumptions and values of OD OD interventions include process consultation, change
management, action research, survey feedback, group
The assumptions and values of OD as originally dynamics and personal interventions.
conceived were that:
Criticisms of OD organization, the strategic, operational or process

issues that are affecting the organization and its
The main criticisms of OD, as noted by Marsh et al
ability to perform well. This involves the use of
(2010: 143), were that it was ‘Oriented to process and
diagnostic tools.
tools rather than results... where techniques are
considered to be ends in themselves rather than a
means to deliver organizational performance.’ Organization development programmes
The traditional OD programme was behavioural
Organization development strategy science-based and almost entirely devoted to
interpersonal relationships, organizational processes
Organization development strategy is based on the
and culture change in the broadest sense. There may
aspiration to improve organizational capability, which
still be a need for such interventions today but the
is broadly the capacity of an organization to function
emphasis now is on much more focused activities to
effectively in order to achieve desired results.
do with high-performance working, Lean
manufacturing, smart working and the enhancement of
The practice of organization development levels of engagement.
The practice of organization development is based on
an analysis and diagnosis of the circumstances of the
References
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(2011) Developing Organisation Culture: Six case Lewin, K (1951) Field Theory in Social Science,
studies, London, CIPD New York, Harper & Row
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New York, Harper & Row Management Today, November, pp 91–93
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New York, AMACOM twenty-first century HR: the convergence of HRM,
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Harvard University Press
192

193
PART VI
Factors affecting the
behaviour of people at
work
PART VI CONTENTS introduce policies and practices that encourage peo-
ple to do everything expected of them if not more.
HR can also provide any advice and help managers
22 Motivation to fulfil their people management responsibilities.
23 Commitment To do this, managers and HR specialists need to
take into account the general factors that affect
24 Employee engagement how people behave at work, as described in Chapter
17 – namely, ability, intelligence, personality, atti-
tudes, emotions and emotional intelligence. But
Introduction they should also be aware of the following more
specific factors that influence behaviour and there-
A preoccupation shared by all those involved in fore performance:
managing people is how to get the best out of them. ●● Motivation – the strength and direction of
‘The best’ may be difficult to define. It could be high behaviour and the factors that influence
performance. Or it could be discretionary behav- people to behave in certain ways.
iour (the choice made by people to exercise addi-
tional effort, care, innovation and productive ●● Commitment – the strength of an individual’s
behaviour in their jobs). This could involve doing identification with, and involvement in, an
more than is contracted for so that the words ‘it’s organization.
not in my job description’ or ‘this is above my pay ●● Engagement – a situation in which people
grade’ are seldom if ever heard. It could be cooper- are committed to their work and the
ating fully with managers and colleagues or show- organization and are motivated to achieve
ing loyalty to the organization. It could be any high levels of performance.
combination of these.
These are examined in the three chapters of this
Getting the best out of people is primarily the re-
part.
sponsibility of managers and team leaders by exer-
Of the three constructs (a construct is a concep-
cising effective leadership. But it is also the concern
tual framework that explains how people perceive
of HR specialists who can help to create a work en-
and react to their environment), motivation is a long-
vironment conducive to high performance and can
standing one that has been extensively researched
194 Part 6 | Factors Affecting the Behaviour of People at Work
and written about since the earlier part of the 20th this part. Simplistically, it could be argued that
century. Motivation theory has been, and still is, used when motivation is extrinsic, ie when things are
to inform decisions on how to get more effort and done to or for people in order to motivate them,
better performance from employees, for example the such as through pay or recognition, the aim is to
use of performance-related pay. The importance of make a direct impact on individual behaviour. In
the construct of commitment emerged later, notably contrast, commitment and engagement are states of
in the contribution of Richard Walton (1985) whose being – the actions taken by management to affect
seminal article in the Harvard Business Review advo- them are likely to be less direct and immediate than
cated the adoption of a commitment strategy rather those used in motivation strategies aimed at indi-
than one based on control. The most recent construct viduals. Engagement and commitment strategies
is that of engagement, which was first presented in a may be more about taking action that affects em-
1990 Academy of Management Journal article by ployees collectively such as improvements in the
William Kahn. He defined engagement as ‘the har- work environment.
nessing of organization members’ selves to their Three other aspects of the behaviour of people at
work roles’ (1990: 694). work are considered in this part. The first of these is
There is some overlap between the concepts of job satisfaction, ie the attitudes and feelings that
commitment and engagement but they are not the people have about their jobs. This is associated with
same. Commitment is about identification with the motivation and engagement but it could be re-
organization while engagement is concerned both garded as an outcome of engagement rather than a
with how people identify with their organization constituent of it. Whether or not job satisfaction
(organizational engagement) and with the extent to improves performance is considered in Chapters 22
which they have positive feelings about the work and 24. Second, the relationship between money
they do (job engagement). and motivation, ie the role of money as an incentive,
The construct of engagement contains elements is examined in Chapter 22. This is important be-
of motivation and commitment. It also embraces cause it affects policies and practices concerned
the notion of organizational citizenship behaviour with the use of pay as an incentive or reward. Third,
(OCB), which is positive discretionary behaviour at reference is made in Chapter 24 to the dark side of
work that goes beyond role requirements. engagement – burnout – how it happens and what
It can be difficult to disentangle the concepts of can be done about it. In addition, the increasingly
motivation, commitment and engagement, although popular concept of ‘the employee experience’ and
an attempt to do so is made in the three chapters of its relationship to engagement is examined in
Chapter 24.
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,
Academy of Management Journal, 33 (4), March–April, pp 77–84
pp 692–724
195
22
Motivation
to develop the ‘content’ theory of motivation which
Introduction explained it in terms of the constituents of motiva-
tion in the shape of needs. The main ‘process’ theo-
Motivation is the force that energizes, directs and ries such as expectancy theory (Vroom, 1964), goal
sustains behaviour. As Ryan and Deci (2000: 54) theory (Latham and Locke, 1970), equity theory
observed: ‘To be motivated means to be moved to (Adams, 1965) and self-determination theory (Deci
do something. A person who feels no impetus or in- and Ryan, 1985) explaining motivation as a func-
spiration to act is thus characterized as unmoti- tion of psychological processes or forces emerged in
vated, whereas someone who is energized or acti- the 1960s, 70s and 80s.
vated toward an end is considered motivated.’ This chapter starts with an analysis of the mean-
High performance is achieved by well-motivated ing of motivation. This is followed by a review of
people who are prepared to exercise discretionary how motivation works as described by traditional
effort, ie independently do more than is expected of views (explained by reinforcement theory) and the
them. Hunter et al (1990) found through their re- more valid research-based content and process the-
search that even in fairly basic roles, the difference ories. Next, the concepts of intrinsic and extrinsic
in value-added discretionary performance between motivation are examined. Finally, consideration is
‘superior’ and ‘standard’ performers was 19 per given to how the theories and concepts of motiva-
cent. For highly complex jobs it was 48 per cent. tion described earlier can be put to practical use
The earliest approaches to understanding human taking into account the impact of motivation on job
motivation date from the time of the Greek philoso- satisfaction and the uses of money as a motivator.
phers who believed that hedonism was the principle
driving force in behaviour. Individuals were seen as
directing their efforts to seeking pleasure and avoid-
ing pain. This principle was later refined and further
The meaning of motivation
developed in the works of philosophers such as
The term ‘motivation’ derives from the Latin word
John Locke and Jeremy Bentham in the 17th and
for movement (movere). A motive is a reason for
18th centuries.
doing something. Motivation is the strength and di-
Motivation theory as we know it today started in
rection of behaviour and the factors that influence
the earlier part of the 20th century with the contri-
people to behave in certain ways. People are moti-
butions of the exponents of scientific management
vated when they expect that a course of action is
like F W Taylor (1911) and of reinforcement theory
likely to lead to the attainment of a goal and a val-
such as Thorndike (1911). Their contributions sup-
ued reward – one that satisfies their needs and
ported the basic ‘carrot and stick’ (reward or pun-
wants. The term ‘motivation’ can refer variously to
ishment) approach to motivation, still prevalent
the goals that individuals have, the ways in which
today. The middle years of that century saw the
individuals chose their goals, and the ways in which
birth of ‘behavioural science’, defined as the field of
others try to change their behaviour. Locke and
enquiry dedicated to the study of human behaviour
Latham (2004: 388) noted that ‘The concept of mo-
through sophisticated and rigorous methods. The
tivation refers to internal factors that impel action
behavioural scientists who entered the field then,
and to external factors that can act as inducements
such as Maslow (1954) and Herzberg (1957), began
to action.’
As described by Arnold et al (1991) the three explanatory vehicles for understanding work moti-
components of motivation are: vation and job performance, and as a justification
of performance pay. They can be used to justify a
1 Direction – what a person is trying to do.
‘carrot and stick’ approach to motivation. Daniel
2 Effort – how hard a person is trying. Pink (2009: 34–35) delivered the following trench-
3 Persistence – how long a person keeps on ant attack on that approach:
trying.
At the heart of the carrot and stick approach
Well-motivated people engage in positive discre- are two elegant and simple ideas: Rewarding
tionary behaviour – they decide to make an effort. an activity will get you more of it. Punishing an
Such people may be self-motivated, and as long as it activity will get you less of it… . Carrots and
means they are going in the right direction to attain sticks can produce precisely the opposite of their
what they are there to achieve, this is the best form intended aims. Methods designed to increase
of motivation. But additional motivation provided motivation can dampen it. Actions aimed at
increasing creativity can reduce it. Programs to
by the work itself, the quality of leadership, and
promote good deeds can make them disappear
various forms of recognition and reward builds on
meanwhile, instead of restraining negative
self-motivation and helps people to make the best
behaviour, rewards and punishments can often set
use of their abilities and to perform well.
it loose – and give rise to cheating, addiction, and
There have been many assumptions and expla- desperately myopic thinking.
nations over the years of how motivation works.
These can be grouped under three headings: Reinforcement theory can be criticized for taking
an unduly mechanistic view of human nature. It im-
1 Reinforcement theory. plies that people can be motivated by treating them
2 The generally accepted although somewhat as machines – by pulling levers. In assuming that the
limited content theories explaining present choices of individuals are based on an un-
motivation in terms of the satisfaction of derstanding of the outcomes of their past choices,
needs. reinforcement theory ignores the existing context in
3 The more recent process theories explaining which choices are made. In addition, motivational
how motivation functions, such as theories based on the principle of reinforcement pay
expectancy, goal and equity theories, which insufficient attention to the influence of expecta-
offer a more comprehensive and useable tions – no indication is given of how to distinguish
basis for action. in advance which outcomes would strengthen re-
sponses and which would weaken them. Above all,
they are limited because they imply, in Allport’s
Reinforcement theory (1954) vivid phrase, a hedonism of the past.
This theory provides a rationale for financial in-
Reinforcement theory developed by Thorndike centives such as performance-related pay, albeit a
(1911), also known as ‘the law of effect’, states that dubious one. Motivation using this approach has
over time people learn about the relationships be- been and still is widely adopted. It may be success-
tween their actions and the consequences of them ful in some circumstances such as piece work, but –
and this understanding guides their future behav- for reasons explained in Chapter 46 – performance
iour. In other words, if they believe that something or merit pay is flawed.
has worked previously then they will do it again.
Skinner (1953) and others later built on these
principles with the notion of ‘operant conditioning’, Content theory
which was influenced by the work of Pavlov and his
salivating dogs. As Shields (2007: 76) put it: ‘Positive Content or needs theories as developed by Maslow,
reinforcement of desired behaviour elicits more of Alderfer, McClelland and Herzberg explain the pro-
the same; punishment of undesired behaviour (neg- cess of motivation in terms of its content in the shape
ative reinforcement) elicits less of the same.’ of needs. Its basis is the belief that an unsatisfied
Reinforcement models continue to thrive today as need creates tension and a state of disequilibrium. To
Chapter 22 | Motivation 197
F I G U R E 22.1 The process of motivation according to content theory
Establish
goal
Take
Need
action
Attain
goal
restore the balance a goal is identified that will sat- move up the hierarchy of needs, but this is not neces-
isfy the need, and a behaviour pathway is selected sarily a straightforward progression. The lower
that will lead to the achievement of the goal and the needs still exist, even if temporarily dormant as mo-
satisfaction of the need. Behaviour is therefore moti- tivators, and individuals constantly return to previ-
vated by unsatisfied needs. A content theory model is ously satisfied needs.
shown in Figure 22.1. Maslow’s needs hierarchy has an intuitive appeal
Content theory, as the term implies, indicates the and has been popular. But it has not been verified by
components of motivation but it does not explain empirical research such as that conducted by Wahba
how motivation affects performance – a necessary and Bridwell (1979), and it has been criticized for
requirement if the concept is to provide guidance on its apparent rigidity – different people may have dif-
HR policy and practice. This is what process theory ferent priorities and the underpinning assumption
does, as discussed later. that everyone has the same needs is dubious. It is
difficult to accept that needs progress steadily up
the hierarchy and Maslow himself expressed doubts
Maslow’s hierarchy of needs about the validity of a strictly ordered hierarchy.
But he did emphasize that the higher-order needs
The best known classification of needs is the one for-
are more significant.
mulated by Maslow (1954). He suggested that there
are five major need categories that apply to people in
general, starting from the fundamental physiological
needs and leading through a hierarchy of safety, so-
ERG theory (Alderfer)
cial and esteem needs to the need for self-fulfilment, Alderfer (1972) produced a more convincing and
the highest need of all. When a lower need is satis- simpler although less well-known theory, which
fied the next highest becomes dominant and the in- postulated three primary categories of needs:
dividual’s attention is turned to satisfying this higher
1 Existence needs such as hunger and thirst –
need. The need for self-fulfilment, however, can
pay, fringe benefits and working conditions
never be satisfied. ‘Man is a wanting animal’; only
are other types of existence needs.
an unsatisfied need can motivate behaviour and the
dominant need is the prime motivator of behaviour. 2 Relatedness needs, which acknowledge that
Psychological development takes place as people people are not self-contained units but must
engage in transactions with their human and they serve primarily to prevent job dissatisfac-
environment – acceptance, understanding, tion, while having little effect on positive job atti-
confirmation and influence are elements of tudes. Pay is not a satisfier but if it is inadequate or
the relatedness process. inequitable it can cause dissatisfaction. However, its
3 Growth needs, which involve people in provision does not provide lasting satisfaction.
finding the opportunities to be what they are Herzberg’s two-factor theory in effect identifies
most fully and to become what they can. needs but it has been attacked by, for example,
This is the most significant need. Opsahl and Dunnette (1966). The research method
has been criticized because no attempt was made to
measure the relationship between satisfaction and
McClelland’s achievement performance. It has been claimed that the two-fac-
tor nature of the theory is an inevitable result of the
motivation questioning method used by the interviewers. It has
An alternative way of classifying needs was devel- also been suggested that wide and unwarranted in-
oped by McClelland (1961), who based it mainly ferences have been drawn from small and special-
on studies of managers. He identified three needs, of ized samples and that there is no evidence to suggest
which the need for achievement was the most im- that the satisfiers do improve productivity. The un-
portant: derpinning assumption that everyone has the same
needs is invalid. Denise Rousseau (2006: 263)
1 The need for achievement, defined as the summed up these views: ‘Herzberg’s long discred-
need for competitive success measured ited two-factor theory is typically included in the
against a personal standard of excellence. motivation section of management textbooks, de-
2 The need for affiliation, defined as the need spite the fact that it was discredited as an artefact of
for warm, friendly, compassionate method bias over thirty years ago.’
relationships with others. In spite of these objections, the Herzberg two-
3 The need for power, defined as the need to factor theory continues to thrive; partly because it
control or influence others. is easy to understand and seems to be based on
real life rather than academic abstractions, and
partly because it convincingly emphasizes the pos-
Herzberg’s two-factor model itive value of the basic motivating factors and
highlights the need to consider both financial and
The two-factor model of motivation as described by non-financial factors when developing reward sys-
Herzberg (1966) was based on an investigation he tems. It is also in accord with a fundamental belief
conducted with his colleagues (Herzberg et al, in the dignity of labour and the Protestant ethic –
1957) into the sources of job satisfaction and dis- that work is good in itself. Herzberg’s strength as
satisfaction of accountants and engineers who were a proselytizer rather than a researcher meant that
asked what made them feel exceptionally good or he had considerable influence on the job enrich-
exceptionally bad about their jobs. According to ment movement, which sought to design jobs in a
Herzberg, this research established that there were way that would maximize the opportunities to ob-
two factors that affected feelings of satisfaction or tain intrinsic satisfaction from work and thus im-
dissatisfaction. Motivating factors or ‘satisfiers’ re- prove the quality of working life.
late to the job content and consist of the need for
achievement, the interest of the work, responsibility
and opportunities for advancement. These needs are Comment on content theories
the basic motivators. He summed this up in the
phrase ‘motivation by the work itself’. Shields (2007: 74) observed that content theories
Hygiene factors relate to the job context, includ- share some common shortcomings. His criticisms
ing such things as pay and working conditions. were that they incorrectly assume:
‘Hygiene’ is used in the medical use of the term, ●● the existence of a universally applicable set
meaning preventative and environmental. In them- of human needs;
selves, hygiene factors neither satisfy nor motivate
●● that according to Maslow (1954), needs Valency stands for value; instrumentality is the be-
conform to a simple ordered hierarchy of lief that if we do one thing it will lead to another;
need importance, when in reality, needs seem and expectancy is the probability that action or ef-
to operate in a more flexible, less ordered fort will lead to an outcome.
and predictable way; The strength of expectations may be based on
●● that the link between needs and behaviours past experiences (reinforcement), but individuals
is direct and automatic, rather than mediated are frequently presented with new situations – a
by human consciousness, values and choice. change in job, payment system or working condi-
tions imposed by management – where past experi-
In addition, he pointed out that content theories ence is an inadequate guide to the implications of
‘underestimate the motivational potency of extrin- the change. In these circumstances, motivation may
sic rewards, including financial rewards’. be reduced.
Motivation is only likely when a clearly per-
ceived and usable relationship exists between per-
Process theory formance and outcome, and the outcome is seen as
a means of satisfying needs. This explains why fi-
In process theory, the focus is on the psychological nancial motivation – for example, an incentive or
or mental processes and forces that affect motiva- bonus scheme – works only if the link (line of sight)
tion, as well as on basic needs. It is also known as between effort and reward is clear and the value of
cognitive theory because it refers to people’s percep- the reward is worth the effort. It also explains why
tions of their working environment and the ways in intrinsic motivation arising from the work itself can
which they interpret and understand it. The most be more powerful than extrinsic motivation.
important process theories are concerned with ex- Intrinsic motivation outcomes are more under the
pectancy, goals, equity and self-determination. control of individuals, who can place greater reli-
ance on their past experiences to indicate the extent
to which positive and advantageous results are
Expectancy theory likely to be obtained by their behaviour (intrinsic
Expectancy theory states that motivation will be and extrinsic motivation are discussed in more de-
high when people know what they have to do in tail later in this chapter).
order to get a reward, expect that they will be able This theory was developed by Porter and Lawler
to get the reward, and expect that the reward will (1968) into the model shown in Figure 22.2, which
be worthwhile. follows Vroom’s ideas by suggesting that there are
The concept of expectancy was originally con- two factors determining the effort that people put
tained in the valency-instrumentality-expectancy into their jobs: first, the value of the rewards to indi-
(VIE) theory that was formulated by Vroom (1964). viduals in so far as they satisfy their needs for security,
F I G U R E 22.2 Motivation model (Porter and Lawler)
Value of rewards Abilities
Effort Performance
Probability that
Role
rewards depend
expectations
upon effort
social esteem, autonomy and self-actualization; sec- They assign two values when making a decision –
ond, the probability that rewards depend on effort, as its desirability and its achievability – but they tend
perceived by individuals – in other words, their ex- to be influenced mainly by desirability – they let
pectations about the relationships between effort and their tastes influence their beliefs. And they may be
reward. Thus, the greater the value of a set of awards able to evaluate the extrinsic rewards they expect
and the higher the probability that receiving each of but can find it difficult to evaluate the possibility of
these rewards depends upon effort, the greater the ef- achieving intrinsic rewards. Behling and Starke con-
fort that will be put forth in a given situation. cluded that ‘Expectancy theory can account for
But, as Porter and Lawler emphasized, mere ef- some of the variations in work effort but far less
fort is not enough. It has to be effective effort if it is than normally attributed to it’ (page 386).
to produce the desired performance. The two vari- Shields (2007: 80) commented that a problem
ables additional to effort that affect task achieve- with expectancy theory is that it assumes that ‘be-
ment are: (1) ability – individual characteristics haviour is rational and premeditated when we
such as intelligence, knowledge, skills and (2) role know that much workplace behaviour is impulsive
perceptions – what the individual wants to do or and emotional.’
thinks they are required to do. These are good from However, in spite of these objections, the simple
the viewpoint of the organization if they correspond message of expectancy theory – that people will be
with what it thinks the individual ought to be doing. motivated if they expect that their behaviour will
They are poor if the views of the individual and the produce a worthwhile reward – is compelling. And
organization do not coincide. it provides a useful tool to assess the effectiveness of
Alongside goal theory (see later in this chapter), motivating devices such as performance-related pay.
expectancy theory has become the most influential
motivation theory, particularly as it affects perfor-
mance and reward management. But reservations Goal theory
have been expressed about it. House et al (1974)
Goal theory as developed by Latham and Locke
remarked that ‘Evidence for the validity of the the-
(1979) following extensive research, states that mo-
ory is very mixed.’ They also established that there
tivation and performance are higher when individu-
were a number of variables affecting expectations
als are set specific goals, when goals are demanding
that make it difficult to predict how they function.
but accepted, and when there is feedback on perfor-
These are:
mance. Goals must be clearly defined. Participation
●● Leadership behaviour – the function of the in goal setting is important as a means of getting
leader in clarifying expectations, guiding, agreement to the setting of demanding goals.
supporting and rewarding subordinates. Feedback is vital in maintaining motivation, par-
●● Individual characteristics – the subjects’ ticularly towards the achievement of even higher
perception of their ability to perform the goals. Goal theory has had considerable influence
required task. on performance and reward management practices.
However, the universality of goal theory has
●● Nature of the task – whether accomplishing
been questioned. For example, Pintrich (2000)
the task provides the necessary
noted that people have different goals in different
reinforcements and rewards.
circumstances and that it is hard to justify the as-
●● The practices of the organization – its sumption that goals are always accessible and con-
reward and control systems and how it scious. And Harackiewicz et al (2002) warned that
functions. goals are only effective when they are consistent
Research conducted by Behling and Starke (1973) with and match the general context in which they
established that individuals make crucial personal are pursued. But support for goal theory was pro-
decisions without clearly understanding the conse- vided by Bandura and Cervone (1983) who empha-
quences and do not in practice consistently evaluate sized the importance of self-efficacy (a belief in
their order of preference for alternative actions. one’s ability to accomplish goals).
Equity theory Intrinsic motivation

Equity theory, as defined by Adams (1965), is con- Intrinsic motivation takes place when individuals feel
cerned with the perceptions people have about how that their work is important, interesting and challeng-
they are being treated as compared with others. He ing and that it provides them with a reasonable degree
proposed that employees assess the fairness or oth- of autonomy (freedom to act), opportunities to
erwise of their rewards (outcomes) in relation to achieve and advance, and scope to use and develop
their effort or qualifications (inputs) and that they their skills and abilities. It can be described as motiva-
do this by comparing their own input/output ratio tion by the work itself. It is not created by external
against that of other individuals. If the input/output incentives. Deci and Ryan (1985) suggested that in-
ratio is perceived to be unfavourable, they will feel trinsic motivation is based on the need to be compe-
that there is reward inequity. Equity theory explains tent and self-determining (that is, to have a choice).
only one aspect of the processes of motivation and Intrinsic motivation can be enhanced by job de-
job satisfaction, although it may be significant in sign. Katz (1964) suggested that jobs should in
terms of morale and, possibly, of performance. themselves provide sufficient variety, complexity,
challenge and skill to engage the abilities of the
worker. Hackman and Oldham (1974) in their job
Self-determination theory characteristics model identified the five core charac-
teristics of jobs that result in intrinsic motivation,
Self-determination is a combination of attitudes
namely: skill variety, task identity, task significance,
and abilities that lead people to set goals for them-
autonomy and feedback. Pink (2009) stated that
selves and take the initiative to reach those goals. As
there are three steps that managers can take to im-
formulated by Deci and Ryan (1985) it suggests
prove motivation:
that people are motivated to grow and change by
three innate and universal psychological needs – for 1 Autonomy – encourage people to set their
competence, connection and autonomy. They ar- own schedule and focus on getting work
gued (page 268) that done not how it is done.
The fullest representations of humanity show 2 Mastery – help people to identify the steps
people to be curious, vital and self-motivated. At they can take to improve and ask them to
their best they are agentic and inspired, striving identify how they will know they are making
to learn, extend themselves, master new skills and progress.
apply their talents responsibly. 3 Purpose – when giving instructions explain
Self-determination theory makes an important dis- the why as well as the how.
tinction between two types of motivation: intrinsic Intrinsic motivation is associated with the concept of
motivation and extrinsic motivation, as described employee engagement, as explained in Chapter 24.
below.
Extrinsic motivation
Intrinsic and extrinsic Extrinsic motivation occurs when things are done
motivation to or for people in order to motivate them. These
include rewards such as incentives, increased pay,
It is useful to understand the factors that affect mo- praise or promotion, and punishments such as dis-
tivation as explained by content and process theo- ciplinary action, withholding pay or criticism.
ries. When deciding on motivation strategy and
practice it is also useful to appreciate how these fac-
tors function through the processes of intrinsic and Extrinsic v intrinsic motivation
extrinsic motivation. Extrinsic motivators can have an immediate and
powerful effect, but it may not necessarily last long.
The intrinsic motivators, which are concerned with the need for a ‘line of sight’ between the effort and
the ‘quality of working life’ (a phrase and move- the reward.
ment that emerged from this notion), may make a
deeper and longer-term impact because they are in-
herent in individuals and the work. They are not Comments on process theories
imposed from outside in such forms as incentive
Process theories are not based on suspect assump-
pay. Intrinsic motivation outcomes are more under
tions about the universality of needs, as are content
the control of individuals, who can place greater re-
theories. Instead, they emphasize the importance of
liance on their past experiences to indicate the ex-
individual decision making on work behaviour. As
tent to which positive and advantageous results are
pointed out by Shields (2007: 85): ‘They acknowl-
likely to be obtained by their behaviour.
edge the importance of social and job context as
Following their research, Deci and Ryan (1985)
co-determinants of motivational strength while
suggested that there was a risk that extrinsic moti-
those other than reinforcement theory also high-
vation would ‘crowd out’ the longer-lasting and
light the importance of self-efficacy, task or goal
more effective intrinsic motivation. They claimed
clarity and motivational learning’.
that extrinsic rewards can erode intrinsic interest.
To summarize, research has found that what mo-
Michael Sandel (2012: 122) argued that ‘When peo-
tivates people is a combination of a number of fac-
ple are engaged in an activity they consider intrinsi-
tors, especially need satisfaction and the expectation
cally worthwhile, offering money may weaken their
that their behaviour will result in a worthwhile re-
motivation by “crowding out” their intrinsic inter-
ward. The impact of these factors will vary accord-
est or commitment.’
ing to the characteristics of individuals and the cir-
However, as noted by Gerhart and Rynes (2003:
cumstances in which they are working.
52): ‘The vast majority of research on this theory
Age is likely to be one of those characteristics
has been performed in school rather than work set-
and Dwivedula and Singh (2020: 49) conducted re-
tings, often with elementary school-aged children.’
search to find out what motivated younger people
But this did not stop commentators such as Daniel
(generation Z – those born between the years 1996
Pink assuming that the results were equally signifi-
and 2010). They established that ‘Four factors
cant for working adults.
related to organizational support, growth opportu-
A meta-analysis of 145 studies conducted by
nities, rewards and accountability at work, and
Cameron et al (2001) led to the conclusion that re-
work-related interaction are found to best explain
wards do not inevitably have negative effects on
the worker motivation. The findings of the study
intrinsic motivation. Cotton et al (2022: 10) com-
support the contemporary arguments that motiva-
mented that
tion is a complex variable. It is an outcome of a mul-
We can also dispense with another popular idea: titude of factors such as work content, work c ontext,
that financial incentives tend to ‘crowd out’ and and individual disposition.’
reduce intrinsic motivation. Many in the field The main motivation theories are summarized in
of management – both academics and popular Table 22.1.
authors – have argued that financial incentives
reduce the innate pleasure that we can get from
work and, as such, can damage performance.
However, the best research evidence does not
Motivation and job
support it; there is no such generalisable effect. satisfaction
There are exceptions to this – in particular when
incentives are seen as exploitative and unfair… but Job satisfaction takes place when people have posi-
it is not a general feature of incentives. tive and favourable attitudes towards their work. It
It is reasonable to conclude that there is room for can be distinguished from morale, which is a group
both extrinsic and intrinsic motivation as long as rather than individual variable, related to the degree
the former provides for fair rewards which satisfy to which group members feel attracted to their
the requirements of expectancy theory, especially group and want to remain a member of it.
TA B L E 22.1 Summary of motivation theories

Summary of
Category Type Theorist(s) theory Implications
Reinforcement Thorndike As experience is Provide feedback

(1911) gained in satisfying which positively
Skinner needs, people reinforces
(1953) perceive that certain effective
actions help to behaviour.
achieve goals while
others are
unsuccessful. The
successful actions
are repeated when a
similar need arises.
Content theory Hierarchy of Maslow People are Focuses attention

needs (1954) motivated by their on the various
needs which are needs that
translated into goals motivate people
for them to attain. and the notion
The content of that a satisfied
motivation is need is no longer
therefore those a motivator. The
needs and the goals concept of a
they generate to hierarchy has no
which people aspire. practical
significance.
Two-factor Herzberg Two groups of Identifies a

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

theory (1964), depends on the system to be
Porter and likelihood that effective, there
Lawler rewards will follow must be a link
(1968) effort and that the between effort
reward is and reward (line
worthwhile. of sight), the
reward should be
achievable and it
should be
worthwhile.
(continued )
Summary of
Category Type Theorist(s) theory Implications
Goal theory Lathom and Motivation will Influences

Locke (1979) improve if people performance
have demanding but management and
agreed goals and learning and
receive feedback development
practices.
Equity theory Adams People are better Need to have

(1965) motivated if treated equitable reward
equitably. and employment
practices.
Self- Deci and States that the Rely more on

determination Ryan (1985) quality of experience using intrinsic
theory and performance rather than
can be much better extrinsic methods
when a person is of motivation.
behaving for intrinsic
rather than extrinsic
reasons
The factors that affect job ●● Success or failure. Success obviously creates
satisfaction, especially if it enables
satisfaction individuals to prove to themselves that they
Levels of job satisfaction or dissatisfaction are influ- are using their abilities to the full. And it is
enced by: equally obvious that the reverse is true of
failure.
●● The intrinsic motivating factors. These relate
to job content, especially the five dimensions
of jobs identified by Hackman and Oldham Job satisfaction and performance
(1974): skill variety, task identity, task
It is a commonly held and not unreasonable belief
significance, autonomy and feedback (the job
that an increase in job satisfaction results in im-
characteristics model).
proved performance. The whole human relations
●● The quality of supervision. The Hawthorne movement led by Mayo (1933) and supported by
studies (Roethlisberger and Dixon, 1939) the Roethlisberger and Dixon (1939) research was
resulted in the claim that supervision is the based on the belief that productivity could be in-
most important determinant of worker creased by making workers more satisfied, primar-
attitudes. ily through pleasant and supportive supervision and
●● Social contacts. Elton Mayo (1933) believed by meeting their social needs. But research by Katz
that a man’s desire to be continuously et al (1950, 1951) found that the levels of satisfac-
associated in work with his fellows is a tion with pay, job status or fellow workers in high-
strong, if not the strongest human productivity units were no different to those in low-
characteristic. productivity units.
Meta-analysis by Brayfield and Crockett (1955) performance-related pay scheme will miraculously
of a number of studies concluded that there was lit- transform everyone overnight into well-motivated,
tle evidence of any simple or appreciable relation- high-performing individuals.
ship between satisfaction and performance. A later Nevertheless, money is a powerful force because
review of research by Vroom (1964) found that the it is linked directly or indirectly to the satisfaction
median correlation between job satisfaction and job of many needs. Money may in itself have no intrin-
performance for all these studies was only 0.14, sic meaning, but it acquires significant motivating
which is not high enough to suggest any marked power because it comes to symbolize so many in-
relationship between them. Spector (1997) came to tangible goals. It acts as a symbol in different ways
the same conclusion. Indeed, it can be argued that it for different people, and for the same person at dif-
is not increases in satisfaction that produce im- ferent times. A comprehensive evidence review by
proved performance but improved performance the CIPD (Cotton et al, 2022: 4) came to the con-
that increases satisfaction. This was confirmed by clusion that ‘There is a strong body of research
data on the link between job satisfaction and per- showing that, overall, financial incentives have a
formance for 177 store managers, analysed by positive effect on employee motivation and conse-
Christen et al (2006). It was established that store quently performance’.
managers’ performance increased their job satisfac- But badly designed and managed pay systems
tion but that job satisfaction had no impact on job can demotivate. An important researcher in this
performance. area was Elliott Jaques (1961), who emphasized the
need for such systems to be perceived as being fair
and equitable. In other words, the reward should be
Motivation and financial clearly related to effort or level of responsibility and
people should not receive less money than they de-
incentives serve compared with their fellow workers. Jaques
called this the ‘felt-fair’ principle.
Financial incentives are regarded by many people as
the most obvious extrinsic reward. Money is said to
provide the carrot that most people want. Conclusions on motivation
Doubts were cast on the effectiveness of money
by Herzberg (1968), which although unsupported theory
by his research, had some face validity. He claimed
that while the lack of money can cause dissatisfac- Steers et al (2004) contended that ‘Motivation theo-
tion, its provision does not result in lasting satisfac- ries that were discredited long ago still permeate
tion. This could apply to people on fixed salaries or textbooks’. They were referring mainly to Maslow
rates of pay who do not benefit directly from an and Herzberg. But, needs theory still offers an indi-
incentive scheme. They may feel good when they cation of the factors that motivate people and con-
get an increase; apart from the extra money, it is a tent theory provides some useful explanations of
highly tangible form of recognition and an effective how motivation takes place. And while reinforce-
means of helping people to feel that they are val- ment theory may be simplistic it still explains some
ued. But this feeling of euphoria can rapidly die aspects of how reward affects motivation and per-
away. Other causes of dissatisfaction from formance and continues to exert sublimal influence
Herzberg’s list of hygiene factors, such as working on the beliefs of some managers about the power of
conditions or the quality of management, can loom incentives to motivate people. And the distinction
larger in some people’s minds when they fail to get between intrinsic and extrinsic motivation as a guide
the satisfaction they need from the work itself. to motivation policy and practice is important.
However, it must be re-emphasized that different
people have different needs and wants. Some will
be much more motivated by money than others. Motivation strategies
What cannot be assumed is that money motivates
everyone in the same way and to the same extent. Motivation strategies aim to create a working envi-
Thus it is naive to think that the introduction of a ronment and to develop policies and practices that
will provide for higher levels of performance from about their work. The better employees feel about
employees. But when formulating strategies and their work, the more motivated they remain over
turning them into policies and practice, the follow- time. When we step away from the traditional
ing words of wisdom by Lai (2017) should be carrot or stick to motivate employees, we can
remembered: engage in a new and meaningful dialogue about
the work instead.
Motivation is less about employees doing great
work and more about employees feeling great The factors affecting motivation strategies and the
HR contribution are summarized in Table 22.2.
TA B L E 22.2 Motivation strategies

Factors affecting motivation strategies The HR contribution
The complexity of the process of motivation means Avoid the trap of developing or supporting
that simplistic approaches based on instrumentality or strategies that offer prescriptions for motivation
needs theory are unlikely to be successful. based on a simplistic view of the process or fail to
recognize individual differences.
People are more likely to be motivated if they work in Encourage the development of performance
an environment in which they are valued for what they management processes that provide opportunities
are and what they do. This means paying attention to to agree expectations and to recognize
the basic need for recognition. accomplishments.
Extrinsic motivators such as incentive pay can have an ●● Develop total reward systems which provide
immediate and powerful effect, but it will not opportunities for both financial and non-
necessarily last long. The intrinsic motivators, which financial rewards to recognize achievements.
are concerned with the ‘quality of working life’ (a Bear in mind, however, that financial rewards
phrase and movement which emerged from this systems are not necessarily appropriate and
concept), are likely to have a deeper and longer-term the lessons of expectancy, goal and equity
effect because they are inherent in individuals and the theory need to be taken into account in
work they do and not imposed from outside in such designing and operating them.
forms as performance-related pay. ●● Pay particular attention to recognition as a
means of motivation and developing intrinsic
motivation through job design.
Some people will be much more motivated by money Avoid the introduction of a performance-related
than others. It cannot be assumed that money pay scheme in the belief that it will miraculously
motivates everyone in the same way and to the same transform everyone overnight into well-motivated,
extent. high-performing individuals.
Recognition should be given to the need for work Advise on processes for the design of jobs which
which provides people with the means to achieve their take account of the factors affecting the
goals, a reasonable degree of autonomy, and scope for motivation to work, providing for job enrichment in
the use of skills and competences. the shape of variety, decision-making
responsibility and as much control as possible in
carrying out the work.
The need for the opportunity to grow by developing ●● Provide facilities and opportunities for learning
abilities and careers. through such means as personal development
planning processes as well as more formal
training.
●● Develop career planning processes.
(continued )
Factors affecting motivation strategies The HR contribution
The cultural environment of the organization in the Advise on the development of a culture which
shape of its values and norms will influence the impact supports processes of valuing and rewarding
of any attempts to motivate people by direct or indirect employees.
means.
Motivation will be enhanced by leadership which sets ●● Devise competency frameworks which focus
the direction, encourages and stimulates achievement on leadership qualities and the behaviours
and provides support to employees in their efforts to expected of managers and team leaders.
reach goals and improve their performance generally. ●● Ensure that leadership potential is identified
through performance management and
assessment centres.
●● Conduct leadership development programmes.
Key learning points
The process of motivation significant theories are those concerned with

expectancy, goal setting, equity and cognitive
Motivation is goal-directed behaviour. People are evaluation, which are classified as process or
motivated when they expect that a course of action is cognitive theories.
likely to lead to the attainment of a goal and a valued
reward – one that satisfies their needs and wants.
Motivation strategies
Types of motivation Motivation strategies aim to create a working
environment and to develop policies and practices that
The two basic types are intrinsic and extrinsic will provide for higher levels of performance from
motivation. employees. They include the design of intrinsically
motivating jobs and leadership development
Motivation theories programmes and the development of total reward
systems and performance management processes.
There are a number of motivation theories that, in the
main, are complementary to one another. The most
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210
23
Commitment
2 A strong belief in and acceptance of the
Introduction values and goals of the organization.
Commitment represents the strength of an individual’s 3 A readiness to exert considerable effort on
identification with, and involvement in, an organiza- behalf of the organization.
tion. It is a concept that has played an important part Appelbaum et al (2000: 183) rephrased this
in HRM philosophy. As Guest (1987: 503) suggested, definition as ‘Organizational commitment is a mul-
HRM policies are designed to ‘maximize organiza- tidimensional construct that reflects a worker’s:
tional integration, employee commitment, flexibility identification with the organization (loyalty), at-
and quality of work’. Beer et al (1984: 20) identified tachment to the organization (intention to stay),
commitment in their concept of HRM as a key dimen- and willingness to expend effort on the organiza-
sion because it ‘can result not only in more loyalty and tion’s behalf (discretionary effort).’ An alternative,
better performance for the organization, but also in although closely related definition of commitment,
self-worth, dignity, psychological involvement, and emphasizes the importance of behaviour in creat-
identity for the individual.’ ing commitment. Three features of behaviour are
This chapter starts with a definition of commit- important in binding individuals to their acts: the
ment followed by comments on the related concepts visibility of the acts, the extent to which the out-
of mutuality and mutual gains. The next two sec- comes are irrevocable, and the degree to which the
tions deal with the relationship between commit- person undertakes the action voluntarily.
ment and engagement and the factors affecting Commitment, according to Salancik (1977), can be
commitment. The chapter continues with a critical increased and harnessed to obtain support for or-
evaluation of the concept and ends with suggestions ganizational ends and interests through such ploys
on how to develop a commitment strategy. as participation in decisions about actions.
The meaning of Mutuality and commitment

organizational commitment Mutuality is a state that exists when management
and employees are interdependent and both benefit
Commitment refers to attachment and loyalty. It is
by achieving mutual gains from this interdepend-
associated with the feelings of individuals about
ency. The importance of mutuality and its relation-
their organization. Mowday (1998) stated that it
ship to commitment was spelt out by Walton
involves an emotional attachment to one’s organi-
(1985a: 64) as follows:
zation that results from shared values and interests.
The three characteristics of commitment identified The new HRM model is composed of policies
by Mowday et al (1982) are: that promote mutuality – mutual goals, mutual
influence, mutual respect, mutual rewards, mutual
1 A strong desire to remain a member of the responsibility. The theory is that policies of
organization.
Chapter 23 | Commitment 211
mutuality will elicit commitment which in turn commitment is associated with lower labour turno-
will yield both better economic performance and ver and absence, but there is no clear link to perfor-
greater human development. mance.’ Swailes (2002: 164) confirmed that ‘Despite
the best efforts of researchers... the evidence for a
strong positive link between commitment and per-
Commitment formance remains patchy.’
It is probably unwise to expect too much from
and performance commitment as a means of making a direct and im-
mediate impact on performance. It is not the same
Walton’s theme was that improved performance as motivation. It is possible to be dissatisfied with a
would result if the organization moved away from particular feature of a job while retaining a fairly
the traditional control-oriented approach to work- high level of commitment to the organization as a
force management, which relies upon establishing whole. But it is reasonable to believe that strong
order, exercising control and achieving efficiency. commitment to work may result in conscientious
He proposed that this approach should be replaced and self-directed application to do the job, regular
by a commitment strategy that would enable work- attendance, the need for less supervision and a high
ers ‘to respond best – and most creatively – not level of discretionary effort. Commitment to the or-
when they are tightly controlled by management, ganization will certainly be related to the intention
placed in narrowly defined jobs, and treated like an to stay there. It will also be concerned with mutual-
unwelcome necessity, but, instead, when they are ity, the Walton concept that has more recently
given broader responsibilities, encouraged to con- evolved as the mutual gains perspective.
tribute and helped to achieve satisfaction in their
work’ (Walton, 1985b: 77). He described the com-
mitment-based approach as follows: The mutual gains
Jobs are designed to be broader than before, to perspective
combine planning and implementation, and to
include efforts to upgrade operations, not just The mutual gains perspective proposes that organi-
to maintain them. Individual responsibilities zations should pursue employment policies that
are expected to change as conditions change, produce benefits for both employees and them-
and teams, not individuals, often are the selves. It is influenced by social exchange theory
organizational units accountable for performance. which states that feelings of loyalty and commit-
With management hierarchies relatively flat and
ment and discretionary effort are a social reciproca-
differences in status minimized, control and
tion by employees to a good employer. Kochan and
lateral coordination depend on shared goals. And
Osterman (1994: 46) suggested that
expertise rather than formal position determines
influence. (page 79) The term mutual gains is appropriate because
it conveys a key message: achieving and
Expressed like this, a commitment strategy sounds
sustaining competitive advantage from human
idealistic (‘the American dream’ as Guest put it in
resources requires the strong support of multiple
1990) but it does not appear to be a crude attempt stakeholders... employees must commit their
to manipulate people to accept management’s val- energies to meeting the economic objectives of
ues and goals, as some have suggested. In fact, the enterprise. In return, owners must share the
Richard Walton did not describe it as being instru- economic returns with employees and invest those
mental in this manner. His prescription was for a returns in such a way as promotes the long-run
broad HRM approach to the ways in which people economic security of the workforce.
are treated, jobs are designed and organizations are
managed. He believed that the aim should be to de- As Peccei et al (2013: 21) pointed out, ‘The mutual
velop a situation in which management and em- gains model hypothesises that HRM has a positive
ployees are interdependent and both benefit from impact on both employee well-being and organiza-
this interdependency, ie mutuality. tional performance.’
However, a literature search by Guest (1991) led The concept of mutual gains is applied in employ-
him to the conclusion that ‘High organizational ment relations as a factor in achieving partnership
between management and trade unions and as a organization.’ Salanova et al (2005) saw commitment
framework for collective bargaining. as part of engagement but not equivalent to it. Macey
and Schneider (2008: 8–9) stated that:
Organizational commitment is an important
Commitment and facet of the state of engagement when it is
engagement conceptualized as positive attachment to the
larger organizational entity and measured as
a willingness to exert energy in support of the
The notion of commitment as described above ap-
organization, to feel pride as an organizational
pears to be very similar if not identical to that of member, and to have personal identification with
organizational engagement which focuses on attach- the organization.
ment to, or identification with, the organization as a
whole. Are there any differences? Some commenta-
tors have asserted that commitment is a distinct al-
though closely linked entity. As cited by Buchanan Factors affecting
(2004: 19), the US Corporate Executive Board di-
vides engagement into two aspects of commitment: commitment
(1) rational commitment, which occurs when a job
serves employees’ financial, developmental or pro- Kochan and Dyer (1993) indicated that the factors
fessional self-interest, and (2) emotional commit- affecting the level of commitment in what they
ment, which arises when workers value, enjoy and called ‘mutual commitment firms’ were as follows:
believe in what they do and has four times the power 1 Strategic level: supportive business strategies,
to affect performance as its more pragmatic coun- top management value commitment and
terpart. The Corporate Executive Board (2004: 1) effective voice for HR in strategy making
indicated that engagement is ‘the extent to which and governance.
employees commit to someone or something in their
2 Functional (human resource policy) level:
organization, how hard they work, and how long
staffing based on employment stabilization,
they stay as a result of that commitment’. Macey
investment in training and development and
and Schneider (2008: 8–9) considered that
contingent compensation that reinforces
Organizational commitment is an important cooperation, participation and contribution.
facet of the state of engagement when it is 3 Workplace level: selection based on high
conceptualized as positive attachment to the standards, broad task design and teamwork,
larger organizational entity and measured as employee involvement in problem solving
a willingness to exert energy in support of the
and a climate of cooperation and trust.
organization, to feel pride as an organizational
member, and to have personal identification with The research conducted by Purcell et al (2003) iden-
the organization. tified the following key policy and practice factors
that influence levels of commitment:
Clearly, organizational engagement and commitment
are closely associated, and commitment was included ●● received training last year;
by the Institute for Employment Studies in its model ●● satisfied with career opportunities;
(see Chapter 24) as an element of engagement.
Appelbaum et al (2000: 183) noted that ‘The willing- ●● satisfied with the performance appraisal
ness to exert extra effort is the aspect of organiza- system;
tional commitment that has been shown to be most ●● think managers are good in people
closely related to an employee’s job performance.’ management (leadership);
Robinson et al (2004: 7) suggested that the closest ●● find their work challenging;
relationship of commitment to engagement was ‘af- ●● think their firm helps them achieve a work–
fective commitment, ie the satisfaction people get life balance;
from their jobs and their colleagues and their willing-
ness to go beyond the call of duty for the sake of the ●● satisfied with communication or company
performance.
‘Commitment is not an all-or-nothing affair (though

Critical evaluation of the many managers might like it to be) but a question
concept of commitment of multiple or competing commitments for the indi-
vidual.’ A pluralist perspective recognizes the legiti-
A number of commentators have raised questions macy of different interests and is more realistic.
about the concept of commitment. These relate to It could be argued that values concerned with
three main problem areas: (1) the imprecise nature performance, quality, service, equal opportunity
of the term, (2) its unitary frame of reference and and innovation are not wrong because they are
(3) commitment as an inhibitor of flexibility. managerial values. But pursuing a value such as in-
novation could work against the interests of em-
ployees by, for example, resulting in redundancies.
The imprecise nature of the term And flexibility may sound a good idea but, beyond
the rhetoric, as Sisson (1994: 5) observed, the real-
Guest (1987: 513) raised the question of what com- ity may mean that management can do what it
mitment really means as follows: wants. It would be quite reasonable for any em-
The case for seeking high commitment among ployee encouraged to behave in accordance with a
employees seems plausible but the burgeoning value supported by management to ask, ‘What’s in
research on the topic has identified a number of it for me?’ It can also be argued that the imposition
problems. One of these concerns the definition from above of management’s values on employees
of the concept. The first issue is – commitment to without their having any part to play in discussing
what? Most writers are interested in commitment and agreeing them is a form of coercion.
to the organization, but others have examined
career commitment and job commitment. Once the
general concept of commitment is utilized, then Commitment and flexibility
union commitment, workgroup commitment and
family commitment should also be considered. It was pointed out by Coopey and Hartley (1991: 22)
The possibility of multiple and perhaps competing that ‘The problem for a unitarist notion of organiza-
commitments creates a more complex set of issues. tional commitment is that it fosters a conformist ap-
proach which not only fails to reflect organizational
reality, but can be narrowing and limiting for the or-
Unitary frame of reference ganization.’ They argued that if employees are ex-
pected and encouraged to commit themselves tightly
The concept of commitment, especially as put for- to a single set of values and goals they will not be able
ward by Walton (1985b), can be criticized as being to cope with the ambiguities and uncertainties that
simplistic, even misguided, in adopting a unitary are endemic in organizational life in times of change.
frame of reference that assumes that organizations Conformity to ‘imposed’ values will inhibit creative
consist of people who share their interests. It has problem solving, and high commitment to present
been suggested by people such as Cyert and March courses of action will increase both resistance to
(1963), Mangham (1979) and Mintzberg (1983) change and the stress that invariably occurs when
that an organization is really a coalition of interest change takes place.
groups where political processes are an inevitable If commitment is related to tightly defined plans,
part of everyday life. this will become a real problem. To avoid it, the em-
Legge (1989: 38) also raised this question in her phasis should be on overall strategic directions.
discussion of strong culture as a key requirement of These would be communicated to employees with
HRM, which she criticized because it implies ‘a the proviso that changing circumstances will require
shared set of managerially sanctioned values... that their amendment. In the meantime, however, every-
assumes an identification of employee and employer one can at least be informed in general terms where
interests.’ As Coopey and Hartley (1991: 21) put it: the organization is heading and, more specifically,
the part they are expected to play in helping the or- 3 Impress on management the need to
ganization to get there; if they can be involved in the develop a climate of trust by being honest
decision-making processes on matters that affect with people, treating them fairly, justly and
them (including management’s values for perfor- consistently, keeping its word and showing
mance, quality and customer service), so much the willingness to listen to the comments and
better. suggestions made by employees during
Values need not necessarily be restrictive. They processes of consultation and participation.
can be defined in ways that allow for freedom of 4 Develop a positive psychological contract
choice within broad guidelines. In fact, the values (the set of reciprocal but unwritten
themselves can refer to such processes as flexibility, expectations that exist between individual
innovation and responsiveness to change. Thus, far employees and their employers) by treating
from inhibiting creative problem solving, they can people as stakeholders, relying on
encourage it. But they will not do so if they are im- consensus and cooperation rather than
posed from above. Employees need to have a say in control and coercion, and focusing on the
defining the values they are expected to support. provision of opportunities for learning,
development and career progression.
Advise on the establishment of partnership
Developing a commitment 5
agreements with trade unions that
strategy emphasize unity of purpose, common
approaches to working together and the
The reservations above do not diminish the value of importance of giving employees a voice in
seeking to gain commitment by developing a com- matters that concern them.
mitment strategy, although they need to be taken 6 Recommend and take part in the
into account when doing so. Such a strategy can be achievement of single status for all
based on a high commitment management model employees (often included in a partnership
incorporating policies and practices in areas of HR agreement) so that there is no longer an ‘us
such as job design, learning and development, ca- and them’ culture.
reer planning, performance management, reward 7 Encourage management to declare a policy
management, participation, communication and of employment security and ensure that
employee wellbeing. HR should play a major part steps are taken to avoid involuntary
in developing a high-commitment organization. The redundancies.
ten steps that can be taken are:
8 Develop performance management
1 Advise on methods of communicating the processes that provide for the alignment of
values and aims of management and the organizational and individual objectives.
achievements of the organization so that 9 Advise on means of increasing employee
employees are more likely to identify with identification with the company through
the organization as one they are proud to rewards related to organizational
work for. performance (profit sharing or gainsharing)
2 Emphasize to management that or employee share ownership schemes.
commitment is a two-way process; 10 Enhance employee job engagement, ie
employees cannot be expected to be identification of employees with the job
committed to the organization unless they are doing, through job design
management demonstrates that it is processes that aim to create higher levels of
committed to them and recognizes their job satisfaction (job enrichment).
contribution as stakeholders.
Key learning points
The meaning of commitment The factors affecting the level of

Commitment refers to attachment and loyalty. It is commitment
associated with the feelings of individuals about their ●● Strategic level: supportive business strategies, top
organization. The three characteristics of commitment management value commitment and effective
identified by Mowday et al (1982) are: voice for HR in strategy making and governance.
1 A strong desire to remain a member of the ●● Functional (human resource policy) level: staffing
organization. based on employment stabilization, investment
2 A strong belief in and acceptance of the values and in training and development and contingent
goals of the organization. compensation that reinforces cooperation,
participation and contribution.
3 A readiness to exert considerable effort on behalf
of the organization. ●● Workplace level: selection based on high
standards, broad task design and teamwork,
employee involvement in problem solving, and a
Commitment and mutuality
climate of cooperation and trust.
In his seminal Harvard Business Review article,
Richard Walton (1985a) stated that ‘eliciting employee Problems with the concept
commitment will lead to enhanced performance [and]
the evidence shows this belief to be well founded’. The
of commitment
importance of commitment was highlighted by Walton. There are four main problem areas: (1) the imprecise
His theme was that improved performance would nature of the term, (2) its unitary frame of reference,
result if the organization moved away from the (3) commitment as an inhibitor of flexibility and (4) the
traditional control-oriented approach to workforce extent to which high commitment does in practice
management, which relies upon establishing order, result in improved organizational performance.
exercising control and achieving efficiency. He
proposed that this approach should be replaced by a HR’s role in enhancing commitment
commitment strategy.
HR should play a major part in developing a high-
commitment organization. The 10 steps it can take are:
The mutual gains perspective
1 Advise on methods of communicating the values
The mutual gains perspective states that organizations
and aims of management.
should pursue employment policies that produce
benefits for both employees and themselves. 2 Emphasize to management that commitment is a
two-way process.
Engagement and commitment 3 Impress on management the need to develop a
Organizational engagement and commitment are climate of trust.
closely associated. Commitment was included by the 4 Develop a positive psychological contract.
IES in its model as an element of engagement. But
commitment is a somewhat wider concept in that it is 5 Advise on the establishment of partnership
concerned with both job engagement and agreements with trade unions.
organizational engagement.
6 Recommend and take part in the achievement of 9 Advise on means of increasing employee
single status for all employees. identification with the company.
7 Encourage management to declare a policy of 10 Enhance employee job engagement through job
employment security. design processes.
8 Develop performance management processes.
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218
24
Employee
engagement
Introduction The meaning of employee
Engagement takes place when people are motivated engagement
to achieve high levels of performance. According to
the CIPD (2012: 13), ‘Engagement has become for Kahn (1990: 894) defined employee engagement as
practitioners an umbrella concept for capturing the ‘the harnessing of organization members’ selves to
various means by which employers can elicit addi- their work roles; in engagement, people employ and
tional or discretionary effort from employees – a express themselves physically, cognitively, and emo-
willingness on the part of staff to work beyond con- tionally during role performances.’ There have been
tract. It has become a new management mantra.’ many definitions since the explosion of interest in
The notion that individuals can be ‘personally’ en- the concept during the 2000s, which perhaps ex-
gaged in their work was first proposed by Kahn plains its somewhat elusive nature. Harter et al
(1990) in his seminal article in the Academy of (2002: 269) stated that engagement was ‘the indi-
Management Journal. vidual’s involvement and satisfaction with as well as
Reilly and Brown (2008) noted that the terms enthusiasm for work.’ Saks (2006: 602) defined
‘job satisfaction’, ‘motivation’ and ‘commitment’ employee engagement as ‘a distinct and unique con-
are generally being replaced now in business by ‘en- struct consisting of cognitive, emotional and behav-
gagement’ because it appears to have more descrip- ioural components that are associated with
tive force and face validity. Truss et al (2013: 2657) individual role performance.’ He distinguished be-
suggested that ‘engagement may constitute the tween ‘job engagement’ (performing the work role)
mechanism through which HRM practitioners im- and organizational engagement (performing the role
pact individual and organizational performance.’ as a member of the organization).
This chapter starts with an analysis of the mean- A later definition was produced by Macey et al
ing of employee engagement and continues with an (2009: 7) who defined engagement as ‘an individu-
assessment of its components, drivers and out- al’s purpose and focused energy, evident to others in
comes. This is followed by a discussion of ‘burnout’ the display of personal initiative, adaptability, effort
(a state of complete exhaustion at work), the possi- and persistence directed towards organizational
bility of which should be taken into account in pur- goals.’
suing the engagement strategies described at the end Alfes et al (2010: 5) saw engagement as having
of the chapter. The chapter ends with a critical eval- three core facets:
uation of the concept. ●● intellectual engagement – thinking hard
about the job and how to do it better;
Chapter 24 | Employee Engagement 219
●● affective engagement – feeling positively the parties abide by certain ‘rules’ of exchange...
about doing a good job; [These] usually involve reciprocity or repayment
●● social engagement – actively taking rules such that the actions of one party lead to a
response or actions by the other party. (page 603)
opportunities to discuss work-related
improvements with others at work. He argued that one way for individuals to repay
their organization is through their level of engage-
ment. In other words, employees will choose to en-
Job or organizational engagement gage themselves to varying degrees and in response
or both? to the resources they receive from their organiza-
tion. This is consistent with the description of
The term ‘engagement’ can be used in a specific job- engagement by Robinson et al (2004) as a two-way
related way to describe what takes place when peo- relationship between the employer and the
ple are interested in and positive – even excited – employee.
about their jobs, exercise discretionary behaviour As discussed below, the concept of engagement
and are motivated to achieve high levels of perfor- can be further explored in terms of its make-up (its
mance. Truss et al (2006: ix) stated that ‘Put simply, components), its antecedents (the forces that drive
engagement means feeling positive about your job.’ it) and its outcomes.
They went on to explain that ‘The engaged employee
is the passionate employee, the employee who is to-
tally immersed in his or her work, energetic, com- The components of
mitted and completely d edicated’ (page 1).
Organizational engagement focuses on attach- employee engagement
ment to or identification with the organization as a
whole. The Conference Board (2006) defined em- Engagement can be regarded as having three over-
ployee engagement as the heightened connection lapping components: motivation and commitment as
that employees feel for their organization. Robinson defined in Chapters 22 and 23 and organizational
et al (2004: 9) emphasized the organizational aspect citizenship behaviour (OCB) as defined below. A
of engagement when they referred to it as ‘a positive model of engagement containing these components
attitude held by the employee towards the organiza- produced by the Institute for Employment Studies
tion and its values.’ This definition of organizational (Armstrong et al, 2010) is shown in Figure 24.1.
engagement resembles the traditional notion of Work or job engagement is also associated with job
commitment. satisfaction. These components of engagement are
Perhaps the most illuminating and helpful ap- considered below.
proach to the definition of engagement is to recog- The concepts of commitment and organiza-
nize that it involves both job and organizational tional engagement are closely related, although
engagement as suggested by Saks (2006) and Balain Robinson et al (2004) stated that while engage-
and Sparrow (2009). ment contains many of the elements of commit-
ment it is not a perfect match. They suggested that
the term commitment does not reflect sufficiently
The theory of engagement two aspects of engagement – its two-way nature,
and the extent to which engaged employees are ex-
Saks (2006) thought that a strong theoretical ra- pected to have positive attitudes about their job.
tionale for engagement was provided by social ex- However, Storey (2007: 8) referred to the concept
change theory, which he described as follows: of employee engagement as ‘a term that broadly
equates with the notion of high commitment.’
Social exchange theory argues that obligations
Yalabik et al (2013: 2803) proposed that ‘affec-
are generated through a series of interactions
tive commitment’ (ie an emotional attachment to
between parties who are in a state of reciprocal
the organization and identification and involvement
interdependence. A basic tenet of social exchange
with it) is an antecedent of work engagement.
theory is that relationships evolve over time into
trusting, loyal and mutual commitments as long as
F I G U R E 24.1 IES model of employee engagement

Commitment Organizational
citizenship
Engagement
Motivation
SOURCE Armstrong et al (2010)
Engagement and motivation has been shown to be related more to the work
situation than to individual dispositions.
The motivation element in engagement is intrinsic.
Macey et al (2009: 67) commented that ‘When the
work itself is meaningful it is also said to have in- Engagement and job satisfaction
trinsic motivation. This means that it is not the pay
Job satisfaction was defined by Locke (1976: 1304)
or recognition that yields positive feelings of en-
as ‘a pleasurable or positive emotional state result-
gagement but the work itself.’ They also pointed out
ing from the appraisal of one’s job and job experi-
that engaged employees ‘feel that their jobs are an
ences.’ Engaged employees are likely to be satisfied
important part of what they are’ (page 127).
with their jobs.
Job satisfaction, like commitment, is regarded by
Engagement and organizational Yalabik et al (2013: 2805) as an antecedent of work
engagement. It has been shown to be related to
citizenship behaviour other attitudes and behaviours. Positively, it is re-
Organizational citizenship behaviour (OCB), as lated to organizational commitment, job involve-
originally defined by Organ (1988), is employee be- ment, organizational citizenship behaviours and
haviour that goes above and beyond the call of duty mental health. Negatively, it is related to turnover
and contributes to organizational effectiveness. It is and stress.
discretionary and not explicitly recognized by the
employing organization’s formal reward system.
As Little and Little (2006) observed, OCB is an
Engagement and the employee
outcome of the attitudes of job satisfaction and or- experience
ganizational commitment. It is similar to the defini-
The term ‘the employee experience’, as considered
tions in the engagement literature of being respectful
in more detail in Chapter 29, is associated with that
of and helpful to colleagues and willingness to go
of engagement. The employee experience refers to
the extra mile or work longer hours, try harder, ac-
everything that people encounter, observe and feel
complish more and speak positively about the or-
during the course of their employment. Having a
ganization. They noted that this desirable behaviour
good experience will enhance engagement and tak- In addition, the quality of leadership exercised by
ing steps to enhance engagement, as described later line managers is an important driver. Hakanen et al
in this chapter, will enhance the employee experi- (2006) established through their research into
ence. The aim is to make this experience positive at teachers’ burnout that supervisory support is posi-
each stage and ensure that employees feel valued for tively related to employee engagement, as is involve-
what they do. ment in decision making and day-to-day control
over tasks and schedules. Macey and Schneider
(2008) argued that when leaders have clear expec-
Drivers of employee tations, are fair, and recognize good performance
they will have positive effects on employee engage-
engagement ment by engendering a sense of attachment to the
job. Research by MacLeod and Clarke (2009) con-
To be able to do anything about engagement it is firmed that line managers played a key part in pro-
necessary to understand the factors that affect it. moting engagement by providing clarity of purpose,
Crawford et al (2014: 59–62) listed the following appreciating employees’ effort and contribution,
drivers: treating their people as individuals and ensuring
●● Job challenge – this takes place when the that work is organized efficiently and effectively so
scope of jobs is broad, job responsibility is that employees feel they are valued, and equipped
high and there is a high workload. It and supported to do their job.
enhances engagement because it creates Macey et al (2009: 11) emphasized the impor-
potential for accomplishment and personal tance of the work environment and the jobs people
growth. do. They noted that ‘Engagement requires a work
environment that does not just demand more but
●● Autonomy – the freedom, independence and promotes information sharing, provides learning
discretion allowed to employees in opportunities and fosters a balance in people’s lives,
scheduling their work and determining the thereby creating the bases for sustained energy and
procedures for carrying it out. It provides a personal initiative.’
sense of ownership and control over work
outcomes.
●● Variety – jobs which allow individuals to Outcomes of engagement
perform many different activities or use
many different skills. Stairs and Galpin (2010) asserted that high levels of
●● Feedback – providing employees with direct engagement result in:
and clear information about the effectiveness
●● lower absenteeism and higher employee
of their performance.
retention;
●● Fit – the existence of compatibility between
●● increased employee effort and productivity;
an individual and a work environment (eg
job, organization, manager, co-workers) that ●● improved quality and reduced error rates;
allows individuals to behave in a manner ●● increased sales;
consistent with how they see or want to see ●● higher profitability, earnings per share and
themselves. shareholder returns;
●● Opportunities for development – these make ●● enhanced customer satisfaction and loyalty;
work meaningful because they provide
●● faster business growth; and
pathways for employee growth and
fulfilment. ●● higher likelihood of business success.
●● Rewards and recognition – these represent But they did not produce convincing evidence to
both direct and indirect returns on the support those claims.
personal investment of one’s time in acting Alfes et al (2010: 2) suggested that engaged em-
out a work role. ployees perform better, are more innovative than
others, are more likely to want to stay with their
employers, enjoy greater levels of personal wellbe- mutually supporting. However, it is useful to con-
ing and perceive their workload to be more sustain- sider what can be done specifically in each area,
able than others. Rich et al (2010: 619) stated that bearing in mind the particular circumstances and
needs of the organization.
In engagement, organization members harness
their full selves in active, complete work role
performance by driving personal energy into
physical, cognitive and emotional labours. Enhancing job engagement
Engaged employees are described as being
psychologically fully there, attentive, feeling, As established by the Institute for Employment
connected, integrated and focussed in their role Studies (IES) review of engagement (Robertson-
performances. Smith and Markwick, 2009), job engagement can
be enhanced through six managerial practices:
good-quality line management, two-way communi-
cation, effective internal cooperation, a focus on
Engagement strategy development, commitment to employee wellbeing,
and clear, accessible HR policies and practices.
To enhance engagement the CIPD (2018) suggested A Kings College London survey in 2012 re-
that people strategies should pay attention to: ported by Guest (2014) found that typical actions
●● fair treatment of employees and support for to promote engagement included more effective
wellbeing; leadership and more learning and development op-
portunities. But he noted (page 229) that: ‘None of
●● empowering employees to shape their jobs;
these actions… is in any way uniquely linked to
●● effective channels for employee voice; employee engagement and all would fit equally well
●● good people management skills; with steps to enhance organizational commitment
●● performance management systems that or employee involvement.’ HR is concerned with
motivate and provide opportunities for developing and implementing policies and practices
professional development; dealing with job design, learning and development,
performance management and reward that are val-
●● communications to reinforce purpose and
uable generally as well as in terms of their contribu-
vision and keep employees informed.
tion to increasing levels of engagement as described
Jenkins and Delbridge (2013) proposed that in line below. But the most important contribution is
with Storey’s (1989) contrast between ‘hard’ and made by line managers.
‘soft’ HRM it was possible to distinguish between Enhancing job engagement can take place gener-
hard and soft management approaches to enhancing ally throughout the employee life cycle and the ac-
engagement. In their case studies of two companies, tions of line managers and more specifically through
one adopted a soft approach that centred on work job design, learning and development programmes,
design and promoting positive workplace condi- performance management and reward.
tions and relationships between management and
employees. Enhanced employee engagement was
seen as a positive outcome – productivity was not The employee life cycle
the primary goal. In the other case, a ‘hard’ ap-
Enhancing engagement through the six stages of the
proach concentrated on directly increasing employee
employee life cycle involves:
effort to improve organizational performance. In the
company using a soft approach high levels of en- 1 Attraction – the development of an employee
gagement were reported, while in the other com- brand that will present the organization as a
pany high levels of employee disengagement were good place to work.
evident. 2 Recruitment – reinforcing the image of
To enhance employee engagement, employers employee brand as presented in attracting
have to address issues concerning both job and or- candidates and ensuring that the recruitment
ganizational engagement. These are interrelated and process is carried out efficiently and with due
any actions taken to enhance either aspect will be regard to the interests of applicants.
3 Onboarding (induction) – providing people ●● build trust by showing commitment to the

with a good first impression of the employee’s success;
organization and help in settling down. ●● challenge people within areas of their
4 Development – providing opportunities to distinctive strengths;
acquire and develop skills. ●● focus upon particular skills and knowledge
5 Retention – providing a satisfying work in order to build talent into strength;
experience to all employees but taking steps ●● give employees ownership and creation of
to encourage key people to stay. their outcomes.
6 Separation – handling leavers with care and
Research by Lewis et al (2012) for the CIPD re-
consideration so that remaining employees
sulted in the production of the competency frame-
receive a good impression of the way in
work for employee engagement management set
which the organization treats people.
out in Table 24.1.
The role of line managers Job design

Line managers play a key role in enhancing job en-
Job design as described in Chapter 20 is an impor-
gagement. According to Coffman and Gonzalez-
tant factor in enhancing engagement. Macey et al
Molina (2002: 130), to increase levels of engagement
(2009: 69) commented that ‘People come to work
they should:
for pay but get engaged at work because the work
●● make employees aware of their individual they do is meaningful.’ Intrinsic motivation and
strengths; therefore increased engagement can be generated by
●● provide continuous feedback on how those the work itself if it provides interest and opportuni-
strengths are being used; ties for achievement and self-fulfilment. Finding the
right people for the right roles is not just a matter of
●● ‘clear the path’ so that employees can do
matching people in skills, but also in values and in-
what they do best without unnecessary
terests. In this way performance drives engagement
distractions;
TA BLE 24.1 Employee engagement management competency framework

Competency Description
Autonomy and empowerment Trusts and involves employees
Development Helps to develop employees’ careers
Feedback, praise and recognition Gives positive feedback and praise and rewards good work
Individual interest Shows concern for employees
Availability There when needed
Personal manner Positive approach, leads by example
Ethics Treats employees fairly
Reviewing and guiding Helps and advises employees
Clarifying expectations Sets clear goals and defines what is expected
Managing time and resources Ensures resources are available to meet workload
Following processes and procedures Understands and explains processes and procedures
SOURCE Adapted from Lewis et al (2012: 9)

as much as engagement drives performance, which given the guidance, support and encouragement
means that people will love their jobs more when they need if they are to fulfil their potential and
they are given the chance to perform highly and feel achieve a successful career with the organization in
proud about what they do at work. tune with their talents and aspirations. The actions
Chamorro-Premuzic (2017: 85) commented that required to provide men and women of promise
with a sequence of learning activities and experi-
Finding the right people for the right roles is not
ences that will equip them for whatever level of re-
just a matter of matching people in skills, but also
in values and interests. In this way performance sponsibility they have the ability to reach should be
drives engagement as much as engagement drives included in the strategy.
performance, which means that people will love
their jobs more when they are given the chance to
perform highly and feel proud about what they Developing engagement through
do at work. performance management
Performance management processes can be used to
Learning and development define individual goals and responsibilities, offer
feedback on performance, and provide the basis for
programmes developing skills and planning career development.
Learning and development programmes ensure that Although the organization can create a performance
people have the opportunity to learn and grow in management system, its effectiveness will depend
their roles. Their aims should be to develop learner on the interest and competence of line managers.
engagement – the identification of learners with the
learning process – and to enhance role flexibility –
giving people the chance to develop their roles by Developing engagement through
making better and extended use of their talents. It reward
also means going beyond talent management for
the favoured few and developing the abilities of the Reilly and Brown (2008) proposed that appropriate
core people on whom the organization depends. reward practices and processes, both financial and
The strategy should also cover career develop- non-financial and managed in combination (ie a total
ment opportunities and how individuals can be reward approach), can help to build and improve
F I G U R E 24.2 How reward policies influence performance through engagement

Culture/people management
• Supportive supervisors
• Regular open feedback
• Teamworking
• Involvement in decision
making Staff attitudes and
• Career development commitment
• Work/life balance • Satisfaction with pay and
recognition Performance
• Treated fairly
Rewards • Feeling involved and
• Performance pay developed
• Variable pay • Identification with organization
• Team rewards
• Recognition
• Reward for customer
service/quality
• Single status
SOURCE Reilly and Brown (2008)

employee engagement, and that badly designed or environment is one in which employees have a voice
executed rewards can hinder it. Their model, based in the sense that they can share their concerns, opin-
on research of how reward policies influence perfor- ions and ideas with their employers.
mance through engagement, is shown in Figure 24.2.
The ‘big idea’

Enhancing organizational A basis for building organizational engagement was
engagement established by the longitudinal research in 12 com-
panies conducted by Professor John Purcell and his
The approaches that can be used to enhance organ- colleagues (Purcell et al, 2003: 13). They found that
izational engagement consist of: (1) high-involve- the most successful companies had the ‘big idea’.
ment management; (2) providing more scope for This was ‘a clear sense of mission underpinned by
employee voice; (3) developing the ‘big idea’; and values and a culture expressing what a firm is and
(4) tackling the work environment. its relationship with its customers and employees.’
High-involvement management The work environment

Organizational engagement can be developed Increasing organizational engagement through the
through high-involvement management – a term work environment means developing a culture that
first used by Lawler (1986) to describe manage- encourages positive attitudes to work, promotes in-
ment systems based on commitment and involve- terest and excitement in the jobs people do, reduces
ment, as opposed to the old bureaucratic model stress, recognizes the importance of social interac-
based on control. The underlying hypothesis is tion and, crucially, is concerned about employee
that employees will increase their involvement wellbeing.
with the company if they are given the opportunity It was suggested by Guest (2009) that engage-
to manage and understand their work. Lawler ment can be achieved through effective leadership
claimed that high-involvement practices worked of a strong, positive culture that ensures the enact-
well because they acted as a synergy and had a ment of organizational values; through strong
multiplicative effect. management that supports employees’ work and
High-involvement management means treating wellbeing; through careful design of systems and
employees as partners in the enterprise, whose in- jobs to enable employees to contribute through full
terests are respected. It also means providing em- use of their knowledge and skills; through effective
ployees with a voice, as discussed below. employee voice; and through provision of appro-
priate resources, tools and information to perform
effectively.
Employee voice
Employee voice policies enable employees to effec- Burnout
tively communicate their concerns to management.
Rees et al (2013: 2781) suggested that there is a di- There is a negative side to engagement – burnout,
rect relationship between the effectiveness of such defined by Maslach and Jackson (1981: 99) as ‘a
policies and levels of employee engagement. They syndrome of emotional exhaustion and cynicism.’
invoked social exchange theory, which states that Burnout can take place when individuals are placed
employees engage in reciprocal relationships that under too much pressure to perform. It is some-
can develop into trusting, loyal and mutual commit- times called disengagement. Workaholics who put
ments when certain ‘rules of exchange’ are observed. themselves under too much pressure can suffer
Employees will demonstrate positive attitudes and burnout.
behaviours when they perceive that their employer Burnout is a response to high stress caused by
values them and their contribution. They will dem- excessive job demands, which include attempting to
onstrate higher levels of performance if the work
meet challenging, relentless and unreachable stand- ●● understanding the link between one’s job and
ards. It is more likely to happen when workers have the organization’s mission;
no control over their work environment. Burnout ●● prospects for future growth with one’s
can result in failure, absenteeism or leaving the or- employer;
ganization.
●● intention to stay with one’s employer.
To avoid the pursuit of engagement resulting in
burnout and disengagement, managements need to The most commonly used measure is the one associ-
ensure that employees are not put under too much ated with the definition of engagement as ‘a posi-
pressure, are provided with support when required tive, fulfilling, work-related state of mind.’ This is
and are recognized for what they can achieve with known as the Utrecht Work Engagement Scale’
the resources they have available (including their (UWES) which captures feelings of vigour, eg ‘At my
own skills and ability to exert effort). Alfes et al work, I feel that I am bursting with energy’, dedica-
(2010) concluded that a responsible approach to tion, eg ‘I am enthusiastic about my job’, and ab-
engagement requires a work environment that does sorption, eg ‘I am immersed in my work’.
not just demand more from people but fosters a bal- The nine-item ISA engagement measure pro-
ance in their lives. duced by Soane et al (2012) captures three com-
ponents: intellectual engagement, eg ‘I focus hard
on my work’, social engagement, eg ‘I share the
Measuring engagement same work values as my colleagues’, and affective
engagement, eg ‘I feel positive about my job’. In
Engagement surveys provide the basis for the devel- their study, the ISA measure seemed to be more
opment and implementation of engagement strate- powerful than the UWES in predicting perfor-
gies. A review by Vance (2006) of a number of such mance indicators.
surveys identified the following common themes: However, as the CIPD (2017) pointed out, com-
monly used engagement measures are actually
●● pride in employer;
measuring subjective perceptions of aspects of
●● satisfaction with employer; working.
●● job satisfaction; The important thing to do with an engagement
●● opportunity to perform well at challenging survey, as with any form of employee survey, is to
work; ensure that proper use is made of it through the
‘triple-A’ approach: Analysis, Assessment and
●● recognition and positive feedback for one’s Action. It is also important to inform employees of
contributions; the results of the survey in full and involve them in
●● personal support from one’s supervisor; assessing those results and agreeing actions.
●● effort above and beyond the minimum;
C A S E S T U DY
Land Registry – modernizing the public sector
The Land Registry is a government executive agency The change process focused on the engagement of
employing 300 people. Engaging and enthusing its staff has individuals at all levels. An internal project board
been a challenge. The Swansea site was an masterminded a series of staff surveys and conferences.
underperforming office within an otherwise successful Senior management team away-days and line manage-
organization. Today it is one of the most productive Land ment training and coaching to improve performance
Registry offices as a result of a planned high-engagement management and the development of soft skills were all
working change process. resourced in-house. Training initially focused on senior
management team development, so they could understand 2 Effective teamwork: contributing to the team’s
and lead the changes, building middle management skills performance; building and leading a team.
so that they could lead change and create an atmosphere
3 Knowledge and experience: acquiring and applying
in which employees could have confidence in an open
technical/specialist knowledge.
appraisal process, and team building and development.
Service to customers was always at the centre of the 4 Providing a quality service: meeting customers’ needs;
process. Personal development plans, based on the Land anticipating problems and achieving solutions.
Registry’s national core competency framework, provided
5 Personal effectiveness: communicating effectively;
the opportunity to discuss knowledge, skills and ‘most
showing initiative and determination.
importantly’ attitudes. The framework bands nine
competencies in five main performance areas: Each of these competencies can be demonstrated at four
levels, from entry to senior management level.
1 Delivering results: planning and organizing the
workload; dealing effectively with/managing change.
3 The problem of redundancy. It was noted by

Critical evaluation of the Briner (2014) that ‘Existing accounts of
concept of employee engagement describe it in terms of a whole
range of very well-known and in some cases
engagement historic ideas including organizational
commitment, job satisfaction, motivation,
The difficulties with the concept of engagement are organizational identification, discretionary
as follows: behaviour, citizenship behaviours, positive
moods, emptions and job satisfaction.’
1 The problem of definition. Definitions of Because of this, Fletcher and Robinson
engagement vary widely. Some, for example (2014) suggested that engagement in its
Robinson et al (2004) and the Conference current form is a redundant concept.
Board (2006) define it in terms of
engagement with the organization. Others 4 The problem of impact on performance.
such as Truss et al (2006) and Macey et al Sparrow (2014: 102) warned against
(2009) define it in terms of engagement with over-confident claims that high engagement
the job. Yet others – Saks (2006) and Balain results in high performance. He suggested
and Sparrow (2009) – refer to both that it is possible that being in a well-
‘engagement with the job’ and ‘engagement performing unit makes employees engaged,
with the organization’. In their influential not the other way round. In other words
report on employee engagement, MacLeod ‘reverse causation.’ And Purcell (2014: 248)
and Clarke (2009: 8) stated that ‘There is no noted that ‘the one particular difficulty that
one agreed definition of employee advocates of employee engagement have is
engagement – during the course of this showing conclusive and causal evidence
review we have come across more than 50 between engagement and performance.’ This
definitions. Without a clear definition it will was confirmed in an extensive study by
be difficult for an organization to adopt a Briner (2014).
coherent approach to managing engagement.’ 5 The problem of idealism. Keenoy (2014:
2 The problem of measurement. Unless you 198) referred to the message delivered by
know what you are measuring, ie what employee engagement prescriptions as
engagement is, you can’t measure it. This ‘motherhood and apple pie’ and suggested
reduces the validity of engagement surveys, that the term engagement could be replaced
which provide the basis for most analyses of by job involvement, empowerment, high-
engagement levels in organizations. performance management or ‘any of the
other putative solutions’ to the problem of do we pay so much attention to what must be
getting employees to be more productive. unobtainable for the majority of staff? It seems to
describe a perverse picture of the world of work. It
Bakker (2009) provided evidence of the psychologi- comes as no surprise to find that measures of work
cal disposition of engaged employees: low neuroti- engagement rarely find that more than a third of
cism, high extraversion, cheerfulness, sociability, employees are fully engaged.
conscientiousness, emotional stability, habitually
careful, reliable, hard-working, well organized. But The problems set out above may mean that engage-
Purcell (2014: 243) made the following point: ment programmes can be matters of faith. They
could involve doing a number of seemingly useful
The central problem is that the fully engaged and necessary things but the hoped-for results are
employee, as revealed in these descriptions not guaranteed. However, that does not mean that
and characteristics, is a rare breed. Why then
the attempt should not be made.
Key learning points
The meaning of employee engagement (2010) established that the main drivers of engagement
are meaningful work (the most important), senior
Engagement happens when people are committed to management vision and communication, positive
their work and the organization and are motivated to perceptions of one’s line manager and employee
achieve high levels of performance. It has two voice – employees having a say in matters that
interrelated aspects: (1) job engagement, which takes concern them.
place when employees exercise discretionary effort
because they find their jobs interesting, challenging
Enhancing engagement
and rewarding; and (2) organizational engagement,
when they identify with the values and purpose of their Line managers play a key role in enhancing job
organization and believe that it is a great place in engagement with the support of organizational
which to work and to continue to work. initiatives in the areas of job design, learning
programmes (including leadership development for
Components of engagement line managers) and performance and reward
management systems.
The components of engagement are commitment, The approaches that can be used to enhance
organizational citizenship behaviour, motivation and organizational engagement include: (1) high-
job satisfaction. involvement management; (2) developing the ‘big idea’;
and (3) tackling the work environment.
Theory of engagement
Engagement will have behavioural outcomes leading Burnout
to what can be described as an ‘engaged employee’. A Burnout can take place when individuals are placed
strong theoretical rationale for engagement is under too much pressure to perform. It is sometimes
provided by social exchange theory. called disengagement.
Drivers of engagement Measuring engagement

Macey et al (2009) emphasize the importance of the Engagement surveys provide the basis for the
work environment and the jobs people do. Alfes et al development and implementation of engagement
strategies.
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231
PART VII
People resourcing
PA R T V I I CO N T E N T S
25 Resourcing strategy
26 Workforce planning
27 Recruitment and selection
28 Talent management
the employment activities of workforce planning,

Introduction recruitment and selection, and talent management,
the purpose of which is to ensure that the organiza-
People resourcing, often called ‘employee resourcing’ tion has the people it needs.
or simply ‘resourcing’, is the term used to describe
232

233
25
Resourcing strategy
(skills and behaviours) and motivate people to make
Introduction the most of their abilities. Competency frameworks
and profiles can be prepared to define the skills and
Resourcing strategy is concerned with identifying
behaviours required and used in selection, employee
how many and what sort of employees are required
development and employee reward activities. Efforts
and making plans to obtain and retain them and on
can be made to develop an attractive employer brand
how best to employ them. This chapter starts with a
(the image of the organization as an employer) and
look at the concept of strategic resourcing. It contin-
enhance the experiences employees have when work-
ues with descriptions of the nature of resourcing
ing for the organization. This means considering
strategies.
what needs to be done about employment practices
such as managing diversity, providing flexibility and
employee wellbeing. Perhaps the most important role
Strategic resourcing of strategic resourcing is to integrate these activities
so that coherent and all-embracing resourcing strate-
Strategic resourcing is about taking a broad and gies exist.
longer-term view of what needs to be done to ensure
that the organization has the people it needs and
that strategies for obtaining, employing and devel-
oping those people support the achievement of cor-
The nature of resourcing
porate strategic goals and are integrated with each strategies
other. It has affinities with what is known as ‘soft
workplace planning’ to address employment issues Resourcing strategies set out what the organiza-
as mentioned in Chapter 26 and may make use of tion proposes to do in specific aspects of resourc-
the techniques of ‘hard workforce planning’ to de- ing to ensure that it has the people it needs. They
fine the number of people required, as also described are formulated against the background of strategic
in Chapter 26. resourcing considerations concerning the achieve-
Strategic resourcing recognizes that it is people ment of strategic fit and the broad future people
who implement the corporate plan and that, in the requirements and issues that need to be addressed.
words of Quinn Mills (1983), the process is one of Resourcing strategies are specific ‘action vehicles’
‘planning with people in mind’. It is based on the be- for getting things done against this background.
lief that the strategic capability of an organization They are based on the analysis of, first, the people
depends on its resource capability in the shape of requirement implications of the corporate plan,
people (the resource-based view). It is concerned with and second, any other internal or external events
all the means available to meet the organization’s or issues that may affect those requirements. This
need for certain skills and behaviours, not just re- is done through workforce planning as described
cruitment and selection. Thus it embraces strategies in Chapter 26.
for talent management and learning and develop- Resourcing strategies need to cover every stage
ment. It also encourages performance management of the employee life cycle, namely, attraction, re-
processes that help to identify development needs cruitment, onboarding, development, retention and
234 Part 7 | People Resourcing
separation. A holistic approach is required which selection and talent management covered in chap-
links the different stage of the cycle so that steps ters 27 and 28, the employment practices dealt
taken for each stage will complement and reinforce with in Part 8 and the learning and development
the actions taken for the other stages. This could be activities described in Part 9. Methods of develop-
called an employee life cycle strategy. ing and implementing strategies were set out in
The main components of resourcing strategy are Chapter 9.
the specific resourcing activities of recruitment and
Key learning points
Strategic resourcing Resourcing strategy

Strategic resourcing is about taking a broad and Resourcing strategy is a declaration of intent that sets
longer-term view of what needs to be done to ensure out what the organization proposes to do about ensuring
that the organization has the people it needs and that it has the people it needs. It is based on the analysis of,
strategies for obtaining, employing and developing first, the people requirement implications of the corporate
those people support the achievement of corporate plan, and second, of any other internal or external events
strategic goals and are integrated with each other. or issues that may affect those requirements.
Reference
Quinn Mills, D (1983) Planning with people in mind,
Harvard Business Review, November–December,
pp 97–105
235
26
Workforce planning
organizations carry out hard planning. It depends
Introduction on the needs and context of the organization and the
inclinations of its management.
An organization has to match its demand for work- The purpose of this chapter is to describe how
ers with the supply of workers over time. It must workforce planning operates, bearing in mind that
also consider how well its employment practices it is not as straightforward as it was presented when
contribute to the development of an effective work- the notion of ‘manpower planning’ became popular
force. These are the functions of workforce plan- in the 1960s and 70s. Workforce planning, or
ning. A powerful argument for workforce planning human resource planning as it used to be called,
was made by Quinn Mills (1985: 105) in the may be well established in the HRM vocabulary
Harvard Business Review: but it does not seem to be embedded as a key HR
Companies that have the people in place to meet activity.
their performance objectives are well-equipped The chapter starts with a definition of workforce
to implement their business plans successfully. planning and continues with a discussion of its aims
If, however, the right people are unavailable… and the issues involved, including its link with busi-
the plans themselves may require revision. ness or corporate planning. The final section of the
Many companies would have spared themselves chapter describes the processes used in ‘hard’ plan-
embarrassing market-place failures if they had first ning including scenario planning, demand and sup-
recognised that the human resource implications ply forecasting and action planning.
of their strategic plans were unrealizable.
A distinction can be made between ‘hard’ and ‘soft’
workforce planning. ‘Hard’ workforce planning is Workforce planning defined
about numbers – forecasting people requirements
based on assumptions about future activity levels The purpose of workforce planning is to establish
and changing needs. The purpose of ‘soft’ workforce an organization’s people requirements so that plans
planning as described by Rothwell (1995: 194) is ‘to can be made to satisfy them. These requirements are
alert the organization to the implications of business expressed in numbers and skills but also by refer-
strategy for people development, culture and atti- ence to the employment conditions needed to en-
tudes as well as numbers and skills.’ It focuses on courage the effective contribution of the workforce
strategic resourcing factors relating to people such and provide for the attraction and retention of
as productivity and high-performance working, flex- high-quality people. The following definition by the
ible working, talent management, learning and de- CIPD (2021) focuses on the quantitative (hard)
velopment (L&D) and the employee experience, rather than the qualitative (soft) aspects of work-
rather than on simply forecasting requirements. It force planning:
has affinities with strategic resourcing as described Workforce planning is the process of balancing
in Chapter 25. Workforce planning activities may labour supply (skills) against the demand
include varying degrees of both hard and soft work- (numbers needed). It includes analysing the current
force planning. Or it may be exclusively concerned workforce, determining future workforce needs,
with one or other of these categories although fewer identifying the gap between the present and the
future, and implementing solutions so that an ways in which people could be developed and de-
organisation can accomplish its mission, goals, and ployed more effectively to further the achievement
strategic plan. It’s about getting the right number of strategic goals. It will also address issues con-
of people with the right skills employed in the cerning the supply of suitable people that might
right place at the right time, at the right cost and affect the achievement of business/corporate ob-
on the right contract to deliver an organisation’s jectives.
short- and long-term objectives.
A distinction can be made between strategic and
operational workforce planning. Strategic work- Incidence of work planning
force planning concentrates on aligning workforce
plans to an organization’s business or corporate The 2020 CIPD survey of resourcing showed that
strategy. As the CIPD (2021) noted, it identifies organizations vary considerably in how far ahead
critical job roles and families and the strategic ca- they look when planning and taking action on cur-
pabilities required to meet future goals and has a rent and future workforce requirements. Over a
three- to five-year forecast horizon. Operational quarter of the respondents (28 per cent) took a rela-
workforce planning has a shorter forecast horizon, tively short-term approach (up to six months),
typically three to 12 months. The focus is more on while only 13 per cent were planning for over three
identifying skill gaps and the numbers of people years into the future. Larger organizations are more
required to satisfy immediate needs. The practice likely to have a longer-term outlook.
of strategic workforce planning tends to be limited
to larger organizations. Operational workplace
planning is something all organizations have to do, Workforce planning issues
although the extent to which it is carried out sys-
tematically varies. The main difficulties faced by those involved in
The problem with the long-term forecasts made quantitative (hard) workforce planning are the im-
in strategic workforce planning is that in the face of pact of change and trying to predict the future.
volatile conditions plans can too easily be out of Many organizations therefore adopt a short-term
date before the ink is dry. ‘Hard’ operational work- approach and deal with deficits or surpluses of
force planning has therefore tended to be limited to people as they arise. This problem is compounded
projections from managers on their short-term re- by what Rothwell (1995) referred to as the shifting
quirements based on known information about kaleidoscope of policy priorities and strategies
workloads in the near future. within organizations. It sounds like a good idea to
adopt an integrated approach to workforce and
business planning but it won’t work well if busi-
The link between workforce ness plans are volatile, vague, misleading or non-
existent, as they easily can be. HR plans need to be
and business/corporate treated as tentative, flexible and reviewed and
modified on a regular basis. Cappelli (2009: 10)
planning commented that ‘The competitive environment for
businesses is so changeable, and firms adjust their
Workforce planning is an integral part of business own strategies and practices so frequently that
(corporate) planning. The strategic planning process these estimates [of the demand for talent] are
defines projected changes in the types of activities rarely accurate and they get much worse the far-
carried out by the organization and the scale of ther out one goes.’
those activities. It identifies the core competences This problem will not be so acute in a stable
that the organization needs to achieve its goals and marketplace, with largely passive (and static) cus-
therefore its skill and behavioural requirements. tomers, and with scope for long-term forecasting.
Workforce planning interprets these plans in But these are rare conditions today, even in the pub-
terms of people requirements. But it may influence lic sector where workplace planning has thrived for
the corporate strategy by drawing attention to the a long time.
Chapter 26 | Workforce Planning 237
It can be said that workforce planning is more Data collection

art than science. Perhaps the accuracy of demand
and supply forecasts is less important than the over- The information used in workforce planning can be
all understanding of what the organization needs in collected under the following headings:
the way of people, which can be generated by a sys-
●● Qualitative internal data: business
tematic approach to planning.
information on product/market
developments, proposed work system and
organizational changes; HR information on
Systematic workforce people (skills, performance, etc).
planning ●● Quantitative internal data: workforce data
on turnover, absence, demographics, skills
A flow chart of the process of workforce planning is audits, etc.
shown in Figure 26.1. This identifies the main hard ●● Qualitative external data: PESTLE analysis
and soft planning activities described below. covering the following factors: political,
Although these are referred to as separate areas, economic, social, technological, legal and
they are interrelated and can overlap. For example, environmental.
demand forecasts may be prepared on the basis of ●● Quantitative external data: labour market –
assumptions about the productivity of employees. demographics, skills availability.
But a forecast of the supply of suitable people will
also have to consider productivity trends and how
they might affect the supply.
The business/corporate plan provides the basis Analysis
for the workforce plan insofar as it sets out what The analysis stage brings all the information to-
the organization intends to do in terms of activities gether from the business plan, the activity forecast,
and the scale of those activities. scenarios and internal and external data to provide
the basis for demand and supply forecasts.
Forecast activity levels
Forecasts of future activity levels flow from the Demand forecasting
business/corporate plan, which will have implica- Demand forecasting is the process of estimating the
tions for the demand for people. Activity level fore- future numbers of people required and the likely
casts will also be affected by external factors, for skills and competences they will need. It is con-
example demographic and political policy trends, cerned with the numbers of people needed but it
especially in the public sector. Data will need to be will also assess overall future skill requirements and
collected and analysed for this purpose. therefore contribute to the preparation of learning
and development plans.
The basis of the forecast may be an annual
Scenario planning budget and longer-term business plan, translated
Scenario planning involves an assessment of changes into activity levels for each function and depart-
in the business and its environment which are likely ment. In a manufacturing company the sales
to affect the organization. The aim is to produce a budget would be translated into a manufacturing
picture of where the organization might be heading plan, giving the numbers and types of products to
and to predict the possible contextual situations be made in each period. From this information the
that may have to be dealt with in the future and the number of hours to be worked by each skill cate-
implications for people and skills requirements. gory to make the quota for each period would be
computed.
F I G U R E 26.1 Workforce planning flow chart
Business/
Corporate Plan
Forecast activity levels
Data collection Analysis Scenario planning
Demand forecast Supply forecast
Employment factors:
Forecast of future • Productivity
requirements • High-performance
working
• Flexible working
• Talent management
Action planning: • Learning and
Recruitment Talent retention Succession development
• The employee
Flexible working Learning and development High- experience
performance
working
Implement
Monitor and evaluate
Joint Soft
Hard
hard/soft
Details are required of any organizational and work creating a new sales department, decentralizing a
plans that would result in increased or decreased de- head office function to the regions, plans for new
mands for employees or the need for new skills. methods of working, additional outsourcing, increas-
Examples are setting up a new regional organization, ing productivity and reducing employment costs. The
demand forecasting methods for estimating the num- be taken of possible improvements in productivity
bers of people required are described below. that would affect the ratio. The analysis may be ex-
tended to cover employees connected to but not di-
Managerial judgement rectly involved in the activity – the indirect workers
who provide support to the direct workers respon-
The most typical method of forecasting used is sible for carrying out the activity. The existing ratio
managerial judgement. This simply requires manag- of directs to indirects would be applied to the fore-
ers to sit down, think about their future workloads cast number of directs needed to deal with the new
and decide how many people they need. It may be activity levels to forecast the number of indirects
quite unscientific and misleading. needed.
Forecasting might be done on a ‘bottom-up’
basis with line managers submitting proposals for
agreement by senior management. Alternatively, a Work study techniques
‘top-down’ approach can be used, in which com- Work study techniques are used in association with
pany and departmental forecasts are prepared by activity level forecasts to calculate how long opera-
top management, possibly acting on advice from tions should take and the number of people re-
the HR department. These forecasts are reviewed quired. For direct workers they can be combined
and agreed with departmental managers. A less di- with ratio-trend analysis to calculate the number of
rective approach is for top management to prepare indirect workers needed.
planning guidelines for departmental managers, set-
ting out the planning assumptions and the targets Forecasting skill and competency
they should try to meet.
Perhaps the best way of using managerial judge- requirements
ment is to adopt both the ‘bottom-up’ and ‘top- Forecasting skill and competency requirements is
down’ approaches. Guidelines for departmental largely a matter of managerial judgement. This
managers should be prepared, indicating broad judgement should, however, be exercised on the
company assumptions about future activity levels basis of an analysis of the impact of projected prod-
that will affect their departments. Targets are also uct/market developments and the introduction of
set where necessary. Armed with these guidelines, new technology such as artificial intelligence appli-
departmental managers prepare their forecasts to a cations, information technology and computerized
laid-down format. They are encouraged to seek help manufacturing.
at this stage from the personnel or work study de-
partments. Meanwhile, the HR department, in con-
junction as necessary with planning and work study Supply forecasting
departments, prepares a company forecast. The two
Supply forecasting measures the number of people
sets of forecasts can then be reviewed by a human
likely to be available from within and outside the
resource planning committee consisting of func-
organization. The internal supply analysis covers
tional heads. This committee reconciles with de-
the following areas:
partmental managers any discrepancies between the
two forecasts and submits the final amended fore- ●● existing number of people employed by
cast to top management for approval. This is some- occupation, skill and potential;
times called the ‘right-angle method’. ●● potential losses to existing resources through
attrition (employee turnover);
Ratio-trend analysis ●● potential changes to existing resources
Ratio-trend analysis is carried out by analysing ex- through internal promotions;
isting ratios between an activity level and the num- ●● changes to the organization structure, new
ber of employees working on that activity. The ratio methods of working (including flexible
is applied to forecast activity levels to determine an working) more part-time working and
adjusted number of people required. Account can different working hours;
●● effect of increases in productivity; to the preparation of plans to implement any

●● sources of supply from within the developments thought necessary.
organization – existing employees and the
outputs of talent management or training
programmes; Action planning
●● a skills audit to establish the skills available Action plans to satisfy future requirements are de-
so that any gaps that need to be filled can be rived from the broad resourcing strategies and the
identified. more detailed analysis of demand and supply fac-
tors. However, the plans often have to be short term
The external supply analysis examines the local and
and flexible because of the difficulty of making firm
national labour markets to assess implications for
predictions about workforce requirements in times
the availability of the type of people the organiza-
of rapid change. The planning activities start with
tion needs. It will also take account of environmen-
the identification of internal resources available
tal changes as revealed by scenario planning.
now or that could be made available through learn-
ing and development programmes. They continue
with plans for recruitment and retention, succession
Forecast of future requirements and talent management, the reduction of employee
To forecast future requirements it is necessary to turnover and absenteeism, flexible working, out-
analyse the demand and supply forecasts to identify sourcing, productivity improvement and the revi-
any deficits or surpluses. The analysis can be made sion of role responsibilities.
with the help of spreadsheets. The basic data can be Learning and development programmes may be
set out as follows: prepared to provide for future skill requirements.
Regrettably, but sometimes inevitably, plans for
1 Current number employed 700
downsizing may be necessary, but these can aim to
2 Annual level of turnover 10 per cent avoid compulsory redundancies by such means as
3 Expected losses during year 70 recruitment freezes.
4 Balance at end year 630 Consideration has to be given to the possibility
of the demand requirements being met by the use of
5 Number required at end year 750 the existing mix of employees. If this is problematic,
6 Number to be obtained (5–4) 120 during alternative approaches will have to be explored.
year This may involve deploying different types of work-
The data on the number of employees required may ers or changing working arrangements. A core of
be modified by reference to the impact of any pro- key workers may be maintained while on the pe-
ductivity plans, organizational changes, new meth- riphery more use may be made of part-time or home
ods of working or revision of role responsibilities. workers. Some businesses could employ ‘gig’ work-
ers – freelancers or people on short-term contracts
– or workers on zero-hours contracts. More work
Employment factors could be sub-contracted or outsourced and increas-
ing use made of management consultants. This
Employment factors are those that affect the capa- more flexible ‘core/periphery’ approach character-
bility of members of the work force and their per- izes what has been described as the ‘flexible firm’
formance and productivity. For example, it might (see Chapter 32).
be desirable to plan for a stronger emphasis on
growing skills internally to mitigate the risk of not
being able to find them externally. Implementation
The nature of these factors is affected by the
business/corporate plan and the changes to the or- The implementation of the action plans will provide
ganization’s environment as identified by scenario a challenge. A flexible approach involving quick re-
planning. The analysis of employment factors leads sponses is needed to cope with unforeseeable
changes in people requirements.
Monitoring and evaluation Organizations get the concept but find it hard to
put it into practice. He believes that HR should
Because of unpredictable events, the implementation keep workforce planning as simple as possible,
of action plans does not always run smoothly. It is concentrating on the essential data needed for the
necessary to monitor progress carefully, evaluate the task. HR should identify important business prob-
effects and, as required, amend the action plan. lems (such as expansion, downsizing or relocation)
and work backwards from there to plan the re-
source implications. The focus of workforce
Approach to workforce planning should be on key employment groups de-
termined by their labour market scarcity and
planning impact on organizational performance.
It was suggested by Reilly (2015) that the real

problem with workforce planning is its execution.
C A S E S T U DY
Buckinghamshire County Council
Business need drove the workforce planning project at The council therefore decided to align strategy and
Buckinghamshire County Council. This recognized that workforce planning in social care for children and
current workforce planning practices would not meet the families. The workforce plan was developed with the input
challenge of the Care Standards Act 2000, or of future of a team of representatives from social care for children
service delivery. One of the main issues in working with and families. It was recognized that workforce planning
children and families was recruiting and retaining was essential to anticipate future areas of skills short-
qualified social workers. There were insufficient numbers ages. This council is now in a position to anticipate skills
of social workers in post. Turnover levels among shortages and has dealt with them innovatively and
established and new employees were high. immediately.
C A S E S T U DY
Siemens (UK)
Workforce planning at Siemens (UK), the engineering and business unit managers. This enables the skills in each job
technology services company, involves obtaining answers family to be matched to business initiatives and provides
to three fundamental questions: What do we have? What the basis for the workforce forecast.
do we want? How do we fill the gap? At the highest level, the corporate people strategy gives
The workforce planning process starts with a review of the context for workforce planning, the key objective of
the current workforce derived from SAP data (SAP is a which is to ensure that Siemens has the right level of
business software system) and onto this is overlaid the capability to execute business strategy. In essence, the
likely attrition. Future requirements are identified by process of workforce planning is one in which the
means of a dialogue between HR business partners and business strategy converges with the people strategy.
C A S E S T U DY
Plymouth Primary Care Trust
The Trust set up a multidisciplinary team drawn from the demand, assess supply, undertake a gap analysis and
workforce planning and development department, finance subsequent action planning, and carry out
and public health teams within the organization to implementation and a review of the plans.
introduce workforce planning across the whole It was found that while some managers were skilled in
organization. The trust’s 230 managers and budget holders workforce planning, the majority needed support to link
were then invited to an awareness programme to together the financial, workforce and planning elements
introduce the Six Steps Workforce Planning Methodology of the process. The outcomes were:
developed by the NHS Workforce Projects Team (2009).
●● trust-wide workforce planning, using electronic staff
The steps are:
record and planning tools;
1 Define the plan.
●● workforce planning is now part of day-to-day trust
2 Map service change. business;
3 Define the required workforce. ●● detailed workforce plans across clinical and non-
clinical directorates;
4 Understand workforce availability.
●● increased awareness of financial position, age profiles
5 Plan to deliver the required workforce.
and workforce risk assessment;
6 Implement, monitor and refresh.
●● the development of a more efficient workforce by
Managers were informed that, using this framework, reviewing skill mix and succession planning;
they would be required to produce plans over a
●● integration of workforce planning into the corporate
one-year, two-year and five-year timescale. The guide
management programme.
was applied by asking each manager to define their
workforce plan, outline forces for change, assess
Key learning points
Workforce planning defined The rationale for workforce planning

The purpose of workforce planning is to establish an Workforce planning provides a basis for a systematic
organization’s people requirements so that plans can approach to assessing the number and type of people
be made to satisfy them. These requirements are needed and, having taken into account information on
expressed in numbers and skills but also by reference the supply of labour and environmental scanning, for
to the employment conditions needed to encourage the preparation of recruitment, retention, management
the effective contribution of the workforce and provide succession and talent management plans. Workforce
for the attraction and retention of high-quality people. planning is important because it encourages
employers to develop clear and explicit links between
Link to business planning their business and HR plans and to integrate the two
more effectively.
Workforce planning is an integral part of business
planning.
Workforce planning issues ●● Data collection
The main difficulties faced by those involved in ●● Analysis

workforce planning are the impact of change and ●● Demand forecasting
predicting the future.
●● Supply forecasting
Approaches to workforce planning ●● Forecast of future requirements

●● Business planning ●● Action planning
●● Forecast activity levels ●● Implementation
●● Scenario planning ●● Monitoring and evaluation
References
Cappelli, P (2009) A supply chain approach to Quinn Mills, D (1985) Planning with people in mind,
workforce planning, Organizational Dynamics, Harvard Business Review, July-August, pp 97–105
38 (1), pp 8–15 Reilly, P (2015) Workforce Planning: A framework
Chartered Institute of Personnel and Development for thinking about your own approach, Brighton,
(2020) Resourcing and Talent Planning Survey, Institute for Employment Studies
London, CIPD Rothwell, S (1995) Human resource planning, in (ed)
Chartered Institute of Personnel and Development J Storey, Human Resource Management: A critical
(2021) Workforce Planning, London, CIPD text, London, Routledge
244

245
27
Recruitment
and selection
tions, education and training match a person
Introduction specification.
It is not easy to get it right. According to
This chapter starts with an overview of the recruit- Groysberg et al (2009), usually about a third of
ment and selection process and of how it is planned promising new hires leave within three years of
and progressed. It then deals in turn with: being recruited. And it can be costly, especially for
1 Defining requirements senior staff. The 2020 CIPD survey of resourcing
2 Attracting applicants and talent planning found that the average recruit-
ment cost of filling a vacancy for a director or sen-
3 Sourcing candidates: digital and traditional ior manager was £5,000, while for other employees
approaches it was £2,000.
4 Screening applications Recruitment and selection programmes can be
5 Selection methods complex and careful planning is necessary. There is
always a choice between different sources of candi-
6 Interviewing
dates, the use of digital or other technologies rather
7 Testing than traditional methods, the use of interviews, tests
8 Assessment centres or assessment centres, and the type of interview
9 Assessing candidates (face-to-face, telephone or video) and the type of test.
The process may start with a workforce plan
10 Completing the process
from which detailed recruitment plans are derived.
But requirements more commonly emerge on an ad
hoc basis because of the creation of new posts, ex-
The recruitment and pansion into new activities or areas, or the need for
a replacement. These short-term demands often put
selection process HR under pressure to deliver candidates quickly.
Following notification of a requirement the first
Recruitment is the process of finding and engaging thing to do is to consider filling the vacancy from
the people the organization needs. Selection is that internal sources by promotion or transfer or by en-
part of the recruitment process concerned with de- hancing the skills of existing employees (upskilling).
ciding which applicants or candidates should be ap- It may also be worth trying to persuade former em-
pointed to jobs. ployees to return to the organization or obtain sug-
The aim of recruitment and selection is to find gestions from existing employees (referrals). These
suitable candidates to fill vacancies and then pre- can be encouraged by offering rewards when a re-
dict the extent to which they will be able to carry ferral results in a vacancy being filled. Talent banks
out a role successfully. It involves deciding on the that record details of potential employees can be
degree to which the characteristics of applicants in maintained and consulted.
terms of their competencies, experience, qualifica-
If it is decided that the job(s) will most likely

have to be filled by attracting external candidates
Defining requirements
other than referrals, a preliminary recruitment plan
is prepared. This may be quite elaborate for large- It is necessary to define what you are looking for in
scale recruitment campaigns, eg for graduates. For terms of knowledge, skills, abilities and expected
‘one-off’ requirements it will be much simpler, but behaviour (behavioural competencies). Remember
its basic features are still the same. The plan covers: the advice of Chamorro-Premuzic (2017: 85) that
‘Finding the right people for the right roles is not
●● responsibility for each part of the process, just a matter of matching people in skills, but also in
including who conducts the interviews and values and interests.’
makes the final decision; Requirements should be defined in the form of
●● the choice of sources to generate role profiles and person specifications. These pro-
applications; if external candidates need to vide the information required to post vacancies,
be considered; brief agencies or recruitment consultants and assess
candidates by means of interviews and selection
●● the method of selection: interviews, tests, an
tests.
assessment centre;
●● the timing of each stage including the date
when it is hoped that the vacancy or Role profiles
vacancies will have been filled.
Role profiles define the overall purpose of the role, its
The preparation of detailed plans for selecting can- reporting relationships and the responsibilities in-
didates (interviews and tests) may take place at a volved. For recruiting purposes, the profile is extended
later stage after applications have been processed. to include information on terms and conditions (pay,
benefits and hours of work) and on special require-
ments such as mobility, travelling or unsocial hours;
Digital recruitment and selection and learning, development and career opportunities.
Recruitment programmes can use traditional ap- The recruitment role profile provides the basis for a
proaches to interviewing and assessment but over person specification.
the last few years the use of digital methods has in-
creased considerably. As Robinson (2020: 2) com-
mented: Person specifications
People who work in recruitment will need to Person specifications, also known as recruitment or
adapt quickly to digital means when attracting, job specifications, define the knowledge, skills and
interviewing, selecting and onboarding talent. abilities (KSAs) required to carry out a role which
Video interviews and AI screening will become include the behavioral and technical competencies
more commonplace. Great efforts will need to needed to carry out the job. This combination of
be taken to ensure this doesn’t create a terrible technical and behavioural competences can form
candidate experience. the framework for a competency-based interview.
Person specifications also list anything that the job
The CIPD (2020) reported that the application of
holder will be expected to achieve in specified areas,
technology in recruitment has benefited respond-
eg develop new markets or products; improve sales,
ing organizations by increasing accessibility for
productivity or levels of customer service; introduce
candidates, producing more applications from
new systems or processes.
both suitable and unsuitable candidates, screening
It is advisable not to overstate what is required.
out candidates to a certain extent and helping to
Perhaps it is natural to go for the best, but setting an
increase the diversity and quality of their recruits.
unrealistically high level for candidates increases
The use of digital sourcing methods is dealt with
the problems of attracting applicants and results in
later in this chapter.
dissatisfaction among recruits when they find their
talents are not being used. Understating what is
wanted can, of course, be equally dangerous, but it
happens less frequently.
Chapter 27 | Recruitment and Selection 247
An example of a person specification is shown in The analysis is used to assess what it is about the
Figure 27.1. job or the organization that is likely to attract good
candidates so that the most can be made of these
characteristics when reaching potential applicants.
Attracting candidates Thought should also be given to what might put
them off, for example the location of the job, so
Attracting candidates involves making a prelimi- that objections can be anticipated. The possibility
nary study of the strengths and weaknesses of the of including a ‘realistic job preview’ in interviews
organization as an employer and developing the should be considered. This would spell out any
employer brand and employee value proposition. challenges the job will present, for example a lot of
travelling.
Candidates are, in a sense, selling themselves, but
Analyse recruitment strengths and they are also buying what the organization has to
offer. If, in the latter sense, the labour market is a
weaknesses buyer’s market, then the company selling itself to
The analysis should cover such matters as the na- candidates must study their wants and needs in re-
tional or local reputation of the organization, pay, lation to what it can provide. The study can be used
employee benefits and working conditions, the in- to develop the employee brand and the employee
trinsic interest of the job, security of employment, value proposition. The aim is to make the organiza-
opportunities for education and training, career tion ‘an employer of choice’.
prospects and the location of the office or plant.
This is the ‘employer brand’ as described below. The
analysis could make use of an employee survey to Employer brand
obtain the views of existing employees and should
An employer brand is the image presented by an
take account of the opinions expressed in Glassdoor
organization as a good employer – ‘a great place to
(the website that publishes reviews of organizations
work’. A positive brand will help the business to
as employers based on the views of their employees).
become an employer of choice, thus attracting bet-
It is also advisable to identify organizations that are
ter applicants for jobs. The key feature of the brand
in the same market for talent so that the employ-
will be the reputation of the company as an em-
ment offer is competitive.
F I G U R E 27.1 Example of a person specification

Person specification: HR recruitment specialist
Knowledge of:
●● all aspects of recruitment;
●● sources of recruits;
●● different media for use in recruiting;
●● relevant test instruments (OPQ qualified).
Skills in:
●● interviewing techniques;
●● test administration;
●● role analysis;
●● use of social media and AI.
Abilities (behavioural competencies):
●● able to relate well to others and use interpersonal skills to achieve desired objectives;
●● able to influence the behaviour and decisions of people on matters concerning recruitment and
other HR or individual issues;
●● able to cope with change, to be flexible and to handle uncertainty;
●● able to make sense of issues, identify and solve problems and ‘think on one’s feet’;
●● focus on achieving results;
●● able to communicate well, orally and on paper.
ployer – the way people are treated, the provision of of Resourcing and Talent Planning, are corporate
a fair deal, opportunities for growth, flexible work- websites (74 per cent of respondents), networking
ing, work–life balance, leadership, the quality of sites such as LinkedIn (60 per cent), commercial job
management and involvement with colleagues. But boards (58 per cent), recruitment consultants
the reputation of the organization in terms of how (52 per cent) and social media sites such as Facebook
it functions, the quality of its products or services, (40 per cent). National newspapers advertisements
its core values as revealed by its actions and how were only used by 12 per cent of employers al-
and why it is successful are also important. though local newspapers were more popular
To develop an employer brand it is necessary first (21 per cent).
to define the desirable features of the brand (ie the When selecting the source or, better, sources,
organization) on the basis of an examination and re- consideration should be given to those that are
view of each of the areas that are likely to affect peo- more likely to attract the type of person wanted.
ple’s perceptions of it. This analysis provides the basis When using the selected source(s) the invitation to
for an employer value proposition as described below. apply or the advertisement should be tailored to fit
‘Recruitment content marketing’ can be used to de- the type of candidates wanted. The criteria for mak-
velop the message to potential applicants. This means ing the choice are: (1) the likelihood that it will pro-
defining objectives such as increasing brand aware- duce good candidates; (2) the speed with which the
ness and traffic to career sites, identifying the target choice enables recruitment to be completed; and (3)
audience in terms of job titles, skills and locations, and the costs involved, bearing in mind that there may
deciding on content and presentation in forms such as be direct advertising costs or consultants’ fees.
video and written text, video images and photographs Finding (‘sourcing’) candidates can be done by
that will attract members of that audience using digital or traditional sources as described
It is advisable to monitor how the employer below. Candidate relationship management systems
brand is being perceived. This can be done by listen- can help. These allow recruiters to maintain a pool
ing to and recording any comments by applicants of potential candidates that can be brought in for
and contacts with newly joined employees. It is consideration at short notice. While this can be
worth keeping an eye on Glassdoor, the employee done manually through phone calls or emails, dedi-
review site, to see how the organization is regarded cated candidate relationship management systems
by its staff. can automate the process, making it easier to ag-
gregate candidates from various channels, know
each candidate’s level of interest and sort candidates
Employee value proposition for specific jobs.
An organization’s employee value proposition con-
sists of what it offers to prospective or existing em-
ployees that they will value and that will persuade
Digital sources
them to join or remain with the business. It will in- Digital recruitment uses the internet to advertise or
clude pay and benefits – which are important but post vacancies, provides information about jobs
can be overemphasized compared with the non-fi- and the organization and enables email communi-
nancial factors that comprise the reputation of the cations to take place between employers and candi-
organization as a business and an employer. The dates. The latter can apply for jobs online and can
aim is to become a firm that people want to work email application forms and CVs to employers or
for and to stay with, one in which the employee ex- agencies. Tests can be completed online.
perience is a good one. Acikgoz (2019) emphasized The advantages of digital recruiting are that it
that employers should understand and take account can reach a wider range of possible applicants. It is
of the expectations of candidates in the same way quicker and cheaper than traditional methods of
that they tailor their products to customers. advertising, more details of jobs and firms can be
supplied on the site, and CVs can be matched and
applications can be submitted electronically. It can
Sourcing candidates be used alongside other recruitment methods to
maximize response. The main varieties of digital re-
There are many sources of candidates. The most cruiting are corporate websites, networking sites,
used ones, as established by the 2020 CIPD Survey
social media, matching technology, artificial intelli- employers to search for potential candidates by sec-
gence and job boards. tor, job level, specialism and location and then to
contact them directly. It can be used to identify and
Corporate websites provide details of possible recruits from the target
audience by entering the job title, company name
The most developed form of a corporate website and key words. A Boolian search, which combines
consists of a dedicated area that gives details of va- key words with ‘operators’ such as AND, NOT and
cancies, person specifications, benefits and how to OR, can be used to produce more specific and rele-
apply for jobs, for example by completing online vant results. LinkedIn is most effective when the
application forms and tests. Such areas may be target audience and the key words appropriate for
linked directly to an organization’s home page so that audience are known. It is best to personalize
that general browsers can access them. An intranet direct approaches whether in emails or invitations
link may be available to enable internal staff to ac- to connect. It is also necessary to be selective about
cess the website. Some organizations are building the number and type of jobs that are publicized – it
their own professional communities or talent net- is easy to overwhelm people’s feeds and inboxes.
works. The management of websites can be out-
sourced to recruitment consultants or specialized
web agencies. A less sophisticated approach is sim- Social media
ply to list vacancies and contact details. A fully de- Social media consists of online platforms such as
veloped site can be a very effective source. Facebook and Twitter, which apply Web 2.0 tech-
To ensure that websites work well it is necessary nologies for networking or sharing information or
to keep the content of the site up to date, make sure opinions. They can be used to search for recruits
the site is accessible directly or through search en- and find out more about them online. They can also
gines and provide contact numbers for those with be used to promote the employer brand and make
technical problems. contacts. They can be even more effective when
combined together or with LinkedIn. Such cross-
Networking sites platform sharing and messaging takes account of
the fact that each social network has a slightly dif-
LinkedIn is the most popular professional network- ferent audience and can widen the field of potential
ing site for recruiters. LinkedIn Recruiter enables recruits.
C A S E S T U DY
At CERN, the world’s largest particle physics laboratory, who wants to submit a question, whereas the professional
extensive use has been made of social media for network LinkedIn provides a forum for more specialized
recruiting purposes. All job vacancies are advertised on discussions.
LinkedIn, Facebook and Twitter. These networks provide T-Mobile International has created a Facebook site for
much more than simple job boards in that they are used as graduate recruitment. Potential graduate recruits
communication tools to interact with the audience, with established an individual presence on this invitation-only
candidates and with people who are not necessarily site. The site was used to provide information on selection
candidates but may know people who may want to apply. procedures and processes, for example criteria and
Appropriate use is made of each medium. For example, timetables and to allow the potential recruits to communi-
Facebook is used to host a weekly question and answer cate with each other. As well as T-Mobile’s IT department,
session between one of CERN’s recruiters and anyone an internal ‘brand ambassador’ was involved in the design.
Matching technology Traditional sources of candidates

Matching technology takes the principles of online
dating into job searching. Candidates are asked to Advertising
make a list of the values that matter to them which Advertising in newspapers was once the main
are then matched by the service provider to poten- method of attracting candidates but it is no longer
tial employers for whom those values are impor- so important, especially at national level, although
tant. A battery of assessment methods is used to it is used more at local level and in specialized jour-
evaluate candidates across multiple competencies nals. Many organizations now prefer online recruit-
that are relevant to and predictive of success in the ment, agencies or consultants.
job. The results from these assessments are com- If it is decided to advertise, the aim should be to
bined into one score to help recruiters make effi- attract a sufficient number of good candidates at
cient and objective decisions about candidates. minimum cost. To do this the advertisement should:
●● be placed in the appropriate medium;
Artificial intelligence (AI)
●● be tailored to specific candidates;
Artificial intelligence can be used to sift CVs, profile
existing high performers and apply their traits to ●● attract attention – it must compete for the
candidates, write job descriptions that eliminate bi- attention of potential candidates against
ased language, and remove all trace of protected other job adverts;
characteristics from applications. ●● create and maintain interest – it has to
As suggested by Jeffery (2018: 35): communicate, in an attractive and interesting
way, information about the job, the company
Algorithms deploying sophisticated machine
and the terms and conditions of employment.
learning are reshaping recruitment faster than
any other part of HR. That’s not surprising to ●● stimulate action – the message needs to be
technologists: recruitment (and not just in the conveyed in a way that will prompt a
Googleplex) is full of routinised actions, relies on sufficient number of replies from candidates
analysing swathes of data and for decades has with the right qualifications for the job.
hinged on humans making the sort of judgements
It is essential to measure the response to advertise-
we’re heroically bad at.
ments to provide guidance on the relative cost-ef-
But as yet little use has been made of AI (only 5 to fectiveness of different media. Cost per reply is the
6 per cent of the respondents to the CIPD 2020 basic ratio.
survey). When drafting advertisements remember the
anti-discrimination legislation set out in the Equality
Act (2010). This makes it unlawful to discriminate
Commercial job boards
in an advertisement by favouring either sex, the
Commercial job boards consist of large databanks of only exceptions being a few jobs that can be done
vacancies. Information about vacancies may repro- only by one sex. Race and age discrimination are
duce an advertisement so that the site is simply an also prohibited.
additional form of communication, but some vacan-
cies are only found online. Links may be provided to
the organization’s website. They are operated by spe- Recruitment agencies
cialized firms such as Monster.co.uk and Fish4jobs. Agencies can charge a fee for finding someone of
com. Companies pay to have their jobs listed on the 15 per cent or more of the first year’s salary. It can be
sites. To make the best use of a job board go for spe- cheaper to advertise or use the internet, especially
cialized rather than generalist sites, stick to one or when the company is in a buyer’s market.
two sites rather than spreading the vacancy every- Agencies should be briefed carefully on what is
where and consider paying more to obtain a promi- wanted. They can produce unsuitable candidates
nent site. Bear in mind that job sites are not like print but the risk is reduced if they are clear about the
advertisements, which have to attract casual readers; requirements.
people who look at a site are seeking a job.
Recruitment consultants searchers who will identify suitable people who may
fit the specification or can provide a lead to someone
Recruitment consultants advertise, interview and
else who may be suitable. The more numerous the
produce a shortlist. They provide expertise and re-
contacts, the better the executive search consultant.
duce workload. The organization can be anonymous
When a number of potentially suitable and interested
if it wishes. Most recruitment consultants charge a
people have been assembled, a fairly relaxed and in-
fee based on a percentage of the basic salary for the
formal meeting takes place and the consultant for-
job, usually ranging from 15 to 20 per cent.
wards a shortlist to the client with full reports on
When choosing a recruitment consultant check
candidates.
their reputation and expertise, compare fees and
There are some good and some not so good ex-
meet the person who will work on the assignment
ecutive search consultants. Do not use one unless a
to assess his or her quality. To use them effectively:
reliable recommendation is obtained.
●● Agree terms of reference.
●● Brief them on the organization, where the Educational and training
job fits in, why the appointment is to be
establishments
made, terms and conditions and any special
requirements. Many jobs can, of course, be filled by school leav-
ers. For some organizations the main source of re-
●● Give them every assistance in defining the
cruits for training schemes will be universities and
job and the person specification – they will
colleges as well as schools. Graduate recruitment is
do much better if they have comprehensive
a major annual exercise for some companies, which
knowledge of what is required and what type
go to great efforts to produce glossy brochures, visit
of person is most likely to fit into the
campuses on the ‘milk run’ and use elaborate sifting
organization well.
and selection procedures to vet candidates, and as-
●● Check carefully the proposed programme sessment centres.
and the draft text of the advertisement.
●● Clarify the arrangements for interviewing Recruitment process outsourcing
and shortlisting.
Recruitment process outsourcing (RPO) is the term
●● Clarify the basis upon which fees and used when an organization commissions a provider
expenses will be charged. to take responsibility for the end-to-end delivery of
●● Ensure that arrangements are made to deal the recruitment process, covering all vacancies or a
directly with the consultant who will handle selection of them. This involves liaising with hiring
the assignment. managers to define requirements and specifications,
deciding on the best ways to attract candidates, pro-
Executive search consultants cessing applications and setting up and facilitating
interviews. Some companies do not hand over all
Use an executive search consultant or ‘headhunter’ recruitment, using RPO only for high-volume va-
for senior jobs where there is only a limited number cancies. They may retain responsibility for senior
of suitable people and a direct lead to them is and specialist jobs.
wanted. Headhunters are not cheap. They charge a The advantage of RPO is that it can save time,
fee of 30 to 50 per cent or so of the first year’s sal- bring outside expertise to bear on recruitment prob-
ary, but they can be quite cost-effective. lems and free up HR for more value-adding activi-
Executive search consultants first approach their ties. The disadvantage is the perception by some HR
own contacts in the industry or profession concerned. people and line managers that the provider is too
The good ones have an extensive range of contacts remote to deal with the real issues and that there is
and their own data bank. They will also have re- a danger of losing control.
F I G U R E 27.2 Example of an application form
APPLICATION FORM
Surname: First name:
Address:
Tel. (home) Tel. (work) Email (personal)
Position applied for:
Education
Dates Name of secondary Main subjects taken Qualifications

school, college or
From To university
Specialized training received
Other qualifications and skills (eg languages, keyboard skills, current driving licence etc)
Employment history
(give details of all positions held since completing full-time education, start with your present or most
recent position and work back)
Dates Name of employer, Position and summary Starting and Reasons for
address and nature of of main duties leaving rate of leaving or wanting
business including pay to leave
From To any service in the
armed forces
Add any comments you wish to make to support your application
I confirm that the information given on this application form is correct
Signed…………………………………………………………………………Date…………………….
More than eight will mean that too much time is

Screening applications spent on interviewing.
Screening applications to decide who should be in-
terviewed means reviewing responses to an invita- Processing applications
tion to apply for a job. Responses may be by email,
letter or telephone and are usually supported by a When there is a large number of candidates a
CV. Applicants may be asked to provide informa- computer-based applicant tracking system can be
tion about their education, qualifications, training used. Machine learning (AI) algorithms can model
and experience on an application form to provide a patterns of hiring to identify the right people
consistent basis for drawing up shortlists and for quickly and easily. If such aids are not available,
the interview itself. An example of an application the initial step is to list the applications on a re-
form is given in Figure 27.2. To eliminate bias be- cruitment database setting out name, date appli-
cause of an applicant’s name, the application form cation received and actions taken (reject, hold,
may be ‘name blind’. interview, shortlist, offer). The next step is to
Applicants are screened by comparing the infor- screen applications prior to drawing up a shortlist
mation they provide with the criteria in the person and arranging interviews.
specification. Criteria for screening applications
can be classified as follows:
Checking applications
●● Essential – applicants will not be considered
unless this criterion is satisfied. Some applicants misinform their prospective em-
ployers about their education, qualifications or em-
●● Very desirable – preference will be given to
ployment record. This was confirmed by a survey
applicants who meet this criterion.
carried out by the CIPD (2008), which found that
●● Desirable – applicants who meet this 25 per cent of employers had to withdraw their of-
criterion will be given favourable fers because applicants had lied or misrepresented
consideration but it is not an essential their application. It is always advisable to check
requirement. However, if a number of with universities, colleges, professional institutes
applicants meet the first two criteria, and previous employers that the facts given by ap-
satisfying desirable criteria would be a factor plicants are correct. Other checks can be made such
in making a choice. as interview questions about actual (not hypotheti-
Screenings can be done through AI algorithms but cal) experiences, with deep probing to ascertain the
under the General Data Protection Regulation extent of the individual’s personal involvement, de-
(GDPR) candidates will have to be told if they are cision making and contribution. There are a number
to be subjected to an automated process. GDPR of organizations that can provide more information
also requires explicit consent from candidates be- about an individual if this is believed to be neces-
fore an organization retains or uses their details. sary. They include Cifas, the not-for-profit fraud
Following the analysis, applicants can be sorted prevention service, credit reference agencies and the
initially into three categories: possible, marginal Criminal Records Bureau. A check can be made on
and unsuitable. The more information made avail- the extent to which a CV tallies with a social media
able and the clearer the criteria the easier this pro- profile – one in five employers polled by YouGov
cess is. When there is a large field of applicants with say they have turned down a prospective employee
many ‘possibles’, screening may have to be repeated after seeing their media profile.
against more stringent criteria until a shortlist of
the ‘possibles’ for interview is identified.
Ideally, the numbers on the shortlist should be Selection methods
between four and eight. Fewer than four leaves
relatively little choice (although such a limitation The aim of the selection process is to assess the suit-
may be forced on the recruiter if an insufficient ability of candidates by predicting the extent to
number of good applications have been received). which they will be able to carry out a role success-
F I G U R E 27.3 Use of different types of selection methods
Competency-based interviews 60%
Interviews following contents of CV/application form 49%
Strengths-based interviews 38%
Values-based interviews 38%
Pre-application assessments (situational job tests) 36%
Verbal and/or numerical reasoning tests 28%
Other aptitude assessments 27%
Assessment centres 22%
Personality/psychological questionnaires 22%
Work-sample tests 18%
Group exercises 15%
SOURCE CIPD (2020)
TA B L E 27.1 Validity of different selection methods

Intelligence tests and structured interviews .63
Intelligence tests and unstructured interviews .55
Assessment centres and structured interviews .53
Intelligence tests only .51
Structured interviews only .51
Unstructured interviews only .38
Assessment centres only .37
Graphology only .02
SOURCE Schmidt and Hunter (1998)

fully. It involves deciding on the degree to which the video interviews and 44 per cent held telephone
characteristics of applicants match the person speci- interviews.
fication and then using this assessment to make a The interview is the most familiar method of
choice between candidates. Figure 27.3 shows the selection. When it is face to face and not a panel
percentages of respondents to the CIPD 2020 re- interview, it provides the best opportunity for
sourcing survey using different types of selection the establishment of close contact – rapport –
methods. The most important ones are various kinds between the interviewer and the candidate thus
of interviewing, testing and assessment centres. facilitating the acquisition of the required infor-
mation about the candidate’s suitability and
how well they would fit into the organization.
Choice of selection methods Most people – line managers as well as HR pro-
fessionals – think they are good at interviewing
There is a choice between selection methods. The
but this is often an illusion. It is a highly skilled
most important criterion is the ability of a selection
process and everyone who has to carry out a
method or combination of methods to predict fu-
selection should be trained in the skills involved.
ture performance. Predictive ability is expressed as
Selection interviewing skills are covered in de-
a coefficient – complete validity would be 1.0; no
tail in Chapter 71.
validity would be 0.0.
The main types of interviews as described
A meta-analysis on the validity of different selec-
below are structured, competency-based,
tion methods conducted by Schmidt and Hunter
strength-based, value-based and unstructured.
(1998: 265), which covered 85 years of research
They can be face to face or conducted by tele-
findings, produced the predictive validity coeffi-
phone or video.
cients shown in Table 27.1.
Robertson and Smith (2001) added personal-
ity assessments to this list with a validity coeffi-
cient of .37.
Structured interviews
Schmidt and Hunter (1998) observed that the A structured interview is one based on a defined
reason why intelligence (GMA) is such a good pre- framework consisting of a set of predetermined
dictor of job performance is that intelligent people questions. All candidates are asked the same
acquire job knowledge more rapidly and acquire questions that will focus on the attributes and
more of it, and it is this knowledge of how to per- behaviours required to succeed in the job.
form the job that causes their job performance to be Guidelines or scoring criteria are available to
higher. Their research clearly indicates that the com- evaluate answers. It can include experience-based
bination of structured interviews and intelligence questions in which candidates are asked to relate
tests is the most effective in terms of predictive va- how they handled situations in the past requiring
lidity. Graphology is useless. skills and abilities necessary for effective perfor-
The next three sections of this chapter deal with mance in the job for which they are applying.
the recruitment and selection processes of inter- And/or it may include situational questions that
views, testing and assessment centres. provide candidates with hypothetical job-rele-
vant situations and ask how they would deal
with them. Research by Pulakos and Schmitt
Selection interviews (1995) found that experience-based interviews
yielded higher levels of validity than situation-
Selection interviews provide information about based ones. But both types of questions may be
candidates or applicants that enable a prediction to incorporated in an interview. Examples of ques-
be made about how well they will do a job and thus tions are given in Chapter 71. Structured inter-
help to make decisions on who should be appointed views can include competency-based, strength-
to it. Almost all the respondents to the 2017 CIPD based and value-based questions as described
resourcing survey (99 per cent) used the traditional below. When considering their use it is worth
face-to-face interview. But the CIPD’s 2020 survey bearing in mind the remark of Mike Distifano,
revealed that telephone or video interviews were president of the Korn Ferry Institute, quoted by
used extensively: 54 per cent of respondents held Marr (2018: 131), that ‘people get hired for what
they know and fired for who they are’.
Competency-based interviews date as an individual. Questions are often random

and non-specific and may be only vaguely related to
A competency-based interview is a structured inter- the actual job requirements. Candidates are judged
view in which the predetermined questions put to on the general impression they make and the pro-
all candidates aim to establish the extent to which cess is likely to be quite subjective. Research quoted
they have the competencies required to perform the later in this chapter has shown that the predictive
job as set out in the person specification. The inter- validity (the extent to which it predicts performance
view will cover both behavioural competencies such in a job) of an unstructured interview is fairly low.
as ability to communicate, leadership and team- The preferred method is a structured interview that,
work, and technical competencies (what people when conducted well, has a higher level of predic-
have to know and be able to do to carry out their tive validity.
role effectively).
Telephone interviews
Strengths-based interviews Telephone interviews speed up the recruitment pro-
A strengths-based interview is a structured inter- cess. They are used to screen applicants and enable
view in which the objective is to find out what can- interviewers to decide which ones they would like
didates are good at doing rather than just what they to take further. But they have to be planned and
are capable of doing. It includes questions such as conducted carefully because of the limitations im-
‘What are you good at?’ ‘What comes easily to posed by the lack of face-to-face contact. As inter-
you?’ and ‘What have you done recently that you viewers are unable to judge things like personal
are proud of?’ It is often used with graduates and appearance, body language and, to some extent,
school leavers who have little work experience. personality on the telephone, they shouldn’t try to.
Strengths-based questions can be incorporated Telephone interviews should be used simply to con-
alongside experience-based and situation-based firm or amplify basic information about candi-
questions as long as the same questions are put to dates – whether they have the required skills and
each candidate. The strengths that are important in experience, can they communicate in a clear way,
a job can be established by identifying the strengths can they explain anything you’re unsure about on
of existing high performers in a similar job. their CV and, afterwards, whether or not more
should be found out about them by seeing them in
person. Details of how to conduct a telephone in-
Value-based interviews terview are given in Chapter 71.
A values-based interview is a form of structured in-
terview that explores how and why people behave
in certain situations in relation to the values of the
Video interviews
organization. Interviews can be entirely value-based The methods of conducting a telephone interview
although the candidate in this case would still have set out above are equally applicable to a video inter-
to meet the specified requirements for experience view. Obviously, the interviewer is in a better posi-
and/or qualifications. But a structured interview can tion to assess candidates from the perspective of
include value-based questions, for example ‘Have their behaviour. But caution is necessary. The way
you ever helped a team to work better? If so, please someone behaves in the highly artificial context of a
tell me how you did it.’ video call may be quite different from how they be-
have in real life.
Unstructured interviews
Unstructured interviews take the form of a general
Interviewing programme
discussion during which the interviewer asks a few For some jobs, particularly more senior or profes-
questions that are relevant to what he or she is sional/technical ones, an interviewing programme
looking for but without any specific aim in mind could consist of a preliminary video or telephone in-
other than getting an overall picture of the candi- terview. Members of the shortlist produced after the
preliminary interview could be asked to attend face- contacted, preferably by telephone, and informed
to-face interviews. The time allowed for an interview why they were not successful. They should be let
will vary according to the complexity of the job. down as lightly as possible.
Video or telephone interviews can last from 20 to 30
minutes. Face-to-face interviews for a fairly routine
job need only last 30 minutes or so. For a more sen- Limitations of interviews
ior job, 60 minutes or more may be required. It is
A trenchant view on the limitations of face-to-face
best not to schedule too many face-to-face interviews
interviews was expressed by Moore (2017: 8) who
for senior jobs in a day – interviewers who try to
wrote:
conduct more than four or five exacting interviews
will quickly run out of steam and do neither the in- One of the clearest lessons to emerge from decades
terviewee nor the organization any justice. It is advis- of research on personnel selection is that the
able to leave 15 to 30 minutes between interviews to traditional face-to-face job interview is terrible
write up notes and prepare for the next one. for predicting future job performance. The sad
A computer-based applicant tracking system can truth is that no selection tool is perfect, and
be used to automate the whole recruitment process future performance cannot be predicted precisely,
from initial application through invitation to but the traditional interview is particularly bad.
interview(s) or rejection, outcome of interview Fortunately, it is easy to improve the predictive
validity of the job interview by structuring it
(offer, rejection) and on to the outcome of an offer.
around hard-to-fake tests of key skills and abilities
If a manual process is used the actions required are
that actually predict future performance.
described below.
When the programme has been drawn up, short- Chamorro-Premuzic, quoted by Burt (2019), said
listed candidates can be invited for interview, using that ‘Decision-makers and HR professionals really
a standard letter or email where large numbers are overrate their intuition, and when it comes to peo-
involved. Candidates should be asked to complete ple decisions, the majority of people believe a
an application form if they have not already done short-term interaction, whether it’s a video inter-
so. There is a lot to be said at this stage for sending view or even a CV, will predict whether anyone
candidates more details of the organization and the will be a good fit in an organization.’ People tend
job so that too much time is not spent in going to pair new information with subjective memories,
through this information at the interview. steering them towards one option over another,
The remaining ‘possibles’ and ‘marginals’ can forming opinions that feel objective but are noth-
then be reviewed to decide if any are to be held in ing of the sort.
reserve. Send reserves a standard ‘holding’ letter There is also the problem of bias, whether con-
and send the others a standard rejection letter. The scious or unconscious. Decisions can be biased be-
latter should thank candidates for the interest cause of the gender, race, sexual orientation or age
shown and inform them briefly, but not brusquely, of the person being interviewed. Line managers
that they have not been successful. A typical reject need to be trained not only in interview techniques
letter might read as follows: but also in how to recognize and avoid bias.
Since writing to you on… we have given careful
consideration to your application for the above
position. I regret to inform you, however, that we Selection testing
have decided not to ask you to attend for a further
interview. Selection tests are used to provide valid and reliable
evidence of levels of abilities, intelligence, personal-
Note that this suggested message does not give the ity characteristics, aptitudes and attainments.
reason for the decision. It is probably best not to Psychological tests are measuring instruments,
put this in writing, except, possibly, to write some- which is why they are often referred to as psycho-
thing like ‘because your qualifications and experi- metric tests: ‘psychometric’ means mental measure-
ence, although good, do not sufficiently fit the ment. A criterion-referenced test is a type of test
specification for the role’. Candidates can and do that uses test scores to generate a statement about
sometimes ask for the reason. If so, they should be
the behaviour that can be expected of a person with the mental and actual age correspond, the IQ is
that score. 100. Scores above 100 indicate that the individu-
Psychometric tests assess intelligence or per- al’s level of average is above the norm for his or
sonality. They use systematic and standardized her age, and vice versa. It is usual now for IQs to
procedures to measure differences in individual be directly computed as an IQ test score. It is as-
characteristics, thus enabling selectors to gain a sumed that intelligence is distributed normally
greater understanding of candidates to help in throughout the population; that is, the frequency
predicting the extent to which they will be suc- distribution of intelligence corresponds with the
cessful in a job. The other types of tests described normal curve shown in Figure 27.4.
below are ability and aptitude tests. The normal curve is a way of expressing how
A recent development in firms such as Deloitte is scores will typically be distributed; for example,
to use a recruitment app in the form of a mobile that 60 per cent of the population are likely to
phone game to test mental agility, persistence and get scores between x and y, 20 per cent are likely to
appetite for taking risks. get scores below x, and 20 per cent are likely to get
more than y.
Intelligence tests can be administered to a single
Intelligence tests individual or to a group. They can also be com-
pleted online.
Intelligence tests measure a range of mental abili-
ties that enable a person to succeed at a variety of
intellectual tasks using the faculties of abstract
thinking and reasoning. They are concerned with
Personality tests
general intelligence (termed ‘g’ by Spearman, 1927, Personality tests attempt to assess the personality
one of the pioneers of intelligence testing) and are of candidates in order to make predictions about
sometimes called ‘general mental ability’ (GMA) their likely behaviour in a role. There are many
tests. Intelligence tests measure abilities while cog- different theories of personality and, consequently,
nitive tests measure an individual’s learning in a many different types of personality tests. These in-
specific subject area. They contain questions, prob- clude self-report personality questionnaires and
lems and tasks. The meta-analysis conducted by other questionnaires that measure interests, values
Schmidt and Hunter (1998) showed that intelli- or work behaviour.
gence tests had high predictive validity. Personality tests can provide interesting supple-
The outcome of a test can be expressed as a mentary information about candidates that is free
score that can be compared with the scores of from the biased reactions that frequently occur in
members of the population as a whole, or the pop- face-to-face interviews, but they have to be used
ulation of all or part of the organization using the with care. The tests should have been developed by
test (norms). An intelligence test may be recorded a reputable psychologist or test agency on the basis
as an intelligence quotient (IQ), which is the ratio of extensive research and field testing, and they
of an individual’s mental age to the individual’s ac- must meet the specific needs of the user.
tual age as measured by an intelligence test. When
Ability tests
F I G U R E 27.4 A normal curve
Ability tests establish what people are capable of
knowing or doing. They measure the capacity for:
●● verbal reasoning – the ability to comprehend,
interpret and draw conclusions from oral or
written language;
●● numerical reasoning – the ability to
60 100 140 comprehend, interpret and draw conclusions
score from numerical information;
●● spatial reasoning – the ability to understand A criterion-related approach is used to assess the
and interpret spatial relations between effectiveness of a test. This means selecting criteria
objects; against which the validity of the test can be meas-
●● mechanical reasoning – understanding of ured. These criteria must reflect ‘true’ performance
everyday physical laws such as force and at work as accurately as possible. A single criterion
leverage. is inadequate: multiple criteria should be used. The
extent to which criteria can be contaminated by
other factors should also be considered and it
Aptitude tests should be remembered that criteria are dynamic –
they will change over time.
Aptitude tests are occupational or job-related tests
that assess the extent to which people can do the
work. They typically take the form of work sample Interpreting test results
tests, which replicate an important aspect of the
actual work the candidate will have to do such as The main methods of interpreting test results are:
carrying out a skilled task like using a keyboard, ●● Norms. An individual’s score in a test is not
carrying out a repair, conducting a fault-finding meaningful on its own. It needs to be
exercise or making a presentation to clients. Work compared with the scores achieved by the
sample tests can be used only with applicants who population on whom the test was
are already familiar with the task through experi- standardized – the norm or reference group.
ence or training. A normative score is read from a norms table
and might, for example, indicate that
someone has performed the test at a level
Characteristics of a good test equivalent to the top 30 per cent of the
A good test is one that provides data that enables relevant population.
reliable predictions of performance or behaviour ●● Criterion scores. Norms simply tell us how
to be made and therefore assists in the process of someone has performed a test relative to
making objective and reasoned decisions when se- other people. A more powerful approach is
lecting people for jobs. It will be based on re- to use the relationship between test scores
search that has produced standardized criteria and an indication of what the test is designed
derived by using the same measure to test a num- to measure, such as job success. This is called
ber of representative people to produce a set of a criterion measure.
‘norms’ for comparison purposes. The test should
be capable of being objectively scored by refer-
ence to the normal or average performance of the The use of tests in a selection
group.
The two key characteristics of a good test are first
procedure
that it is reliable in the sense that it always measures Validated intelligence and personality tests can pro-
the same thing; a test aimed at measuring a particular duce useful data, but it is best to combine them with
characteristic, such as intelligence, should measure structured interviews in a selection procedure. Tests
the same characteristic when applied to different can be used where a large number of candidates
people at the same or a different time or to the same have to be assessed and where it is not possible to
person at different times. Secondly, a test should be rely entirely on examination results or information
valid in the sense that it measures the characteristic about previous experience as the basis for predict-
the test is intended to measure. Thus, an intelligence ing future performance. In these circumstances it is
test should measure intelligence (however defined) economical to develop and administer special tests,
and not simply verbal facility. A test meant to predict and a sufficient number of cases can be built up for
success in a job or in passing examinations should the essential validation exercise. Tests usually form
produce reasonably convincing (statistically signifi- part of an assessment centre programme. They can
cant) predictions. be administered online.
Intelligence tests are particularly helpful in situa- ●● performance in the centre is measured in
tions where intelligence is a key factor and there is several dimensions in terms of a competency
no other reliable method of measuring it. Aptitude framework which defines what is required to
tests are most useful for jobs where specific and achieve success in a career with the
measurable skills are required, such as word-pro- organization and possibly to become a
cessing and skilled repair work. Personality tests can member of a talent pipeline (see Chapter 28);
complement structured interviews and intelligence ●● several candidates or participants are
and aptitude tests. Some organizations use them for assessed together to allow interaction and to
jobs such as selling, where they believe that ‘person- make the experience more open and
ality’ is important and where it is not too difficult to participative;
obtain quantifiable criteria for validation purposes.
●● several trained assessors or observers are
They may be used to assess integrity and conscien-
used in order to increase the objectivity of
tiousness where these characteristics are deemed to
assessments.
be important.
In some situations a battery of tests may be used, The case for assessment centres is that they obtain
including various types of intelligence, personality much more information about candidates than
and aptitude tests. These may be a standard battery conventional interviews, even when these are sup-
supplied by a test agency, or a custom-built battery plemented by tests. But research by Schmidt and
may be developed. The biggest pitfall to avoid is Hunter (1998) has shown that on their own, the
adding extra tests just for the sake of it, without ability of assessment centres to predict how well
ensuring that they make a proper contribution to someone will perform (predictive validity) is
the success of the predictions for which the battery lower than that of intelligence tests combined
is being used. with structured interviews. Assessment centres
Tests should be administered only by people who are expensive and time-consuming and their use
have been trained in what the tests are measuring, tends to be restricted to large organizations for
how they should be used, and how they should be managerial positions, graduates and, sometimes,
interpreted. Also, it is essential to evaluate all tests sales staff.
by comparing the results at the interview stage with
later achievements. To be statistically significant,
these evaluations should be carried out over a rea- Making the decision
sonable period of time and cover as large a number
of candidates as possible. When making the decision the first step is to iden-
tify the candidates who have the abilities and per-
sonality that most closely match the specification
Assessment centres for the job (person-job fit). Account may also be
taken of the extent to which the candidates’ person-
Assessment centres assemble a group of candidates ality and values will fit into the organization (per-
and use a range of assessment techniques over a son-organization fit).
concentrated period (one or two days) with the aim The next step is to make a choice if there is more
of providing a more comprehensive and balanced than one possible candidate. This choice should be
view of the suitability of individual members of the evidence-based but judgement may still be required,
group. The main features of assessment centres are: which can be difficult. The decision may have to be
a balanced one – the match may not be perfect but
●● exercises used to capture and simulate the
it may be felt that it will do. However, for the sake
key dimensions of the job; these may include
of the organization and the individual concerned,
one-to-one role-plays and group exercises;
what should be avoided is the selection in despera-
●● computer games (gamification) which may tion of someone who is not properly qualified to do
be used to test reasoning power, problem the job. If there is no one available, it is better to
solving and decision making; start again. It can happen that no suitable person
●● candidates are interviewed and tested; emerges, even after another attempt or attempts.
It could then be necessary to rethink the job specifi- A written request for a reference could simply
cation to make it more realistic. In these circum- ask the previous employer to confirm the candi-
stances organizations have been known to resume date’s employment record. More precise answers
their internal search, recognizing that some special may be obtained if a standard form is provided for
training may be necessary for an individual with the the employer to complete. The questions asked on
potential to do the job but who lacks some of the this form should be limited to the following:
expertise required.
●● What was the period of employment?
Understandably, managers will want to appoint
someone they think they will be able to work with, ●● What was the job title?
but great care has to be taken to avoid superficial or ●● What work was carried out?
prejudiced decisions based on appearances rather ●● What was the rate of pay or salary?
than the reality of what the candidate has to offer. It
●● How many days’ absence were there over the
is too easy to make superficial judgements.
last 12 months?
Managers can also fall into the trap of selecting ‘like
for like’, ie, someone they feel is like themselves ●● Would you re-employ (if not, why not)?
rather than someone who can do the job well, even The last question is important, if it is answered hon-
if they are different. estly or at all.
Telephone references may save time and may be
more reliable. They can be used as an alternative or
Provisional offers and in addition to written references. Ask factual ques-
obtaining references tions only and keep a record of the conversation.
After the interviewing and testing procedure has

been completed, a provisional decision to make an
References – legal aspects
offer by letter, email or telephone can be made. The key legal points that should be considered
This is normally ‘subject to satisfactory references’ when asking for or giving references are:
and the candidate should, of course, be told that
●● Once the decision has been made to make an
these will be taken up. If there is more than one
offer, the letter should state that ‘this is a
eligible candidate for a job it may be advisable to
provisional offer subject to the receipt of
hold one or two people in reserve. Applicants often
satisfactory references’.
withdraw, especially those whose only purpose in
applying for the job was to carry out a ‘test mar- ●● It has been generally held that there is no
keting’ operation, or to obtain a lever with which common law duty on an employer to provide
to persuade their present employers to value them references for a serving or past employee
more highly. unless there is a term to that effect in the
The main purpose of a reference is to obtain in employment contract. But it has been ruled
confidence factual information about a prospective (Spring v. Guardian Assurance 1994) that
employee. This information is straightforward and there might be a moral duty to provide a
essential. It is necessary to confirm the nature of the reference where it is ‘natural practice’ to
previous job, the period of time in employment, the require a reference from a previous employer
reason for leaving (if relevant), the salary or rate of before offering employment, and where the
pay and, possibly, the attendance record. employee could not expect to enter that type
Opinions about character, competence, perfor- of employment without a reference.
mance and suitability are unreliable. Referees are ●● If a reference contains a false or
reluctant to commit themselves and they are not in unsubstantiated statement that damages the
any position to assess suitability – only the prospec- reputation of the individual, action for
tive employer can do that. Personal referees are, of damages may result.
course, useless. All they prove is that the applicant
has at least one or two friends.
●● It is possible to succeed in a claim for to fill. In this situation any compromise that in-
damages if it can be shown that the volves appointing someone who does not meet the
reference provided was negligent because specification must be avoided. To deal with the
reasonable care had not been taken in problem constructively it is necessary to ensure that
preparing it, which includes ensuring that it all the possible sources of candidates have been
is factually correct. used. Look for ways in which the website or social
media notice or advertisement could be made more
attractive and the employer’s brand and employ-
Offering employment ment proposition could be improved. It is also a
good idea to check that the person specification is
The final stage in the selection procedure is to con- realistic – that the requirements have not been over-
firm the offer of employment after satisfactory ref- stated.
erences have been obtained, and the applicant has The actions taken by respondents to the 2020
passed the medical examination required for pen- CIPD survey to deal with recruitment difficulties
sion and life assurance purposes or because a cer- were:
tain standard of physical fitness is required for the
●● Upskilling existing employees to fill hard-to-
work. The contract of employment should also be
recruit-for positions – 57 per cent
prepared at this stage. Further details on contracts
are given in Chapter 60. ●● Offering greater work
flexibility – 54 per cent
●● Developing apprenticeship
Following up schemes – 50 per cent
●● Sponsoring relevant professional
It is essential to follow up with newly engaged em- qualifications – 45 per cent
ployees to ensure that they have settled in and to ●● Developing graduate
check on how well they are doing. If there are any programmes – 44 per cent
problems it is much better to identify them at an
early stage rather than allowing them to fester. ●● Recruiting candidates from a different
Following up is also important as a means of industry/sector – 43 per cent
checking on the selection procedure. If by any ●● Recruiting candidates with potential but
chance a mistake has been made, it is useful to find without experience – 40 per cent
out how it happened so that the procedure can be ●● Recruiting candidates from
improved. Misfits can be attributed to a number of overseas – 30 per cent
causes, for example inadequate person specifica-
●● Developing mid-career/career-returner
tion, poor sourcing of candidates, weak advertis-
programmes – 29 per cent
ing, poor interviewing techniques, inappropriate
or invalidated tests, or prejudice on the part of the ●● Offering better pay and/or
selector. benefits – 29 per cent
●● Increasing investment in recruitment/
selection technologies – 28 per cent
Dealing with recruitment Another action taken by a number of desperate em-
problems ployers faced with considerable recruitment prob-
lems in 2021 was to offer prospective employees in
Every experienced HR professional who is respon- key occupations a substantial bonus if they joined
sible for recruitment and selection will occasionally their organization. This is sometimes called a
come across a vacancy that is particularly difficult ‘golden handshake’.
Key learning points
The recruitment and selection process Selection methods

Recruitment is the process of finding and engaging the The aim is to assess the suitability of candidates by
people the organization needs. Selection is that part of predicting the extent to which they will be able to
the recruitment process concerned with deciding carry out a role successfully. This is done mainly
which applicants or candidates should be appointed through interviews and tests.
to jobs. There is a choice between the selection methods.
Schmidt and Hunter (1998) found that the best results
Define and analyse requirements were obtained by combining intelligence tests with
structured interviews.
Define required knowledge, skills, abilities and
expected behaviour (behavioural competencies).
Analyse recruitment strengths and A structured interview (competency, strengths or
value-based) is one consisting of a set of
weaknesses predetermined questions put to all candidates in the
The analysis should cover the reputation of the person specification.
organization, pay and benefits and employment
conditions. Selection tests
Selection tests are used to provide valid and reliable
Identify sources of candidates evidence of levels of abilities, intelligence, personality
The main digital sources are corporate websites, characteristics, aptitudes and attainments.
networking sites (LinkedIn), commercial job boards,
recruitment consultants and social media sites.
Non-digital sources include advertisements,
recruitment consultants and educational
establishments.
References
Acikgoz, Y (2019) Employee recruitment and job Chartered Institute of Personnel and Development
search: towards a multi-level integration, Human (2017) Survey of Resourcing and Talent Planning,
Resource Management Review, 29 (1), pp 1–13 London, CIPD
Burt, E (2019) Stop getting hiring wrong, People Chartered Institute of Personnel and Development
Management, February, pp 27–32 (2020) Survey of Resourcing and Talent Planning
Chamorro-Premuzic, T (2017) The Talent Delusion, Survey, London, CIPD
London, Piatkus Groysberg, B, Nohria, N and Fernández-Aráoz, C
Chartered Institute of Personnel and Development (2009) The definitive guide to recruiting in good
(2008) Survey of Recruitment, Retention and times and bad, Harvard Business Review, May,
Turnover, London, CIPD pp 74–84
Jeffery, R (2018) Don’t hire the candidate who presses Robinson, T (2020) Leading in a Changing World,
this key, People Management, December, pp 35–39 London, CIPD
Marr, B (2018) Data-driven HR, London, Kogan Page Schmidt, F L and Hunter, J E (1998) The validity and
Moore, D A (2017) How to improve the accuracy utility of selection methods in personnel
and reduce the cost of personnel selection, psychology: practical and theoretical implications
California Management Review, 60 (1), pp 8–17 of 85 years of research findings, Psychological
Pulakos, E D and Schmitt, N (1995) Experience-based Bulletin, 124 (2), pp 262–74
and situational interviews: studies of validity, Spearman, C (1927) The Abilities of Man, New York,
Personnel Psychology, 48 (2), pp 289–308 Macmillan
Robertson, I T and Smith, M (2001) Personnel
selection, Journal of Occupational and
Organizational Psychology, 74 (4), pp 441–72
265
28
Talent management
have the potential to make an important contribu-
Introduction tion in the future. The following four definitions of
talent were produced by Chamorro-Premuzic
The success, indeed the survival, of organizations (2017: 30):
depends on the quality of the people they employ –
their talent. This has to be managed by being identi- The first is the rule of the vital few, which posits
fied, obtained, developed and nurtured. As that, in any organization or group of individuals, a
Chamorro-Premuzic (2017: 85) commented: ‘The minority of people will be responsible for most of
two critical issues in talent management concern the the collective output. The second is the maximum
ability to place the right people in the right roles performance rule, which states that a person’s
and to ensure their typical performance is as close talent can be gauged when he is trying to do his
to their maximum performance as possible.’ best. The third is the effortless performance rule,
which asserts that if a person has talent he will be
This chapter starts with a definition of talent
able to achieve the same level of performance as
management and continues with a review of talent
a less talented individual; despite exerting lower
management policy and strategy. This is followed
levels of effort, because performance is ability
by a description of the process of talent manage- plus motivation. The fourth states that talent is
ment including the operation of a ‘talent pipeline’ personality in the right place, in that a person
and the creation and maintenance of a ‘talent pool’. will display talent if he finds the right context –
or role – for his natural disposition and default
behavioural tendencies.
Talent management defined Talent management is based on the proposition that
Talent management is about ensuring that the or- ‘those with the best people win’. The term emerged
ganization has the capable and well-qualified people in the late 1990s when McKinsey and Company
it needs to attain its goals. As stated by Gallardo- coined the phrase ‘the war for talent’. But Hymowitz
Gallardo et al (2020: 457): (2007) pointed out that ‘Rather than worry so much
about the war for talent in today’s tight job market,
Talent management (TM) can be described as executives ought to focus on the waste of talent in
the activities and processes that involve the their ranks.’
systematic attraction, identification, development, As suggested by Younger et al (2007), approaches
engagement, retention, and deployment of to talent management include emphasizing ‘growth
those talents which are of particular value to an from within’, regarding talent development as a key
organization to create strategic sustainable success.
element of the business strategy, being clear about
Talent is what people must have in order to perform the competencies and qualities that matter, maintain-
well in their roles. Talented people make a difference ing well-defined career paths, taking management
to organizational performance through their efforts, development, coaching and mentoring seriously and
they have the ability to learn and grow, and they demanding high performance.
There are many versions of talent management likely to be out of date as soon as they are made.
but in one way or another it can cover such tradi- They commented that
tional HRM activities as workforce planning,
Succession planning has evolved from the
recruitment, managing employee retention, perfor-
traditional short-term focus on replacing senior
mance management, potential assessment, managers if they happened to leave without prior
leadership and management development, succes- warning. There is now a more long-term aim of
sion planning and career planning. The difference developing a cadre of key talent who able to take
is that talent management is a wider-reaching on higher level roles, potentially roles that may
integrated approach which ‘joins up’ these HR
not currently exist... The utilization of talent pools
practices. The process of talent management as de- consisting of employees with key generic type
scribed later needs to be directed by an articulated competencies and skills allows the organization
talent management policy and strategy. far greater scope when positions become available.
Management will be able to select the most
suitable candidate from a pool of candidates and
Talent management policy train the person into the specific requirements of
that particular role. (page 64)
An organization developing a talent management There is much to be said for adopting a talent on
programme has initially to make the following three demand policy in any situation in which it is diffi-
policy decisions. cult to produce precise definitions of future talent
requirements; and today that is a typical situation.
Talent on demand policy
The first decision is whether to adopt a ‘talent on Inclusion in talent management
demand’ policy. This means ensuring that talented programme policy
people are available as required to meet emerging
needs for senior managers or other key staff. The second policy decision is on who should be in-
Cappelli (2008) advocated this policy and sug- cluded in a talent management programme. The
gested that it should be based on the following choice is between an inclusive or an exclusive ap-
four principles: proach. An inclusive approach means that everyone
in the organization is seen as actually or potentially
1 Make and buy talent to manage the demand- talented, given opportunity and direction. An exclu-
side risk. sive approach is much more common. This focuses
2 Reduce the uncertainty in talent demand. on those who are believed to have considerable po-
3 Earn a return on investment in developing tential – the ‘high flyers’; the possible future leaders
employees. who will fill senior posts in the organization.
Huselid et al (2005) argued that talent management
4 Balance employee interests by creating an
policies should concentrate on this ‘A list’. It is
internal labour market that offers all the
sometimes assumed that talent management is only
advantages of the external labour market
about this elite group. But it can and should be
and helps to reduce staff turnover and loss of
equally concerned with any pivotal professional or
talents.
technical roles.
McDonnell and Collings (2011) observed that a tal- However, even if talent management is exclusive
ent on demand policy is a more practical approach to a certain degree, it should not be at the expense
than the management succession plans that were of the development needs of people generally. A
formerly produced by large bureaucratic organiza- case study of a global management consultancy
tions. These plans never worked well and were even (Tansley and Tietze, 2013) revealed that the consul-
less likely to succeed in today’s more flexible and tancy’s approach to talent management was both
rapidly changing organizations, where they are inclusive (everyone is talented) and exclusive (key
Chapter 28 | Talent Management 267
people were developed in ways different to those requirements of the organization as determined by
adopted for ‘everyday talent’). This was expressed workforce planning although in practice this may
by the company’s Talent Development Director as be difficult, hence the need for talent on demand
follows: policies. It should also take into account talent
management policies referring to who is included in
Talent in the Firm means two things. One I think
the talent management programme and definitions
that everybody is a talented individual. We recruit
bright people intellectually. But our business also of what is meant by talent in terms of competencies
has the responsibility to help them realize that. and potential. The talent resourcing strategy should
So there is a fundamental belief that everyone include the establishment of an employer brand and
is talented, and there is a belief that we do need an employee value proposition that will attract
to identify future leaders, who are going to lead high-quality candidates.
key parts or have key roles in the business in the The aims of a talent management strategy can be
future and these would be quite senior roles. And expressed as being to:
that identifying talent to these spaces, and helping
●● generate and maintain a talent pool or pools
people to gravitate towards one of these roles, will
so that ‘talent on demand’ is available to
be the key challenge for us.
meet requirements for high-quality people
These beliefs were put into effect by the firm through and to provide for management succession;
a talent progression sequence of four stages: ●● develop the organization as an ‘employer of
1 Rising talent – highly educated graduate choice’;
recruits who are given education and ●● plan and implement recruitment and
training for core technical or professional selection programmes that ensure good-
roles. quality people are recruited who are likely to
2 Emerging leaders – who are given training thrive in the organization and stay with it for
and education for management under the a reasonable length of time (but not
guidance of sponsors or mentors. necessarily for life);
3 Next generation leaders – who undertake ●● plan and implement talent retention
leadership development programmes and programmes;
may attend a corporate academy. ●● introduce reward policies that help to attract
4 Corporate next generation leaders – who are and retain high-quality staff;
provided with one-to-one development ●● design jobs and develop roles that give
through coaches and mentors and briefed on people opportunities to apply and grow their
corporate/governance strategy. skills and provide them with autonomy,
interest and challenge;
●● implement talent development programmes;
Talent pool policy ●● provide talented staff with opportunities for
The third policy area is concerned with the need to career development and growth;
create inclusive talent pools that contain a propor- ●● recognize those with talent by rewarding
tionate number of people from diverse backgrounds. excellence, enterprise and achievement.
Cappelli (2008) suggested that the signs of a success-
Talent management strategy ful talent management strategy are that it is inclusive
and that it can address and resolve any incongruity
A talent management strategy consists of a view on between the supply and demand of talent. He ar-
how to acquire and nurture talent wherever it is and gued that talent management should not just be
wherever it is needed by using a number of interde- about employee development or succession plan-
pendent policies and practices. Talent management ning, as many of the commonplace definitions sug-
is the notion of ‘bundling’ in action. The strategy gest, but should focus on helping the firm attain its
should ideally take into account the future talent strategic objectives.
qualify people for membership of a pool. Inclusion

The process of talent and diversity obligations should be met.
management For its senior posts, the UK Civil Service uses
the three Corporate Leadership Council (2002)
The process of talent management is to establish a elements:
‘talent pool’ (or talent pools) from which people 1 Ability: technical skills, attitudes and
can be obtained as required to fill key roles. This is behaviour.
achieved by operating a ‘talent pipeline’ that pro-
2 Aspiration: setting and achieving challenging
vides for the flow of talent needed to maintain the
goals, and seeking opportunities for learning
talent pool through the processes of resourcing, tal-
within their subject area.
ent identification and talent development. These ac-
tivities are initiated by the business or corporate 3 Engagement: emotional and rational
strategy that informs workforce plans. Talent man- commitment to the organization, resulting in
agement policies and strategies determine the scope discretionary effort.
of the talent pool and influence workforce plans. Fernandez-Araoz (2014) recommended the follow-
The process is modelled in Figure 28.1. ing criteria for defining high talent:
●● Motivation: a fierce commitment to excel in
The talent pool the pursuit of unselfish goals.
●● Curiosity: a penchant for seeking out new
A talent pool contains the resources of talented experiences, knowledge and candid feedback
people required by an organization to ensure that and an openness to learning and change.
vacancies for people in pivotal roles can be filled ●● Insight: the ability to gather and make sense
readily. Talent management policy will define the of information that suggests new
view of the organization on what constitutes talent possibilities.
and who should be included in a talent manage-
●● Engagement: a knack for using emotion and
ment pool. The talent management strategy will
logic to communicate a persuasive vision and
indicate the size of the talent pool and the opera-
connect with people.
tion of the talent pipeline.
Criteria for inclusion in the talent pool in the shape ●● Determination: the wherewithal to fight for
of generic competencies and skills need to be defined. difficult goals despite challenges and to
These criteria will be used to identify potential and bounce back from adversity.
F I G U R E 28.1 The process of talent management
Talent
management
policy
TALENT MANAGEMENT PIPELINE
Business Workforce Talent Talent Talent

Resourcing pool
plans planning identification development
Talent
management
strategy
(talent relationship management). In some organi-

Talent planning zations, the learning and development function
plays a leading role in talent management.
Talent planning as an aspect of workforce planning It is also necessary to consider what needs to be
estimates the number of talented people needed in done to retain as well as to obtain talent. The steps
the future taking into account the implications of that can be taken include demonstrating that the
business/corporate plans. It also assesses the type organization values its talented people, providing
of skills that will be required and informs decisions ample scope for learning and growth, recognizing
on the size and composition of the talent pool in and rewarding achievement and high performance,
accordance with talent management policy. It pro- and keeping people informed about their progress
vides the basis for the resourcing (recruiting) ac- (regular feedback). Talent management specialists
tivities required to ensure that the talent needed by will be responsible for dealing with talent retention
the organization is readily available in terms of issues.
both numbers and skills. But the ability of an or-
ganization to make long-term plans in unstable
conditions is limited.
Identifying talent
Procedures are necessary for identifying people who
Resourcing are now qualified for membership of a talent pool
or who have the potential to become members after
Resourcing is the first step in the creation of a talent completing a talent management development pro-
pool. It is primarily about ensuring that the organi- gramme. Managers can be asked to assess potential
zation develops and obtains the right people with and make recommendations on who should be in-
the right skills for future roles as well as for immedi- cluded in such a programme. A simple three-box
ate vacancies. The UK Civil Service has a fast-stream method can be used to classify people. For example:
entry scheme, which is used to attract relatively
small numbers of external recruits with the per- 1 Ready now to progress beyond current
ceived potential to reach senior leadership levels grade.
over their career. These entrants have rapid early 2 Could progress beyond current grade within
career progression and a wide range of early experi- two years.
ences to accelerate the early stages of their career
3 Best suited to current grade.
development. Organizations in such fields as ac-
countancy, retailing, aerospace engineering and As noted by Campbell and Hirsh (2013), a UK po-
pharmaceuticals recruit graduates who have the police force uses five categories for talent development:
tential for a career in management, a professional
1 Performance difficulties in their role –
role, or research and development.
remedial action required.
Role specifications for recruiting purposes
should define the competencies required to progress 2 Good match now – still room to develop in
in the organization. Structured interviews should current role.
focus on these competencies; intelligence and ability 3 Lateral development – consistent performer,
tests should be used and consideration should be consider opportunities for individual in other
given to the use of assessment centres. Interviewers areas.
should be trained in how to assess potential. 4 Ready to go now – high performing, one-step
The implementation of talent resourcing plans progression to the next level.
may be the responsibility of a talent management
5 Ones to watch – high performing and high
function in an organization but it can be carried out
potential, require opportunities to develop
by recruitment specialists leaving those concerned
quickly to senior level.
with talent management to concentrate on the pipe-
line activities of identification and development, the A more elaborate method is the nine-box grid for
management of the talent pool and, importantly, identifying talent. This is a widely adopted
keeping in touch with those in the talent pipeline approach – over half of the organizations studied by
Campbell and Hirsh were using it or were planning tential talent pool members interviewed by a talent
to. As illustrated in Figure 28.2, the grid uses two management specialist (or whoever in HR is re-
axes – performance and potential – with three levels sponsible for talent management) or better still, by
on each axis, forming nine boxes in total. a talent management panel of senior managers ad-
The problem is that line managers are not neces- vised by an HR specialist. A further stage in a larger
sarily well qualified to judge potential to carry out organization could be attendance at an assessment
higher-level roles because they may not be aware of centre which would not only confirm who should
the requirements for successful performance in be included in the programme but would also iden-
those roles. This was confirmed by research con- tify what needs to be done to develop potential.
ducted by Viswasvaran et al (1996), which estab- Whatever approach to assessing potential is
lished that potential assessments by line managers adopted it is important to ensure that the line man-
can be unreliable and inconsistent. To deal with this ager discusses it with the individual, explaining the
problem it is necessary to brief managers on the reason for the assessment, and giving performance
method and criteria to be used and train them in feedback. This should be a two-way conversation
their use. in which the individual has the opportunity to
Recommendations need to be reviewed and po- comment. It should lead to a general discussion on
F I G U R E 28.2 A nine-point performance/potential assessment grid

Performance
Low Medium High
Shows every sign of the Has the potential to go Demonstrates high potential.
potential to go further but further. Performance is at Regularly achieves
is under-performing in the an acceptable level. challenging and stretching
present role. goals.
High
Capable of taking on greater Has the potential to keep Capable of growing into a
responsibilities if there is a developing and to deliver higher-level role in due
significant improvement in more in either scale or course. A consistently
performance. complexity. Performance is strong performer,
acceptable. delivering excellent value.
Medium Potential
No potential for growth Valued in current role but is Highly valued at this level
beyond this level. Is not expected to advance and in current role. A strong
seriously under-performing beyond this level. Generally performer who is a core
in the present role. meets performance team member.
expectations. Low
the career prospects of the individual. If there is order to provide those with promise a sequence of
room for performance improvement the aim should experience and learning activities that will equip
be to reach an agreement on what needs to be them for whatever level of responsibility they have
done – by the individual and by the manager. the ability to reach. It includes career counselling to
help people progress their careers to their advan-
tage as well as that of the organization.
Talent development Career development includes the following
activities:
Talent development is the process of ensuring that
●● a policy of promoting from within wherever
talented employees gain the skills and experience
possible;
required to fulfil their promise, advance their ca-
reers and satisfy the organization’s need to fill senior ●● personal development planning to develop
and key posts with high-quality people. It enables each individual’s knowledge and skills;
those with potential to become a member of a talent ●● systems and processes to achieve sharing and
pool but, because there is always room for further development of knowledge across the firm;
growth, qualified members of a talent pool will still ●● multidisciplinary project teams, with a
benefit from continuing developmental activities. shifting membership, to offer developmental
Talent development involves leadership and man- opportunities for as wide a range of
agement development and career development. employees as possible.
The organization can take steps to manage careers
Leadership and management as part of its talent management programme and
can provide support and guidance to people with
development potential. At Richer Sounds a system of career
Leadership and management development pro- counselling has been introduced. An employee can
grammes, as described in Chapter 40, ensure that request a meeting with a senior person at any time
managers have the leadership and managerial qual- in order to discuss their career, whether there is a
ities required to achieve success. A blended learning specific problem or whether they are concerned
approach is used which is based on an analysis of with their whole future direction.
learning needs and combines a number of learning Ultimately, however, it is up to individuals to
activities. These can include planned experience, manage their own careers. Schein (1978) originated
coaching, mentoring, action learning, outdoor the notion of ‘career anchors’. He defined them as
learning and formal training courses. the self-concept of people, consisting of self-per-
ceived talents and abilities, basic values and a sense
of motives and needs relating to their careers. As
Career development people gain work experience, career anchors evolve
and function as stabilizing forces, hence the meta-
Career development is concerned with shaping the phor of ‘anchor’.
progression of individuals within an organization in
CASE STUDIES
CEMEX Ltd
A model of talent management produced by CEMEX Ltd is HSBC

shown in Figure 28.3.
HSBC has created a system of talent pools that track and
manage the careers of employees with high potential.
F I G U R E 28.3 The CEMEX model of talent management

BUSINESS STRATEGY
FUTURE TALENT REQUIREMENTS
Recruitment and
Succession management Development
selection
TALENT POOL
Employees in these pools are selected initially for new people gaining international experience. For employees,
assignments within their region or line of business and, being identified as talent therefore drives many opportunities
over time, are given positions that cross boundaries in in the company.
order to demonstrate that they have the potential to reach Every leader in the company has responsibility for
a senior management role. They can then be placed in the identifying and nurturing talent. The areas for them to
group talent pool, which means that they have the look for are aptitude, potential and the ability to grow
potential to reach the senior executive level in three to and develop. The identification of talented individuals is
five years and top management in the longer term. based on their performance against 10 leadership
Leaders conduct talent relationship dialogues with competencies, which are consistent globally. The leader-
members of each pool in order to address their ship competencies are used as a development tool for
development needs and concerns. employees at all levels in IBM, not just those already
highlighted as having potential.
Readiness for promotion to executive roles is linked
IBM to competencies. For example, if an individual needs to
get client relationship-building skills, then his or her
The overall aim of talent management within IBM is ‘to next job has to include that. Readiness is categorized in
develop the leaders of tomorrow’. Part of what makes it a terms of ‘next job’ or ‘two jobs away’ rather than a
global company is the importance it places on high-potential number of years.
Key learning points
Talent management defined resourcing, talent identification and talent

development.
●● Talent management is about ensuring that the
organization has the talented people it needs to
attain its goals. Talent defined
●● It involves establishing and maintaining a ‘talent Talent is what people must have in order to perform
pool’ (or talent pools). well in their roles. They make a difference to
organizational performance through their immediate
●● This is achieved by operating a ‘talent pipeline’,
efforts, they have the ability to learn and grow, and
which provides for the flow of talent needed to
they have the potential to make an important
maintain the talent pool through the processes of
contribution in the future.
Talent management policy account the implications of business plans. It also

assesses the type of skills that will be required.
An organization developing a talent management
programme has initially to make two policy decisions.
Resourcing
The first decision is whether to adopt a ‘talent on
demand’. There is much to be said for doing this in any Resourcing is the first step in the direction of creating
situation in which it is difficult to produce precise a talent pool. It is primarily about ensuring that the
definitions of future talent requirements. organization obtains the right people with the right
The second policy decision is on who should be skills for future roles as well as for immediate
included in a talent management programme. The vacancies.
choice is between an exclusive (talented people are
the high flyers in an organization) and inclusive Identifying talent
(everyone is talented) approach.
●● Procedures are necessary for identifying people
who are now qualified for membership of a talent
Talent management strategy pool or who have the potential to become members
A talent management strategy consists of a view on after completing a talent management development
how the processes involved in creating a talent pool programme.
should mesh together with an overall objective – to
●● It is usual for assessments of potential to be made
acquire and nurture talent wherever it is and wherever
initially by the individual’s line manager. They may
it is needed by using a number of interdependent
be followed up with additional conversations with a
policies and practices.
talent management specialist, and possible
attendance at an assessment centre for promising
The process of talent management individuals.
●● The process of talent management involves
operating a talent management pipeline in which Talent development
resourcing, talent identification and talent
Talent development is the process of ensuring that
development activities take place in order to create
talented employees gain the skills and experience
the talent pool.
required to fulfil their promise, advance their careers
●● These activities are initiated by the business strategy and satisfy the organization’s need to fill senior and
which informs workforce plans. Talent management key posts with high-quality and capable people.
policies and strategies determine the scope of the
talent pool and influence workforce plans Leadership and management
development
The talent pool
●● Leadership and management development
A talent pool contains the resources of talented people programmes ensure that managers have the
required by an organization to ensure that vacancies leadership and managerial qualities required to
for people in pivotal roles can be filled readily (talent achieve success.
on demand).
●● A blended learning approach is used which is
based on an analysis of learning needs and
Talent planning combines a number of learning activities which can
Talent planning involves estimating the number of include planned experience, self-managed
talented people needed in the future taking into learning, coaching, mentoring, action learning,
outdoor learning and formal training courses.
Career development order to provide those with promise a sequence of

experience and learning activities that will equip them
Career development is concerned with shaping the for whatever level of responsibility they have the
progression of individuals within an organization in ability to reach.
References
Campbell, V and Hirsh W (2013) Talent management: Hymowitz, C (2007) Oped, The Wall Street Journal,
a four-step approach. http://www.employment- 19 March
studies.co.uk/system/files/resources/files/502.pdf McDonnell, A and Collings, D G (2011) Identification
(archived at https://perma.cc/B2MJ-9DLY) and evaluation of talent in MNEs, in H Scullion
Cappelli, P (2008) Talent on Demand: Managing and D G Collings (eds), Global Talent
talent in an uncertain age, Boston, MA, Harvard Management, London, Routledge, pp 56–73
Business School Press Schein, E H (1978) Career Dynamics: Matching
Chamorro-Premuzic, T (2017) The Talent Delusion, individual and organizational needs, Reading, MA,
London, Piatkus Addison-Wesley
Corporate Leadership Council (2002) Building the Tansley, C and Tietze, S (2013) Rites of passage
high performance workforce, Stamford, CA, through talent management stages: an identity
Gartner Inc work perspective, International Journal of Human
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spotting, Harvard Business Review, June, Viswasvaran, C, Ones, D S and Schmidt, F (1996)
pp 46, 48–56 Comparative analysis of the reliability of job
Gallardo-Gallardo, E, Marian Thunnissen, M and performance ratings, Journal of Applied
Scullion, S (2020) Talent management: context Psychology, 81 (5), pp 557–74
matters, International Journal of Human Resource Younger, J, Smallwood, N and Ulrich, D (2007)
Management, 31 (4), pp 457–73 Developing your organization’s brand as a talent
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December, pp 110–17
275
PART VIII
Employment practices
PA R T V I I I CO N T E N T S
29 The employee experience

30 Managing employment
31 Managing diversity and inclusion
32 Managing flexibility
33 Managing home and hybrid working
Introduction
People management involves managing the em- andling dismissals, absence management, manag-
h
ployee experience – what happens to people at work ing diversity and inclusion, and seeking ways in
during the employee life cycle and how they feel which to increase flexibility, for the organization
about it. Building on this foundation, it is necessary and for individuals. Recently, the impact of the
to deal with a number of aspects of employment as Covid-19 pandemic has resulted in a big increase in
covered in this part. These consist of the activities home working or working part time at home and
concerned with the induction (onboarding) and part time in the office (hybrid working).
retention of employees, managing
redundancy,
276

277
29
The employee experience
managers and colleagues, the extent to which work
Introduction is stressful, working conditions, work–life balance
and the degree to which jobs are fulfilling. The work
The ‘employee experience’ is what happens to peo- experience is also affected by the extent to which
ple at work and how they feel about it. As noted by the organization listens to what employees say and
Morgan (2017), it encompasses all the interactions implements progressive and effective policies on di-
between an organization and its employees. Plaskoff versity and inclusion, protection from bullying or
(2017) wrote that ‘The employee journey has many harassment, and handling grievances. Bersin et al
milestones and interactions, and the quality of em- (2017) summarized the factors that contribute to a
ployee experience has a direct influence on em- positive employee experience as:
ployee satisfaction.’ Organizations need to take ac-
count of how people feel about their experience at ●● meaningful work
work when deciding on the approach they want to ●● supportive management
take to people management. This will cover each
●● positive work environment
of the six stages of the employee life cycle, namely,
attraction, recruitment, onboarding, development, ●● growth opportunity
retention and separation. ●● trust in leadership
They commented that
The concept of the Traditionally, HR has addressed issues such as
employee engagement, culture, rewards, and
employee experience learning and career development as separate,
independent programs in individual silos. Each
The concept of the employee experience is based on program has a senior HR leader, a set of tools and
the belief that employees want and deserve their diagnostics, and solutions to drive and measure
working life to be productive, engaging and enjoy- change. The employee sees the picture differently.
able. It is associated with the idea of employee en- Starting as potential hires and recruits, employees
gagement but it focuses more on the integration of look at everything that happens at work as an
HR processes and getting the views of employees as integrated experience that impacts daily life in and
a means of enhancing their experience rather than outside the workplace, including overall physical,
concentrating on ways of improving engagement emotional, professional, and financial well-being.
levels, as described in Chapter 24. Candidates assess future employers from the very
start of the talent acquisition experience and
The employee experience starts with the impres-
make quick judgments about what life will be like
sion employees gain of the organization when they
for them in the organization, based on how they
join it. It continues during their working life – the
interact with the enterprise during the recruiting
employee life cycle – with the ways in which they cycle. This integrated view increasingly leads to
are treated – fairly, without bias and with respect employees demanding a holistic, end-to-end –
and consideration. Other significant aspects of their recruitment-to-retirement – experience from their
work experience are their relationships with line
278 Part 8 | Employment Practices
employers, whether they are full-time employees, 3 Achievement – a sense of accomplishment in

contingent workers, or even crowdsourced talent. the work.
This also requires a radical change in emphasis on 4 Happiness – the pleasant feeling arising in
the part of employers.
and around work.
The notion of the employee experience has some- 5 Vigour – the presence of energy, enthusiasm
times been treated as a form of ‘brand manage- and excitement at work
ment’. This involves organizations ‘branding’ what
they offer employees in the same way as they brand IBM and Globoforce used this index in a workforce
their products for customers. In this sense, employ- survey covering 113 organizations and found that
ees are customers. organizations which score in the top 25 per cent
But brand management in the commercial sense earned nearly three times the return on assets com-
can be more about improving the image of the pared to organizations in the bottom quartile. It
product than improving the product itself. The em- was established that employee experience is posi-
ployer brand may be important when attracting tively associated with employee work performance,
people to the organization but there is more to peo- discretionary effort and turnover intention. The
ple management and the notion of the employee conclusion reached following the research was that
experience than just presenting an attractive image. to create a positive employee experience, organiza-
Managing the employee experience is essentially tions had to provide for meaningful work, empow-
the pursuit of a policy of integration. This means erment and voice, feedback, recognition, opportuni-
developing management practices that address the ties for growth and work–life balance.
issues raised by the factors that affect the experi- This does not necessarily happen. As reported by
ence and dealing with these as a whole in an em- Lynda Gratton (2019), the 2018 PwC Future of
ployee experience framework, ensuring that a co- Work Survey, of more than 1,200 business and HR
herent approach is adopted and that the practices leaders from 79 countries, found that there is a sig-
are mutually supportive. There is nothing funda- nificant mismatch between what people want and
mentally new in this aspect of managing the em- their experience of working through the employee
ployee experience. It is simply the well-established life cycle as described below. Of all the organiza-
process of bundling (achieving horizontal fit). But tional capabilities the survey examined, those that
the perspective is different. Managing the employee focused on the people experience are the most at
experience is a ‘bottom up’ rather than a ‘top down’ risk – that is, they are the factors with the largest
process. The starting point is to gain understanding gap between what is desired and what is the reality.
of how employees perceive their experience of
working in the organization and from that analysis
identify what needs to be done to deal with any is- Improving the employee experience
sues and enhance that experience, taking into ac- It was suggested by Lynda Gratton (2019) that HR
count what can be done as set out below. It is not a leaders can deliver a positive people experience by
matter of deciding what is best for them and then being creative in designing people management so-
imposing the practices from above. And this under- lutions that support well-being and resilience, while
standing is gained not just by an annual engage- also empowering workers to adapt to changing
ment survey but by pulse surveys using feedback contexts. She emphasized the need for them to be
apps supported by discussions with individual em- values-driven. Instead of replicating the best prac-
ployees and focus groups. tices of other companies, people professionals
The IBM Smarter Workplace Institute working should identify what works within their own or-
in conjunction with Globoforce in 2017 developed ganizations. Creating sustainable and tailored pro-
an employee experience index with five dimensions: cesses that are underpinned by the organization’s
1 Belonging – feeling part of a team, group or values will ensure that they are sustainable, and not
organization. easily imitated by competitors.
The growing interest in this concept means that
2 Purpose – understanding why one’s work organizations are introducing a more integrated ap-
matters. proach to people management that focuses on the
Chapter 29 | The Employee Experience 279
factors which affect that experience. Improvements tion is one of the two distinguishing features of the
to the employee experience can be achieved by: employee experience concept. The other is that
managing the employee experience is a bottom-up
●● implementing the various ways of enhancing
not a top-down process. It starts with an under-
engagement listed in Chapter 24 (these
standing of what employees want, not with a pro-
overlap with and complement a number of
gramme based on what management thinks they
the other approaches mentioned below);
want. This understanding provides the basis for pri-
●● introducing high-performance working; oritization. The marketing technique of ‘customer
●● adopting an ethical approach to people journey mapping ‘(see Chapter 75) can be used to
management with the aim of seeing that find out what employees want.
professed values become values in use; And it is important to recognize that the process
●● giving close attention to job design; is just as important as the product. As suggested by
the CIPD (2021), the processes of enhancing the
●● ensuring that induction (onboarding
employee experience consist of:
arrangements) for new employees is effective;
●● introducing flexible working arrangements; ●● assessing in consultation with employees the
impact that people practices and policies
●● offering learning programmes that enable
have on the employee experience;
people to develop their skills and potential;
●● creating ways to measure and assess
●● improving the arrangements for employee
engagement (for example, through surveys);
voice;
●● designing employee experience frameworks
●● dealing with work–life balance and other
(an integrated approach to the various ways
wellbeing issues.
in which the employee experience can be
Taking these steps presents three challenges. The enhanced);
first is the range and scope of the activities, although ●● reviewing and enhancing the employer
there is nothing special about them – they are all brand;
familiar HR practices. The second is the problem of
●● designing approaches to communications
prioritizing what has to be done. The third is how to
which provide for employee voice;
integrate these activities so that they complement
and support one another. This process of integra- ●● improving physical and mental wellbeing;
●● building a culture of trust.
C A S E S T U DY
Developing the employee experience at Ford

With a focus on innovation, Ford Motor Co., with nearly the HR team deployed a company-wide polling process that
200,000 employees is expanding its business model to let employees contribute ideas, share their experiences and
fortify and transform its core automotive business while rate and rank which HR products and services they felt
growing in the areas of electrification, autonomy and were most important. The company also conducted
mobility. These changes require a change in the way workshops around the world, attended by more than 200 HR
executives think about their people. As the company leaders, and held regional focus groups with employees and
moves from a product to consumer focus in its products people leaders across all areas of Ford’s business.
and services, it is also moving from a product to employee Ford found that many employees felt that people
experience focus in its workforce solutions. processes were overly administrative, complex and not
Starting with a three-week global people strategy lab in always useful in getting their work done. People leaders
which HR leaders from around the globe participated, Ford felt that HR business partners were overwhelmed by
developed a new people strategy, HR vision, integrated plan operational tasks, negatively impacting the time they could
and business case. As part of its efforts to define its vision, spend engaging and developing their teams. To address
these issues, the HR team is now developing products and and programmes that are ‘fit for purpose’. It is working to
services that are more integrated and focused on the simplify everything HR does. All of this is aimed at
employee experience, tools that are more intuitive and improving the employee experience and freeing HR
user-friendly, an interaction model that allows the professionals to support strategic business needs.
workforce to interact with HR through multiple channels
Key learning points
The employee experience defined Enhancing the employee experience

The ‘employee experience’ is what happens to people As suggested by the CIPD (2021):
at work and how they feel about it.
●● assess in consultation with employees the impact
that people practices and policies have on the
The concept of the employee experience employee experience;
The concept of the employee experience is based on ●● create ways to measure and assess engagement
the belief that employees want and deserve their (for example, through surveys);
working life to be productive, engaging and enjoyable.
●● design employee experience frameworks (an
integrated approach to the various ways in which
The factors affecting the employee
the employee experience can be enhanced);
experience
●● review and enhance the employer brand;
●● Meaningful work
●● design approaches to communications which
●● Supportive management provide for employee voice;
●● Positive work environment ●● improve physical and mental wellbeing;
●● Growth opportunities ●● build a culture of trust.
●● Trust in leadership
(Source: Bersin et al, 2017)
References
Bersin, J, Flynn, J, Mazor, A and Melian, V (2017) giving employees the workspaces they want, the
The employee experience: culture, engagement, tools they need, and a culture they can celebrate,
and beyond, 2017 Global Human Capital Trends, Hoboken, NJ, Wiley
Deloitte Insights Plaskoff, J (2017) Employee experience: the new
Chartered Institute of Personnel and Development human resource management approach, Strategic
(2021) Employee Experience Roles, London CIPD HR Review, 16, 136–53
Gratton, L (2019) A crucial role for human resources, PricewaterhouseCoopers (2018) Future of Work
Organizations & People, Spring, 94 Survey, London, PwC
Morgan, J (2017) The Employee Experience
Advantage: How to win the war for talent by
281
30
Managing
employment
Introduction Induction defined
Induction or onboarding is the process of receiving
This chapter covers the following activities related and welcoming employees when they first join a
to employment: company. The basic aims are: (1) to create a good
●● introduction to the organization (induction); impression of the organization, (2) give new em-
ployees the information they need to settle down
●● managing employee retention;
quickly and happily and start work, (3) ease the
●● analysing employee turnover; preliminary stages when everything is likely to be
●● managing redundancy; strange and unfamiliar to them, (4) ensure that they
●● hire and fire; know what to and are helped to do it and (5) reduce
the likelihood of the employee leaving quickly.
●● handling dismissals;
To achieve these aims the induction arrangements
●● absence management; as described below should cover reception, docu-
●● presenteeism; mentation, initial briefing, introduction to the work-
●● data protection. place and formal or informal induction training.
Introduction to the Reception

New starters will be concerned about who they are
organization going to work for (their immediate manager or
team leader), who they are going to work with,
First impressions matter; getting off to a good start what work they are going to do on their first day
is all-important if the experience of the employee in and the geographical layout of their place of work
the firm is going to be a good one. Should it go (location of entrances, exits, lavatories, restrooms
wrong from the beginning the employee will take and the canteen).
too much time to settle down and do a good job. If Some of this information may be provided by a
things go really badly the individual will leave and member of the HR department, or an assistant in
all the hard work and money put into recruitment the new employee’s place of work. But the most im-
will have been wasted. New employees need help in portant source of information is the immediate
adjusting to the performance and social aspects of manager, supervisor or team leader.
their new jobs quickly and smoothly. They need to Reception is most likely to go well if:
learn the knowledge, skills and behaviours required
to function effectively within the organization. It is ●● the person whom the starter meets first (the
essential to take care over introducing people to the receptionist, HR assistant or manager)
organization through effective induction or ‘on- knows of their pending arrival and what to
boarding’ arrangements. do next;
●● reception staff know that they are expected the workplace is probably best carried out by the
to be friendly and helpful; immediate team leader who should do four things:
●● a guide is provided if the starter has to go to 1 Put the new employee at ease.
another location unless the route is very
2 Explain what the employee is expected to do
straightforward;
including the purpose and significance of the
●● the starter is not kept waiting; steady, role, the standards of performance and
unhurried, guided activity is a good antidote behaviour expected and how the role relates
to first-day nerves. to the work going on elsewhere in the
department or company.
3 Provide basic information about working
Information for new staff arrangements.
The following information should be made availa- 4 Tell the employee about any initial training
ble to new staff: that will be provided, the opportunities that
●● a brief description of the company – its will be available later for further training and
history, products, organization and how she or he can progress in the company.
management; The team leader should introduce new starters to
●● basic conditions of employment – hours of their fellow team members. It is best to get one
work, holidays, pension scheme; member of the team to act as a guide or ‘starter’s
●● sickness – notification of absence, certificates, friend’. There is much to be said for these initial
pay, insurance, pensions; guides being people who have not been long with
the organization. As relative newcomers they are
●● leave of absence;
likely to remember all the small points that were a
●● company rules and disciplinary, capability source of worry to them when they started work,
and grievance procedures; and so help new employees to settle in quickly.
●● pay – structure or scales and when paid;
●● trade union arrangements, where applicable;
●● learning and development facilities;
On-the-job induction training
●● health and safety arrangements and rules; Most new starters other than those on formal train-
ing schemes will learn on the job, although this may
●● rules for using the internet.
be supplemented with special off-the-job courses to
This information may usefully be contained in a develop particular skills or knowledge. But on-the-
staff handbook that can be issued and explained job learning can be haphazard, inefficient and
during the induction period. wasteful. A planned, systematic approach is desira-
ble. This can incorporate an assessment of what the
new starter needs to learn, the use of designated and
Introduction to the workplace trained colleagues to act as guides, mentors and
‘buddies’ and coaching by team leaders or specially
The departmental induction programme should,
appointed and trained departmental trainers.
wherever possible, start with the departmental
These on-the-job arrangements can be supple-
manager, not the immediate team leader. The man-
mented by self-managed learning arrangements in
ager may give only a general welcome and a brief
which individuals take responsibility for meeting
description of the work of the department before
their own learning needs, with help and guidance as
handing over new employees to their team leaders
necessary, offering access to flexible learning pack-
for the more detailed induction. But it is important
ages or providing advice on learning opportunities.
for the manager to be involved at this stage so that
Digital learning technology can be used to pro-
he or she is not seen as a remote figure. At least this
vide information or training through material made
means that the starter will not be simply a name or
available on a computer, tablet or smart phone.
a number to the manager. The detailed induction in
Chapter 30 | Managing Employment 283
Formal induction courses and 150 working hours away from walking out of
the door to a better offer. There is no such thing as
Formal induction courses assemble new starters in a job for life and today’s workers have few qualms
groups so that members can be given consistent and about leaving employers. Consideration needs to be
comprehensive information at the same time, which given to the factors that affect retention to provide
might not be forthcoming if reliance is placed on the basis for a retention strategy. This strategy will
the team leader. A formal course provides an be informed by data on the extent to which employ-
opportunity to deliver messages about the organiza- ees are leaving (employee turnover) and why they
tion, its products and services, its mission and are leaving, as covered in the next section of this
values. A range of media can be used which would chapter.
not be available in departments. But formal courses
cannot replace informal induction arrangements in
the work place, where the most important require- Factors affecting retention
ment – settling people down – can best be met.
Retention strategies should be based on an under-
Decisions will have to be made about who at-
standing of the factors that affect whether or not
tends an induction course and when. It is usual to
employees leave or stay. These include:
mix people from different departments but less com-
mon to have people from widely different levels on ●● the quality of the employment experience
the same course. In practice, managers and senior offered by the employer;
professional staff are usually dealt with individually. ●● the employee value proposition – what the
Ideally, induction courses should take place soon employer offers in the shape of terms and
after starting. If there are sufficient new employees conditions of employment;
available, this could be a half day in the first week.
But the course may have to be delayed until a suffi- ●● the culture of the organization – an analysis
cient number of new starters are available. of Glassdoor data cited by Cheese (2022)
The content of the induction course could in- showed that company culture was as much
clude some or all of the following subjects: as ten times more likely to predict attrition
rates than pay;
●● information about the organization – its ●● the effectiveness of recruitment, selection and
products, services, structure, mission and deployment (fitting people into jobs that suit
values; them;
●● learning arrangements and opportunities, ●● leadership – ‘employees join companies and
●● performance management processes; leave managers’;
●● health and safety; ●● social factors (the extent to which individuals
●● policies on such matters as diversity and get on with their co-workers);
inclusion, equal opportunity, bullying, sexual ●● learning and career opportunities;
and racial harassment, use of the internet; ●● recognizing and rewarding good
●● pension arrangements; performance.
●● trade unions and employee involvement. The propensity to stay or leave is also affected by
the stage of employees’ career and their age. For
early-career employees (30 years old and under)
Managing employee career advancement is significant. For mid-career
retention employees (age 31–50) the ability to manage their
careers and satisfaction from their work are more
important. Late-career employees (aged over 50)
The loss of key employees can have a dispropor-
will be more interested in security. It is also the case
tionate impact on the business. The people that or-
that a younger workforce will change jobs and
ganizations wish to retain are often the ones most
employers more often than an older workforce, and
likely to leave. It has been said that every worker is
workforces with a lot of part-timers are less stable
five minutes away from handing in his or her notice,
than those with predominately full-time staff.
A report by the CIPD (2022) revealed that more ●● how serious the effects of a loss would be on
than 6.5 million people in the UK expect to quit the business;
their job in the next 12 months. While the majority ●● the ease with which a replacement could be
of people (37 per cent) cited pay and benefits as made and the replacement costs.
their main reason for changing jobs, 27 per cent
wanted to increase job satisfaction and 24 per cent Each of the estimates could be expressed on a scale,
demanded a better work–life balance. The report say, very high, high, medium, low, very low. An
suggests that to reduce this problem it was necessary overview of the ratings under each heading could
to improve job quality in seven key areas: pay and then indicate where action may need to be taken to
benefits, employment contracts, work–life balance, retain key people or groups of people.
job design and the nature of work, relationships at Information on the reasons for leaving, and
work, employee voice and health and wellbeing. therefore where action needs to be taken, can be
A study by Holbeche (1998) of high-flyers found provided by exit interviews, but they are fallible.
that the factors that aided their retention and moti- More reliance can be placed on the results of em-
vation included providing challenge and achieve- ployee surveys to identify areas of dissatisfaction.
ment opportunities (eg assignments), mentors, real- The retention plan should propose actions that
istic self-assessment and feedback. would focus on each of the areas in which there is
dissatisfaction or lack of commitment.
Basis of the retention strategy

Areas for action
A retention strategy takes into account the reten-
tion issues the organization is facing and sets out Depending on the outcome of the analysis of risk
ways in which these issues can be dealt with. This and the reasons for leaving, the possible actions that
means accepting the following point made by Peter can be taken are:
Cappelli (2000: 104): ●● Carry out whatever steps are necessary to
To adopt the new strategy you have to accept demonstrate that the organization values its
the new reality: the market, not your company, employees.
will ultimately determine the movement of your ●● Select, brief and train managers and team
employees. Yes, you can make your organization leaders so that they appreciate the positive
as pleasant and rewarding a place in which to contribution they can make to improving
work in as possible – you can fix problems that retention by the ways in which they lead
might push people towards the exits. But you their teams. Bear in mind that people often
can’t counter the pull of the market; you can’t leave their managers rather than their
shield your people from attractive opportunities
organization.
and aggressive recruiters. The old goal of HR – to
minimize overall employee turnover – needs to be ●● Ensure that selection and promotion
replaced by a new goal: to influence who leaves procedures match the capacities of
and when. individuals to the demands of the work they
have to do. Rapid turnover can result simply
The strategy should be based on an analysis of the from poor selection or promotion decisions.
risks of leaving.
●● Design jobs to maximize skill variety, task
significance, autonomy, control over work
Risk of leaving analysis and feedback.
●● Provide more opportunities for employees to
As proposed by Bevan et al (1997), risk analysis can increase their skills and advance their
be used to quantify the seriousness of losing key careers.
people. Risk analysis can be carried out by initially
identifying potential risk areas – the key people ●● Reduce the losses of people who cannot
who may leave – and, for each of them, as individu- adjust to their new job – the ‘induction
als or groups, estimating: crisis’ – by giving them proper training and
support when they join the organization.
●● the likelihood of a loss occurring;
●● Deal with uncompetitive, inequitable or ●● Pay close attention to communications with

unfair pay systems. But there is a limit to the employees to explain what is happening and
extent to which people can be bribed to stay. underline improvements to their conditions
●● Encourage the development of social ties of employment. Use all forms of media
within the company. In the words of Cappelli including social media.
(2000: 108), ‘loyalty to companies may be The four most popular methods to improve reten-
disappearing but loyalty to colleagues is not’. tion established by the CIPD 2021 survey were:
●● Improve wellbeing and work–life balance by (1) improve support for employee wellbeing (57
developing policies, including flexible working, per cent of respondents), (2) improve work–life
that recognize the needs of employees. balance (49 per cent), (3) introduce enhanced
●● Eliminate as far as possible unpleasant flexible working options (48 per cent) and (4) in-
working conditions or the imposition of too crease learning and development opportunities
much stress on employees. (38 per cent).
●● Improve arrangements for giving employees
a voice on matters that concern them.
C A S E S T U DY
Staff retention strategy at UCL Hospital Trust
The staff retention strategy at UCL Hospital Trust included 4 Career progression initiatives to rotate and promote
the following steps: talent and redesign roles.
1 Market research with own staff that revealed a lack of 5 The development of a learning passport for staff, providing
promotion opportunities for nursing staff. bespoke learning packages and senior mentoring support
to secure promotion within 12 to 20 months.
2 In-depth analysis of the NHS resourcing market and
the introduction of programmes for attending job fairs 6 The introduction of the ‘Good deed feed’, enabling staff
throughout the UK, with clinical teams giving to publicly thank and recognize one another on the
interviews and providing assessments on the day. Trust’s intranet.
3 The introduction of centres providing practical and

theoretical assessments followed by value-based
interviews.
and costly. The CIPD (2017) survey of resourcing

Employee turnover and talent planning found that the average rate of
turnover (the number leaving as a percentage of the
A retention strategy should be informed by information number employed) in the UK was 16.5 per cent.
on employee turnover showing trends in the incidence The cost of employee turnover can be considerable.
of losses and the reasons why employees are leaving. A survey by the CIPD in 2008 established that the aver-
Employee turnover (sometimes known as ‘labour age cost per employee was £5,800, rising to £20,000
turnover’, ‘wastage’ or ‘attrition’) is the rate at which for senior managers or directors. Cost estimates are
people leave an organization. It can be disruptive useful as means of backing up a business case for taking
action to reduce turnover. The following factors should This method is popular because it is easy to calculate
be considered when calculating costs: and to understand. It is a simple matter to work out
that: if last year 30 out of an average force of 150
●● direct cost of recruiting replacements
employees left (20 per cent turnover) and this trend
(advertising, interviewing, testing, etc);
continues, then the company will have to recruit 108
●● direct cost of introducing replacements employees during the following year to increase and
(induction cost); to hold the workforce at 200 in that year (50 extra
●● direct cost of training replacements in employees, plus 40 to replace the 20 per cent wast-
necessary skills; age of the average 200 employees employed, plus 18
●● leaving costs – payroll and HR to replace wastage of the 90 recruits).
administration; The formula is simple, but it can be misleading.
The problem is that the percentage may be inflated
●● opportunity cost of time spent by HR and
by the high turnover of a relatively small propor-
line managers in recruitment, induction and
tion of the workforce, especially in times of heavy
training;
recruitment. Thus, a company employing 1,000
●● loss of output from those leaving before they people might have had an annual wastage rate of
are replaced; 20 per cent, meaning that 200 jobs had become
●● loss of output because of delays in obtaining vacant during the year. But this could have been
replacements; spread throughout the company, covering all oc-
●● loss of output while new starters are on their cupations and long- as well as short-service em-
learning curves acquiring the necessary ployees. Alternatively, it could have been restricted
knowledge and skills. to a small sector of the workforce – only 20 jobs
might have been affected although each of these
Research by Phillips (1990) found that the ‘visible’ (ie had to be filled 10 times during the year. These are
direct) costs of recruitment accounted for only 10 to different situations and unless they are under-
15 per cent of total costs. By far the highest costs were stood, inaccurate forecasts would be made of fu-
associated with the inefficiencies arising while the ture requirements and inappropriate actions would
post was vacant (33 per cent) and the inefficiency of be taken to deal with the problem. The turnover
new workers (32 per cent). On average, 12.5 months index is also suspect if the average number of
were required for executives to be comfortable in a employees upon which the percentage is based is
new position and 13.5 months were required for a unrepresentative of recent trends because of con-
new employee to achieve maximum efficiency. siderable increases or decreases in the numbers
It is necessary to measure employee turnover and employed during the period.
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- Stability index
duce unnecessary turnover and its associated costs.
There are a number of different methods. The stability index is considered by some to be an
improvement on the turnover index because it is
not so misleading and can provide better guidance
Employee turnover index on the need for action as long as trends have been
analysed. The formula is:
The employee turnover index (sometimes referred to as

the employee or labour wastage index) shown below is Number with 1 year’s service or more
the traditional formula for measuring turnover: ´100
Number employed 1 year ago
Number of leavers in a specified

period (usually 1 year) Survival rate
´ 10
00
Average number of employees The survival rate is the proportion of employees
during the same period who are engaged within a certain period who re-
F I G U R E 30.1 A survival curve
Leavers as a
percentage
of total
entrants
Time
main with the organization after so many months The survival rate is useful as a means of tracking a
or years of service. Thus, an analysis of a cohort of ‘cohort’ of recruits (eg graduates) to assess the ef-
20 trainees who have completed their training fectiveness of recruitment and retention policies. But
might show that after two years, 10 of the original it cannot be used as a means of measuring the turno-
trainees were still with the company, a survival rate ver rates of whole populations in order to allow for
of 50 per cent. The distribution of losses for each future wastage when making supply forecasts.
entry group, or cohort, can be plotted in the form of
a survival curve, as shown in Figure 30.1.
The basic shape of this curve has been found to be Half-life index
similar in many situations, although the peak of the
A simpler concept derived from survival rate analy-
curve may occur further along the time scale and/or
sis is that of the half-life index, which is defined as
may be lower when it relates to more highly skilled or
the time taken for a group or cohort of starters to
trained entry cohorts. An example of a survival rate
reduce to half its original size through the wastage
analysis is shown in Table 30.1. This indicates that
process (five years in the above example).
half the number of recruits in any one year may be
Comparisons can then be made for successive entry
lost over the next five years, unless something can be
years or between different groups of employees to
done about the factors causing wastage.
TA B L E 3 0 . 1 A survival rate analysis

Number surviving to end of year after engagement
Entry cohort Original number Year 1 Year 2 Year 3 Year 4 Year 5
A 40 35 28 26 22 20
B 32 25 24 19 18 16
C 48 39 33 30 27 24
D 38 32 27 24 22 19
E 42 36 30 26 23 21
Total 200 167 142 125 112 100
Average survival rate 100% 83% 71% 62% 56% 50%
288
TA B L E 30.2 Leavers’ length of service analysis
Leavers by length of service
Index of
5 or Total Average employee
Less than 3–6 6 months– 1–2 3–5 more number number turnover
Occupation 3 months months 1 year years years years leaving employed percentage
A 5 4 3 3 2 3 20 220 9
B 15 12 10 6 3 4 50 250 20
C 8 6 5 4 3 4 30 100 30
Totals 28 22 18 13 8 11 100 570 18

show where action may have to be taken to counter euphemism for getting rid of people, employment
undesirable wastage trends. costs being the ones on which organizations in both
the private and public sector focus as they are usu-
ally the largest element in their cost structures.
Leavers’ length of service analysis Costs have been reduced by ‘delayering’ (eliminat-
ing what are deemed to be unnecessary layers of
The information from measures of stability can be
management) and outsourcing. Flexibility pro-
enhanced if an analysis is also made of the average
grammes (see Chapter 32) have led to headcount
length of service of people who leave, as in Table
(number employed) reductions. The pursuit of what
30.2. This analysis is still fairly crude, because it
is sometimes called ‘rightsizing’ (an egregious eu-
deals only with those who leave. A more refined
phemism) has resulted in losses. The introduction of
analysis would compare for each designated length
new technology, especially computerization, has
of service the numbers leaving with the numbers
contributed to the reduction of semi-skilled or un-
employed. If, in the example shown, the total num-
skilled people in offices or on the shop floor. The
ber employed with less than three months’ service
increased use of AI is another factor that may cause
was 80 and the total with more than five years’ ser-
redundancy.
vice was 80, the proportion of leavers in each cate-
To handle redundancy organizations should:
gory would be, respectively, 35 per cent and
14 per cent – more revealing figures. ●● inform their employees that redundancies are
possible, let them know why this is thought
necessary and discuss what can be done to
Choice of measurement avoid any redundancies or at least alleviate
the impact;
The conventional employee (labour) turnover index
as the easiest and most familiar of all methods of ●● plan ahead to achieve headcount reductions
measurement. It provides the simplest basis for as- without involuntary redundancy; this could
sessing future levels of supply by allowing for wast- include adopting other methods of reducing
age. But it can usefully be supplemented with some numbers or avoiding redundancy such as
measure of stability (eg survival rate or the length of freezing recruitment in the occupations likely
service of leavers) to identify recruitment or reten- to be affected, calling in outsourced work,
tion problems. reducing or eliminating overtime, reducing
the number of part-timers and temporary
staff, work-sharing (two people splitting one
Redundancy job between them) or, more reluctantly,
reduction in working hours or temporary
Redundancy takes place when the organization as a layoffs;
whole is reducing the number of employees, when ●● encourage voluntary redundancy if other
structural changes are being made following merg- methods fail;
ers and acquisitions, and when individual jobs are ●● introduce a redundancy procedure or ensure
no longer needed. If, unfortunately, redundancy is that an existing procedure is satisfactory;
contemplated there is a legal requirement to consult
●● develop fair and considerate methods of
with trade unions (see Chapter 60). But there is an
handling redundancy;
overriding moral requirement to consult and hope-
fully agree a joint plan for minimizing the problem. ●● help redundant employees through
Redundancy can result from the impact of exter- outplacement policies and practices.
nal events such as the Covd-19 pandemic or, in the
UK, Brexit. It is frequently caused by adverse trad-
ing conditions, especially during a recession, exacer- Fire and rehire
bated by global competition. Government austerity
programmes lead to redundancies in the public sec- Employers sometimes want to change the terms and
tor. The drive for competitive advantage has forced conditions of their workers. This can happen when
employers ‘to take costs out of the business’, another a company is losing money and wants to cut costs.
Where there are trade unions or workers’ represent- Managers and team leaders should be made aware
atives, employers should normally negotiate with of the procedure and told what authority they have to
them to try to reach an agreement. In individual take action. It is advisable to have all written warnings
cases they should also attempt to get agreement. and any final action approved by a higher authority. In
If agreement is not obtained or sought, employ- cases of gross misconduct, managers and team leaders
ers sometimes dismiss the affected workers, and should be given the right to suspend if higher author-
offer to hire them back under new terms and condi- ity is not available, but not to dismiss. The importance
tions, ie ‘fire and rehire’. This is controversial of obtaining and recording the facts should be empha-
because it presents workers with a stark choice – sized. Managers should always have a colleague with
accept worse terms and conditions or lose your job. them when issuing a final warning and should make a
The legal considerations affecting fire and rehire are note to file of what was said on the spot.
examined in Chapter 60.
Absence management
Dismissal
Absence or attendance management is the develop-
Dismissal takes place when an employer terminates ment and application of policies and procedures
the employment of someone with or without notice. designed to reduce levels of absenteeism. A CIPD
A contract can be terminated as a result of demo- (2018) survey revealed that:
tion or transfer, as well as dismissal. People can be
●● the average length of employee absence was
‘constructively dismissed’ if they resign because of
6.9 days per employee per year;
their employer’s unreasonable behaviour.
Dismissals should be handled in accordance with ●● larger organizations have higher average
the following principles of natural justice: levels of absence than smaller organizations;
●● on average, two-thirds of working time lost
●● Individuals should know the standards of
to absence is accounted for by short-term
performance they are expected to meet and
absences of up to seven days; one-fifth is
the rules to which they are expected to
attributed to long-term absences;
conform.
●● the average cost of absence was £554 per
●● They should be given a clear indication of
employee per year;
where they are failing or what rules they
have broken. ●● musculoskeletal injuries and back pain are
the more common causes of absence for
●● Except in cases of gross misconduct, they
manual workers, while stress is more
should be given an opportunity to improve
common for non-manual workers.
before disciplinary action is taken.
Thirty per cent of respondents to the survey re-
These principles should form the basis of a discipli-
ported that non-genuine absence (‘sickies’) is one of
nary procedure, which is staged as follows:
their top causes of short-term absence for manual
●● An informal discussion on the problem. workers. Twenty-three per cent stated that this was
●● A first written warning. the top cause for non-manual workers. Some re-
spondents suggested that flexible working arrange-
●● A final written warning.
ments may help reduce non-genuine absence.
●● Dismissal or action short of dismissal such as To do something about this situation means under-
loss of pay or demotion. standing the causes of absence, adopting comprehensive
Employees should be reminded of their right to be absence management (or, more positively, attendance
accompanied by a colleague or employee represent- management) policies, recording and measuring a bsence
ative in disciplinary hearings. (An example of a full and implementing procedures for the management of
disciplinary procedure incorporating the stages short- and long-term absence. It is also necessary to de-
listed above is given in Chapter 59.) velop the skills of managers in handling absenteeism
problems as described in Chapter 78.
Causes of absence Attendance factors

The causes of absence have been analysed by ●● Reward systems – as pay increases
Huczynski and Fitzpatrick (1989) under three head- attendance improves.
ings: job situation factors, personal factors and at-
●● Sick-pay schemes may increase absenteeism.
tendance factors.
●● Work group norms can exert pressure for or
against attendance.
Job situation factors
Job scope – a high degree of task
●●
repetitiveness is associated with absenteeism,
Recording and measuring absence
although job dissatisfaction itself is a As a basis for action, absence levels need to be re-
contributory rather than a primary cause of corded so that they can be measured and monitored
absence. against targets for minimizing absenteeism.
●● Stress – it is estimated that 40 million An HR information system (HRIS) can provide
working days are lost each year in the UK the best means of recording absenteeism. If a self-
through stress. This can be attributed to service approach is in place, managers and team
workload, poor working conditions, shift leaders have direct access to absence records show-
work, role ambiguity or conflict, ing the incidence of absenteeism (number and
relationships and organizational climate. lengths of absence). This data can be consolidated
for use by HR in compiling absence statistics and
●● Frequent job transfers increase absenteeism.
monitoring against targets. The most common
●● Management style – the quality of measurement is the percentage of time available
management, especially that of immediate that has been lost due to absence.
supervisors, affects the level of absenteeism. The ‘Bradford Factor’ provides a useful measure.
●● Physical working conditions. This index identifies persistent short-term absence
●● Work group size – the larger the organization by measuring the number and duration of spells of
the higher the absence rate. absence. Its exact origin is a mystery, although it
may have some connection with Bradford
University’s School of Management. A Bradford
Personal factors points score is calculated by using the formula S ×
S × D where S is the number of occasions of absence
●● Employee values – for some workers, doing
in the last 52 weeks and D is the total number of
less work for the same reward improves the
days’ absence in the last 52 weeks. Thus, for employ-
deal made with the employer (the effort-
ees with a total of 14 days’ absence in a 52-week
reward bargain). The following positive
period, the Bradford score can vary enormously de-
outcomes of absence have been shown by
pending on the number of occasions involved. For
research to be particularly important to
example:
employees: break from routine, leisure time,
dealing with personal business and a break ●● one absence of 14 days is 14 points:
from co-workers. 1 × 1 × 14
●● Age – younger employees are more ●● seven absences of two days each is 686
frequently absent than older ones. points: 7 × 7 × 14
●● Personality – some people are absence-prone ●● 14 absences of one day each is 2,744 points:
(studies have noted that between 5 and 10 14 × 14 × 14
per cent of workers account for about half of
The Bradford index can be used as a trigger to take
the total absence, while a few are never
action. It is typically set at 250 points so that action
absent at all).
would be initiated if, for example, there had been
10 days absence over five spells.
Controlling short-term absence controlling short-term absence used by respondents

were:
Short-term absence can be controlled by the following:
1 Return-to-work interviews – 75 per cent
●● return-to-work interviews conducted by line 2 Change work patterns – 69 per cent
managers, which can identify problems at an
early stage and provide an opportunity for a 3 Case management approach – 65 per cent
discussion on ways of reducing absence; 4 Occupational health involvement – 62 per
●● training line managers in methods of cent
controlling absence, including return-to- 5 Disciplinary or capability procedure –
work interviews; 60 per cent
●● use of a trigger period to review attendance
and if necessary issue a warning – the
Bradford Factor can serve as a trigger
Managing long-term absence
mechanism; The best way to manage long-term absence is to
●● invoking disciplinary procedures for keep in contact with absent employees by letter,
unacceptable absence levels; email, telephone or visits to discuss the situation
and, where possible, plan the return to work. This
●● extending the scope for flexible working.
plan may include modified working hours or a
The CIPD’s 2018 survey of Health and Wellbeing at modified role for a period.
Work found that the five most frequent methods of
C A S E S T U DY
Absence management at Westminster City Council
Monitoring with through the ‘enhanced sickness management

procedure’. If sickness absence exceeds 20 days, the
Sickness absence is recorded by line managers on the
long-term sickness procedure is applied.
intranet system.
The enhanced sickness management procedure

Return-to-work interviews
●● Line managers complete a referral form that is
A return-to-work interview is held between the manager
forwarded to Occupational Health staff who decide to
and the employee after any length of absence, even one
conduct a face-to-face consultation or make a desktop
day, although this may only take a couple of minutes.
assessment – and in either case provide any advice
Employees are required to complete a self-certification/
necessary to the manager or the individual and send a
return-to-work form. Employees who have been absent for
report to the manager and HR.
eight days or more are informed that they will be referred
to Occupational Health. ●● Within 10 days of receiving the report the manager
meets the employee to review the sickness record,
Absence trigger points consider any further explanations for the absence,
discuss the report from Occupational Health and agree
An employee who has had more than seven days’ action to improve attendance and minimize sickness.
sickness absence in any rolling 365-day period is dealt
●● As necessary, especially in cases of disability, illness, the impact of the absence on the work and how
Occupational Health will discuss with the manager and any impact will be managed.
the employee any reasonable adaptations to the work
●● Following this assessment a face-to-face meeting is held
environment that may be helpful.
with the employee to ensure that other relevant factors
and personal circumstances are taken into account.
Long-term sickness absence management
●● A sickness absence hearing may be called as a result
Every four weeks managers review cases of long-term of this meeting and the case conference.
absence with the Occupational Health service and
also contact the employee.
Employee assistance programme
●● If an employee has been off work the managers and
An employee assistance programme (EAP) is available
Occupational Health hold a case conference to assess
through an external provider. Employees can raise
the situation. The employee is required to meet
problems with helpline staff, and face-to-face counselling
Occupational Health if this is possible.
can be made available
●● The manager makes an assessment following the case
conference covering the nature and likely length of the
mitigate the impact of presenteeism should take the

Presenteeism form of three steps:
‘Presenteeism’ takes place when someone who is ill 1 Make managers and employees aware of the
shows up for work. As noted by Garrow (2016: 2), problem – the drawbacks of coming to work
‘Research shows that people are significantly less when really ill.
productive when unwell. They can also be a hazard 2 Get to know the health issues facing employees.
to others through passing on infection or making
3 Convince employees that they should make
mistakes and potentially aggravating their condi-
themselves aware of the problem by not
tion, leading to a longer absence.’
allowing any serious illness to be
Hemp’s (2004) article in the Harvard Business
undiagnosed and educate them on the risks
Review suggested that workplace interventions to
involved and how to manage an illness.
Key learning points
Induction defined of entrances, exits, lavatories, restrooms and the

canteen). Detailed induction in the workplace is
Induction is the process of receiving and welcoming probably best carried out by the immediate team
employees when they first join a company and giving leader.
them the basic information they need to settle down
quickly and happily and start work.
On-the-job induction training
Introduction to the workplace Most new starters other than those on formal training
schemes will learn on the job, although this may be
New starters will be concerned about who they are supplemented with special off-the-job courses to
going to work for, who they are going to work with, develop particular skills or knowledge. But on-the-job
what work they are going to do on their first day and learning can be haphazard, inefficient and wasteful. A
the geographical layout of their place of work (location planned, systematic approach is desirable.
Formal induction courses ●● social factors (the extent to which individuals get
on with their co-workers);
Formal induction courses assemble new starters
in groups so that members can be given ●● learning and career opportunities;
consistent and comprehensive information at the ●● performance recognition and rewards.
same time which might not be forthcoming if
reliance is placed on the team leader.
Risk of leaving analysis
Measuring employee turnover Risk analysis can be carried out by initially identifying
It is necessary to measure employee turnover and potential risk areas – the key people who may leave and,
calculate its costs in order to forecast future for each of them, as individuals or groups, estimate:
losses for planning purposes and to identify the ●● the likelihood of this occurring;
reasons that people leave the organization. Plans
can then be made to attack the problems causing ●● how serious the effects of a loss would be on the
unnecessary turnover and to reduce costs. The business;
methods available are employee turnover index, ●● the ease with which a replacement could be made
half-life index, length of service analysis, stability and the replacement costs.
index and survival rate.
Reasons for leaving should be analysed, for example:
Estimating the cost of employee ●● more pay;
turnover: ●● better prospects (career move);
●● direct cost of recruiting replacements; ●● more security;
●● direct cost of introducing replacements; ●● more opportunity to develop skills;
●● direct cost of training replacements; ●● unable to cope with job;
●● leaving costs; ●● better working conditions;
●● opportunity cost of time spent by HR and line ●● poor relationships with manager/team leader;
managers in recruitment, etc;
●● poor relationships with colleagues;
●● loss of output.
●● bullying or harassment;
Retention planning ●● personal – pregnancy, illness, moving away from

area, etc.
Retention strategies should be based on an
understanding of the factors that affect whether
or not employees leave or stay. These include:
Areas for action
Depending on the outcome of the risk and reasons for
●● company image (the employer brand);
leaving analyses the possible actions that can be taken are:
●● the employee value proposition – what the
1 Take whatever steps are necessary to demonstrate
employer offers in the shape of terms and
that the organization values its employees as long
conditions of employment;
as this is expressed in deeds and not just words.
●● the effectiveness of recruitment, selection and
2 Ensure that selection and promotion procedures
deployment (fitting people into jobs that suit
match the capacities of individuals to the demands
them;
of the work they have to do. Rapid turnover can
●● leadership – ‘employees join companies and result simply from poor selection or promotion
leave managers’; decisions.
3 Reduce the losses of people who cannot adjust to and acquisitions, and when individual jobs are no
their new job – the ‘induction crisis’ – by giving longer needed.
them proper training and support when they join
the organization. What organizations should do about
4 Design jobs to maximize skill variety, task significance, redundancy
autonomy, control over work and feedback, and ●● Plan ahead to achieve headcount reductions
ensure that they provide opportunities for learning and
without involuntary redundancy;
growth. Some roles can be ‘customized’ to meet the
needs of particular individuals. ●● adopt other methods of reducing numbers or
avoiding redundancy;
5 Deal with uncompetitive, inequitable or unfair pay
systems. But as Cappelli (2000) pointed out, there is ●● encourage voluntary redundancy if other methods fail;
a limit to the extent to which people can be bribed ●● introduce a redundancy procedure or ensure that
to stay.
an existing procedure is satisfactory;
6 Encourage the development of social ties within ●● develop fair and considerate methods of handling
the company. In the words of Cappelli (2000: 108),
redundancy;
‘loyalty to companies may be disappearing but
loyalty to colleagues is not’. ●● help redundant employees through outplacement
7 Take steps to improve work–life balance by policies and practices.

developing policies, including flexible working, that
recognize the needs of employees outside work. Dismissal
8 Eliminate as far as possible unpleasant working Dismissal takes place when an employer terminates
conditions or the imposition of too much stress on the employment of someone with or without notice. A
employees. contract can be terminated as a result of demotion or
transfer, as well as dismissal. People can be
9 Select, brief and train managers and team leaders
‘constructively dismissed’ if they resign because of
so that they appreciate the positive contribution
their employer’s unreasonable behaviour.
they can make to improving retention by the ways
Dismissals should be handled in accordance with
in which they lead their teams. Bear in mind that
the following principles of natural justice:
people often leave their managers rather than their
organization. ●● Individuals should know the standards of
performance they are expected to meet and the
10 Improve arrangements for giving employees a
rules to which they are expected to conform.
voice on matters that concern them.
●● They should be given a clear indication of where
11 Pay close attention to communications with
they are failing or what rules they have broken.
employees to explain what is happening and
underline improvements to their conditions of ●● Except in cases of gross misconduct, they should
employment. Use all forms of media including be given an opportunity to improve before
social media. disciplinary action is taken.
12 Ensure that policies for controlling bullying and These principles should form the basis of a disciplinary
harassment are in place and are applied. procedure.
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.
Causes of absence Controlling short-term absence

The causes of absence have been analysed by Huczynski Short-term absence can be controlled by the
and Fitzpatrick (1989) under three headings: job situation following:
factors, personal factors and attendance factors.
●● return-to-work interviews conducted by line
managers, which can identify problems at an early
Absence policies stage and provide an opportunity for a discussion
Absence policies should cover: on ways of reducing absence;
●● methods of measuring absence; ●● use of trigger mechanisms such as the Bradford

Factor to review attendance;
●● setting targets for the level of absence;
●● invoking disciplinary procedures for unacceptable
●● deciding on the level of short-term absence that absence levels;
would trigger action, possibly using the Bradford
Factor; ●● training line managers in methods of controlling
absence, including return-to-work interviews;
●● the circumstances in which disciplinary action
might be taken; ●● extending the scope for flexible working.
●● what employees must do if they are unable to

attend work; Managing long-term absence
●● sick-pay arrangements; The best way to manage long-term absence is to keep
in contact with employees by letter, telephone or visits
●● provisions for the reduction and control of absence
to discuss the situation and, where possible, plan the
such as return-to-work interviews;
return to work. This plan may include modified working
●● other steps that can be taken to reduce absence, hours or a modified role for a period.
such as flexible working patterns.
Presenteeism
Recording and measuring absence Presentism is showing up for work when one is ill and
As a basis for action, absence levels need to be therefore becoming a hazard to others. It should be
recorded so that they can be measured and monitored dealt with by creating awareness, understanding the
against targets for maintaining absence at a certain issues and educating employees on the risks involved.
level, or reducing absenteeism.
References
Bevan, S, Barber, I and Robinson, D (1997) Keeping Chartered Institute of Personnel and Development
the Best: A practical guide to retaining key (2008) Survey of Recruitment, Retention and
employees, Brighton, Institute for Employment Turnover, London, CIPD
Studies Chartered Institute of Personnel and Development
Cappelli, P (2000) A market-driven approach to (2017) Resourcing and Talent Planning Survey,
retaining talent, Harvard Business Review, London, CIPD
January–February, pp 103–11 Chartered Institute of Personnel and Development
(2018) Health and Wellbeing at Work Survey,
London, CIPD
Chartered Institute of Personnel and Development Hemp, P (2004) Presenteeism: at work – but out of it,
(2021) Resourcing and Talent Planning Survey, Harvard Business Review, October, pp 49–58
London, CIPD Holbeche, L (1998) Motivating People in Lean
Chartered Institute of Personnel and Development Organizations, Oxford, Butterworth-Heinemann
(2022) CIPD Good Work Index, 2022, London, Huczynski, A A and Fitzpatrick, M J (1989)
CIPD Managing Employee Absence for a Competitive
Cheese, P (2022:50) Light at the end of the tunnel, Edge, London, Pitman
People Management, February, p 5 Phillips, J D (1990) The price tag of turnover,
Garrow, V (2016) Presenteeism: A review of current Personnel Journal, December, pp 58–61
thinking, Brighton, Institute for Employment
Studies
298
31
Managing diversity
and inclusion
Introduction The meaning and
Diversity refers to the differences that exist between significance of managing
people. Inclusion was defined by Lynn et al (2011:
262) as ‘the degree to which an employee perceives
diversity and inclusion
that he or she is an esteemed member of the work
Managing diversity in the workplace means bring-
group through experiencing treatment that satisfies
ing together people of different ethnic backgrounds,
his or her needs for belongingness and uniqueness.’
religions, gender, LGBT and age groups into cohe-
Dealing with diversity involves creating an environ-
sive and productive organizational units. It involves
ment where different kinds of people can thrive and
formulating and implementing policies and pro-
succeed. Dealing with inclusion means welcoming
cesses that maximize the potential advantages of
and encouraging diversity and ensuring that people
diversity while minimizing the potential disadvan-
feel that they are truly part of the organization or
tages. It means developing a culture which spells
their group and are accepted as such.
out that ‘this is the way we do things around here
The management of diversity and inclusion is
about diversity’. It is a concept that recognizes the
based on the proposition that everyone should be
benefits to be gained from differences. It is not the
valued as an individual and treated fairly irrespec-
same as equal opportunity, which aims to legislate
tive of their race, gender, level of disability, religion,
against discrimination, assumes that people should
sexual orientation or age. A number of personal
be assimilated into the organization and, often,
characteristics are covered by discrimination law to
relies on affirmative action.
give people protection to ensure that this happens.
Managing inclusion is about forming and main-
These ‘protected characteristics’ are race, disability,
taining an environment in which individuals of all
gender reassignment, sex, marriage and civil part-
backgrounds – not just members of historically
nership, pregnancy and maternity, religion and
favoured groups – are fairly treated and valued for
belief, sexual orientation and age. But it is not

who they are. Inclusive cultures are characterized
enough to rely on the law. More needs to be done to
by a collective commitment to integrating diverse
create and maintain a culture which recognizes that
identities as a source of insight and skill. It is the
although people are different they all need to be
process of ensuring that people feel they belong and
treated in ways that are fair and tailored to their
are connected.
individual needs and which ensure they feel that
The management of diversity and the manage-
they belong and that they are important to the
ment of inclusion are closely connected. In fact, they
organization.
overlap and much of what can be done to improve
This chapter examines the meaning and signifi-
one will affect the other. But diversity issues con-
cance of managing diversity and inclusion, the
cerning distinct groups of people as well as more
causes of bias and the ways in which they can be
general inclusion issues need to be considered when
managed.
Chapter 31 | Managing Diversity and Inclusion 299
developing policy and practice and ensuring that ●● define the values of the organization
everyone knows what they need to do through concerning diversity and inclusion;
means such as communications, workshops and ●● set out the diversity and inclusion policies of
training interventions. the organization;
However, Nishii (2013: 1754) warned that
●● implement programmes for communicating
To the extent that diversity management the values and policies;
practices that focus specifically on improving the ●● pay particular attention to potential problem
outcomes of historically disadvantaged groups areas – recruitment, appointments and
cause resentment or backlash on the part of
promotions, learning and career development
individuals who do not directly benefit from these
opportunities and pay and the existence of
practices, they can have the unintended effect of
bias;
exacerbating negative stereotypes and perceived
intergroup competition… To really manage both ●● devise and run training programmes designed
the problems and the potential benefits associated to increase awareness and influence behavior;
with diversity, organizations need to create ●● create diversity networks or employee
environments that are inclusive of all employees. support groups as described later;
●● monitor progress and evaluate training.
The rationale for managing
diversity and inclusion Diversity and inclusion strategy
When developing a diversity and inclusion strategy
There is a powerful social justice argument for pur- it is first necessary to ensure that initiatives will
suing diversity and inclusion policies. Everyone has have the support of senior management. This will
the right to be treated fairly in a workplace which mean preparing a business case but equal emphasis
values the differences between people and which should be placed on the moral imperative. The case
promotes an environment of fairness, dignity and should cover the following areas of diversity and
respect. Everyone should have career development inclusion: gender and transgender, ethnicity, age,
and promotion opportunities based on merit and be disability, sexual orientation and religion.
given equal opportunities to improve their work– The strategy should make it plain that the focus
life balance – for example, through working flexible will be on fairness and inclusion, ensuring that
hours. merit, competence and potential are the basis for all
There is also a business case. The effective man- recruitment, employment, development and reward
agement of diversity and inclusion can help to in- decisions and being alert to the influence of con-
crease levels of engagement, promote cooperation scious and unconscious biases. It should emphasize
and reduce conflict. It can provide for the best can- that responsibility is shared amongst all members of
didates from the widest possible source of appli- the organization. The strategy should also cover the
cants to be selected for jobs. need to define the values of the organization con-
cerning diversity and inclusion and it should stress
the importance of involving employees both in
How to manage diversity agreeing those values and, importantly, discussing
how they should be put into effect as ‘values in use’.
and inclusion A broad indication of the methods that will be
used in a programme for managing diversity and
The overall aim of a diversity and inclusion pro- inclusion such as communications, the creation of
gramme should be to achieve culture change so that diversity networks and training, should be given,
the approach to dealing with diversity and inclusion bearing in mind that managing diversity and inclu-
issues becomes a way of life for all concerned. To do sion is a continuous process of improvement, not a
this it is necessary to: one-off initiative. Additionally, the strategy should
●● develop a diversity and inclusion strategy; set out the employment areas that will be covered.
These are typically recruitment and selection, per- ●● focus attention on individual differences
formance management, rewards, opportunities for rather than group differences.
learning and development, career development and
The aims are to deal with issues concerning diver-
talent management and work–life balance.
sity and to create an inclusive environment, one in
Consideration should be given to what needs to
which it is accepted that inclusion is a way of life. It
be done to deal specifically with diversity and with
is necessary to identify and address critical problem
inclusion. Actions should be planned which will
areas including bias.
support the management of diversity and other ac-
tions proposed which will support the management
of inclusion. There will be some planned actions
which support both diversity and inclusion.
Critical areas
For example, Northern Rail introduced diversity The critical areas where there can be diversity and
ambassadors, an inclusion charter, and e-learning inclusion issues are recruitment, appointments and
on unconscious bias. It reached out to local schools promotions, learning and career development op-
and colleges, and targeted advertising on Asian TV portunities, pay, bullying and harassment and
networks to encourage candidates from previously work–life balance. In each case policies and defini-
untapped audiences. tions of good practice need to be developed to
avoid biased and prejudiced decisions. These poli-
cies and practices should be communicated exten-
Defining the values sively and form the base of training programmes.
All these are affected by the overarching problem
The values could be defined under such headings as:
of bias.
●● equality
●● inclusion
●● respect for the individual
Bias as a factor affecting diversity
●● care for the individual and inclusion
●● developing staff. Unfortunately, bias, whether conscious or uncon-
scious, is a fact of life in society and the organiza-
tions that are part of society. Tsui and O’Reilly
Diversity and inclusion policy (1989) found through their research that the more
dissimilar a supervisor and subordinate were in
A policy on managing diversity and inclusion
terms of race or gender the less effective the supervi-
should be produced to provide guidelines to manag-
sor considered the subordinate to be.
ers on their role in managing them and information
As Mor Barak et al (1998) pointed out, social
to employees in general on the part they are ex-
identity theory explains how we feel about our own
pected to play. It could:
and other social groups and how this might lead to
●● acknowledge cultural and individual bias. Identity has two components: a personal one
differences in the workplace; derived from characteristics such as personality
●● state that the organization values the traits, and a social one derived from group member-
different qualities that people bring to their ship. It involves attachment to groups of people
jobs; with whom individuals identify (oneness). Social
identification leads to activities that fit perceptions
●● emphasize the need to eliminate bias in such of other people that may be stereotypes.
areas as selection, promotion, performance Bias is often unconscious and unconscious bias
assessment, pay and learning opportunities; training programmes can be used at least to make
●● indicate the need to promote inclusion, the people aware that they may be biased and that they
process of ensuring that people from all should try to do something about it, even though it
backgrounds feel they belong and are is unlikely that they will be ‘cured’ overnight.
connected.
Chapter 31 | Managing Diversity and Inclusion 301
Communicating swap ideas for dealing with them. But they can ad-
ditionally help organizations to understand the peo-
It is essential to let everyone know about the diver- ple who work for them and assist the business to
sity and inclusion values and policies of the organi- perform better. For example:
zation and what is being done about them. This is a
continuous process, not a one-off campaign. All ●● At Cisco, the women’s network helps
available media should be used including newslet- business development by hosting events for
ters, the intranet, enterprise social networks, con- prospective and existing customers.
sultative committees, briefing groups, in-house ●● At PwC there are four main networks: for
magazines and notice boards. women, ethnic minorities, disabled people
and GLEE (an inclusive business network for
gays, lesbians and everyone else).
Training ●● At BT a disability network focuses on
The aims of diversity and inclusion training should awareness raising about different disabilities
be to alert people to the importance of dealing with to help managers understand them and get
the issues involved, communicate the values and the best from people living with a disability.
policies of the organization and indicate the sort of ‘Knowledge calls’ are provided which consist
behaviours required. This should be part of the in- of presentations done via conference calls
duction training programmes for new employees. It and desktop technology with expert speakers
should be provided for all existing managers and on particular subjects such as Parkinson’s
those who are about to be promoted and should and migraines. They typically include
emphasize the vital part they have to play in creat- someone who has experienced the condition,
ing an inclusive culture and how they should set a Q&A session and inputs from HR relating
about doing it. Specifically, the training for manag- to the condition or disability. There are
ers should cover how to create an inclusive culture, online forums and sub-groups offering
leadership behaviours, interviewing and assessing support.
people, performance management and dealing with
bullying and harassment. Briefing programmes for
other members of staff should also be held. Evaluation
The methods used should be participative – the It is essential to monitor and evaluate progress. The
minimum amount of lecturing and the maximum key performance indicators that can be used are
amount of participation in discussions, the analysis representation/demographic data by employee cat-
of case studies and role plays illustrating situations egories, employee survey results and data on re-
where bias might creep in and what can be done cruitment, promotions and the provision of learning
about it. opportunities. Actions should be tracked to see if
they have had the intended results so that changes
can be made if necessary.
Diversity networks/employee
support groups
Diversity networks or employee support groups can
be set up for minority staff to share problems and
Key learning points
The meaning and significance of How to manage diversity and inclusion

managing diversity and inclusion To manage diversity and inclusion it is
Managing diversity in the workplace means bringing necessary to:
together people of different ethnic backgrounds, ●● develop a diversity and inclusion strategy;
religions, gender and age groups into cohesive and
productive organizational units. ●● define the values of the organization concerning
Managing inclusion is about forming and diversity and inclusion;
maintaining a culture in which individuals of all ●● set out the diversity and inclusion policies of the
backgrounds – not just members of historically organization;
favoured groups –are fairly treated and valued for who
they are. ●● implement programmes for communicating the
values and policies;
The rationale for managing diversity and ●● pay particular attention to potential problem areas –
inclusion recruitment, appointments and promotions, learning
and career development opportunities and pay;
There is a social justice argument for pursuing
diversity and inclusion policies: everyone has the right ●● devise and run training programmes designed to
to be treated fairly in a workplace which values the increase awareness and influence behavior;
differences between people and which promotes an ●● create diversity networks;
environment of fairness, dignity and respect.
There is also a business case. The effective ●● monitor progress and evaluate training.
management of diversity and inclusion can help to
increase levels of engagement, promote cooperation
and reduce conflict.
References
Lynn M, Shore A E, Randel, B G, Chung, M, Dean, K, Nishii, L H (2013) The benefits of climate for
Holcombe, E and Gangaram, S (2011) Inclusion inclusion for gender-diverse groups, Academy of
and diversity in work groups: a review and model Management Journal, 56 (6), pp 1754–74
for future research, Journal of Management, Tsui, A and O’Reilly C A (1989) Beyond simple
37 (4), pp 1262–89 demographic effects: the importance of simple
Mor Barak, M E, Cherib, D A and Bergman, S (1998) demography in superior-subordinate dyads,
Organizational and personal dimensions on Academy of Management Journal, 32, pp 402–23
diversity climate, Journal of Applied Behaviour
and Science, 34, pp 82–104
303
32
Managing flexibility
Making flexible working available in all but the
Introduction most exceptional of circumstances is essential for
promoting greater gender equality. Research has
Managing flexibility takes place at organizational shown that many of the underlying causes of the
and individual levels. In an organization it means gender pay gap are connected to a lack of quality
the swift and smooth response to significant changes jobs offering flexible work. Due to the unequal
in operational demands by the reconfiguration of division of unpaid care and the lack of flexible
resources and activities. In so doing the aims are to working in jobs, women often end up in lower
maintain the ability to achieve the required results, paid part-time work.
make the best use of employees’ skills and capacities
The incidence of the main forms of flexibility in
and control employment costs. The CIPD (2014)
terms of the percentage of the working population
emphasized the importance of ‘agility’ in the form
as established by the TUC (2022) survey is:
of workforce agility (flexibility in matching work-
force fluctuations to demand) and operational agil- ●● part-time working – 23.5 per cent;
ity (responsiveness and adaptiveness of processes ●● flexitime – 13.5 per cent;
and structures). It was suggested by the CIPD that
three practices support flexibility: ●● annualized hours, term-time working job
shares – 0.4 per cent.
1 Workforce composition – who works?
Flexibility can take a number of forms as described
2 Workforce flexibility – when and where do in the first part of this chapter. The importance from
they work? a people management point of view of developing
3 Skills flexibility – how are the skills and managing flexible working arrangements is
developed and updated? dealt with in the second part. Finally, suggestions
are made on the role of HR in managing flexibility.
For employees, flexible working policies and ar-
rangements can give them a degree of freedom to
choose their working hours and where they work.
Flexible working arrangements can be ‘family Forms of flexibility
friendly’ in the sense that they make life easier for
working parents or carers. The CIPD (2019: 1) ar- The four main forms of flexibility are:
gued that flexible working ‘plays a crucial role in an ●● functional flexibility
organization’s performance through enabling better
●● structural flexibility
work-life balance, improving employee engagement
and retention and producing key outcomes includ- ●● numerical flexibility
ing productivity and delivering more flexible service ●● work flexibility.
to customers.’ The TUC (2022:1) stated that
There is widespread recognition of the role that
flexible working can play in ensuring certain
Functional flexibility
groups, including women, disabled workers Functional flexibility involves redeploying employ-
and older are able to access and stay in work. ees quickly and smoothly between activities and
tasks. It may require multi-skilling – workers who lower pay. These employees can be laid off
possess and can apply a number of skills, for exam- relatively easily since people with similar
ple, both mechanical and electrical engineering, or skills can be hired quickly if necessary.
multi-tasking – workers who carry out a number of ●● The external workforce – people who work
different tasks in a work team. for another employer or are self-employed.
A multi-skilling strategy can mean providing This includes workers in firms to which
people with a variety of experience by moving them work has been sub-contracted or outsourced
between different jobs or tasks (job rotation) and and agency workers.
by secondments. It typically includes setting up flex-
ible work teams, the members of which can be de- As Atkinson (1984: 28) commented:
ployed on all or many of the team’s tasks. Flexible Firms have put a premium on achieving a
employee resourcing or rostering practices can be workforce which can respond quickly, easily and
used to enable people to be rapidly redeployed to cheaply to workforce changes, which may need
meet new demands. This may involve abandoning to contract as smoothly as they expand, in which
the traditional job description that prescribes the worked time precisely matches job requirements,
tasks to be carried out and replacing it with a role in which unit labour costs can be held down.
profile that specifies the range of knowledge and
The flexible firm model is a convenient method of
skills the role holder needs to achieve the role’s ob-
summing up the ways in which organizations can
jectives. Functional flexibility requires arrange-
achieve flexibility by using peripheral workers while
ments for employees to rapidly learn any new skills
retaining a core of essential employees. But it does
required or even be completely retrained to under-
not fully represent the reality of how firms manage
take new jobs.
flexibility. This is more likely to be on an ad hoc
basis, selecting whatever method of dealing with
Structural flexibility employment problems is readily available rather
than consciously and systematically applying the
Structural flexibility takes place when the core of model to their organization. Hunter and MacInnes
permanent employees is supplemented by a periph- (1991) found little evidence of a drive towards the
eral group of part-time employees, employees on flexible firm in the companies they studied. However,
short- or fixed-term contracts, or sub-contracted the model is a help to understanding how the vari-
workers. This is the ‘flexible firm’ model developed ous forms of flexible working can take place.
by Atkinson (1984). It distinguishes between what
is called the core and the peripheral workforce and
is sometimes called the ‘core-peripheral model’. The Numerical flexibility
model consists of:
Numerical flexibility is associated with structural
●● The core – workers who have the security of flexibility and means that the number of employees
permanent (ie not fixed-term) contracts, and can be quickly and easily increased or decreased in
have important skills, which ideally they can line with short-term changes in the level of demand
apply across a wide range of tasks. The firm for labour. It is a process through which firms react
will want to retain these employees even in to changes in the demand for their products/services
hard times. by adjusting the number of people they employ.
●● The peripheral group – workers who are There are several ways of achieving numerical flex-
employed on contracts that have some ibility, for example, the use of overtime, part-time
degree of permanence (part-timers could be work, variable working hours, fixed-time contracts,
included in this category) or they may be on workers on zero-hours contracts, temporary lay-
temporary contracts. Due to their lower offs, temporary or on-call workers (who work for a
levels of skill they will not have the same firm for a specific period of time but are not part of
amount of security as their colleagues in the the regular work force), freelance workers, seasonal
core. Typically, their work will be workers and independent contractors. Boxall and
characterized by little responsibility and Purcell (2016: 22) noted that ‘The most resilient
Chapter 32 | Managing Flexibility 305
firms are those which can evolve a clever balance work (flexible hours). Research cited by the CIPD
between stability and flexibility while maintaining (2019) has shown that flexible workers have a
employee trust and confidence. This is easier said higher level of job s atisfaction and commitment and
than done.’ are more likely to increase discretionary effort com-
pared to those who do not work flexibly. Flexible
working options can reduce absence rates and allow
Work flexibility employees to cope with disability and long-term
health conditions, as well as supporting their state
Work flexibility (flexible working as described in
of mental health and reducing stress. They can also
more detail below) is a pattern of working practice
be attractive for new talent, especially as employee
or working hours that deviates from the standard
expectations change with regard to their jobs, ca-
or normal arrangements. It gives a degree of flexi-
reers and work–life balance, and demographic
bility on how long, where, when and at what times
changes affect employees’ needs to balance their job
employees work. This can increase the agility with
with other responsibilities such as caring. The CIPD
which an organization responds to change but,
(2016) flexible working survey revealed that the top
importantly, it can also make a contribution to

three benefits of flexible working most frequently
improving employee wellbeing by, for example,

mentioned by employees were that it enables better
providing for better work–life balance. Home and
work–life balance, helps reduce the amount of
hybrid working, as covered in Chapter 33, is a form
stress/pressure employees feel under, and has been a
of flexibility.
factor in employees staying with their current
employer.
Flexible working practices include:
The problem of flexible labour
markets ●● Part-time working: a contract to work less
than full-time hours.
The problem of flexible labour markets was spelt ●● Working from home on a regular basis
out by Rubery et al (2016: 235) as follows: (home or hybrid working).
Flexible labour markets are increasingly regarded ●● Term-time working: a worker remains on a
as the answer to a wide spectrum of labour permanent contract but can take paid/unpaid
market and societal challenges from creating leave during school holidays.
jobs to reducing segmentation and welfare
●● Job-sharing: a form of part-time working
dependency, improving public finances and
supporting workforce diversity and innovation. where two (or occasionally more) people
The contention is that, contrary to these claims, share the responsibility for a job between
flexible labour markets generate fundamental them.
contradictions and unsustainable long-term trends. ●● Hot-desking: individual desks are shared
The jobs miracle is exaggerated and based on low between several people who use them at
productivity jobs, outsiders often lose most from different times.
competition, claimants must work flexibly but still ●● Flexitime: this allows employees to choose,
secure a full-time wage, low-wage employment
within certain set limits, when to begin and
is shrinking the fiscal base, jobs are not being
end work.
adjusted to accommodate workers’ changing needs
and capacities and the disposable labour model is ●● Compressed hours: the reallocation of work
undermining long-term productivity. into fewer and longer blocks during the
week. Compressed working weeks (or
fortnights) don’t necessarily involve a
Flexible working reduction in total hours or any extension in
individual choice over which hours are
‘Flexible working’ describes a type of working worked.
arrangement that gives a degree of choice on how ●● Annual hours: the total number of hours to
long, where, when and at what times employees be worked over the year is fixed but there is
variation over the year in the length of the ●● In some zero-hours contracts the individual
working day and week. Employees may or will be obliged to accept work if offered, but
may not have an element of choice over in others they will not.
working patterns. ●● The pay arrangements and benefits provided
●● Mobile working/teleworking: this permits may differ.
employees to work all or part of their
Zero-hours contracts are frequently used by em-
working week at a location remote from the
ployers in situations where the workload is irregu-
employer’s workplace.
lar, where there is not a constant need for workers
●● Career breaks: career breaks, or sabbaticals, or where needs are driven by external factors out-
are extended periods of leave – normally side the employer’s control. They are most common
unpaid – of up to five years or more. in retail, hospitality and delivery. But they can too
●● Outcome-based contracts: there are no fixed easily lead to the exploitation of people employed
hours, only an output target that an on them.
individual is working towards. The employee The CIPD (2021) recommends the following
is accountable for results but not how the approaches to good practice that should be adopted
results are achieved (often used for sales by employers using zero-hours contracts:
representatives).
●● Only use zero-hours contracts where the
●● Zero-hours contracts: an individual has no flexibility inherent in these types of
guarantee of a minimum number of working arrangement suits both the organization and
hours, so they can be called upon as and the individual.
when required and paid just for the hours
●● Consider whether zero-hours working is
they work.
appropriate for their business and whether
A survey by the CIPD (2018) showed that the most there are alternative means of providing
commonly available options for working flexibly flexibility for the organization, for example,
are flexitime (available to 42 per cent of workers) through the use of annualized hours or other
and working from home in normal working hours flexible working options.
(40 per cent). One in three (34 per cent) have the ●● All zero-hours contract workers should
chance to reduce their working hours and one in receive a written copy of their terms and
four (25 per cent) the option to work compressed conditions.
hours. Job-sharing and working only during school
●● Set out in the contract the employment status
term times are less common options, being available
of those engaged on zero-hours contracts
to 12 per cent and 11 per cent respectively.
and conduct regular reviews (at least once a
year) of how these contracts are operating in
practice.
Zero-hours contracts ●● Provide training and guidance for line
A zero-hours contract is an agreement between two managers to ensure they are managing
parties that one may be asked to perform work for zero-hours workers properly.
another but there is no minimum set contracted ●● Ensure that zero-hour workers are eligible
hours. Unlike a traditional contract of employment, for their organization’s training and
this means that a zero-hours contract offers no guar- development activities and receive regular
antee of work. The contract will specify how much feedback on their performance.
pay the individual will get when he or she does work ●● Provide zero-hours workers with reasonable
and will deal with circumstances in which work may compensation if pre-arranged work is
be offered and possibly turned down. cancelled with little or no notice. A
The nature of zero-hours contracts differs from reasonable minimum would be to reimburse
organization to organization. For example: any travel expenses incurred and provide at
●● Individuals on zero-hours contracts may be least an hour’s pay as compensation.
engaged as employees or workers.
Chapter 32 | Managing Flexibility 307
●● Ensure there are comparable rates of pay for ●● analysing the scope for flexible working and
people doing the same job regardless of discussing the issues with management and
differences in their employment status. employee representatives;
●● Ensure that zero-hour contract workers are ●● in the light of these discussions, exploring the
offered comparable pay and employment alternatives and assessing the implications for
conditions with those of other workers. the organization and individual employees;
●● developing proposals and where appropriate
and possible testing their suitability;
The role of HR ●● managing the change processes required
when introducing new arrangements;
HR can help to manage flexibility by:
●● ensuring that steps are taken as required to
●● being aware of the business/organizational provide the training needed to update
issues which indicate that greater operational existing skills or develop new ones;
flexibility is required;
●● if zero-hours contracts are a possibility, giving
●● giving careful consideration to how very careful attention to drawing up
structural flexibility can be achieved, eg by contractual arrangements that minimize any
the use of ‘peripheral’ workers; potential detriments for the workers concerned.
Key learning points
Flexibility flexible daily hours, flextime systems, flexible

weekly hours, compressed working weeks, annual
Organizations today have to be able to adjust quickly hours.
and smoothly to rapidly changing circumstances. The
aim of managing flexibility is to satisfy this requirement
Hot-desking
and in so doing, improve the use of employees’ skills
and capacities, increase productivity and control Hot-desking means that individual desks are shared
employment costs. between several people who use them at different
times.
Forms of operational flexibility
Homeworking
The four forms of operational flexibility are:
Home-based employees can carry out such roles as
●● functional flexibility
consultants, analysts, designers or programmers, or
●● structural flexibility they can undertake administrative work.
●● numerical flexibility
Zero-hours contracts
●● work flexibility.
A zero-hours contract is an agreement between two
parties that one may be asked to perform work for
Flexible hour arrangements another but there is no minimum set contracted
Flexible hour arrangements can be included in a hours.
flexibility plan in one or more of the following ways:
References
Atkinson, J (1984) Manpower strategies for the Chartered Institute of Personnel and Development
flexible organization, Personnel Management, (2019) Flexible Working Practices, London, CIPD
August, pp 28–31 Chartered Institute of Personnel and Development
Boxall, P F and Purcell, J (2016) Strategy and Human (2021) Zero-hours Contracts, London, CIPD
Resource Management, 4th edn, Basingstoke, Hunter, L and MacInnes, J (1991) Employers’ Labour
Palgrave Macmillan Use Strategies, London, Employment Department
Chartered Institute of Personnel and Development Research Paper No. 87
(2014) HR: Getting Smart About Agile Working, Rubery, J, Keizer, A and Grimshaw, D (2016)
London, CIPD Flexibility bites back: the multiple and hidden
Chartered Institute of Personnel and Development costs of flexible employment policies, Human
(2016) Commuting and Flexible Working, Resource Management Journal, 26 (3), pp 235–51
London, CIPD TUC (2022) Making Flexible Working the Default,
Chartered Institute of Personnel and Development London, TUC
(2018) Working Lives, London, CIPD
309
33
Managing home and
hybrid working
from home, although partial homeworking was
Introduction more common. A big increase in the number of peo-
ple working from home was one of the most note-
Homeworking is becoming more common. It can be worthy effects of the pandemic. The Office for
full time but it is more usual to split time between National Statistics (ONS, 2021) recorded that in
working at home and working in an office – hybrid April 2020, 46.6 per cent of those in employment
working. As noted by the CIPD (2021: 4): did some work at home compared with 26.7 per cent
For those organisations that are able to in 2019. After the worst effects of the pandemic
accommodate staff working flexibly between were over, many organizations continued to use
locations, hybrid working can offer benefits to homeworking, especially the hybrid version.
employers and workers alike. With rising interest According to data from the ONS (2022a), most
among workers in blended ways of working, offering people who took up homeworking because of the
hybrid working could be key in attracting new talent. coronavirus (Covid-19) pandemic plan to both
Hybrid work can also benefit workers through work from home and in the workplace (‘hybrid
helping them to achieve greater work-life balance, work’) in the future. Workers were asked by the
reducing the costs of commuting and providing ONS about their future plans in February 2022,
autonomy about how and where they work. after government guidance to work from home
This chapter is concerned with what organizations when possible was lifted in England and Scotland.
need to know and do about managing the work of More than 8 in 10 workers who had to work from
homeworkers, whether full or part time. References home during the coronavirus pandemic said they
to homeworking therefore cover hybrid working as planned to hybrid work. Since then, the proportion
well as those working continually at home. In the of workers hybrid working has risen from 13 per
first section of this chapter the incidence of home cent in early February 2022 to 24 per cent in May
and hybrid working is set out. This is followed by a 2022. The percentage working exclusively from
review of the general considerations affecting home- home has fallen from 22 per cent to 14 per cent in
working. The next three sections cover the specific the same period. More than three-quarters
issues and challenges related to homeworking fac- (78 per cent) of those who responded to the survey
ing employers, line managers and employees. The who worked from home in some capacity said that
final section deals with the general process issues being able to work from home gave them an im-
and requirements of home and hybrid working. proved work–life balance. Half reported it was
quicker to complete work (52 per cent) and that
they had fewer distractions (53 per cent). Almost
Incidence of home and half also reported improved wellbeing (47 per cent).
The ONS (2022b) reported that hybrid and
hybrid working homeworking increased by income bracket. More
than a third (38 per cent) of workers earning
Before Covid-19, homeworking was a minority pur- £40,000 or more hybrid worked between 27 April
suit. Only 5 per cent of UK workers worked mainly and 8 May 2022, meaning they both worked from
home and travelled to work. Workers in this income The CIPD also found that homeworking is most
group were the only ones for whom hybrid working prevalent in high-skilled professional and manage-
was the most common working pattern. They were rial occupations, with the transition to digital tech-
also more likely than other income groups to work nology having a profound effect on the way we
from home exclusively. Lower earners were less work. This has combined with a huge increase in
likely to report hybrid working. household internet access over the last two decades
The ONS (2022a) also reported that overall, the so that many more people are able to work from
proportion of businesses reporting using or intend- home if their jobs allow.
ing to include homeworking as a permanent busi-
ness model increased slightly from 16 per cent in
autumn 2020 to 23 per cent in early April 2022. Employers
This varied significantly by industry. More than half
(54 per cent) of businesses in the information and The survey by the CIPD (2020a) found that home-
communication industry said they were using, or working over the pandemic was a positive experi-
intended to use, increased homeworking as part of ence for most employers. But there are challenges.
a permanent business model in early April 2022. Problems mentioned by employers responding to
This was only the case for 3 per cent of businesses this survey included jobs that could not be done
in the accommodation and food services industry, properly from home (48 per cent), supporting the
and 5 per cent of businesses in the construction in- wellbeing of staff (47 per cent), reduced staff inter-
dustry, which are less adaptable to homeworking. action (36 per cent) and the effectiveness of the line
management of home-based workers (33 per cent).
Other major challenges included motivating home-
Working from home: general workers, helping them to organize themselves and
manage their time, and ensuring that their work–
considerations life balance was satisfactory.
It was also noted by the CIPD that an increase in
A review by the CIPD (2020a: 5–8) of research into homeworking could damage team working and or-
homeworking identified the following eight themes: ganization culture (especially relating to new and
1 Increased productivity among homeworkers younger employees). Different management styles
is often achieved through work may be required to oversee remote workers, and
intensification. managers may not be able to support work or em-
ployees to the same degree. A significant increase in
2 For some workers, homeworking can
homeworking may result in the creation of a ‘two-
provide a more productive environment
tier’ workforce, with resentment building from
because there are fewer distractions.
those employees whose role or home circumstances
3 Knowledge-sharing and team relationships do not allow working from home, or those working
often suffer – unless task-related processes from home more frequently missing out on devel-
are designed to take location into account. opment or promotion opportunities compared to
4 Innovation can suffer if knowledge-sharing those present in the workplace.
and team relationships deteriorate. The CIPD (2020b: 25) made the following com-
5 Social isolation can be a problem for some ments on homeworking and productivity:
workers, but this depends on personality and Analysis of the survey data suggests that it is the
lifestyle. people-related factors that matter most rather than
6 Avoiding the commute is a major benefit for technological issues when it comes to productivity
most. and homeworking. Employers who identified
challenges with job suitability, difficulties in staff
7 Attention to work–life boundaries is helpful
coordination, line management, monitoring, and
not just for homeworkers but for anyone in staff motivation were likely to report reduced
the digital age. productivity, while those who reported benefits
8 The career downsides are real and need to be such as improved work–life balance, greater focus,
managed.
Chapter 33 | Managing Home and Hybrid Working 311
ability to meet targets, and enhanced coordination ●● procedures for the induction (onboarding) of
and staff motivation were more likely to report home and hybrid workers;
higher productivity. ●● arrangements for their initial training and
Bearing in mind these difficulties and factors, home subsequent development;
and hybrid working policies need to be formulated ●● methods of reviewing performance;
and applied. They should take account of the guide- ●● the provision of equipment to homeworkers
lines on hybrid working produced by the Flexible such as laptops and office furniture;
Working Taskforce (2021) which encouraged em-
ployers to consider: ●● arrangements for promoting the wellbeing of
homeworkers.
●● Providing training to people managers on
how to manage hybrid teams effectively and Some employers are using surveillance software to
support hybrid workers, including monitor homeworkers. Such software can record
performance management, remote keyboard strokes and mouse movements and note
communication, collaboration and visits to websites and the use and content of emails.
relationship building. Employers need to be clear about the purpose of
monitoring and ensure that it is proportionate and
●● Reviewing HR processes and procedures not intrusive. They should explain what they are
across the whole employee lifecycle to ensure doing and why. Without taking care, there is a risk
they support hybrid working in practice, of it damaging the trust between homeworkers and
while also enabling inclusion and wellbeing. their managers which is an essential element in suc-
●● Engaging with and listening to employees, cessful home and hybrid working.
managers, trade unions and other employee
representatives to understand the early
lessons of hybrid working and ensure it is Line managers
being applied fairly and delivering anticipated
benefits to individuals and the organization. Line managers are responsible for seeing that poli-
●● Keeping any hybrid working policies and cies on home and hybrid working are implemented.
principles under ongoing review, including They have to define what homeworkers are ex-
the impact on workers with protected pected to do, manage their performance, agree with
characteristics, and ensuring that action is hybrid workers how they divide their time between
taken to address any negative or unintended home and the office, set out requirements and pro-
outcomes of hybrid work. cedures for homeworkers to report progress and
●● Recognizing that hybrid working is just one cooperate with fellow workers, provide support,
form of flexible working, and that time guidance and training, ensure that homeworkers
flexibility and flexibility in working schedules have the equipment they need and look after their
can also benefit people and in in particular wellbeing. The responsibility and demands are on-
for those who have to be in a place of work erous. Line managers should be given specific train-
to fulfil their jobs. ing and guidance on managing hybrid workers. The
skills needed to ensure effective communication,
Bearing in mind these guidelines and other require- performance management, team and relationship
ments for the effective management of home and building and collaboration within a distributed
hybrid workers, employers should introduce home team need to be developed.
and hybrid working policies in the following areas: It was suggested by Quisenberry (2018) that while
●● which jobs are suitable for homeworking; the management of people and teams has never been
easy, further problems arise when teams go virtual as
●● the distribution of the time spent by managers have to adopt new and more complex
homeworkers between their home and methods of communication. People prefer to have
workplace; face-to-face conversations. When more and more in-
●● the amount of flexibility homeworkers have teractions happen digitally the outcome is likely to be
in distributing their homeworking time over new forms of miscommunication and misunderstand-
the day (as much as possible); ing. This is an added layer to the already multifaceted
role of line managers. They have to manage perfor-

mance and also play a vital role in establishing the
Individual employees
organization’s corporate values and goals. This must
be done in a way in which trust is maintained and The main benefits of homeworking for individuals
employee wellbeing is looked after. responding to the CIPD (2020a) survey were better
Line managers need to take account of the differ- work–life balance (61 per cent), more collaboration
ent and varying circumstances in which homeworkers (43 per cent), greater ability to focus with fewer dis-
operate. Rebecca Knight (2020: 3) emphasized that tractions (38 per cent) and IT upskilling (33 per cent).
Among the many other positives of homeworking,
With your team members working from home, the lack of a commute was singled out as particularly
your approach calls for a little more flexibility, a beneficial, with employees saving time, money and
little more heart, and a little more leniency. Some energy. Employees therefore enjoy greater flexibility
may be juggling client calls with entertaining to use their time more effectively. The right home
their toddlers or helping their teens with algebra; setup was also highlighted, notably reliable technol-
others may be overseeing projects while caring ogy and good office furniture. Those who can seg-
for elderly family members; still others may be ment their work and home life by having a separate
trying to work while struggling with feelings of
working space have particularly benefited.
isolation. You don’t know exactly how rough it is
But there are a number of challenges. The main
for your employees. As a manager put it ‘you can’t
one is social isolation which could result in employ-
only look at the deliverables people are providing
while ignoring their home situations’. Show
ees becoming disconnected from the work environ-
compassion… . You need to give people a little ment. Informal interactions with fellow workers are
more latitude. important as a means of establishing social identity
and making working life more agreeable. And much
Guidelines for managers on how to manage home- of the learning that takes place at work is social
workers are set out in Figure 33.1. learning. Working from home means that the
F I G U R E 33.1 Guidelines for managing home and hybrid workers
1 Consider the design of their jobs and any changes required to their tasks and the systems they have to use.
2 Define and agree what they are expected to achieve.
3 Agree ways of working at home, including how they should cooperate with their colleagues remotely.
4 Allow homeworkers flexibility to organize their tasks, and discretion to make decisions about how they
manage their work.
5 Decide how their performance should be monitored and reviewed, and discuss and agree the process with
them.
6 Provide for their initial reception and induction training, preferably in the office.
7 Ensure that they have the skills to carry out their work at home, including the use of technology.
8 Take steps to provide for their continuing learning and development through digital learning and coaching
and by encouraging them to embark on self-managed learning.
9 Keep closely in touch with them through regular one-to-ones held virtually or face to face.
10 Promote team cooperation with the help of team meetings held in the office (preferably) or virtually (eg
Zoom).
11 Provide them with the support and equipment they need. The support includes any coaching they might
require to use online systems or work remotely.
12 Monitor their wellbeing and take steps to deal with wellbeing problems.
boundaries between work and home life are less will change for many, the reasons why performance
clear and there can be an increase in work–home management is undertaken are the same.’
conflicts, especially if work has an impact on pri- People want to be appreciated. They need to
vate life. It requires greater personal organizational know that their immediate and longer-term growth
skills and it is difficult for those without much needs have not been forgotten because they are ‘out
space, or those with busy households – home may of sight, out of mind’. People working at home in
not be the best environment to work from. Those conditions of uncertainty want reassurance and
who can segment their work and home life by should not have to wait until a year-end review to
having a separate working space have particularly get it. When managers are able to step up and have
benefited but it has been more difficult for those frequent, meaningful conversations about how
with less privacy. work is going, employees are able to capitalize on
The CIPD research (2020b) identified a number the advantages of working from home.
of tactics that homeworkers adopted to deal with A survey by Gallop (2020) found that frequency
these problems. They included only working in a of feedback was the key to engaging homeworkers.
specific place in the home so they could ‘leave’ that For those working remotely, engagement levels as
space at the end of the working day, not going into measured by Gallup increased in relation to the fre-
another room reserved for home life during working quency of ‘check-ins’ by managers as follows: once
hours, reliable technology and good office furniture, a year 10 per cent, a few times a year 16 per cent, a
disconnecting from technology after working hours, few times a month 47 per cent, a few times a week
and keeping separate work and personal devices. 63 per cent.
Managers should not pay too much attention to
performance on Zoom sessions. Because people are
Managing home and hybrid not face-to-face, there are no context cues, and it’s
easy to have misunderstandings. It’s harder to judge
working processes on a screen the subtext of what is happening.
The assessment of performance by rating is
‘Process’ – how things are done – is particularly im- fraught with difficulties even when people are on
portant when managing home and hybrid working. the spot. These are enhanced when dealing with
As discussed below, the most significant processes homeworkers. Objectivity is harder to achieve in
are those concerned with managing performance, the absence of regular face-to-face contacts, and
learning and development, communications and trying to translate subjective views into some form
employee wellbeing. of ranked assessment can lead to superficial and de-
motivating judgements. Ratings can seem to be ar-
bitrary and unfair when they are awarded on the
Managing performance spot. They can be worse if they are delivered re-
It is necessary to help homeworkers become as motely. In their place, a flexible process should be
strong as possible in the unusual and often difficult established that recognizes the circumstances in
circumstances in which they work. Managing per- which remote working takes place. This could in-
formance is always hard but in these circumstances volve narrative assessments that provide employees
even harder. Traditional approaches to performance with specific and helpful information about what
management consisting of annual appraisals and they’ve done well and how they could do even
ratings are no longer appropriate for remote work- better.
ers who may be subject to rapidly changing demands
and the responsibility for shorter-term projects.
They need to be replaced by more frequent ‘check- Learning and development
ins’ and narrative assessments. Homeworkers have to possess and practise two forms
As the Institute for Employment Studies (2020: 14) of skills: those needed to carry out their role wherever
pointed out: ‘It is now more important than ever for the work takes place, and those specific to working at
performance management to be undertaken in a home, namely self-organization and time manage-
timely and compassionate manner. Although the way ment, the use of technology, and communicating with
in which performance management is undertaken
their line manager and colleagues. Preliminary train- Zoom meetings can inhibit the informal and often
ing in these skills should take place when they start rewarding interactions that take place when people
work and continuation training may be necessary are meeting face-to-face. And there is the phenom-
digitally or in the workplace. Homeworkers will not enon of ‘Zoom fatigue’ when meetings go on too
have the same opportunities for social learning (learn- long. An alternative is to use what are called ‘asyn-
ing from others in the flow of work) as those em- chronous’ tools like Slack or chat functions in plat-
ployed in the office, so extra effort may be needed to forms such as Microsoft Teams (‘asynchronous’ is
fill that gap. jargon for communications between people that
The continued development of homeworkers take place at different times). Emails and WhatsApp
should not be neglected. Line managers should pro- messaging are in effect asynchronous tools but
vide coaching, and digital learning (e-learning) pro- packages offering chat facilities such as Slack or
grammes should be made available. Homeworkers Microsoft Teams are available.
should be encouraged by their manager to carry out
self-managed learning. HR or L&D can provide ad-
vice and support to managers and, indeed, to home- Wellbeing
workers themselves on doing this.
Working from home may have different impacts on
the wellbeing of employees. For some, it may end
commuting and give more time for other interests.
Communications For others, there may be stress from having a poor
Homeworking is based on effective communica- space to work in, interruptions from children or
tion. Casual conversations don’t happen as they do even being exposed to domestic abuse. Hybrid
in the workplace, so meetings have to be planned, working may affect work–life balance and the
possibly taking place at regular intervals. People management of the boundaries between work and
can get more out of meetings or conversations when home. It is necessary to provide training and sup-
they can see as well as hear the people with whom port to employees so that they can overcome the
they are in contact and for this purpose, video can challenges associated with homeworking.
be used for one-to-ones and video conferencing, for Managers should be briefed on the symptoms of
example Zoom, can be used when more people are poor wellbeing and what can be done to alleviate
involved in team or other meetings. But video or any problems.
Key learning points
Home and hybrid working defined Challenges of homeworking

Home or remote working involves working away from The biggest challenges reported by employers to the
the office, to a large extent depending on the ready CIPD are the unsuitability of jobs to be done from
availability of laptops, tablets or smart phones and home, reduced wellbeing among staff, reduced staff
with the support of communication technology such as interaction and the effectiveness of line management
Zoom and video conferencing. Hybrid working takes of home-based workers.
place when workers split their time between working
at home and working in an office. Line managers
Line managers define what homeworkers are
Benefits of homeworking expected to do, manage their performance, agree with
The main benefits for employees from homeworking as hybrid workers how they divide their time between
established by CIPD research are better work–life home and the office, set out requirements and
balance, greater collaboration, greater ability to focus procedures for homeworkers to report progress and
with fewer distractions, no commuting and IT cooperate with fellow workers, provide support,
upskilling.
guidance and training, ensure that homeworkers have uncertainty want reassurance and should not have to
the equipment they need and look after their wait until a year-end review to get it.
wellbeing.
Communications
Employees Homeworking is based on effective communication.
Homeworking requires greater personal Casual conversations don’t happen as they do in the
organizational skills and it is difficult for those without workplace, so meetings have to be planned, possibly
much space, or those with busy households – home taking place at regular intervals.
may not be the best environment to work from. Those
who can segment their work and home life by having a Wellbeing
separate working space have particularly benefited
but it has been more difficult for those with less Working from home may have different impacts on
privacy. the wellbeing of employees. For some, it may end
commuting and give more time for other interests.
For others, there may be stress from having a poor
Performance management space to work in, interruptions from children or even
People want to be appreciated. They need to know being exposed to domestic abuse. Hybrid working
that their immediate and longer-term growth needs may affect work–life balance and the management
have not been forgotten because they are ‘out of sight, of the boundaries between work and home.
out of mind’. People working at home in conditions of
References
Chartered Institute of Personnel and Development resources/files/IES_COVID19_HR_Toolkit.pdf
(2020a) Working From Home: Assessing the (archived at https://perma.cc/RJL7-ECZC)
Evidence, London, CIPD Knight, R (2020) How to do Performance Reviews
Chartered Institute of Personnel and Development Remotely, Harvard Business Review, 15 June,
(2020b) Embedding New Ways of Working, pp 1–5. https://hbr.org/2020/06/how-to-do-
London, CIPD performance-reviews-remotely (archived at https://
Chartered Institute of Personnel and Development perma.cc/EM43-NWLC)
(2021) Hybrid Working: Practical Guidance, Office of National Statistics (2021) Coronavirus and
London, CIPD homeworking in the UK labour market: 2020,
The Flexible Working Taskforce (2021) Guidance on London, ONS.
hybrid working to promote best practice, London, Office of National Statistics (2022a) Is hybrid
CIPD working here to stay? London, ONS
Gallop (2020) Performance Management Must Office of National Statistics (2022b) Opinions and
Evolve to Survive COVID-19, Washington, DC, lifestyle survey, London, ONS
Gallup Quisenberry, W L (2018) Exploring how emotional
Institute for Employment Studies (2020) Covid-19 – intelligence contributes to virtual teams:
Practical guidance for the HR Professional. https:// interpretive analysis of a phenomenological study,
www.employment-studies.co.uk/system/files/ European Scientific Journal, 14, pp 1857–81
316

317
PART IX
PA R T I X CO N T E N T S
34 The basis of learning and development

35 Strategic learning and development
36 Organizational learning and the learning organization
37 Individual learning
38 The process of learning and development
39 The practice of learning and development
40 Leadership and management development
The initial chapter in this part sets the scene through and programmes. Practice describes what is done to
a definition of what is involved in learning and ensure that learning and development strategy is
development (L&D) The next chapter examines the implemented, taking into account the processes that
need for a strategic and integrated approach to are available. It consists of a sequence of activities:
L&D. This is followed by explanations of the con- (1) the identification of learning needs; (2) planning
cepts that underpin the process and practice of and implementing the various types of learning
L&D – organizational learning (Chapter 36) and activities, covering formal and informal learning,

individual learning (Chapter 37). These concepts workplace, social and digital learning, and blended
cover explanations of how people learn and the learning; (3) implementing planned learning events
effect this has on learning and development activities. or programmes, bearing in mind the importance of
The process and the practice of learning and de- ensuring that the learning arising from such events is
velopment are dealt with in Chapters 38 and 39 re- transferred to the workplace; and (4) evaluating the
spectively. Process describes how things are done in effectiveness of L&D generally and L&D interven-
the light of an understanding of what constitutes tions or learning events in particular.
organizational and individual learning and the fac- Finally in Chapter 40, leadership and manage-
tors that affect how people learn. It includes the ment development is covered by reference to pro-
identification of learning needs, and the planning, grammes for developing leadership qualities and for
implementation and evaluation of learning activities developing managers generally.
318

319
34
The basis of learning and
development
Introduction The basis of learning
This chapter covers: Learning is what happens when a person acquires
and develops new knowledge, skills, capabilities,
●● the nature, elements and components of
behaviours and attitudes. It was defined by
learning and development (L&D);
Harrison (2009: xxvii) as ‘A qualitative change in
●● the relationships of L&D with other aspects a person’s way of seeing, experiencing, under-
of human resource management; standing and conceptualizing something in the
●● the ethical dimension of learning and real world.’ In particular, learning in organizations
development; is concerned with gaining declarative knowledge
●● the state of L&D. of facts, developing procedural knowledge about
how to do things, and acquiring skills. Learning
happens primarily in the domain of the workplace
but it also occurs in the other domains of social
Learning and development learning, digital learning and formal training.
defined
Learning and development is the process of ensur-
The elements of learning
ing that organizations have the knowledgeable, and development
skilled and engaged people they need to achieve
their goals, now and in the future. It means develop- The elements of learning and development are:
ing the capabilities of employees so that they can
carry out their work effectively and progress in ●● Learning – the acquisition and development
their careers. Capability is defined as a combination of knowledge, skills, capabilities, behaviours
of knowledge, skills and behaviours – what people and attitudes. As described by Collins (2016:
know, understand and do. 51): ‘Learning is a process by which changes
This purpose is achieved by learning through in your brain allow you to behave and
experience (learning in the flow of work) and by respond in particular ways.’ People learn by
social contacts, coaching, mentoring, guidance doing (experiential learning) and from each
from line managers, self-directed learning and for- other (social or cooperative learning) and to
mal training. It was stated by Flanagan (2015: 34) a smaller extent, by instruction (training).
that ‘The ultimate aim of L&D is to lead people to Learning involves the modification of
personal growth.’ This is true, but its fundamental behaviour through experience as well as
purpose is to improve individual, group and or- more formal methods of providing people
ganizational effectiveness by developing the or- with learning opportunities within or outside
ganization’s skills base. the workplace. A learning experience can be
320 Part 9 | Learning and Development
structured (eg formal events, e-learning,

coaching) or unstructured (through
Formal and informal
experience and self-directed learning). learning
●● Development – the realization or growth of a
person’s capabilities and potential through People learn both formally and informally. Formal
the provision of learning and educational learning can occur face to face (F2F) in the workplace,
experiences. lecture or training centre. It can also take place through
●● Training – the systematic application of various forms of digital learning. Informal learning is
formal processes to help people to acquire primarily experiential learning and can be self-man-
the knowledge and skills necessary for them aged although support should be made available from
to perform their jobs satisfactorily. A training managers, coaches, mentors and social media. It takes
event or intervention is a course in which place in the form of connected learning as explained
face-to-face learning takes place, usually in later in this chapter. According to Hoyle (2015), infor-
locations outside the workplace (off-the-job mal learning is not entirely directed and controlled by
training). A training programme is a planned the learner. He describes it as a continuum as illus-
sequence of training events or learning trated in Figure 34.1. In the south-west quadrant there
experiences or a combined sequence of both are traditional courses and programmes. But these ses-
events and experience. sions only work if a degree of informal learning takes
place to effect the traditional change in behaviour that
●● Education – the expansion of the knowledge,
improves performance. In the north-west quadrant
values and understanding required for all
there is performance support. This may be provided by
aspects of life rather than a knowledge or
the organization in the shape, for example, of e-learn-
skill in only a limited area of activity.
ing programmes. Support may also be available from
F I G U R E 34.1 Formal and informal learning

Learner directed
Performance Learning through

support work
Formal Informal
Organization directed
Courses
Guided discovery
and programmes
SOURCE Hoyle (2015)

Chapter 34 | The Basis of Learning and Development 321
F I G U R E 34.2 The components of learning and development
Strategic
corporate goals
Learning and
Learning Strategic learning
development
culture and development
policies
Learning and Learning and

development development
processes context
Organizational Individual
learning learning
Knowledge Formal Self-directed Informal

management learning learning learning
Workplace
Training
learning
Blended
learning
Digital learning Digital

learning
Connected
Coaching
(social)
learning
s ocial networks. The south-east quadrant covers such noring everything else. Further learning is required on
activities as coaching and learning with colleagues – the job.
trying new things and reporting back on e xperiences. Hoyle recommends that the formal training pro-
The north-east quadrant refers to work experiences vided on induction courses should be interspersed
from which people learn by reflecting, drawing conclu- with on-the-job experience. Following that experi-
sions and planning future actions. This model indicates ence the employee can return to the classroom for a
that there are many varieties of informal training and review of the learning that has been achieved. He
that formal training does have a part to play but not in suggested (page 3) that
the old way of relying on classroom training and ig-
For a formal programme to result in learning a ctivities are closely linked to the people manage-
that actually enables people to do different ment activities of organization design and develop-
things, training courses must require learners to ment, knowledge management, resourcing, talent
take some tentative steps to try things out, to management and performance management. This
experience through trial and error, to reflect on underlines the importance of aligning L&D strategy
lived experience, and to discuss and connect with with HR strategy and provides some support to the
others. contention that L&D should be regarded as an as-
pect, albeit a key aspect, of people management.
One of the important aims of strategic L&D is to
Connected learning integrate its activities with these related people
management activities and so achieve what is called
Connected learning involves the creation of knowl- ‘horizontal fit’.
edge between participants in semi-structured, semi-
directed learning activities. It provides a link between
the individual’s need to learn and interest in learning The ethical dimension
and the opportunities available in the workplace, in-
cluding those provided by fellow workers (social Ethics is concerned with making decisions and judge-
learning). It means helping individuals to recognize ments about what is the right course of action to
their learning needs and to develop their commit- take. It embraces concepts in the shape of equity, jus-
ment to learning, and ensuring that there is scope for tice and fair dealing that affect and guide behaviour.
furthering that commitment by providing support An ethical approach to learning and development is
and guidance and by means of social interactions required in order to ensure that everyone involved in
with other workers. learning activities is treated in accordance with these
Connected learning therefore offers an approach concepts. This means that while learning and devel-
to workplace learning that fits between the directed, opment practices are expected to further the aims of
structured knowledge transfer (ie training or the organization they should also take account of the
e-learning) that has been the way that L&D has needs of employees for fulfilment at work and for the
traditionally operated, and the unstructured, self- opportunity to develop their knowledge, skills and
directed knowledge sharing that happens in work abilities. Ethical guidelines for L&D are set out in
teams and groups during the flow of work. Chapter 6.
The components of learning The state of L&D

and development The survey of learning and skills at work conducted
by the CIPD in 2020 established that high-perform-
The components of learning and development and the
ing organizations were:
relationships between them are shown in Figure 34.2.
These components are described in Chapters 35 ●● using learning as a driver of business value
and 36. and revenue – moving away from learning as
a cost;
investing in strategic learning to drive the
Relationships between ●●
skills needed in future work and using
L&D and other people learning as an enabler of agility;
●● nurturing a learning culture where learning is
management activities valued and supported by leaders – and
people help each other to learn constantly;
Learning and development take place within the ●● personalizing learning for individuals,
framework of the human resource management providing learning that’s just enough and just
policies and practices of an organization. L&D for me;
Chapter 34 | The Basis of Learning and Development 323
●● weaving learning into the flow of work and uting to between 60 and 100 per cent of the learn-
performance, where people learn as they ing provided in 44 per cent of the respondents’
work and work as they learn; organizations. However, it is much more prevalent
●● tapping into the value of powerful digital in smaller organizations. The use of digital learning
learning – from apps, to advanced was limited, delivering less than 20 per cent of
simulations, to virtual reality; learning. As the CIPD (2020: 19) commented: ‘With
the desire to facilitate accessible, personalised learn-
●● investing in learning platforms – to enable a
ing in the flow of work and to support remote
better learning experience and also to
working, this is a concern, highlighting the pressing
prompt organizational insight through data
need for digital transformation.’ The CIPD also
and analytics.
noted that only 29 per cent of organizations had
The most commonly reported learning and devel- clear learning and development plans for their
opment method was face-to-face training, contrib- employees.
Key learning points
Learning and development defined ●● Education – the development of the knowledge,

values and understanding required in all aspects of
Learning and development (L&D) is concerned with life rather than those relating to particular areas of
ensuring that organizations have the knowledgeable, activity.
skilled and engaged people they need to achieve their
goals. Its aim is to improve individual, group and
The components of learning and
organizational effectiveness.
This involves enabling employees to acquire development
knowledge and skills and develop their potential These were shown in Figure 34.1.
through experience and social contacts, coaching,
mentoring, guidance provided by line managers,
Relationships between L&D and other
self-managed learning and training provided by the
organization. people management activities
People management philosophy is underpinned by the
The elements of learning and resource-based view (Barney, 1991) that it is the range
development of resources in an organization, including its human
resources, that produces its unique character and
The elements of L&D are: creates competitive advantage.
●● Learning – the process by which a person acquires People (HR) management delivers added value and
and develops knowledge, skills, capabilities, helps to achieve sustainable competitive advantage
behaviours and attitudes. It involves the through the strategic development of the
modification of behaviour through experience as organization’s rare, hard-to-imitate and hard-to-
well as more formal methods of helping people to substitute human resources. Learning and
learn within or outside the workplace. development plays a major part in this.
This means that the people management activities
●● Development – the growth or realization of a of organization design and development, knowledge
person’s ability and potential through the provision management, talent management and performance
of learning and educational experiences. management are closely associated with L&D.
●● Training – the systematic application of formal One of the important aims of strategic L&D is to
processes to help people to acquire the knowledge integrate its activities with related people management
and skills necessary for them to perform their jobs activities such as these and so achieve what is called
satisfactorily. ‘horizontal fit’.
The ethical dimension take. It embraces concepts that affect and guide
ethical behaviour, namely equity, justice and fair
Ethics is concerned with making decisions and dealing. An ethical approach to learning and
judgements about what is the right course of action to development is required.
References
Barney, J B (1991) Firm resources and sustained Flanagan, J (2015) Transformational L&D, Training
competitive advantage, Journal of Management Journal, January, pp 34–36
Studies, 17 (1), pp 99–120 Harrison, R (2009) Learning and Development, 5th
Chartered Institute of Personnel and Development edn, London, CIPD
(2020) Learning and Skills at Work 2020, London, Hoyle, R (2015) Informal Learning in Organizations,
CIPD London, Kogan Page
Collins, S (2016) Neuroscience for Learning and
Development, London, Kogan Page
325
35
Strategic learning and
development
Introduction Learning and development
Strategic learning and development is an approach strategies
to helping people learn and develop that is con-
cerned with how the organization’s goals will be Learning and development strategies define the pri-
achieved through its people by means of integrated orities that should be attached to different aspects
learning and development strategies, policies and of learning and development and, in accordance
practices. Learning and development strategies set with the fundamental feature of strategic L&D,
out specifically what an organization intends to do how they should be aligned with the corporate or
about developing the capabilities of employees business strategy and integrated – ‘bundled’ – with
through its learning policies and practices. The crea- each other.
tion and implementation of L&D strategies takes The CIPD (2020) stated that ‘a learning and de-
place within the framework provided by strategic velopment (L&D) strategy sets out the workforce
L&D. capabilities, skills and competencies the organia-
tion needs and how they can be developed to en-
sure a sustainable, successful organization.’ It was
Strategic learning and emphasized that ‘L&D strategy has to reflect the
overall business strategy and drive progress di-
development rectly towards that. It must also align with the
broad people strategy and with other strategies (for
Strategic learning and development (strategic example, recruitment).’
L&D) means taking a wide and far-reaching view L&D strategies are driven by the capability needs
of what needs to be done about learning and de- of the organization – what it required in terms of
velopment and ensuring that L&D strategies and people with the necessary knowledge, skills and be-
activities are aligned with corporate or business haviours to ensure that the organization will be able
priorities (vertical integration or fit) and linked to respond adequately to any demands made upon
to each other (horizontal integration or fit). It is it and achieve its strategic goals. They may cover
an overarching concept that links the develop- specific areas such as the development of workplace
ment of the people in an organization to the learning, the use of digital learning facilities or the
business as a whole and its environment and
extension of self-directed learning. But they can ad-
therefore illuminates the process of developing vantageously consist of general statements of intent
L&D strategies. It is more of a mindset than a which provide the framework for more specific stra-
collection of techniques. tegic plans in individual areas. Three key areas for
such statements are described below.
Strategy for creating a learning is to recognize the importance of developing

capability in order to increase the organization’s

culture stock of knowledge and skills and ensure that it has
A fundamental objective of L&D strategy is to the human capital it requires.
create a learning culture. This is one in which
learning is recognized by top management, line
managers and employees generally as an essential
Individual learning strategy
organizational process to which they are commit- The individual learning strategy of an organization
ted and in which they engage continuously. The is driven by its people requirements which are ex-
strategy should demonstrate how learning benefits pressed in terms of the sort of skills and behaviours
individuals and the organization. It should spell that are required. An individual learning strategy
out the roles in organizational and individual should be based on:
learning of all the stakeholders. This means en-
couragement and support from senior manage- ●● a systematic programme for identifying
ment, the active involvement of line managers, the learning needs;
participation of individual employees in self-di- ●● an understanding of how people learn –
rected learning and the contributions of members people learn for themselves but they also
of the learning and development function. It learn from other people and they tend to
should indicate what approaches will be adopted learn better from experience than from what
to facilitate learning in the flow of work, to make they have been told;
use of digital learning and to provide face-to-face ●● a belief that most learning happens in the
training. workplace and priority needs to be given to
encouraging this;
the use of training in its complementary role
Organizational learning strategy ●●
of accelerating learning;
Organizational learning strategies aim to improve ●● blended learning – the combination of
organizational effectiveness through the acquisition different approaches to learning (for
and development of knowledge, understanding, in- example, face-to-face training supplemented
sights, techniques and practices. This is in accord- by digital learning) so that they complement
ance with one of the basic principles of L&D which and support one another.
C A S E S T U DY
People development strategy statement: Astra Zeneca

A key strategic business objective of Astra Zeneca is ‘To business strategies. The appropriate resources must
ensure a well-motivated organization in which people are be available to meet the key priorities for people
respected, enjoy their jobs and obtain fulfilment.’ development. Expenditure on education, training and
development is regards as a necessary and calculated
1 Our people development strategy applies to all
investment yielding considerable pay-off in terms of
employees, not just to managers or people of high
enhanced business performance.
potential. It relates to the continuing development of
ability and contribution in each person’s current job 3 Managers have a clear responsibility to develop their
and, if considered to have the potential to advance subordinates. Performance management, which is the
further, towards subsequent jobs. key management process that brings together the
setting of personal work targets and development
2 People development strategies are vital to the
plans, is the preferred integrated approach by which
business but it is important that they support the key
Chapter 35 | Strategic Learning and Development 327
employees’ learning and development are managed 6 Career planning will be a joint activity between the
continually in relation to all work activities. individual and the manager, with employees having a
major responsibility for their own career management,
4 All employees must have a personal development plan
including personal development.
jointly agreed with their manager and this plan must be
progressed and regularly reviewed and updated. It 7 The development of individuals must take into account
should be derived from the accountabilities of the that Astra Zeneca is a complex, globally managed
jobholder and the personal targets for the coming business. Particular emphasis should be placed on the
period, plus any anticipated future needs. The plan need for good business understanding and team work
should cover coaching and on-the-job and off-the-job across the business worldwide. The nature of the
training. business requires special attention in the areas of
organization development activities, team building, project
5 All employees are to be encouraged continually to
management and cross-cultural management skills.
develop their skills and experience both for their own
benefit and that of the business through the 8 People development activities will be regularly audited
improved contribution that will result, thus to ensure that appropriate, cost-effective investment
maintaining and extending the business’s is made in all parts of the organization to support
competitive advantage. current business activities.
Formulating and all stakeholders of the direction it is believed

learning and development should go. The strategy
implementing L&D should respond to but also anticipate the critical
learning needs of the organization and the people
strategies in it. It should incorporate the experienced and
collective judgement of top management about
The formulation of L&D strategy is based on the organizational requirements while also taking
same principles as those that govern the formula- into account the views of line managers and em-
tion of HR strategy as described in Chapter 9. ployees generally.
The aim is to develop an understanding shared by
C A S E S T U DY
Developing a learning strategy for Remploy
Remploy provides employment and development national strategy was developed with learning centres
opportunities for disabled people. It operates 83 factories. The as a major element in all 83 sites. Although the use of
company’s strategy for learning is explicit and well understood each learning centre is locally determined, they all have
in the organization, and was developed from the bottom up the following in common: a physical location (with at
rather than top down. Its starting point was recognition that a least some PCs); a relationship with a local college
number of local initiatives in the factories were proving whose tutors will visit the site to advise and facilitate;
successful and could be developed on a national basis. and access to a suite of e-learning programmes, made
The trade unions advocated enhanced opportunities available from the LearnDirect library (the national
for skill development in basic areas. As a result a e-learning initiative).
Key learning points
Strategic L&D defined means defining the priorities that should be attached
to different aspects of learning and development
Strategic learning and development (strategic L&D) and how they should be aligned with the corporate
means taking a wide and far-reaching view of what or business strategy and integrated with each other.
needs to be done about learning and development and L&D strategies may cover specific areas such as
ensuring that L&D strategies and activities are the development of workplace learning or the use of
aligned with corporate or business priorities digital learning facilities. But they may simply consist
(vertical integration or fit) and linked to each other of a broad statement of intent, which provides the
(horizontal integration or fit). framework for more specific strategic plans in
individual areas.
L&D strategies
Learning and development strategies describe what
the organization intends to do about L&D. This
Reference
(2020) Learning and Development Strategy and
Policy, London, CIPD
329
36
Organizational learning
and the learning
organization
Introduction and practices in order to improve organizational
effectiveness. It is concerned with the methods
The learning and development practices taking part adopted by organizations to promote learning; it is
in the implementation of L&D strategy need to be not simply the sum of individual learning, although
based on an understanding of how learning takes the role of individuals as active agents is important.
place at the level of the organization, as covered by It was argued by Kim (1993: 37) that ‘Organizations
this chapter and, within that context, how individu- can learn independent of any single individual but
als learn, as dealt with in Chapter 37. not independent of all individuals.’
There are two approaches to the analysis of Organizational learning focuses on collective
learning at the organizational level: the concept of learning but takes into account the proposition
organizational learning and that of the learning or- made by Argyris (1992) that organizations do not
ganization. At first sight these may look the same perform the actions that produce the learning; it is
but they are not. The initial section of this chapter individual members of the organization who be-
deals with organizational learning and the next one have in ways that lead to it, although organizations
with the learning organization. The third section can and should create the conditions that facilitate
compares the two. such learning. The concept of organizational learn-
ing recognizes that the way in which it takes place is
affected by the context of the organization and its
Organizational learning culture.
It was suggested by Tsang (1997: 75) that ‘It is com-

monly agreed that the concept of organizational The purpose of organizational
learning is complex and multidimensional.’ It has learning
been defined in many different ways and there are a
number of theories on how organizational learning As Crossan et al (1999: 522) maintained:
takes place. ‘Organizational learning can be conceived of as a
principal means of achieving the strategic renewal
of an enterprise.’ And Tsang (1997: 79) claimed that
Organizational learning defined ‘Learning usually, but not always increases an or-
ganization’s capacity to perform better. An organi-
Organizational learning can be defined as the de- zation which is quick to correct its errors and reacts
velopment and acquisition in organizations of fast to environmental change should, on average,
knowledge, understanding, insights, techniques outperform one which seldom learns from its past
mistakes. In addition, lessons learnt from the past, if The process of organizational
properly stored in the organizational memory, are
an important source of knowledge for members of learning
the organization to draw upon.’ Organizational learning is a three-factor process
consisting of the acquisition, dissemination and
shared implementation of knowledge. As such it is
Single- and double-loop learning closely related to knowledge management.
The concept of single- and double-loop learning as Knowledge may be acquired from direct experience,
developed by Argyris (1992) was an early and influ- the experience of others or organizational memory.
ential attempt to describe how organizational learn- A description of how this happens is provided by
ing works. Argyris believed that it occurs in two the 4I theory of Crossan et al (1999). Their proposi-
ways: first, through what he called single-loop tion was that organizational learning is a multi-
learning which is incremental learning that arises level process: individual, group and organization.
when deviations from the norm occur and small These three levels are linked by four social and psy-
changes and improvements are made using existing chological processes (the 4Is) which are defined as
ways of doing things. The second way is double- follows:
loop learning in which assumptions, beliefs, norms
●● Intuiting is the recognition of the pattern
and decisions are challenged rather than simply ac-
and/or possibilities inherent in a personal
cepted and learning occurs when a monitoring pro-
stream of experience. This process can affect
cess initiates action to deal with a new situation.
the actions of individuals and of others when
The process is illustrated in Figure 36.1.
they interact with the individual.
As Easterby-Smith and Araujo (1999) com-
mented, single-loop learning could be linked to in- ●● Interpreting is the explanation, through
cremental change. In contrast, double-loop learning words and/or actions, of an insight or idea to
is associated with radical change, which may in- one’s self and to others.
volve a major shift in strategic direction. It is some- ●● Integrating is the process of developing
times assumed that double-loop learning is better, shared understanding among individuals and
but there are situations when single-loop learning is of taking coordinated action through mutual
more appropriate. The concept of single- and adjustment. This process will initially be ad
double-loop learning explains an important feature hoc and informal, but if the coordinated
of organizational learning but does not cover the action taking is recurring and significant, it
whole process as described below. will be institutionalized.
F I G U R E 36.1 Single- and double-loop learning

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

corrective action as necessary
Double-loop
learning
Re-define
expectations as
necessary
Chapter 36 | Organizational Learning and the Learning Organization 331
●● Institutionalizing is the process of ensuring results they truly desire, where new and expansive
that routinized actions occur. Tasks are patterns of thinking are nurtured, where collective as-
defined, actions specified and organizational piration is set free, and where people are continually
mechanisms are put in place. learning how to learn together.’
Institutionalizing sets organizational learning Other definitions of a learning organization have
apart from individual or ad hoc group been provided by Wick and Leon (1995: 299), who
learning. stated that it was one that ‘continually improves by
rapidly creating and refining the capabilities re-
As Crossan et al (1999: 529) observe:
quired for future success’, and by Pedler et al (1997:
The underlying assumption is that organizations 3), who referred to it as an organization that ‘facili-
are more than simply a collection of individuals; tates the learning of all its members and continually
organizational learning is different from the simple transforms itself.’ Garvin (1993) suggested that
sum of the learning of its members. Although learning organizations are good at doing five things:
individuals may come and go, what they have
learned as individuals or in groups does not 1 Systematic problem solving
necessarily leave with them. Some leaming is 2 Experimentation
embedded in the systems, structures, strategy, 3 Learning from past experience
routines, prescribed practices of the organization,
and investments in information systems and 4 Learning from others
infrastructure… . This institutionalization is a 5 Transferring knowledge quickly and
means for organizations to leverage the learning efficiently throughout the organization.
of the individual members. Structures, systems,
and procedures provide a context for interactions. The notion of the learning organization is persua-
Over time, spontaneous individual and group sive because it provides a rationale for comprehen-
learning become less prevalent, as the prior sive learning and development programmes.
learning becomes embedded in the organization However, Scarborough et al (1999) argued that the
and begins to guide the actions and learning of learning organization concept is over-concerned
organizational members. with organization systems and design. Little atten-
tion seems to be paid to what individuals want to
learn or how they learn. The idea that individuals
should be enabled to invest in their own develop-
Developing organizational learning ment seems to have escaped learning organization
Organizational learning can be developed by using theorists, who are more inclined to focus on the im-
knowledge management processes to capture and position of learning by the organization, rather than
disseminate knowledge and learning. Learning and creating a climate conducive to learning.
knowledge can be recorded in databanks, manuals Burgoyne (1999), one of the earlier exponents of
and the intranet. But the knowledge gained from the learning organization, has admitted that there
experience should be exchanged and shared by cre- has been some confusion about it and that there
ating networks and encouraging face-to-face com- have been substantial naiveties in most of the early
munication between individuals and teams by thinking. He believes that the concept should be in-
means of informal conferences, workshops and tegrated with knowledge management initiatives so
communities of practice (groups of people bound that different forms of knowledge can be linked, fed
together by shared expertise who meet together to by organizational learning and used in adding
share knowledge). value. Pedler and Hsiu (2019: 98) have conceded
that ‘Whilst the early learning organization ideas
retain attraction and relevance their practice has
The learning organization been disappointing and has produced unintended
consequences.’
A learning organization was described by Senge The CIPD as reported by Lancaster (2020) at-
(1990: 3), who originated the idea, as one ‘where peo- tempted to redefine the concept as ‘the new learning
ple continually expand their capacity to create the organization’, the characteristics of which are clar-
ity of purpose, holistic people experience, thriving
ecosystem (the interconnected arrangements, facili- simultaneously but inappropriately. The former
ties and practices present in an organization to refers to the processes or activities of learning,

promote learning), agile digitally enabled infra- while the latter emphasizes the outcomes of
structure, intelligent decision making and continued learning processes A learning culture is required to
engagement. All these are important but they are facilitate organizational learning processes.
present in any effective approach to L&D and are Easterby-Smith and Araujo (1999: 8) explained that
only broadly related to the original notion of the the literature on organizational learning concen-
learning organization. trates on the observation and analysis of the pro-
cesses of individual and collective learning in
organizations, whereas the learning organization

Comparison of the literature is concerned with using specific diagnostic
organizational learning and and evaluative tools that can help to identify, pro-
mote and evaluate the quality of the learning pro-
learning organization cesses inside organizations. They pointed out that
the idea of the learning organization involves the
concepts creation of normative models and methodologies
for improving learning processes (a normative
The notion of the learning organization is often as- model is a theory that prescribes a norm or stand-
sociated with the concept of organizational learn- ard pattern as best practice). In contrast, organiza-
ing. But they are not the same. Lau et al (2017: 163) tional learning is about understanding the nature
offered the following explanation of the differences and processes of learning within organizations. In
between organizational learning and the learning other words, organizational learning is about how
organization: people learn in organizations, while the learning or-
ganization notion explains what organizations
Organizational learning, learning organization
should do to facilitate learning. The learning organ-
and learning culture conceptually overlap, but
they are distinct. While organizational learning ization is an aspiration; organizational learning is a
is defined as the process whereby learning occurs fact. The former concept is prescriptive – it tells you
in organizations through creating, sharing, to ‘get out and do things’. The latter is descriptive –
disseminating, storing, and retrieving information ‘this is what happens; mark, learn and inwardly di-
to increase organizational competencies; learning gest; make use of it’. The idea of a learning culture
organization is defined as a growing entity that supported by the understanding of how organiza-
evolves in form through organizational learning tions learn, as provided by the concepts of organiza-
processes to achieve organizational outcomes. tional learning and knowledge management, has
These terms are often used interchangeably and more to offer.
Key learning points
Organizational learning defined ●● ‘Learning usually, but not always increases an

organization’s capacity to perform better.’ Tsang
Organizational learning is defined as the development (1997: 79)
and acquisition in organizations of knowledge,
understanding, insights, techniques and practices in
order to improve organizational effectiveness. The process of organizational learning
Organizational learning can be characterized as an
The purpose of organizational learning intricate three-stage process consisting of knowledge
●● ‘Organizational learning can be conceived of as a acquisition, dissemination and shared implementation.
principal means of achieving the strategic renewal As such it is closely related to knowledge
of an enterprise.’ Crossan et al (1999: 522) management. The process is explained by the 4I
Chapter 36 | Organizational Learning and the Learning Organization 333
theory (Crossan et al, 1999). Organizational learning is new and expansive patterns of thinking are nurtured,
a multi-level process: individual, group and where collective aspiration is set free, and where
organization. These three levels are linked by four people are continually learning how to learn together.’
social and psychological processes: intuiting, Pedler et al (1997: 3) referred to it as an organization
interpreting, integrating and institutionalizing (the 4Is). that ‘facilitates the learning of all its members and
continually transforms itself’.
Practical implications The concept of a learning organization incorporates
miscellaneous ideas about human resource
Organizational learning theory draws attention to the development, systematic training, action learning,
importance of developing a learning culture and the organizational development and knowledge
need to take active steps to improve knowledge management, with an infusion of the precepts of total
management processes. quality management. But they do not add up to a
convincing whole. It provides a dubious base for
The concept of the learning organization action. The idea of a learning culture supported by the
understanding of how organizations learn, as provided
A learning organization was described by Senge (1990:
by organizational learning theory and knowledge
3) as one ‘where people continually expand their
management initiatives, has more to offer.
capacity to create the results they truly desire, where
References
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Cambridge, MA, Blackwell Development International, 20 (2), pp 159–79
Burgoyne, J (1999) Design of the times, People Pedler, M and Hsiu, S-W (2019) Regenerating the
Management, 3 June, pp 39–44 learning organization: towards an alternative
Crossan, M M, Lane, H W and White, R E (1999) An paradigm, The Learning Organization, 26 (1)
organizational learning framework: from intuition pp 97–112
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24 (3), pp 523–37 Learning Company: A strategy for sustainable
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and the Learning Organization, London, Sage Senge, P (1990) The Fifth Discipline: The art and
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334
37
Individual learning
4 Adults prefer learning which helps them to
Introduction carry out tasks.
Individual learning is what employees do or what is 5 Intrinsic motivation – the self-generated
done for them in order to acquire the knowledge, factors affecting people’s behaviour which
skills and abilities (KSAs) they need to perform ef- may arise from the work itself – is more
fectively in their present job and to develop in the effective as a motivator than extrinsic
future. The first part of this chapter is concerned with motivation which occurs when things are
the general considerations that affect the ways in done to or for people to motivate them.
which individual learning takes place: the character- 6 Adults need to know and understand why
istics of adult learning, the theories explaining how they should learn something.
people learn and the 70:20:10 model of learning.
Later, Hase and Kenyon (2013) suggested that what
These influence the application in practice by organi-
they called ‘self-determined learning’ happens when
zations of learning and development approaches and
adults are motivated to learn and decide for them-
techniques in the various areas in which learning
selves what learning they want to undertake irre-
takes place, as described in Chapter 38.
spective of what is provided by the organization.
The second part covers the various things that
The associated concept of self-directed learning has
individuals can do to promote their learning,
become a major feature of a learner-centric ap-
namely, self-directed learning, personal develop-
proach, one that focuses on the needs of learners.
ment planning, learning how to learn and continual
Individual learning was described by Birdi et al
professional development.
(2007: 266) as follows:
Individual learning can be facilitated by a number
The characteristics of of practices within organizations. The two most
common types of activities are: (1) on-the-job
individual learning training, where employees new to a job are
paired up with more experienced employees for
The theory of adult learning developed by Knowles observation, practice and feedback on tasks as
(1984) describes the characteristics of individual they are carried out in the job; and (2) off-the-job,
learning. He calls adult learning ‘andragogy’ as con- classroom-based training, where combinations
trasted with ‘pedagogy’ which is about how children of lecturing, discussion and practical exercises
learn. His six principles of adult learning are: are used. Both of these types of training tend
to be task-specific and tied to the incumbent’s
1 Adults can make their own decisions about current job requirements. Broader educational
learning. opportunities can also be used to widen
2 Adults use prior learning and experience to individuals’ understanding. These include more
bear on new learning. knowledge-based activities, such as provision
of open learning centres, e-learning, funding of
3 Adults learn best at work when what is being college courses or employee development schemes.
learnt is relevant to their working life.
Chapter 37 | Individual Learning 335
How people learn Experiential learning theory

Experiential learning takes place when people learn
There are a number of different theories of learning from their experience by absorbing and reflecting
as described below that aim to explain how people on it so that it can be understood and applied. Thus
learn. Each of them provides a different perspective people become active agents of their own learning.
on the process of learning which has been enhanced As long ago as 1910 John Dewey defined learn-
by the lessons provided by neuroscience. ing as a continuous reorganization and reconstruc-
tion of experience (reflective experience). People
only learn when they are able to reflect on their ac-
Behaviourist learning theory tions and recognize as well as reconstruct experi-
Behaviourist learning theory is concerned with the ence by a continuous process of reflection. This is
behaviour of people and how they can learn to thinking as a means of action.
change that behaviour or learn new ones. It is based A model was created by Kolb et al (1974) to de-
on the idea of ‘stimulus-response’ – changes in behav- scribe how experience is translated into concepts
iour take place as a result of an individual’s response that are used to guide the choice of new experi-
to events or stimuli and the ensuing consequences ences. As shown in Figure 37.1, this was expressed
(rewards or punishments). This is called ‘associative as a learning cycle consisting of four stages:
learning’. Thorndike (1898) conducted experiments 1 Concrete experience – which can be planned
that produced the ‘Law of Effect’, which states that or accidental.
when behaviour is followed by something pleasant it
is likely to be repeated but behaviour followed by 2 Reflective observation – which takes the
something unpleasant will stop. This led to the conform of actively thinking about the
cept of reinforcement, which is the belief that indi- experience and its significance.
viduals can be ‘conditioned’ to repeat behaviour by 3 Abstract conceptualization (theorizing) –
positive reinforcement in the form of feedback and generalizing from experience to develop
knowledge of results. This idea was developed by various concepts and ideas that can be
Skinner (1974) as the notion of ‘operant condition- applied when similar situations are
ing’ when the strength of a behaviour is modified by encountered.
reinforcement or punishment. 4 Active experimentation – testing the concepts
or ideas in new situations. This gives rise to a
new concrete experience and the cycle begins
Cognitive learning theory again.
Cognitive learning explains learning in terms of This model is that it is a simple description of how
how the mind works. It refers to the acquisition of experience is translated into concepts that are then
knowledge and understanding by absorbing infor-
mation in the form of principles, concepts and facts
and then internalizing it. Learners can be regarded F I G U R E 3 7. 1 The Kolb learning cycle
as powerful information-processing machines. The
Concrete
cognitive processes of rehearsal, organization and
experience
elaboration are deployed to understand the con-
cepts, link them together and put them to use.
Cognitive learning theory originated in the work of
Piaget (1973) who focused on how the development Active Reflective
of learning took place. experimentation observation
Abstract
conceptualization
(theorizing)
used to guide the choice of new experiences. To needs to be taken into account when planning and
learn effectively, individuals must shift from being implementing training programmes.
observers to participants, from direct involvement
to a more objective, analytical detachment.
The concept of ‘learning in the flow of work’, a Lessons from neuroscience
phrase coined by Bersin (2008), is associated with
Neuroscience is the study of how the brain works.
experiential learning theory. Learning in the flow of
As explained by Collins (2016: 57), it teaches us
work is the learning that takes place when people
that learning ‘is a physical set of changes in your
are doing their job rather than receiving some form
brain that includes synthesizing new proteins,
of formal training. They are primarily learning from
releasing neurotransmitters and changing your neu-
their actions not from what they are told to do. It
rons to generate new connections.’ The latter pro-
focuses attention on the work itself as a basis for
cess was defined by Hebb (2002) whose ‘law’ states
learning. It is about ‘learning in the moment’.
that ‘cells that fire together wire together’. This
means that when a new connection has been estab-
lished it becomes stronger the more frequently it is
Social learning theory ‘refreshed’. So to learn something difficult you may
Social learning theory was initiated by Bandura have to go over it again and again.
(1977) who viewed learning as a series of informa- Neuroscience also teaches us that our brains
tion-processing steps set in train by social interac- work best when they focus on one thing at a time,
tions. Behaviours are learnt from experience but also rather than multitasking. This means that in creat-
through the example of others. This happens whether ing learning content for a learning event or online
or not it is organized. Bandura emphasized the im- learning it may be advisable to sequence the learn-
portance of reflection and self-determination. The ing in stages so that learners are able to grasp one
six concepts of Bandura’s social learning theory are: concept before moving on to another. It also sup-
ports the idea of microlearning.
1 Expectations – the individual’s beliefs about
Another key concept of neuroscience is that of
likely results of actions.
neuroplasticity. This suggests that the brain has
2 Observational learning – the individual’s ‘plasticity’ in that it is able to keep developing and
beliefs based on observing desired behaviour. changing. It challenges the belief that the ability to
3 Behavioural capability – the knowledge and learn diminishes with age.
skills needed to influence behaviour. The Maritz Institute (Hendel-Giller, 2010: 6)
4 Self-efficacy – confidence in ability to take produced the following learning design principles
action. based on research linking the Kolb learning cycle to
the structure of the brain:
5 Reciprocal determinism – behaviour changes
resulting from interaction between a person 1 Engage the entire Kolb learning cycle. Make
and the environment. time for reflection, creating and active testing
6 Reinforcement – responses to a person’s as well as absorbing new information.
behaviour that increase or decrease the 2 Make a connection with the learner’s prior
chances of recurrence. knowledge and experience.
3 Create opportunities for social engagement
and interaction as part of the learning
The learning curve process.
4 Engage both feeling and thinking. Learning
The concept of the learning curve refers to the time
needs emotion as well as intellect.
it takes an inexperienced person to reach the re-
quired level of performance in a job or a task, which 5 Actively attend to attention-gaining, holding
is sometimes called the experienced worker’s stand- and focusing the learner’s attention.
ard (EWS). The existence of the learning curve 6 Engage a maximum number of senses –
especially visual – when designing learning.
Practical implications of learning Self-directed learning

theory
Self-directed learning is learning carried out at the dis-
The practical implications of learning theory are cretion of the learner (discretionary learning). It hap-
summarized in Table 37.1. pens when individuals take the initiative to learn
Learning theory tells us how people learn and, something, set their own learning goals and plan for
as indicated above it significantly affects the meth- themselves how they are to be attained. As observed
ods of learning and development adopted by an by the CIPD (2017: 1), ‘It is about user choice and co-
organization. But it is also necessary for organiza- creation, not just prescription learning.’ Self-directed
tions to be aware of the relative importance of the learning is associated with the concept of agency – the
ways in which learning is achieved, and guidance ability of people to make independent choices and to
on this is provided by the 70:20:10 model de- learn and retain more if they find things out for them-
scribed below. selves (discovery learning). It involves recording
achievements and action planning, which means that
individuals review and reflect on what they have
The 70:20:10 model learnt, what their goals are, how they are going to
achieve those goals and what new learning they need
The 70:20:10 model explains that learning is to acquire. They can in effect design the content of
achieved by about 70 per cent from work experi- their own learning programmes which may be ‘self-
ence, about 20 per cent from social learning and paced’ – learners decide for themselves the rate at
10 per cent from formal training courses. It is which they learn, measure their own progress and ad-
based on research conducted by the Centre for just the programme accordingly. It also involves:
Creative Leadership (Lombardo and Eichinger,
1996). The model draws attention to the signifi- ●● finding ways to learn in such ways as making
cance of learning from experience and from others use of curated learning material, completing
(social learning) and the relatively small contribu- learning programmes on a digital learning
tion made by formal training. In other words, most platform (a piece of software designed to
learning takes place informally in the workplace, assist learning), or taking an online course
while formal instruction plays a much less impor- such as a MOOC;
tant part. ●● trying new ways of doing things;
The model has been criticized by Clardy (2018) ●● asking for help when something is not
on the grounds that it has been under-researched understood;
and the evidence for it is therefore weak. In reality,
●● observing more experienced employees at
he argued, learning doesn’t happen in these three
work;
neat boxes and thinking of it in this way can do
more harm than good. The model should not be ●● practising what has been learned already;
taken too literally and should instead be regarded ●● learning how to learn and personal develop
mainly as an illustration of the value of experiential ment planning (see later in this chapter);
and social learning. And it is still necessary to recog- ●● interactive learning through digital learning
nize the importance of formal training which can (see Chapter 38).
play an important role in helping people to acquire
specific knowledge and skills, especially when it is Individual learners can do a lot of this for themselves
blended with other forms of learning. but they will benefit from guidance and help from
However, the model does draw attention to the their line managers and L&D or HR professionals.
significance of experiential learning. The organiza- They need support through coaching, mentoring and
tion’s role in making this happen in the workplace learning facilities, including digital learning. This sup-
is considered in Chapter 38 but the individual plays port can include the provision of learning material
a major part through self-directed learning as de- online. They should be encouraged to define, with
scribed below. whatever help they need, the knowledge and skills
required to do their work. They need information on
where they can get the material – online and elsewhere
TA B L E 37.1 The practical implications of learning theory

Theory Content Practical implications
Behaviorist theory Behaviours can be Reinforcement theory underpins training

strengthened by reinforcing programmes concerned with developing
them with positive feedback skills through instruction. In these, the
(conditioning). learner is conditioned to make a response
and receives immediate feedback and
progress is made in incremental steps,
each directed to a positive outcome.
Cognitive learning Learners acquire The knowledge and understanding of

theory understanding, which they learners can be enriched and internalized by
internalize by being exposed the use of a variety of learning materials in
to learning materials and by addition to face-to-face instruction (eg
solving problems. e-learning, case studies, projects and
problem-solving activities). Cognitive
learning theory also underpins self-directed
learning and personal development planning
activities.
Experiential People learn by constructing Learning through experience in the

learning theory meaning and developing workplace (learning in the flow of work) can
their skills through be enhanced by encouraging learners to
experience. reflect on and make better use of what they
learn through their own work and from
other people.
Social learning Learning is most effective in Learning can be encouraged in

theory a social setting. Individual communities of practice and in project
understanding is shaped by teams and networks.
active participation in real
situations.
The learning curve The time required to reach Recognize that progress may vary and may
an acceptable standard of not be continuous. Enable learners to
skill or competence varies consolidate their learning and introduce
between people. Learning reinforcement periods in training
may proceed in steps with programmes to recognize the existence of
plateaus rather than being a learning steps and plateaus.
continuous process.
Neuroscience Understanding the way in The aids to effective learning include:

which the brain functions ●● Emotional engagement with what is
provides useful insights into being learnt.

approaches to learning and ●● Stimulating environments, both
development physically and online.

●● Creating opportunities for social
engagement and interaction as part of

the learning process.
●● Time for the brain to reflect to embed
the learning.
(curation). The stages of self-directed learning are active, self-regulated learning can facilitate the
shown in Table 37.2. development of complex skills and adaptive
The term ‘self-managed’ learning is often used as performance. (Bell et al, 2017). Self-regulation also
an alternative to ‘self-directed learning’. But it could plays an important role in life-long learning in the
be argued that the latter term is more comprehen- context of continuing professional development
sive because it suggests that learners decide what and has been found to predict goal attainment in
they want to learn and then learn it, while ‘self- new training formats. (page 118)
managed learning’ suggests that individuals are A major contribution to thinking about self-regu-
given a lead on what they should learn and only lated learning was made by Zimmerman (1990: 4)
then manage the learning themselves. who wrote:
Another term associated with self-directed learn-
ing often used by academics is ‘self-regulated learn- At one time or another, we have all observed
ing’. It may be hard to distinguish this from ‘self- self-regulated learners. They approach
directed learning’, but Lourenco and Ferreira (2019) educational tasks with confidence, diligence,
and resourcefulness. Perhaps most importantly,
argued that, although these constructs show many
self-regulated learners are aware when they know
similarities, especially with regard to the processes
a fact or possess a skill and when they do not.
associated with active engagement, goal-directed
Unlike their passive classmates, self-regulated
behaviour, cognitive skills and intrinsic motivation, students proactively seek out information when
they are not the same. While self-regulated learning needed and take the necessary steps to master
is usually considered to be a learner characteristic, it. When they encounter obstacles such as poor
self-directed learning is both a learner characteristic study conditions, confusing teachers, or abstruse
and a design feature of the learning environment. text books, they find a way to succeed. Self-
They also commented that regulated learners view acquisition as a systematic
There is a body of research showing that training and controllable process, and they accept greater
designs that encourage and support more responsibility for their achievement outcomes.
C A S E S T U DY
Self-directed learning in Vestas Blades UK Ltd
Vestas Blades UK Ltd is a wind turbine blade research, Process (NAP). Individuals decided the learning goals that
development and manufacturing company based in the Isle of would have the greatest benefit to them and their part of
Wight and Southampton. The L&D policy adopted by Vestas the business. The NAP focused attention on the impact that
was to give ownership of learning to individuals. Learning the business’s strategic and operational objectives had on
needed to be continuous, timely and relevant for people whose each participant’s current and future level of performance.
roles would present new challenges as the business grew. It Once participants were made aware of the wealth of
wanted employees to have a choice about what they earnt, learning resources available through books or e-learning,
when and how. A menu of training courses not only seemed they chose the learning group they wanted to join. Each
unattractive but was also seen to have limited effectiveness in group consisted of four people from across the organiza-
terms of the transfer of learning to the workplace. A tion who would meet regularly every six weeks in
requirement of any new approach was that it should motivate confidence – serving as a support structure for its
employees by serving their own individual learning needs members. Such support was critical. The opportunity to
while at the same time meeting those of the business. talk about how to apply learning in the workplace not only
The self-directed learning programme began by helped group members make sense of the effect that their
introducing the concept of personal awareness (via the learning had but also supported fellow learners in the
Myers-Briggs Type Indicator) and its relevance to learning. group working on the same or similar topics. During the
An inquiry tool was developed to help participants identify first year each group had its own facilitator. The facilita-
their own learning needs, known as the Needs Analysis tor’s role was to accelerate the group’s capability to learn.
TA B L E 37.2 The staged self-directed learning model

Stage Learner Trainer Examples
1 Dependent Authority Coaching with immediate feedback

Coach Lecture
Overcoming deficiencies and
resistance
2 Interested Motivator Guided discussion

Guide Goal setting
Developing learning strategies
3 Involved Facilitator Discussion facilitated by trainer who

participates as equal
Seminar
Group projects
4 Self-directed Consultant Internship

Delegator Dissertation
Individual work
Self-directed study group
SOURCE Adapted from Grow (1991: 121)
The L&D function can do much to support self- Learners can be helped to think for themselves
directed learning. This can be at different levels and about what they need to learn and how they should
a model of the stages that might take place pro- do it by answering questions like these:
duced by Grow (1991: 121) is shown in Table 37.2.
●● What knowledge and skills do I need to do
They can also help by advising people on how to
my job properly?
learn and the use of personal development planning
as described below. ●● To what extent are there any gaps between
the knowledge and skills I need and the
knowledge and skills I possess?
Learning to learn ●● What learning methods are available to fill
these gaps?
People learn all the time and through doing so ac- ●● How do I set about selecting the most
quire knowledge, skills and insight. But they will be appropriate methods and putting them to
better at learning if they ‘learn how to learn.’ As use?
defined by Honey (1998), learning to learn means
●● How should I track my progress and
the acquisition of knowledge and skills about the
evaluate the results?
learning process itself. The aims are to provide a
basis for organizing and planning learning (self-di- Learners should be encouraged to work through
rected learning), pinpoint exactly what has been these questions and take action themselves. But they
learnt and what to do better or differently as a con- will benefit from advice on the learning methods
sequence, and share what has been learnt with other available, help in learning from others in learning
people so that they benefit and transfer what has communities or learning sets (social learning, see
been learnt and apply it in different circumstances Chapter 38) and guidance on where learning material
to improve the learning process itself.
can be obtained (curation), some of which might be 4 Formal training to develop knowledge and
provided on a learning experience platform (see skills may be part of the plan but it is not the
Chapter 38). most important part.
5 Implement. Take action as planned.
Personal development The plan can be expressed in the form of a learning

contract, which is a formal agreement between the
planning manager and the individual on what learning should
take place, the objectives of such learning and what
Personal development planning is a method of for- part the individual, the manager, the L&D function
malizing self-directed learning. It is carried out by or a mentor will play in ensuring that learning hap-
individuals with guidance, encouragement and help pens. The partners to the contract agree on how the
from their managers, usually on the basis of perfor- objectives will be achieved and their respective
mance and development reviews. A personal devel- roles. It will spell out learning programmes and in-
opment plan sets out the actions people propose to dicate what coaching, mentoring and formal train-
take to learn and to develop themselves. The pur- ing activities should be carried out. It is, in effect, a
pose is to provide what Tamkin et al (1995) called a blueprint for learning.
‘self-organized learning framework’. The stages of
personal development planning are:
1 Analyse current situation and development
Continuing professional
needs. This can be done as part of a development
performance management process.
2 Set goals. These could include improving Continuing professional development (CPD) is an-
performance in the current job, improving or other aspect of individual learning. It is about track-
acquiring skills, extending relevant ing and documenting the skills, knowledge and
knowledge, developing specified areas of experience that people gain both formally and in-
competence, moving across or upwards in formally as they work, beyond any initial education
the organization, preparing for changes in or training. It includes both the development and
the current role. the application of that learning. The idea is that eve-
3 Prepare action plan. The action plan sets out ryone, especially professionals, should keep up to
what needs to be done and how it will be date with any new ideas or practices that affect
done under headings such as outcomes their work and their ability to continue functioning
expected (learning objectives), the effectively.
development activities, the responsibility for In a statement in 2020 on its CPD policy, the
development (what individuals are expected Chartered Institute of Personnel and Development
to do and the support they will get from defined it as:
their manager, the L&D or HR department a combination of approaches, ideas and techniques
or other people) and timing. A variety of that will help you manage your own learning and
activities tuned to individual needs should be growth. The focus of CPD is firmly on results – the
included in the plan, for example observing benefits that professional development can bring
what others do, project work, planned use of you in the real world. Perhaps the most important
e-learning programmes and internal learning message is that one size doesn’t fit all. Wherever
resource centres, working with a mentor, you are in your career now and whatever you
coaching by the line manager or team leader, want to achieve, your CPD should be exactly that:
experience in new tasks, guided reading, yours.
special assignments and action learning.
Key learning points
Individual learning defined contribution made by formal training is represented by

the 70:20:10 model for learning. This claims that
Individual learning is what employees do or what is people’s development will be about 70 per cent from
done for them in order to acquire the knowledge, skills work experience, about 20 per cent from social
and abilities (KSAs) they need to perform effectively in learning and 10 per cent from formal training courses.
their present job and to develop in the future. But these figures are only guidelines.
The basis of learning What makes people want to learn?

People learn by doing (experiential learning) and from People want to learn if they are motivated to learn and
each other (social or cooperative learning) and to a engaged with the learning process.
much smaller extent, by instruction (training).
Discretionary, self-directed, learning is important.
How people learn
The 70:20:10 model How people learn is explained by learning theories
(behaviorist, cognitivist, experiential and social
The significance of learning from experience and from learning), the concept of the learning curve and
others (social learning) and the relatively small neuroscience.
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344
38
The process of learning
and development
Introduction Approaches to learning needs
analysis
The process of learning and development in organi-
zations consists of four steps: Evidence on learning needs in the form of capability
(knowledge and skill) requirements can be obtained
1 Analyse – identify learning and development through a gap analysis and review of corporate, col-
needs. lective and individual needs. These three areas are
2 Plan – decide on how the needs should be interconnected, as shown in Figure 38.1. The analy-
satisfied by formal means and by informal sis of corporate needs will lead to the identification
learning and self-directed learning. of collective learning needs in the form of skills en-
3 Implement – formal learning events and hancement in different departments, functions or
plans for developing self-directed and occupations, while these in turn will indicate what
workplace learning. individual employees need to learn. The process op-
erates in reverse. As the needs of individual employ-
4 Evaluate – measure the overall contribution ees are analysed separately, common needs emerge,
of L&D and the effectiveness of formal which can be dealt with on a group basis. The sum
learning events. of group and individual needs will help to define
These four steps as described in this chapter provide corporate needs, although there will be overarching
the framework for the practice of L&D, as covered learning and development requirements for the or-
in Chapter 39 ganization as a whole arising from its corporate and
workforce plans. These areas of analysis are dis-
cussed below.
Identify learning needs
The identification of learning needs means finding Gap analysis
out the skills required by the organization to achieve Learning needs analysis is often described as the
its goals as the basis for planning and delivering rel- process of identifying the learning gap – the gap be-
evant learning and development programmes and tween what is and what should be, as illustrated in
events. All learning activities need to be based on an Figure 38.2.
understanding of what should be done and why it Gap analysis is the identification of the gap be-
should be done. This may be set out in broad terms tween what people know and can do and what they
in the learning and development strategy. But to should know and be able to do. The learning needed
provide a basis for planning specific L&D activities to fill the gap can then be specified. Information on
it is necessary to identify and analyse corporate, the nature of the gap may be obtained by one or
group and individual learning needs in more detail. more of the methods described below. But this ‘defi-
Chapter 38 | The Process of Learning and Development 345
F I G U R E 38.1 Learning needs analysis – areas and methods
Corporate Collective Individual
Analysis of Analysis of Performance

business/ workforce and Role Learning
Surveys
corporate plans development analysis specification
plans reviews
F I G U R E 38.2 The learning gap
What is Learning gap What should be
• Performance levels
• Actual performance
required
levels
• Knowledge and skill
• Knowledge and skill
(capabilities)
possessed
required
ciency model’ – only putting things right that have make. These broad indicators are translated into
gone wrong – is limited. Learning is much more plans on the contribution L&D activities can make
positive than that. It should be concerned with iden- to ensuring that these needs are met.
tifying and satisfying development needs – fitting
people to take on extra responsibilities, acquire new
skills to deal with changing work demands or de- Surveys
velop a range of skills to facilitate multitasking.
Special surveys or an interviewing programme ob-
tain the views of managers and other employees on
learning needs. However, the material gathered
Analysis of corporate and from a survey may be unspecific and, when inter-
workforce plans viewed, people may find it difficult to articulate
what they want. In the latter case it is best to lead
Corporate and workforce plans are analysed to in-
with a discussion of the work they do and identify
dicate in general terms the types of skills that may
any areas where they believe that their performance
be required in the future and the numbers of people
and potential could be developed. This could con-
with those skills that will be needed. Plans to intro-
tinue with the identification of any additional things
duce new products or services or change existing
they feel they need to know or be able to do.
ones are reviewed and the implications for skill re-
Individual views can be amalgamated to provide a
quirements assessed. Consideration is given to pro-
picture of common learning needs.
posed changes in work processes, methods or job
responsibilities and the impact on skills they will
F I G U R E 38.3 A learning specification
LEARNING SPECIFICATION
Role: Product Manager Department: Marketing
What the role holder must understand
Learning outcomes Learning methods

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

Learning outcomes Learning methods
• Prepare product budget • Coaching: budget accountant
• Prepare marketing plans • Coaching: mentor
• Conduct market reviews • Coaching: market research department
• Prepare marketing campaigns • Read: product manager’s manual
• Specify requirements for advertisements and • Attachment to agency
promotional material • Coaching: mentor, read analyses
• Liaise with advertising agents and creative • Read: previous reports; observe
suppliers • Marketing review meetings
• Analyse results of advertising campaigns
• Prepare marketing reports
Role analysis Skills analysis

Role analysis is the basis for preparing role profiles Skills analysis, as described in Chapter 72, deter-
that provide a framework for analysing and identify- mines the skills required to achieve an acceptable
ing learning needs. Role profiles set out the key result standard of performance. It is mainly used for tech-
areas of the role but, importantly, also define the com- nical, craft, manual and office jobs to provide the
petencies required to perform it. Performance man- basis for devising learning and training programmes.
agement should ensure that role profiles are updated
regularly. An assessment is made of any learning re-
quired to develop levels of competency. Ideally, this Performance management
should be a self-assessment by individuals who should Performance management processes, as described in
be given every encouragement to identify learning Chapter 41, are a prime source of information
needs for themselves. But these can be discussed with about individual learning and development needs.
the individuals’ manager and agreement reached on Performance management is based on an analysis of
individuals through self-directed learning. The output role requirements in the shape of knowledge, skills
of role analysis could be a learning specification, as il- and abilities (KSAs) and the behavioural competen-
lustrated in Figure 38.3. cies needed to perform effectively, taking into ac-
This method of assessing individual learning needs count any new demands that will be made on the
generates information on common learning needs. role holder. Performance reviews, which should be
The information can be related to the organization’s held whenever appropriate rather than simply being
competency framework and used to inform the design an annual event, will include discussions on the ex-
of competency-based learning events and digitally tent to which the individual would benefit, in career
based learning material (e-learning).
progression as well as performance terms, from ●● Training – the formal provision of face-to-
some form of learning and development activity. face learning by the use of systematic and
Problems of performance arising from lack of planned instruction activities either on or
knowledge or skill can be identified so that remedial off-the-job.
action can be taken. A joint assessment can then be ●● Blended learning – combining two or more
made of what sort of development programme is learning activities to increase their impact.
required. This can lead to personal development
plans and learning contracts, which involve action Fuller descriptions of these activities are contained
plans, self-directed learning and an agreement on in Chapter 39. Instructional, coaching and mentor-
what support will be provided to the individual by ing skills are covered in Chapter 73.
the organization and the manager. An overall analy- But to a large extent learning takes place infor-
sis of performance and development review reports mally – learning in the flow of work. This cannot be
can reveal any common learning needs that can be planned in the same way as a learning intervention
satisfied by tailored learning events. but plans can be made on how informal learning
should be promoted. This applies to self-directed
learning through the provision of encouragement
Planning learning and and guidance and help in the form of learning mate-
rial developed or obtained from available sources
development (curated) by L&D specialists. It is also a matter of
getting line managers to play their part through
Learning in organizations takes place both formally coaching and instruction and by providing an envi-
and informally. Formal learning happens through ronment is which informal learning can take place.
training courses (learning events) and programmes,
planned and systematic coaching and instruction
activities, and e-learning (the delivery of learning Implement
material by digital means). These are often called
‘interventions’ because they are planned to supple- L&D or HR specialists are usually responsible for
ment or support the normal process of learning that implementing formal training courses and manag-
takes place at work. The areas of L&D that can be ing extended training or development programmes.
covered in the planning stage are: They also have to provide guidance and encourage-
ment to line managers in fulfilling their responsi-
●● Workshop learning – this can be largely
bilities for workplace learning. Line managers play
informal (learning by doing) but may include
a crucial role, not only in promoting learning within
more formal activities such as face-to-face
their departments but also in ensuring that individ-
(F2F) instruction, coaching, mentoring and
uals have the opportunity to use and develop the
buddying. The effectiveness of workshop
skills they have acquired on off-the-job training
learning is largely up to line managers so
courses.
plans need to be made on how they can be
encouraged and trained to do this.
●● Social and collaborative learning – learning
by interactions with other people, especially
Evaluate learning
working colleagues. This is also largely The evaluation of learning involves establishing how
informal but can include more formal well L&D activities contribute to the achievement of
arrangements such as learning communities. organizational goals and measuring the effectiveness
●● Digital learning – e-learning, virtual learning of individual learning events or programmes so that
environments and the use of social media any necessary improvements or changes can be made.
and smart phones. This can be planned, as in The CIPD (2021) suggested that the outcomes of
e-learning or a virtual working environment, learning evaluation are:
or it can support self-managed learning, as in
knowledge sharing, social media and smart 1 Impact – where L&D can work with the
phones. organization to show how the learning
interventions have impacted on such as Kearns and Miller (1997) and Phillips
performance – these can include links to (2011) emphasize the importance of assessing the
key performance indicators (financial and value of L&D outcomes in financial terms. They
operational). argue that such measurements resonate with sen-
2 Transfer – where L&D can work with the ior management who rely upon ROI as a means of
organization to show how any learning evaluating their business investments. The ROI for
undertaken on L&D events has been L&D is calculated as:
transferred back into the employee’s role and
Benefits from L & D (£) − costs of L & D (£)
work area – these can include performance ×100
goals and how new skills and knowledge Costs of L & D (£)
have been used.
The problem with using ROI for learning evalua-
3 Engagement – where L&D can demonstrate
tion is that while it is easy to record the costs it is
how stakeholders are engaged with learning –
much harder to produce convincing financial as-
this can be at an organizational level where a
sessments of the benefits. Another problem is that
positive learning environment is the goal, at
the arithmetic of ROI means that investments in
team levels or at an individual level.
L&D, which are typically much smaller than invest-
ments in technology or research, can look superfi-
Evaluating the overall contribution cially impressive. As Phillips noted, it is not unusual
for L&D programmes to generate ROIs in the 100–
of L&D 700 per cent range while the target for ROI on other
As Anderson (2007: 3) commented: business investments is generally set in the range of
15–20 per cent. Huge L&D returns are likely to be
Traditional approaches to evaluation set out to suspect and lead management to question the basis
prove the merit of specific learning interventions on which they were calculated. These problems ex-
and to demonstrate their cost-effective delivery... . plain why only 17 per cent of the respondents to the
Whereas a traditional approach to evaluation 2020 CIPD survey used this method.
focuses on the reactions and consequences for
learners and trainers resulting from discrete and
individual training interventions, a strategic Return-on-expectations
approach requires a focus on the aggregate value Return-on-expectations assesses the extent to which
contribution made by a more dispersed range of people believe that L&D has achieved what it was
learning processes. expected to achieve. It is probably the most practi-
Measuring the overall contribution of L&D in fi- cal way of assessing the overall effectiveness of
nancial terms is not easy. Return-on-investment as L&D. Objectives such as one or more of these could
described below is one approach that attempts to be considered:
do this. But there are other ways of assessing the ●● reflect the strategic goals of the business and
effectiveness of L&D, also described below, even if support their achievement;
the financial impact cannot be calculated. These
●● enable the organization to develop the
comprise return-on-expectations, internal surveys
capable people it needs;
and external benchmarking.
●● develop the skills required by the
organization;
Return-on-investment ●● foster the development of a learning culture;
Return-on-investment (ROI) measures the value of
●● enhance learner engagement;
an investment – the allocation of money in the ex-
pectation of some benefit or return in the future. It ●● help to embed organizational learning;
is expressed as the income derived from an invest- ●● promote the use of blended learning;
ment expressed as a percentage of the financial ●● integrate learning into the flow of work;
value of that investment. Expenditure on learning
and development can be regarded as an investment ●● support social learning;
and advocates of this method of measurement ●● provide for the extended use of digital
(online) learning;
●● encourage and support self-directed learning; Return-on-expectations has much to offer because
●● support a curator approach to L&D; it focuses on the comparison of results with clearly
defined objectives and does not rely entirely on the
●● make use of learning analytics and learning
difficult task of assessing the financial benefits of
evaluations to guide strategy and practice.
learning events as does return on investment. It also
Return-on-expectations is an approach to the eval- avoids the problem of the Kirkpatrick method as
uation of learning processes and the outcomes of described below which in practice is mainly used to
learning that focuses on what stakeholders antici- evaluate learning in terms of immediate reactions –
pate will be the result of a learning experience. For level one – which means that the impact of the
individual learning events, these are defined as ob- training on behaviour and performance will not
jectives (terminal behaviour) during the planning have been assessed. Return-on-expectations is a
stage. The objectives are expressed as outcomes useful way to evaluate individual learning events or
rather than the inputs of the training event itself. programmes.
Outcomes consist of any changes in the behaviour
of people at work that follow an event and the im- Internal surveys
pact this has on their performance and that of the
organization. In the learning-impact model produced by Bontis
As a method of evaluation, return-on-expecta- (2009) the success of training is not treated simply
tions can be criticized because its judgements are as a function of what he calls ‘the course ware and
qualitative. But this is not necessarily so. Anticipated trainer delivery’. It is also concerned with the per-
results can be expressed in quantitative terms, de- ceived value of the training by the trainee. Internal
pending on the area covered by the event such as surveys aim to do this and can also obtain the views
increases in output, higher sales, improvements in of line managers on the effectiveness of the learning
customer service levels, quicker progress to experi- and development activities.
enced worker standard (EWS), higher 360-degree
feedback ratings (upward assessments of managers External benchmarking
by their subordinates) and fewer grievances or cases An overall assessment of the effectiveness of learn-
of bullying or harassment. ing and development processes can be achieved by
The following suggestions on how to use return- comparing what is happening within the organiza-
on-expectations were made by Priest (2018: 19): tion with what can be regarded as ‘good practice’ in
1 Be clear on what exactly will be measured. other businesses. This is ‘benchmarking’ which is
Figure out the goals and direction of a defined as a systematic process of making these
business and identify the return on comparisons and evaluating the results to identify
expectations – begin with the end in mind. areas for improvement and stimulate change.
When employees receive training without
clarity or next steps, the seriousness of the
learning will fall by the wayside Evaluate individual learning events
2 Sit with all the stakeholders and identify who The reasons for evaluating individual earning events
needs training – a specific department, were defined by Paine (2015: 130–31) as follows:
management or entry-level positions. And
We need to know who has taken the programme,
what kind of training – is it for time what networks they belong to and what they
management, better communication or have been saying about the programme. We
process improvement? need to know how they learnt and their degree
3 From this information, determine what of engagement with the programme. We need to
behaviours need to change and what success know why they took this programme and the
would look like. These questions should be working context that led to that decision. We
asked during the initial assessment, before need to know where they learnt and their mode of
the design phase, because they help shape the learning, and we need to know the precise times
overall learning programme. 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 model is the best known and the most popular. Its
them in a specific work problem or equipped them four levels are:
to deal with contingencies they have yet to meet
but could encounter in the future. Level 1: Reaction
At this level, evaluation measures how those who
Approach to evaluating learning participated in the training have reacted to it, ie an
assessment of immediate customer satisfaction.
events Reactions may be recorded on a form (sometimes
Evaluation methods should be determined at the called a ‘happy sheet’) on which those attending the
planning stage. This means defining the impact the event indicate the extent to which their time was well
event is expected to make in two ways. First as cri- spent, if they learned something they could apply im-
terion behaviour (the performance standards or mediately to their work and if the course provided
changes in behaviour on the job to be achieved if a them with new ways of thinking about their job.
learning process is to be regarded as successful) and Kirkpatrick suggested the following guidelines
second as terminal behaviour (the actual work be- for evaluating reactions:
haviour of learners when they complete their learn-
ing programme), for example: ‘On completing this ●● determine what you want to find out;
programme participants will be able to….’. The aim ●● design a form that will quantify reactions;
is to establish the extent to which the event has ●● encourage written comments and
achieved its purpose. At the same time, it is neces- suggestions;
sary to consider how the information required for
●● get 100 per cent immediate response;
evaluation should be obtained and analysed.
The aspects of learning events that should be ●● get honest responses;
evaluated are: ●● develop acceptable standards;
1 Planning – the extent to which needs were ●● measure reactions against standards, and
properly evaluated and objectives set. take appropriate action;
2 Conduct – how well the programme or event ●● communicate reactions as appropriate.
was organized and managed, the degree to Research by Warr et al (1970) showed that there
which the inputs and methods were was relatively little correlation between learner re-
appropriate and effective and its cost actions and subsequent measures of changed behav-
compared with the budget. iour. Ruona et al (2002: 226) noted that ‘Despite
3 Reactions – what participants felt about the their widespread use, participant reactions do not
event. seem to contribute greatly to predicting transfer of
4 Outcomes – the impact the event made on learning nor do they seem to predict actual perfor-
individual, departmental and organizational mance improvement.’ As pointed out by Hutchins
performance. and Burke (2007: 257–58), ‘In their evaluation of
learning interventions, trainers may inaccurately
reason that stopping at a reaction level (satisfac-
The Kirkpatrick model for tion) of measurement is sufficient… This misinter-
evaluating learning events pretation alone would represent a flawed assump-
As noted by Tamkin et al (2002: 28), ‘Learning can tion in the field and may explain, in part, the
be modelled as a chain of impact from the planning widespread neglect of measurement activities in
of learning to meet organizational or individual firms beyond assessing learning outcomes.’ But as
learning needs, to the learning that takes place in a Tamkin et al (2002) claimed, despite this, organiza-
learning event, from learning to changed behaviour, tions are still keen to get reactions to training, and
and from changed behaviour to impact on others used with caution this can at least produce some
and the organization as a whole.’ A number of information on the extent to which the event has
models exist but the Kirkpatrick (1979, 1994) been organized successfully and why.
Level 2: Evaluate learning tional performance above its previous level. The
This level obtains information on the extent to evaluation has to be based on before-and-after
which learning objectives have been attained. It will measures and should determine the extent to which
aim to find how much knowledge was acquired, the fundamental objectives of the training have
what skills were developed or improved and the ex- been achieved in areas such as increasing sales, rais-
tent to which attitudes have changed in the desired ing productivity, reducing accidents or increasing
direction. When possible, the evaluation of learning customer satisfaction. Evaluating results is obvi-
should involve the use of tests before and after the ously easier when they can be quantified. However,
programme – written, oral or performance tests. it can be difficult to prove the contribution to im-
proved results made by training as distinct from
Level 3: Evaluate behaviour other factors and, as Kirkpatrick said, evaluators
This level evaluates the extent to which the expected should be satisfied with evidence, because proof is
changes in behaviour have happened when people usually impossible to get.
attending the programme return to their jobs.
Ideally, the evaluation should take place both before The problem of evaluation
and after the training. Time should be allowed for
Evaluating the effectiveness of learning events is
the change in behaviour to take place. The evalua-
necessary but it is difficult and time consuming –
tion needs to assess the extent to which specific
results may be hard to measure. As the CIPD (2020)
learning objectives relating to changes in behaviour
found, the most common method of evaluation re-
and the application of knowledge and skills have
ported was by participant satisfaction (28 per cent).
been achieved.
Only 16 per cent measured the behaviour change of
participants by assessing the transfer of learning
Level 4: Evaluate results in terms of impact on into the workplace and just 12 per cent evaluated
organizational performance the wider impact on the business. But a learning
This is the ultimate level of evaluation and provides event can still be evaluated by assessing the extent
the basis for assessing the benefits of the training to which any changes in behaviour that the pro-
against its costs. The objective is to determine the gramme was expected to produce have happened.
added value of learning and development pro- This is the return-on-expectations model as de-
grammes – how they contribute to raising organiza- scribed earlier.
Key learning points
The process of learning and development ●● gap analysis – identifying the gap between what
people know and can do and what they should
This consists of the following steps: know and be able to do;
●● Analyse ●● business and workforce plans should indicate in
●● Plan general terms the types of skills and competencies
that may be required in the future;
●● Implement
●● special surveys can obtain the views of managers
●● Evaluate. and other employees on what they need to learn;
●● role analysis indicates the level of competencies
Identifying learning needs required;
All learning activities need to be based on an
●● skills analysis determines the skills required to
understanding of what needs to be done and why.
achieve an acceptable standard of performance;
Evidence should be collected on needs through a gap
analysis and review of corporate, collective and ●● performance management reviews include
individual needs as follows: discussions on the extent to which the individual
would benefit from some form of learning and provide guidance and encouragement to line managers
development activity. in fulfilling their responsibilities for workplace learning.
Line managers also play a crucial role.
Planning
Planning varies according to the type of event or
Evaluation of learning
programme but it generally takes place in the following Evaluation is an integral feature of learning activities.
phases: In essence, it is the comparison of objectives with
outcomes to answer the question of how far the event
●● Analysis
has achieved its purpose. The four levels of evaluation
●● Design in the Kirkpatrick methodology are: (1) reaction, (2)
evaluate learning, (3) evaluate behaviour, (4) evaluate
●● Development.
results.
An alternative method of evaluation is return-on-
Implementation investment, the use of learning analytics and return-
L&D or HR specialists are usually responsible for on-expectations.
implementing formal training courses. They also have to
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,
Bontis, N (2009) The Predictive Learning Impact Kogan Page
Model, Chicago, IL, Knowledge Advisors Phillips, J J (2011) Return on Investment on Training
Chartered Institute of Personnel and Development and Performance Improvement Programs, 2nd
(2020) Learning and Skills at Work 2020, London, edn, Abingdon, Oxon, Routledge
CIPD Priest, N (2018) Evaluation at first sight, Training
Chartered Institute of Personnel and Development Journal, November, pp 18–20
(2021) Evaluating Learning and Development, Ruona, W, Leimbach, M, Holton, E and Bates, R
London CIPD (2002) The relationship between learner utility
Hutchins, H M and Burke, L A (2007) Identifying reactions and predicted learning transfer among
trainers’ knowledge of training transfer research trainees, International Journal of Training and
findings – closing the gap between research and Development, 6 (4), pp 218–28
practice, International Journal of Training & Tamkin, P, Yarnall, J and Kerrin, M (2002)
Development, 11 (4), pp 236–64 Kirkpatrick and Beyond: A review of training
Kearns, P and Miller, T (1997) Measuring the impact evaluation, Report 392, Brighton, Institute for
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353
39
The practice
of learning and
development
colleagues (social learning) and reflecting on experi-
Introduction ence so that it can be understood and applied.
Workplace learning involves self-directed learning
Learning and development process, as described in and is enhanced by planned experience and e-learn-
Chapter 38, provides the framework for the L&D ing. But some more formal training activities take
practices covered in this chapter: workplace place there. These include instruction, coaching,
learning, social learning, also known as collabo mentoring and onboarding (induction) training.
rative learning, digital learning, training and The latter aims to provide new starters with the
apprenticeships. knowledge and skills they require. Additional for-
mal training may be provided later to develop new
skills or enhance existing ones.
Workplace learning A study by Eraut et al (1998) established that in
organizations adopting a learner-centred perspec-
Workplace learning happens when people learn tive, formal education and training provided only
where they work (‘on the job’) by gaining experience, a small part of what was learnt at work. Most of
observation (social learning), formal training (in- the learning described to the researchers was non-
struction) or coaching. As Charles Jennings of the formal, neither clearly specified nor planned. It
70:20:10 Institute, cited by Daly and Ahmetaj (2020: arose naturally from the challenges of work.
42), commented: ‘In an ever-changing world, learning Effective learning was, however, dependent on the
leaders need to focus their efforts where they can employees’ confidence, motivation and capability.
have greatest impact. This is not in the classroom or Some formal training to develop skills (especially
through e-learning modules. It’s in the daily flow of induction training) was usually provided, but
work. We learn far more from working than we do in learning from experience and other people at work
other ways.’ A study at the Research Center for predominated.
Education and the Labor Market quoted by Daly and Reynolds (2004: 3) explained that
Ahmetaj (2020) found that 96 per cent of time spent
learning occurs in the daily flow of work and only 4 The simple act of observing more experienced
per cent of time occurs away from the flow of work. colleagues can accelerate learning; conversing,
Learning in the workplace is mainly informal al- swapping stories, cooperating on tasks and
though line managers have an important part to offering mutual support deepen and solidify
play in facilitating it through coaching and by ar- the process... This kind of learning – often very
informal in nature – is thought to be vastly
ranging supporting activities, including formal
more effective in building proficiency than more
training sessions. Much of it is experiential learn-
formalized training methods.
ing – learning in the flow of work, working with
But there are disadvantages. Learning on the job Planned experience

was once anathematized as ‘sitting by Nellie’ (this
Planned experience involves deciding on a sequence
was when Nellie was a fairly common name), mean-
of experience that will enable people to obtain the
ing that trainees were left to their own devices to
knowledge and skills required in their jobs and pre-
pick up bad habits from their neighbours. It can be
pare them to take on increased responsibilities. This
argued that formal training has its limits but at least
enables experiential learning to take place to meet a
it is, or should be, planned and systematic and a bet-
learning specification. A programme is drawn up that
ter way of learning a skill than simply hoping that it
sets down what people are expected to learn in each
will be acquired by some form of osmosis. The sys-
department or job in which they are given experi-
tematic training movement of the 1960s was a reac-
ence. This should spell out what they are expected to
tion against traditional laissez-faire approaches.
discover for themselves. A suitable person (a mentor)
A further difficulty is that while much of the
should be available in order to see that people in a
learning that occurs in the workplace is self-regu-
development programme are given the right experi-
lated, learners still benefit, indeed depend to a cer-
ence and opportunity to learn. Arrangements should
tain extent, on the support and guidance of their
be made to check progress. A good way of stimulat-
line managers. Some managers will provide this
ing people to find out for themselves is to provide
support, many won’t. This crucial aspect of learning
them with a list of questions to answer. It is essential,
may therefore be neglected unless the L&D func-
however, to follow up each segment of experience to
tion does something about it. And that isn’t easy.
check what has been learnt and, if necessary, modify
the programme.
Planned experience can be provided by job rota-
Approaches to workplace learning tion, which involves the movement of employees from
Experiential learning in the workplace is important one task to another to gain additional experience. It
but it should not be left to chance. It needs to be can also reduce monotony by increasing variety.
enhanced by such means as induction learning,
planned experience, job rotation, coaching, mentor- Coaching
ing, ‘buddying’, shadowing, performance manage-
ment, personal development planning, e-learning Coaching is a personal (usually one-to-one) ap-
and the development of connected learning approach to helping people develop their skills and
proaches, as described below. knowledge and improve their performance. The
need for coaching may arise from formal or infor-
mal performance reviews, but opportunities for
Induction training coaching will emerge during everyday activities.
Most new starters other than those on formal train- Coaching as part of the normal process of manage-
ing schemes such as apprenticeships will learn on- ment consists of:
the-job, although this may be supplemented with
●● using whatever situations may arise as
special off-the-job courses to develop particular
opportunities to promote learning;
skills or knowledge. On-the-job training can be hap-
hazard, inefficient and wasteful. A planned, system- ●● controlled delegation – ensuring that
atic approach is desirable. This can incorporate the individuals not only know what is expected
definition to new starters of what they are expected of them but also understand what they need
to do (their roles), an assessment of what they need to know and be able to do to complete the
to learn (a learning specification), the use of desig- task satisfactorily; this gives managers an
nated and trained colleagues to act as guides and opportunity to provide guidance at the
mentors, and coaching by team leaders or specially outset: guidance at a later stage may be seen
appointed and trained departmental trainers. A as interference;
planned experience programme as described below ●● making people aware of how well they are
may be desirable. These on-the-job arrangements performing by, for example, asking them
can be supplemented by self-managed learning ar- questions to establish the extent to which they
rangements that offer access to e-learning material. have thought through what they are doing;
Chapter 39 | The Practice of Learning and Development 355
●● encouraging people to look at higher-level a blended learning approach (ie one that includes a
problems and how they would tackle them. number of complementary learning activities) to
leadership and management development. Coaching
Coaching has an important role in workplace learn-
skills are described in Chapter 73.
ing. Executive coaching is used frequently as part of
C A S E S T U DY
Coaching at Marks & Spencer

Traditionally M&S trained its customer assistants by taking additional training they may need once qualified. Formal
them off the shop floor for classroom-style training, but the coaching cards are used, which address both service and
company has introduced a new role, that of coach. When technical skills and tell the coaches what to assess and
trainees join M&S, their coaches take them through all of what the learning should be. Each trainee is also provided
the training required for their immediate role, as well as any with a booklet summarizing the main learning points.
Mentoring Performance management

Mentoring is the process of using specially selected and Performance management processes, as described in
trained individuals (mentors) to provide guidance, prag- Chapter 41, enable managers and individual members
matic advice and continuing support that will help the of their teams to work together to identify any areas
person or persons allocated to them to learn and de- where there is a need to enhance skills or knowledge
velop. Mentoring promotes learning on the job. It also in order to help someone to progress or to deal with
complements formal training by providing those who a performance problem.
benefit from it with individual guidance from experi-
enced managers who are ‘wise in the ways of the or-
ganization’. Mentoring can play an important part in a
Personal development planning
leadership and management development programme. Personal development planning as described later
in this chapter is carried out by individuals with
guidance, encouragement and help from their
Buddy system managers, usually on the basis of performance
In a ‘buddy system’ an individual works alongside assessments.
someone with more experience. The buddy will be
charged with assisting as and when required, pro-
viding guidance on how best to get the job done. Making workplace learning
effective
Shadowing
Workplace learning of a sort will take place even if
Shadowing is a type of buddying except that the nothing is done about it. But it will be haphazard
trainee is simply observing what an experienced and incomplete. People will pick up bad habits and
colleague does. It will only work if the colleague is will be lucky if they acquire the skills to do the work
briefed on how to ensure that the trainee is really properly. Some or all of the activities described above
learning what needs to be learnt. To this end coach- need to take place as appropriate and it is only line
ing sessions need to be held regularly so that the managers and supervisors – the people on the spot –
trainee can reflect on and learn from the experience. who can do this. In large departments, departmental
learning advisors and trainers can be appointed on a they encounter from other people – which may
full-time or part-time basis. In smaller departments a come from both internal and external channels.
team leader can be given additional responsibilities Knowledge workers need to be able to find answers
for organizing learning. But L&D specialists still to their learning and performance problems as soon
have an important role to play in promoting work- as they encounter them. They don’t want to have to
place learning by providing encouragement, advice wait to go on a course or get some other response.
and guidance to line managers. They want to solve their problems immediately and
get on with their jobs. If when sitting at their desk
they encounter a problem with a task they are
Social learning working on they tend either to seek help from their
professional network or to go straight to Google
As defined by Hart (2014: 14), ‘Social learning is and search for a solution.
about people connecting, conversing, collaborating Some form of social or collaborative learning
and learning from, and with, one another on a daily happens continually in the workplace as individuals
basis at work…It’s about helping teams learn as and groups work together. Groups solve problems
they work, rather than taking them out and forcing jointly and learn in doing so. Project teams do the
them to endure a learning “experience”.’ Social same. Individuals observe what their colleagues do
learning theory as formulated by Bandura (1977) and learn from their observations. But it shouldn’t
regards learning as a series of information-process- be left to chance. Social learning involves connected
ing steps set in train by social interactions and em- learning which addresses the learning needs and in-
phasizes that effective learning requires such inter- terests of individuals and how these can be linked
action. Wenger (1998) suggested that we all with the opportunities for learning provided by fel-
participate in ‘communities of practice’ (groups of low workers through such means as communities of
people with shared expertise who work together) practice and learning communities. As Hart (2014:
and that these are our primary sources of learning. 35) pointed out:
A survey conducted by Hart (2014) into how It is in the area of workforce collaboration where
people valued ten different forms of learning estab- there are plenty of new opportunities for L&D
lished the following order of preference from to support work teams and groups. Since people
respondents: learn from one another as a consequence of
1 Collaborative working within your team working together, rather than focusing exclusively
on the learning, it is more about helping them
2 Web search for resources work collaboratively and enabling continuous
3 General conversations and meetings with learning to take place as part of that process.
people It is also important to reiterate that supporting
4 Personal and professional networks and continuous learning in the flow of work is not
communities about providing them with courses as they do their
work, helping them to find their own courses, or
5 External blogs and news feeds even helping them to create their own courses for
6 Content curated from external sources one another – rather it is about helping them share
7 Self-directed study of external courses their knowledge, experiences, ideas and resources
as part of their daily workflow.
8 Internal job aids
9 Internal documentation But social learning can be encouraged through the
use of learning communities.
10 Company training and e-learning.
As she commented, this clearly shows that social or
collaborative learning activities – and in particular Learning communities
self-organized activities – are the ways in which the Learning communities are groups of people carry-
survey respondents preferred to learn. She noted ing out similar or related work who get together to
that, in particular, knowledge workers want to learn learn from one another. They can be established
as an integral part of their daily job and like to learn within departments by managers or individuals and
continuously from the constant flow of information operate in a fairly informal way. But L&D can and
should encourage and support them as an approach learning communities may become communities of
to learning that offers more than traditional train- practice – groups of people bound together by shared
ing. L&D may appoint a community facilitator expertise who meet together to share knowledge.
who provides guidance and help but does not dic- Although learning communities may sometimes
tate what the community members discuss. be added on to a traditional training course they
Learning communities can also be set up on a work best if the community itself, with help as nec-
more formal basis by L&D professionals to support a essary from L&D, decides on what they need to
training course or an online programme. They might learn together and how they will learn it. They can
be established before a course to prepare participants benefit from the use of online learning resources
and give them some preliminary material to absorb. (digital learning) as described later in this chapter.
After the course community members can get to- These enable people to share with others what they
gether to discuss what they have learnt and how they know and what they have learnt. The learning is
are applying it. Problems can be raised and solutions real – based on the actual experiences of col-
considered. The emphasis is on interaction, sharing leagues – and therefore more effective than a formal
and conversations between the participants. In effect, presentation by a trainer on a course.
C A S E S T U DY
Social networking in the Santa Fe Group

In the Santa Fe Group, a global organization with 1,700 employees to produce, share and comment on learning
employees involved in security risk management amongst content. They can quickly post links to online learning
other things, the learning and development team realized content and The Academy Online is used to deliver
that the traditional model of residential workshops was blended learning and development. An intervention may
not converting learning into practice. The solution was to start with a presentation or workshop and go on to
develop The Academy Online, a learning management self-directed e-learning through an online platform.
system fully integrated with a social networking platform. As a social network, the platform facilitates conversations
Based on the social media product Fuse, it enables between colleagues.
Digital learning learning apps, social media, enterprise social net-

works, web searches for knowledge acquisition, vir-
tual and augmented reality and online courses.
Digital learning is the delivery and administration
Three broad categories of digital learning prac-
of learning opportunities and support via computer,
tices have been identified by the CIPD (2020):
networked and web-based technology. It covers a
wide range of activities and techniques all of which ●● Formal digital – where technology is used to
involve some form of online learning. These can deliver formal course-based content.
broadly be divided into two groups: (1) the provi- ●● Informal digital – where technology provides
sion of overall learning approaches and environ- opportunities to support informal workplace
ments and (2) the application of various learning learning, mainly through forums.
resources and techniques, either independently or
●● Blended or supported learning – where
associated with an overall approach.
formal and/or informal learning may be
Overall approaches consist of the use of e -learning
combined (‘blended’) with other types of
and learning platforms and the development of vir-
learning. For example, the majority of
tual learning environments. Digital resources and
learning content might be delivered through
techniques comprise the use of smart phones and
face-to-face lectures or coaching and/or what depth, and the characteristics of the learners
through text material, but dialogues with who will use the material.
other learners, collaborative activities and Creating content for e-learning means limiting it
searching for access to supporting material to what learners can and will want to absorb and
are all conducted online. A popular blend is sequencing the learning in steps that the learner can
the ‘flipped’ classroom model where the readily assimilate. E-learning works best when it ca-
knowledge transfer is carried out online ters for clearly defined areas of knowledge that can
separately from the face-to-face learning. be presented in easily digestible bites. This is why it
is used for compliance training and onboarding
programmes and for conveying information about
E-learning new products or services. The content for these
should be available within the organization. When
E-learning is the delivery and administration of
choosing a supplier, the main considerations are the
learning material and support in a discrete package
speed and ease with which good-quality learning
via digital technology. The term e-learning originally
content can be produced, the level of customization
referred to any form of digital learning but is now
available and the variety of formats to choose from.
generally treated as a sub-set which is typically used
The content may be presented as a text document
in compliance (eg health and safety) or induction
and/or in the form of PowerPoint slides. The mate-
training. E-learning can be provided in small easily
rial can be interactive, for example, by getting learn-
assimilated nuggets lasting up to 10 minutes or so
ers to answer multi-choice questions. Videos can be
(bite-sized training or micro-learning) and may cater
used to demonstrate how to carry out a task or deal
for interactive learning. It can be ‘blended’ with other
with a problem such as a customer complaint,
forms of learning such as face-to-face learning, and it
Subject experts can appear on them to make mini-
can support informal learning in the workplace and
presentations or answer questions. Videos can be
self-directed learning. It is accessible anytime from
developed in-house or by production companies.
anywhere especially when using smart phones.
There is a variety of course-authoring tools for
It is best to manage e-learning through a learning
converting basic content into e-learning material.
platform. This is typically a learning management
For example, some learning platforms come with
system (LMS) which is a software application for
built-in authoring tools. These can often only be
the administration, documentation, tracking, re-
used to produce fairly basic content although they
porting, automation and delivery of e-learning and
are a relatively easy and cheap option if no more is
other types of L&D programmes. An alternative
required. On the other hand, ‘standalone’ course-
method is a Learning Experience Platform (LEP)
authoring software specially developed for the
which is an open system that operates more flexi-
production of digital learning gives instructional

bly – employees are free to pick and choose their
designers scope to create high-quality, customized
courses, study them at their leisure and complete
content. This type of software can be desktop-based
certifications (or not, if they so choose). LEPs pull
or cloud-based. When a course has been developed
learning from a wide array of sources into one cen-
using an authoring tool, it is exported to a learning
tral location. This allows organizations to deliver
platform as a SCORM file (SCORM stands for
mandatory training – such as compliance or on-
Shareable Content Object Reference Model), which
boarding courses – that they could provide through
enables the LMS or LEP to read the interactive ele-
an LMS. But in addition, they enable educational
ments of the course and deliver them to learners.
content from other sources and third-party provid-
Traditionally, e-learning courses were carefully
ers to be assembled. Furthermore, the flexibility of
built by instructional designers. The courses had
an open system allows the L&D team to grow and
many chapters, were often quite long and were ac-
diversify their content library rapidly.
cessed through a learning management system.
E-learning content may be created within the or-
Progression was linear (it was called ‘page turning’)
ganization from existing or new material. Or it can
and each page had visuals, audio and perhaps a
be outsourced – there are many providers – which
small amount of video. The aim now is to provide
saves time and trouble but can be expensive. In the
content in small digestible chunks and to embed
latter case care has to be taken to brief the provider
learning into the platform in which people work so
on the aims, the subject areas to be covered and in
that coaching is provided as they need it.
Advantages and disadvantages of be encouraged to seek the information they want.

The scope for providing the learning in small ‘bites’
e-learning can make it easily digestible.
The advantages of e-learning are that it makes The biggest disadvantage of e-learning is the ab-
learning available both at the point of need (in the sence of vital personal interactions, not only
workplace) and elsewhere to a dispersed workforce. between learners and instructors, but also among
It can be made readily accessible through the use of fellow learners. The other disadvantages are the
apps on smartphones. People can learn at their own time, effort, technical demands and money required
pace when and where they want to (learning on the to develop and update material. Providing adequate
move). They can tailor the learning to their own support to learners and ensuring that the learning
needs, for example by fast forwarding through con- material is being used effectively may be hard.
tent that is already familiar to them or of limited Standardized e-learning packages may not satisfy
relevance to their roles. It can complement and sup- the learning needs of different people. Developments
plement face-to-face learning and sometimes r eplace in digital technology described below can provide
it. The focus of learning can readily be directed to greater flexibility and increased scope for social
meeting immediate learning needs and people can (collaborative) and self-directed learning.
C A S E S T U DY
Integrated e-learning in a telecommunications company

E-learning in this company was based on the plus about 60 modules commissioned by the company. In
establishment and promotion of a single platform for the first year since the e-learning system was launched,
learning. This is a learning management system that is three-quarters of the workforce used it. Some 20,000
available to employees as a portal labelled ‘iLEARN’. All e-learning activities were accessed and 15,000 hours of
training delivery channels are linked to this portal. The e-learning undertaken in total.
library of generic material consists of some 15,000 items
Virtual learning environment and therefore require a downloadable executable

file. Trainers and individuals are logged into the vir-
A virtual learning environment (VLE) or virtual learn- tual learning environment at the same time to pro-
ing system is a set of learning tools designed to en- vide and receive instruction.
hance an individual’s learning experience by including Webinars (short for web-based seminar) are
computers and the internet in the learning process. A presentations, workshops or seminars that are
VLE package will include online support for both transmitted over the web using video conferencing
trainer and learner, electronic communication such as software. A key feature of a webinar is its interac-
email, threaded discussions (online discussions initi- tive elements – the ability to give, receive and dis-
ated by a trainer – contributions are posted on a discuss information.
cussion forum) and internet links to outside resources.
VLE tools such as Moodle take learners through a
whole system of learning experiences and integrate Social media
the online interactions of the learner. It may involve
the use of virtual classrooms and webinars. Social media such as Facebook, LinkedIn and
A virtual classroom is an online learning envi- Twitter are interactive computer-mediated technol-
ronment. The environment can be either web based ogies that facilitate the creation or sharing of infor-
and accessed through a portal, or software based mation. Social media can be used as platforms for
learning, acting as conduits for locating expertise popular forms of self-managed learning is through
and information. They provide a source for learning web searches (Googling). L&D professionals can
content which can be generated by users as well as ‘curate’ this type of learning by showing employees
L&D specialists and they can catalogue insight and how to find the best material from external sources.
information for future reference. Employees can
gain access to bite-sized learning material so that
they can learn in slots of five minutes or so. Forums Smart phones
can be created where employees can discuss training
The development of smart phone technology has
materials with the experts who created them, giving
enabled mobiles to become an important part of the
the employees greater clarity on how to use them.
learning environment. This trend has accelerated
These activities can be conducted with the help of
through the increased use of ‘apps’. These can be spe-
an Enterprise Social Network (an internal social
cifically designed for organizations and will contain
network, see below). Social media can promote in-
learning material in ‘bites’, which facilitates learning
formal learning. It can help to build new relation-
in any place and at any time – ‘learning on the move’.
ships with people, support learning communities
Apps are available for note-taking on smart phones
and locate learning material and expertise so that
so that learning can be recalled and reflected on.
people can find out what they need to know when
they need to know it.
Game-based learning
Enterprise social networks Game-based learning involves the use of computer
games as part of an online learning programme or
Learning, especially learning in the flow of work and
during a more conventional formal course. Games
social learning, can be encouraged by the use of an
offer ‘immersive experiences’ in which players can
enterprise social network (ESN) such as Yammer.
learn about problem solving, collaboration, leader-
ESNs are open communication tools that are in e ffect
ship and communication. Players have to take in
internal social media channels. They can combine
information from many sources, as in real life, and
various functions, including posting announcements,
make decisions quickly, to deduce a game’s rules
comments, micro-blogs, questions and resources, en-
from playing rather than by being told, to create
abling people to take part in online forum discussions
strategies for overcoming obstacles and to under-
and setting up and servicing online special interest
stand complex systems through experimentation.
groups. They can engage employees with learning
The unlovely term ‘gamification’ is used to de-
events before and after they take place, thus boosting
scribe what is claimed to be a different approach to
interest and focusing attention in the first instance
using games for learning purposes. But the only sig-
and helping to embed learning in day-to-day work
nificant difference is that gamification is more con-
afterwards. ESN technology is similar to public social
cerned with achieving the motivation of learners
networking tools like Facebook in that it supports a
through competition, incentives and rewards such
constant flow of real-time, threaded conversations
as the use of ‘leader boards’ (tables listing game
through user updates and replies. Learning is no
leaders), the award of points for achieving higher
longer seen as a separate activity from working and it
levels and the provision of ‘badges’ (digital indica-
can become a continuous, social experience.
tions of the level of skills reached).
Game–based learning is not an easy option. Time
and effort are needed to plan and implement its use.
Knowledge-sharing technologies The steps required are:
Knowledge-sharing and acquisition technologies in-
1 Define objectives – the sort of behaviours the
clude blogs (websites on which individuals or
game is intended to develop.
groups post their observations and experiences),
podcasts (digital audio files made available on the 2 Select or produce a game, which will focus
internet for downloading to a computer or portable on those behaviours and fits the people who
media player) and wikis (websites which allow col- are going to play it.
laborative modification of their content and struc- 3 Decide on any help that can be provided
ture directly from a web browser). One of the more through e-learning.
4 Define to participants how they should

analyse their performance in the game under
Training
such headings as problem solving, teamwork
and leadership. Training provides for face-to-face (F2F) learning by
the use of systematic and planned instruction a ctivities.
5 Ensure that participants carry out this It takes place in formal events (interventions) off-the-
analysis and draw up a list of lessons learnt. job or by means of formal on-the-job instruction. It
6 Get participants to define what action they can cover ‘hard’ technical or manual skills, ‘soft’ skills
intend to take at work to apply the lessons (people management and personal skills such as prob-
learnt. lem-solving), ‘compliance’ (legal requirements) or in-
formation about the organization. As Reynolds (2004:
45) pointed out, training has a complementary role to
Use of artificial intelligence play in accelerating learning: ‘It should be reserved for
The use of artificial intelligence (AI) in learning and situations that justify a more directed, expert-led ap-
development is still in its relative infancy but the proach rather than viewing it as a comprehensive and
following ways in which it can be applied have been all-pervasive people development solution.’ He also
identified by Eubanks (2019): commented that the conventional training model has
a tendency to ‘emphasize subject-specific knowledge,
●● helping with the scheduling, planning and rather than trying to build core learning abilities.’
resource allocation involved in delivering
learning programmes;
●● developing fully automated learning Systematic training
management systems; Training should be systematic in that it is specifi-
●● identifying skills gaps and skill development cally designed, planned and implemented to meet
needs; defined needs. It should be provided by people who
●● providing for individualized instruction and know how to train and the impact of training is
coaching – learning programmes tailored to carefully evaluated. The concept of systematic train-
the needs of individuals; ing was originally developed for the industrial train-
ing boards in the 1960s and consists of a simple
●● analysing the adoption rates of learning
four-stage model:
programmes to assess impact and indicate
where changes may be required. 1 Identify training needs.
2 Decide what sort of training is required to
satisfy these needs.
F I G U R E 39.1 Systematic training model
1 Identify learning needs
2 Plan training programmes
Techniques Facilities Locations Trainers
3 Implement training
4 Evaluate training
3 Use experienced and trained trainers to The justification for training

implement training.
4 Follow up and evaluate training to ensure Formal training is only one of the ways of ensuring
that it is effective. that learning takes place, but it can be justified in
the following circumstances:
The systematic training model is illustrated in
Figure 39.1 ●● The knowledge or skills cannot be acquired
satisfactorily by experiential learning in the
workplace or by self-directed learning.
Planning and delivering training ●● Different skills are required by a number of
people, which have to be developed quickly
events to meet new demands and cannot be gained
The process of planning and delivering training by relying on experience.
events or interventions is described by the five phase ●● The tasks to be carried out are so specialized
ADDIE model: or complex that people are unlikely to
master them on their own initiative at a
Analysis phase reasonable speed.
Refer to information obtained from learning needs ●● When a learning need common to a number of
analysis and define the learning objectives needed to people has to be met that can readily be dealt
satisfy them as criteria or terminal behaviour (what with in a training event or programme. For
participants will learn and be able to do as a result example: onboarding, compliance, IT skills.
of the training).
Design phase
Transfer of learning
The focus of off-the-job training should be to de-
Decide on the subject matter analysis and the meth-
velop transferable skills and it will only be success-
ods to be used. This should be a ‘blended learning’ ful if those skills are put to good use in the place of
approach making appropriate use of presentations, work. Account should therefore be taken of the
discussions, case studies, role plays and simulations, problem of transferring learning from a formal
and games. The maximum amount of learner involve- training course programme. Training can seem to be
ment rather than spoon-feeding through lectures remote from reality and the skills and knowledge
acquired can appear to be irrelevant. Transfer prob-
should be planned.
lems often occur after management training but
manual skills can also be difficult to transfer.
Development phase To tackle this problem it is necessary to make the
Construct the detailed programme – the session training as relevant and realistic as possible, antici-
plan and the content and learning outcomes of pating and dealing with any potential transfer diffi-
each session. The steps needed to prepare learning culties. Individuals are more likely to apply learning
content are: (1) define objectives, (2) determine when they can put what they have learned into prac-
key learning points and (3) assemble learning tice, do not find it too difficult; believe what they
material. learned is relevant, useful and transferable; are sup-
ported by line managers; have job autonomy; believe
in themselves; and are committed and engaged. A
Implementation phase literature search by Burke-Smalley and Hutchins
Implement the programme as planned. (2007) established that by far the most important
factor in transferring learning was the opportunity to
Evaluation phase perform learned skills. They suggested that success-
ful transfer of learning would be achieved by discuss-
Evaluate the programme to assess how well it met
ing the new learning, the participation of the supervi-
its objectives.
sor in the development programme, providing
opportunity and encouragement to use new skills in
the workplace, assisting managers with overcoming
obstacles to performance, p roviding goals and ac- results in more effective transfer and aids long-term
countability, managing workload during the devel- memory. Bite-sized training is best for training em-
opment programme and providing feedback on per- ployees in straightforward techniques that they can
formance. Support from peers is important. Transfer use immediately in their work.
is also more likely if ‘bite-sized’ and ‘just-in-time
training’ approaches are used, as described below.
Just-in-time training
Just-in-time training is training that is delivered as
Bite-sized training close as possible to the time when the activity is tak-
Bite-sized training involves the provision of opportu- ing place (just-in-time as distinct from just-in-case). It
nities to acquire a specific skill or a particular piece of is effective because it happens in the working envi-
knowledge in a short training session focused on one ronment where the learning can be applied
activity, such as using a particular piece of software, immediately. The training will be based on an identi-
giving feedback, or handling an enquiry about a fication of the current learning needs of the partici-
product or service of the company. It is often carried pants. It should address specific knowledge or skill
out through e-learning. It can be a useful means of gaps when they arise and be brief (‘bite-sized’) and
developing a skill or understanding by means of a easily assimilated. It can be provided on a bespoke
concentrated session or learning activity without di- social learning platform so that the material is easily
versions. Support to the practice of bite-sized training accessible, for example, on a smart phone. Use can be
is provided by the neuroscience concept of ‘spacing’ made of infographics (graphic visual representations
which states that it is better to distribute learning in of information, data or knowledge intended to pre-
discrete blocks delivered over short time periods than sent information quickly and clearly) or a short piece
cram lots of content into a prolonged session. This of e-learning.
C A S E S T U DY
Training overhaul for Scottish police

A radical overhaul of training for the Scottish police be a police officer and you have got to want to learn. After
created more opportunities for promotion and culminated 15 weeks of initial training, a two-week ‘reconvention’
in a prestigious National Training Award. The improved period helps staff with the areas they particularly need to
training scheme uses facilitated learning delivery, where address. This training is tailored to individual
trainees pre-read all information before attending requirements: syndicates of recruits with similar needs
sessions and then discuss issues and learn from each are put together to receive it. This ‘partnership approach’
other. Responsibility for learning is now firmly placed on had helped the participants to focus on communication
the shoulders of the individual – you have got to want to and problem-solving skills.
C A S E S T U DY
Training and learning at a customer support centre

The customer support centre employs 300 people. provides support and advice to his or her agent colleagues.
Customer service agents work in a group of five, known as A working knowledge of each customer support system is
a ‘pod’. One of the pod members will be a team coach who essential to do the job and one of the central tasks of the
training department is to bring new entrants up to compe- Given the emphasis on learning in the workplace, the
tence as quickly as possible. The following pattern is adopted. role of the team coach is critical and there are a number
New entrants join in cohorts of 8 to 10 and spend their first of steps in place to support and enhance their role. A set
week in the training room. As the week progresses they of skills and needs have been defined and these are
spend periods in a pod sitting next to a ‘buddy’, listening to delivered to the 30 centre team coaches in 90-minute
calls. At the end of that week they are allocated to a pod team modules in the training room.
and receive close ongoing support from the pod team coach.
Apprenticeships are built upon an agreed part-

Apprenticeships nership between the employer and the individual
apprentice. The employer undertakes to provide the
Apprenticeships are paid jobs with an accompany- education and training, relevant experience from
ing skills development programme provided by on- which the apprentice will learn, and the end-point
and off-the-job training. Their aim is to meet the assessment. The apprentice is expected to learn and
skills needs of employers and to give young people work diligently to complete the apprenticeship.
the opportunity to embark on a worthwhile career. The Apprentice Levy Scheme was established by
They take between one and four years to complete the government to encourage the extended use of ap-
(the minimum length is 12 months) and in the UK prenticeships to provide the skilled people the coun-
1,500 occupations across more than 170 industries try needs. Under the scheme, all employers with a
are available. Successful apprentices can receive a wage bill greater than £3m pay 0.5 per cent of their
nationally recognized qualification on completing payroll into a central fund. In return they receive
their contract. vouchers, which can be used to fund apprenticeships.
Key learning points
Workplace learning Digital learning

Learning in the workplace is mainly informal although Digital learning takes the forms of e-learning, virtual
line managers have an important part to play in learning environments, social network learning,
facilitating it through coaching and by arranging knowledge sharing, seeking information online
supporting activities, including formal training sessions. (Googling), the use of smart phones and the use of
Much of it is experiential learning – learning by game-based learning.
doing and by reflecting on experience so that it can be
understood and applied. Use of social media
Workplace learning involves self-directed and
self-managed learning and is enhanced by coaching, Social media can be used within the organization as a
mentoring, e-learning and planned experience. But some learning and development aid through enterprise
more formal training activities can take place there. social networks – open communication tools that
combine various functions, including being able to
post announcements, comments, micro-blogs,
Social working questions and resources, join and set up special
As defined by Hart (2014), ‘Social learning is about interest groups, follow colleagues and take part in
people connecting, conversing, collaborating and forum discussions.
learning from, and with, one another on a daily basis
at work.’ Some form of social learning happens Smart phones
continually in the workplace as individuals and groups
work together. The development of smart phone technology has
enabled mobiles to become an important part of the
learning environment. This trend has accelerated Training

through the increased use of ‘apps’. These can be
specifically designed for organizations and will contain Training is the use of systematic and planned
learning material, in ‘bites’, which facilitates learning instruction activities to promote learning.
in any place and at any time – ‘learning on the move’. Training should be systematic in that it is
specifically designed, planned, implemented and
evaluated to meet defined needs
Game-based learning It may be difficult to transfer the learning acquired
Game-based learning involves the use of computer on a training course to the workplace. Special efforts
games as part of an online learning programme or need to be made to affect this transfer
during a more conventional formal course. Games Just-in-time training is training that is closely linked
offer ‘immersive experiences’ in which players can to the pressing and relevant needs of people by its
learn about problem solving, collaboration, leadership association with immediate or imminent work
and communication. activities.
Bite-sized training involves the provision of
Use of artificial intelligence opportunities to acquire a specific skill or a particular
piece of knowledge in a short training session focused
The use of artificial intelligence (AI) in learning and on one activity.
development is still in its relative infancy but the The process of planning and delivering training or
following ways in which it can be applied have been learning events and programmes is described by the
identified by Eubanks (2019): ADDIE model, which has five phases: analysis, design,
●● helping with the scheduling, planning and resource development, implementation and evaluation.
allocation involved in delivering learning
programmes; Apprenticeships
●● developing fully automated learning management An apprenticeship is a genuine job with an
systems; accompanying skills development programme. Through
their apprenticeship, apprentices gain the technical
●● identifying skills gaps and skill development needs;
knowledge, practical experience and wider skills they
●● providing for individualized instruction – learning need for their immediate job and future career.
programmes tailored to the needs of individuals; The Apprentice Levy Scheme was established by
the government to encourage the extended use of
●● analysing the adoption rates of learning
apprenticeships.
programmes to asses impact and indicate where
changes may be required.
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) Training Eubanks, B (2019) Artificial Intelligence for HR,
transfer: an integrative literature review, Human London, Kogan Page
Resource Development Review, 6 (3), pp 3263–96 Hart, J (2014) The Social Learning Handbook,
Chartered Institute of Personnel and Development London, Centre for Modern Workplace Learning
(2020) Digital Learning, London, CIPD Reynolds, J (2004) Helping People Learn, London,
Daly, J and Ahmetaj, G. (2020) Back to the future: CIPD
Why tomorrow’s workforce needs a learning Wenger, E (1998) Communities of Practice: Learning,
culture, London, Emerald Works meaning and identity, Cambridge, Cambridge
Eraut, M J, Alderton, G, Cole, G and Senker, P (1998) University Press
Development of Knowledge and Skills in
366
40
Leadership and
management
development
Introduction Leadership and management
What can organizations can do to develop effective development defined
leaders and managers? Drucker (1955: 158) wrote
that ‘The prosperity if not the survival of any business Leadership and management development pro-
depends on the performance of its managers of to- grammes aim to provide managers with the leader-
morrow.’ And the importance of leadership was un- ship and managerial qualities required to achieve
derlined by Pfeffer and Sutton (2006: 7) as follows: success. They are concerned with unlocking poten-
tial and form a vital ingredient in talent manage-
Research on organizational climate over the past ment. A blended learning approach is used, which
half-century has shown that 60% to 75% of combines in programmes based on an analysis of
employees in any organization – no matter when learning needs a number of learning activities such
or where the survey was completed and no matter as planned experience, self-managed learning,
what occupational group was involved – report
coaching, mentoring, action learning, outdoor
that the worst or most) stressful aspect of their job
learning and formal education and training.
is their immediate supervisor.
The chapter starts with a definition of leadership
and management development. This leads to a dis- The nature of leadership
cussion of the nature of leadership and management
as a basis for an analysis of what leadership and and management
management development programmes might cover
and an examination of the extent, if at all, to which There has been much debate on how leadership
leadership development and management develop- differs from management. The problem is that
ment programmes are different. The conclusion is leadership involves management and management
reached that while they are closely associated, and involves leadership so that it may be difficult to
indeed may be conducted jointly, they are suffi- separate the two. There is some consensus on the
ciently different to justify being examined sepa- essential nature of both and the skills involved, as
rately, which is undertaken in the last two sections set out below, but there is more disagreement on
of the chapter. which is the most important.
Chapter 40 | Leadership and Management Development 367
Leadership What are the differences?

Leadership means inspiring people to do their best Are leadership and management the same or different?
to achieve a desired result. It involves developing Some commentators regard leadership as synonymous
and communicating a vision for the future, motivat- with management; others see them as distinct but
ing people and securing their engagement. As de- closely linked and equally necessary activities; others
fined by Dixon (1994: 214): ‘Leadership is no more consider management to be a subset of leadership; and
than exercising such an influence upon others that yet others praise leadership and demonize manage-
they tend to act in concert towards achieving a goal ment. Bennis (1989) viewed managers as those who
which they might not have achieved so readily had promote efficiency, follow the rules and accept the sta-
they been left to their own devices.’ Leadership tus quo, while leaders focus on challenging the rules
skills include the ability to: and promoting effectiveness. Kotter (1991) saw man-
agers as being the ones who plan, budget, organize and
●● inspire others;
control, while leaders set direction, manage change
●● persuade others willingly to behave differently; and motivate people. Hersey and Blanchard (1998)
●● clarify what needs to be done and why; claimed that management merely consists of leader-
●● communicate a sense of purpose to the team; ship applied to business situations; or in other words,
management forms a subset of the broader process of
●● understand, as established by research
leadership. It can be said that leadership is about man-
conducted by Tamkin et al (2010), that
aging people while management is about managing all
leaders cannot create performance
the available resources, including people.
themselves but are conduits for performance
But as Birkinshaw (2010: 23) commented, ‘By
through their influence on others;
dichotomizing the work of executives in this way,
●● get the team into action so that the task is Kotter, Bennis and others squeezed out the essence
achieved. of what managers do and basically left them with
the boring work that “leaders” don’t want.’ His
view was that ‘To put it simply, we all need to be
Management both leaders and managers’ (page 23). Burgoyne
Management is the process of achieving goals by (2010: 42) observed that ‘Both [management and
deciding what to do and then getting it done through leadership] are needed and need to work closely to-
the effective use of resources. Management has gether, often through the same person or team.’
often been defined as ‘getting things done through Earlier, Mintzberg (2004: 22) summed it all up (as
people’. But managers are also responsible for guid- he often did) when he wrote: ‘Let’s stop the dysfunc-
ing and controlling the business or their part of it by tional separation of leadership from management.
managing their other resources – finance, work sys- We all know that managers who don’t lead are bor-
tems and technology – as well as people. ing, dispiriting. Well, leaders who don’t manage are
Managers are doers. They deal with events as distant, disconnected.’
they occur. But they must also be concerned with
where they are going. This requires strategic think-
ing, especially at higher levels. As strategic thinkers, Leadership and management
managers develop a sense of purpose and frame- development compared
works for defining intentions and future directions.
They are engaged in the process of strategic In some quarters the term ‘leadership development’
management. has replaced ‘management development’, perhaps be-
The traditional model of what managers do is cause the importance of ensuring that people have
that it is a logical and systematic process of plan- leadership qualities has been recognized, while it is be-
ning, organizing, motivating and controlling. But lieved that they can be safely left to acquire manage-
this is misleading. Managers often carry out their ment skills in other ways, eg experience. However, they
work on a day-to-day basis in conditions of variety, are not the same although they are closely associated.
turbulence and unpredictability. Managers may The difference between them is that leadership
have to be specialists in ambiguity, with the ability development tends to be concerned with nurturing
to cope with conflicting and unclear requirements. the softer skills of leadership through various edu-
cational processes, including formal learning events to impose their personality on others. However, even
and programmes and coaching. This is illustrated in they probably have to develop and hone these quali-
the three case studies at the end of the next section ties when confronted with a situation demanding
of this chapter. leadership. Ordinary mortals need not despair: they
In contrast, management development relies too can build on their natural capacities and develop
more on ensuring that managers acquire the ability their leadership abilities. Burgoyne (2010: 42) ob-
to do their jobs by managing a whole range of reserved that ‘The will to lead is largely innate but the
sources, including people. Because they have to ability to do it well is largely learnt.’
work on a day-to-day basis in conditions of variety, Yukl (2006) proposed the following conditions
turbulence and unpredictability their development for successful leadership development:
largely takes place by gaining the right sequence of
●● clear learning objectives;
experience although this may be supplemented by
self-managed learning and courses on management ●● clear, meaningful content;
techniques. Further guidance can be provided by ●● appropriate sequencing of content;
coaching and from mentors. ●● appropriate mix of training methods;
●● opportunity for active practice;
Leadership development ●● relevant, timely feedback;
●● high trainee confidence;
A process designed to ensure that managers have ●● appropriate follow-up activities.
both the leadership and the managerial qualities re-
quired to achieve success, now and in the future. But it is not all about subjecting leaders to develop-
Burgoyne (2010: 43) stated that ‘Leadership devel- ment programmes. The organization has to play its
opment in the widest sense involves the acquisition, part in ensuring that leaders are provided with the
development and utilization of leadership capabil- support and the working conditions they need to
ity or the potential for it.’ carry out their role properly. As Fiedler (1967: 276)
It is sometimes said that leaders are born not made. emphasized, ‘If we wish to increase organizational
This is a rather discouraging statement for those who and group effectiveness we must learn not only to
are not leaders by birthright. It may be true to the train leaders more effectively but also to build an
extent that some exceptional people seem to be vi- organizational environment in which the leaders
sionaries, have built-in charisma and a natural ability can perform well.’
C A S E S T U DY
Leadership development at Cargill

Cargill is an international provider of food, agricultural and them to lead Cargill businesses. All of these courses are
risk management products and services. Those in Cargill’s interspersed with more challenging projects and work
different talent pools, such as the ‘Next Generation assignments. Cargill corporate leaders also take part in
Leaders’ and ‘Emerging Leaders’ undertake both formal the Leadership Academy, where they learn
and informal development. In Cargill’s high-performance transformational leadership skills and the essentials of
Leadership Academy, entrants learn about the coaching and mentoring in formal programmes and
fundamentals of leadership and management in the informal learning activities, all of which form an important
company and work through a number of accelerated part of their leadership development.
leadership modules, gaining the knowledge to enable
C A S E S T U DY
Leadership development at Diageo

At Diageo, the international beverages company, a series The company’s first leadership development programme,
of development strategies, particularly for leadership, ‘Building Diageo talent’ in 1998, was designed to help link
have been based on Diageo’s five values, which were strategy and organizational performance with individual
created as the common heartbeat of all the component performance. This had many components, including
businesses. The values – ‘Be the best’, ‘Passionate about coaching and benchmarking for leadership development
consumers’, ‘Proud of what we do’, ‘Freedom to succeed’ for 4,000 managers. Over the past six years the company’s
and ‘Valuing each other’ – have become central to leadership training has evolved to focus more on building
Diageo’s success, alongside a comprehensive ‘a core Diageo mindset’. The senior team has prioritized
performance management framework. Conversations developing a ‘total talent strategy’ and HR processes have
about performance are now on a ‘partnership’ basis, been thoroughly embedded in management thinking
where managers, with their employees, are expected to worldwide.
discuss the latter’s aspirations and how their growth
needs can be satisfied by the business.
C A S E S T U DY
Leadership development at HML

At HML (a financial services company) the leadership ●● four modules: profit, client, effectiveness, engagement;
development 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 ●● accreditation and celebration event.
one programme group);
Interview
Leadership development – the views of leadership officer at one point. What’s your philosophy
on the best way to train employees to be better
Pierre Nanterme CEO of Accenture, the leaders?’
global professional services firm with
I learned a lot through that role, which frankly I
330,000 employees had to figure out a bit, because it was quite new.
The following answer was given by Pierre Nanterme My background is around economics and finance;
to the question ‘You served as Accenture’s chief yet of course, in professional services, talent is
key. And for many of our clients, whatever the best. Do you feel good in your role? If yes, that’s
industry, they all are coming to me saying their No. the perfect time for you to experiment with
1 challenge is getting the right talent. So first, I something new, to get out of your comfort zone.
figured out that leadership and talent is the name This willingness to learn is probably the most
of the game. Second, it’s all about how you important thing for leaders of today and tomorrow.
motivate people, how you’re making sure they’re
Source: https://www.washingtonpost.com/news/
going to stretch their own boundaries.
on-leadership/wp/2015/07/23/accenture-ceo-explains-
It’s about selecting, hiring the best people, but the-reasons-why-hes-overhauling-performance-
that’s not enough. Performance management is reviews/
extraordinarily important to get people to their very
Management development and provided by the organization. These should be

based on the identification of development needs.
The methods of defining learning needs described
Management development is concerned with improv-
in Chapter 38 can be used to determine collective
ing the performance of managers in their present roles,
needs. For individuals, performance management
preparing them to take on greater responsibilities in
reviews are an important means of producing per-
the future and also developing their leadership skills. It
sonal development plans and learning contracts as
was defined by Peters (2010: 28) as ‘A complex pro-
described in Chapter 37. This can be done more
cess by which individuals learn to perform effectively
systematically at development centres. These con-
in a management role.’ A systematic approach to man-
sist of a concentrated (usually one or two days)
agement development is necessary to meet the needs
programme of exercises, tests and interviews de-
of organizations for the talented managers they re-
signed to identify managers’ development needs
quire and because the increasingly onerous demands
and to provide counselling on their careers.
made on line managers mean that they have to possess
Competency frameworks can be used as a means of
a wider range of developed skills than ever before.
identifying and expressing development needs and
The object of management development is to
pointing the way to self-managed learning pro-
find ways in which the organization can produce,
grammes or the provision of learning opportunities
mainly from within, a supply of managers better
by the organization.
equipped for their jobs at all levels. The principal
The formal approaches that can be used are:
method of doing this is to ensure that managers
gain the right sequence and variety of experience, in ●● planned experience – which includes job
good time, which will equip them for whatever level rotation, job enlargement, taking part in
of responsibility they have the ability to reach in the project teams or task groups and secondment
course of their career. This experience can be sup- outside the organization – this is possibly the
plemented – but never replaced – by courses care- most effective approach on the grounds that
fully timed and designed to meet particular needs. managers learn to manage mainly by
Management development policies involve the use managing;
of both formal and informal approaches. ●● coaching – a personal and usually one-to-one
approach to helping people develop
their skills and levels of competence
Formal approaches to (coaching skills are dealt with in Chapter 73);
management development ●● mentoring – the process of using specially
selected and trained individuals (mentors) to
Formal approaches to management development
provide guidance, pragmatic advice and
consist of processes and events that are planned
continuing support that will help the person 8 Enhance learning by using action learning
or persons allocated to them to learn and sets.
develop (see also Chapter 73); 9 Make participants accountable for applying
●● action learning – a method originated by their learning.
Revans (1989) of helping managers develop 10 Create opportunities for participants to teach
their talents by exposing them to real others.
problems; they are required to analyse them,
11 U
se after-event reviews and conduct follow-
formulate recommendations and then take
up with participants.
action;
12 Use a mentor or colleague to hold participants
●● outdoor learning – getting teams of
accountable for applying learning.
participants to carry out physical activities so
that they can learn about how they act under The content of training programmes and events will
pressure as team leaders or team members; be determined by established learning needs. But
●● the use of performance management the significance of the line manager’s contribution
processes to provide feedback and satisfy to the implementation of HR policies and practices,
development needs; these would be as explained in Chapter 11, suggests that a choice
competency based in the sense that they according to needs from the following areas of line
would specify the competencies required and manager HR responsibilities should be made:
assess the degree to which individuals needed ●● performance appraisal and review practices;
to develop those competencies;
●● assessing potential;
●● structured self-development following a
●● selection interviewing;
self-managed learning programme set out in
a personal development plan and agreed as a ●● coaching and instructing;
learning contract with the manager or a ●● induction of employees;
management development adviser; ●● job design;
●● training by means of internal or external ●● handling absenteeism;
courses or through e-learning.
●● handling discipline;
A blended approach using two or more of these ●● conducting challenging conversations.
methods is best although in most programmes for-
mal training plays an important part. Training These are best made available in bite-sized learning
should be action-oriented – care must be taken to modules using digital techniques as well as more
ensure that what is learnt on a course is translated formal classroom training. The self-management of
into action in the workplace. A useful checklist pro- learning through these modules should be encour-
duced by the CIPD (2017) is set out below. aged and L&D should take the responsibility of
Checklist: planning and delivering management keeping managers informed on sources of learning
training events materials either provided by the firm or available
elsewhere (curating).
1 Integrate the programme with the
organization’s business strategy.
2 Set multiple aligned goals for participants. Informal approaches to
3 Keep senior management support. management development
4 Encourage participants to seek opportunities
Informal approaches to management development
to apply new learning.
make use of the learning experiences managers en-
5 Consider a range of post-training activities. counter during the course of their everyday work.
6 Ensure the programme’s goals and actions Managers are learning every time they are con-
are integrated with the organization’s fronted with an unusual problem, an unfamiliar
performance management system. task or a move to a different job. They then have
7 Maintain opportunities for participants to to evolve new ways of dealing with the situation.
practise and get feedback on their learning. They will learn if they reflect on what they did, in
order to determine how and why it contributed to Managers, in fact, are born not made. Cream rises
success or failure. This retrospective or reflective to the top (but then so does scum). Management
learning will be effective if managers can apply it development has also been seen as a formal process
successfully in the future. using management inventories, multicoloured re-
Managers also learn from their managers. This placement charts, ‘Cook’s tours’ around different
may include how not to do things as well as what to departments for newly recruited graduates, detailed
do. Again, they will learn more if they have the ca- job rotation programmes, elaborate points schemes
pacity to reflect on what they have learnt and apply to appraise personal characteristics and lots of for-
it to their own circumstances. mal courses operating on the ‘sheep-dip’ principle
Experiential and reflective learning is potentially (ie everyone undergoes them).
the most powerful form of learning. It comes natu- The true role of the organization in management
rally to some managers. They seem to absorb, un- development lies somewhere between these two ex-
consciously and by some process of osmosis, the tremes: on the one hand, it is not enough, in condi-
lessons from their experience, although in fact they tions of rapid growth (when they exist) and change,
have probably developed a capacity for almost in- to leave everything to chance – to trial and error; on
stantaneous analysis, which they store in their men- the other hand, elaborate management develop-
tal databank to retrieve when necessary. ment programmes cannot successfully be imposed
But many managers either find it difficult to do on the organization. A mix of formal and informal
this sort of analysis or do not recognize the need. methods is required that has to fit the organization’s
This is where informal or at least semi-formal ap- context and specific requirements.
proaches can be used to encourage and help manag- The success of any management development
ers to learn more effectively. These comprise: programme depends upon the degree to which there
is commitment to it at all levels of management. It is
●● emphasizing self-assessment and the
not a separate activity to be handed over to a spe-
identification of development needs by
cialist and forgotten or ignored. The development
getting managers to assess their own
of subordinates must be recognized as a natural and
performance against agreed objectives and
essential part of any manager’s job. But the lead
analyse the factors that contributed to
must come from the top.
effective or less effective performance – this
can be provided through performance
management;
The role of the individual
●● getting managers to produce their own
personal development plans – self-managed As Drucker perceptively wrote many years ago
learning programmes; (1955: 162), ‘Development is always self-develop-
ment. Nothing could be more absurd than for the
●● encouraging managers to discuss their problems
enterprise to assume responsibility for the develop-
and opportunities with their manager, colleagues
ment of a man. The responsibility rests with the in-
or mentors to establish for themselves what they
dividual, his abilities, his efforts.’ But he went on to
need to learn or be able to do;
make the following point:
●● helping managers to understand their own
learning styles so that they can make the best Every manager in a business has the opportunity
to encourage individual self-development or to
use of their experience and increase the
stifle it, to direct it or to misdirect it. He should be
effectiveness of their learning activities (this
specifically assigned the responsibility for helping
guidance may have to be provided more
all men working with him to focus, direct and
formally).
apply their self-development efforts productively.
And every company can provide systematic
development challenges to its managers. (Drucker,
The role of the organization 1955: 163)
The traditional view is that the organization need The ability to manage is eventually something indi-
not concern itself with management development. viduals mainly develop for themselves while carry-
The natural process of selection and the pressure of ing out their normal duties. But they will do this
competition will ensure the survival of the fittest.
much better if they are given encouragement, guid-

ance and opportunities by their organization and
Criteria for leadership and
their managers. As McGregor (1960: 192) stated:
.
‘Managers are grown – they are neither born nor

management development
made: The individual will grow into what he is ca- The effectiveness and value of any approach to
pable of becoming, providing we can create the leadership and management development include
proper conditions for that growth.’ the extent to which it:
●● links to organizational goals and context –
The role of learning and and so has relevance for the organization as
well as for individuals;
development and HR specialists
●● builds on and develops the qualities, skills
Individuals may have to take the main responsibility and attitudes of participants;
for their own development but L&D and HR special-
●● is supported by appropriate HR policies to
ists still have an important role to play. They interpret
do with recruitment and selection, talent
the needs of the organization and advise on how man-
management, succession planning and
agement development as a business-led activity can
reward;
play its part in meeting these needs. They encourage
managers to carry out their developmental activities, ●● has the full commitment of those responsible
providing guidance as required, and they act as for the operation of the process, including
coaches or mentors. They also, of course, conduct or line managers;
manage formal learning events and programmes, but ●● is motivating to those encouraged to
their most important role is to help in developing a participate in it.
climate in which managers can grow.
Key learning points
Leadership and management Leadership development compared with

development defined management development
Leadership and management development Leadership development tends to be concerned with
programmes ensure that managers have the nurturing the softer skills of leadership through various
leadership and managerial qualities required to educational processes, including formal learning
achieve success. events and programmes and coaching.
Management development relies more on ensuring
Leadership that managers have the right sequence of experience,
which may be supplemented by self-directed learning
Leadership means inspiring people to do their best to and courses on management techniques. Further
achieve a desired result. It involves developing and guidance may be provided by coaching and from
communicating a vision for the future, motivating mentors. Management development programmes
people and securing their engagement. traditionally also cover leadership skills.
Management Leadership development

Defined as deciding what to do and then getting it Leadership development programmes prepare people
done through the effective use of resources. for leadership roles and situations beyond their
current experience.
Management development Informal approaches to management development

make use of the learning experiences that managers
Management development is concerned with encounter during the course of their everyday work.
improving the performance of managers in their
present roles, preparing them to take on greater
responsibilities in the future and also developing their
Responsibility for management
leadership skills. development
Formal approaches to management development Individual managers are largely responsible for their
consist of processes and events planned and provided own development but need guidance, support and
by the organization. They include planned experience, encouragement from their own managers and the HR
coaching and mentoring, action learning, outdoor function.
learning, performance management, formal training
and structured self-development.
References
Bennis, W G (1989) On Becoming a Leader, New and Organizations, Boston, MA, Harvard Business
York, Addison Wesley School Publications
Birkinshaw, J (2010) An experiment in reinvention, McGregor, D (1960) The Human Side of Enterprise,
People Management, 15 July, pp 22–24 New York, McGraw-Hill
Burgoyne, J (2010) Crafting a leadership and Mintzberg, H (2004) Enough leadership, Harvard
management development strategy, in (eds) J Gold, Business Review, November, p 22
R Thorpe and A Mumford, Gower Handbook of Peters, K (2010) National and international
Leadership and Management Development, developments in leadership and management
Farnham, Gower, pp 42–55 development, in (eds) J Gold, R Thorpe and A
Chartered Institute of Personnel and Development Mumford, Gower Handbook of Leadership and
(2017) Developing Managers to Manage Management Development, Farnham, Gower, pp
Sustainable Employee Engagement, Health and 23–38
Well-being, London, CIPD Pfeffer, J and Sutton, R (2006) Hard Facts, Dangerous
Dixon, N F (1994) On the Psychology of Military Half-Truths & Total Nonsense, Boston, Harvard
Incompetence, London, Pimlico Business School Press
Drucker, P (1955) The Practice of Management, Revans, R W (1989) Action Learning, London, Blond
Oxford, Heinemann and Briggs
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
Hersey, P and Blanchard, K H (1998) Management of outstanding leadership, London, The Work
Organizational Behaviour, Englewood Cliffs, NJ, Foundation
Prentice Hall Yukl, G (2006) Leadership in Organizations, 6th edn,
Kotter, J P (1991) Power, dependence and effective Upper Saddle River, NJ, Prentice-Hall
management, in (ed) J Gabarro, Managing People
375
PART X
Performance management
PA R T X CO N T E N T S
41 The basis of performance management

42 Performance management systems
43 Performance leadership
aims, the principles that influence how it is supposed

Introduction to work and the requirements for success. Chapter
42 describes how, ideally, a traditional performance
Performance management is a systematic and management system functions and examines the in-
continuous process for improving organizational
adequacies of such as system. Chapter 43 suggests a
performance by developing the performance of indifferent approach – performance leadership – that
dividuals and teams. The purpose of this part is to avoids the bureaucracy and weaknesses of the tradi-
explain how it can and should work. Chapter 41 tional performance management system.
explores the basis of performance management, its
376

377
41
The basis of
performance
management
Introduction strategic goals of the organization, planning perfor-
mance to achieve the objectives, reviewing and as-
Performance management has been described as a sessing progress, and developing the knowledge,
‘broad set of activities aimed at improving employee skills and abilities of people.
performance’ (DeNisi and Pritchard, 2006: 255). Performance management should be distin-
This definition of the meaning of performance man- guished from performance appraisal. The two top-
agement is expanded in the first section of this ics are clearly related, but are not identical. The
chapter which is followed by an explanation of the term performance management arose when schol-
difference between performance management and ars and practitioners began talking about trans-
performance appraisal. The next section explores the forming performance appraisal from an event to a
nature of performance management as an informal process. DeNisi and Pritchard (2006: 254) described
process (what managers do by acting as ‘performance performance appraisal as
leaders’), or as a formal process (performance man- … a discrete, formal, organizationally sanctioned
agement systems). The chapter continues with event, usually not occurring more frequently than
sections dealing with the purpose and aims of perfor- once or twice a year, which has clearly stated
mance management, its impact, its ethical dimension performance dimensions and/or criteria that are
and the factors affecting the management of perfor- used in the evaluation process. Furthermore, it is
mance. The chapter concludes with a brief review of an evaluation process, in that quantitative scores
approaches to managing performance management. are often assigned based on the judged level of the
Formal methods of performance management in the employee’s job performance on the dimensions or
shape of performance management systems are dealt criteria used, and the scores are shared with the
with in the next chapter. employee being evaluated. Measurement issues are
important for the performance appraisal process,
as are issues of rater motivation, so that effective
Performance management appraisal systems are those where the raters have
the ability to measure employee performance and
defined the motivation to assign the most accurate ratings.
They pointed out that, in contrast, performance
Performance management is what managers do to management is a broad set of activities aimed at im-
ensure that the members of their teams achieve the proving employee performance and that the aim of
levels of performance expected of them. It is con- performance appraisal should be to provide infor-
cerned with improving performance by setting indi- mation that will enable managers to do that. In
vidual and team objectives that are aligned to the short, performance appraisal attempts to measure
378 Part 10 | Performance Management
performance while performance management aims

to improve performance. Performance appraisal
The nature of performance
functions as a subset of performance management. management
Performance management happens informally as a
The purpose and aims of natural process of leadership. It can also operate
performance management formally as a performance management system. It
can make a significant contribution to strategic
human resource management by helping to achieve
As John Shields (2007:24) put it: ‘A well-designed
strategic alignment (the vertical integration of HR
and well-accepted performance management sys-
and business strategies). DeNisi and Smith (2014:
tem can be said to have a four-fold purpose: (1)
144) emphasized that ‘it is important that every as-
strategic communication, (2) relationship build-
pect of this broader performance management sys-
ing, (3) employee development and (4) employee
tem be directly aligned with the firm’s strategic
evaluation.’
goals—this is related to defining what performance
From the viewpoint of the organization, the fun-
means to the firm.’ This is the process of ‘cascad-
damental purpose of performance management is
ing’ goals, an important aim of performance man-
to further the achievement of the organization’s
agement, which involves passing down and
strategic goals. But it also has three specific
interpreting the fundamental strategic goals of the
purposes:
organization through successive layers of manage-
●● managerial – to provide a framework within ment to individual employees and ensuring that
which managers can effectively manage everyone involved understands the contribution
performance; they are expected to make to their achievement.
●● developmental – to provide the basis for But performance management also functions as
identifying and meeting learning and part of a process of horizontal integration when it is
development needs; ‘bundled’ with other HR practices such as talent
management, learning and development and re-
●● administrative – to provide the information
ward management so that they are interrelated and
required to administer performance pay and
therefore complement and reinforce each other.
talent management systems.
F I G URE 41.1 Lloyds Banking Group: Definition of the purpose of the performance
management system
The purpose of performance management: Lloyds Banking Group
The aim is to improve performance. Rather than just saying that somebody’s been very effective and
ticking a box, the process is actually to sit down 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 performance links in with the performance of the
business.
Managing performance is about coaching, guiding, appraising, motivating and rewarding colleagues to
help unleash potential and improve organizational performance. Where it works well it is built on
excellent leadership and high-quality coaching relationships between managers and teams. Through all
this our colleagues should be able to answer three straightforward questions:
1. What is expected of me? How will I be clear about what is expected of me in terms of both results
and behaviour?
2. How am I doing? What ongoing coaching and 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 individual contribution, potential and aspirations be
recognized and rewarded?’
Chapter 41 | The Basis of Performance Management 379
The Lloyds Banking Group’s definition of the pur- companies but it is just as likely that the successful
pose of its performance management system is companies were the ones with the inclination and
shown in Figure 41.1. money to introduce sophisticated practices such as
The following description of the purpose of per- performance management. Other projects (West et al,
formance management was produced by Hitachi 2002; Kochanski, 2007; Rodgers and Hunter, 1991)
Europe: have established correlation but not causation.
The process is as much about building relationships
with employees in order to agree what is
reasonably attainable in the year as it is about Performance management –
setting objectives. It is effective because it focuses
people’s intentions and produces new thinking on
the ethical dimension
the way they work rather than simply continuing
to perform at the same level day-in-day-out. There is an important ethical dimension to perfor-
mance management. The design of a performance
management system and how it is operated should
The impact of performance be based on values related to the ethical principles
of respect for the individual, mutual respect, justice,
management procedural fairness and transparency, as set out in
Chapter 6.
At organizational level, performance management These values are underpinned by the need to pay
is expected to improve performance by creating a attention to due process. In law, there are three
performance culture in which the achievement of essential features of due process: (1) adequate

high performance is a way of life. At individual level notice – that individuals be held responsible for

it is supposed to improve performance by indicating obeying laws only when they have been published
what good performance looks like, agreeing perfor- or otherwise communicated and for satisfying only
mance goals, providing the basis for developing those charges explicitly presented; (2) a fair hear-
knowledge, skills and abilities, identifying where ing – that all relevant evidence to a proposed viola-
performance needs to improve and deciding on the tion be presented and considered and that charged
steps required to achieve that improvement through parties be given the opportunity to provide com-
performance improvement plans, personal develop- mentary; and (3) judgment based on evidence to
ment plans and coaching. ensure that procedural, distributive and interac-
But establishing the impact of performance man- tional justice are achieved. The latter refers to the
agement on organizational performance is prob- quality of the interpersonal treatment people receive
lematic because of causality issues. Determining the and is particularly important. Folger et al (1992)
link between independent and dependent variables proposed that these principles should be applied to
(cause and effect) is a major problem. Correlation performance management as follows: (1) adequate
does not imply causation. It may be relatively easy notice of the performance standards to be met, (2)
to establish correlations in the shape of a demon- fair hearing based on evidence and (3) judgements
stration that X is associated with Y; it is much more based on evidence to apply consistently across
difficult and sometimes impossible to prove that X employees.
causes Y. As DeNisi and Smith (2014: 137) com- Organizational researchers such as Taylor et al
mented, ‘The empirical evidence for link between (1995) have gathered a strong body of evidence
performance appraisal/management and firm per- showing that employees care a great deal about the
formance is, at best, scant.’ justice of performance management practices. It has
One of the few instances of research leading to the been found that the more just or fair employees con-
claim that there was a link was conducted by sider such systems to be, the more satisfied and
McDonald and Smith (1991). This showed that com- accepting they are of the resultant outcomes, even
panies that had introduced performance management when those outcomes are less than desirable.
had made significant gains over three years in finan- Procedurally just performance systems can also
cial performance and productivity. But this looks like increase managers’ own positive outcomes. The

a classic case of reversed causality. Performance man- strength of these findings led researchers Folger and
agement systems may have generated successful Cropanzano (1998) to propose that the provision of
fair procedures is a more powerful foundation for motivation will flourish. It rests on the premise that
the management of employees than is the provision with less structure, people can effectively work in
of financial rewards. concert, within naturally emerging systems that
foster optimal work patterns. (italics in original)
Note the reference to leadership.
Factors affecting the
approach to managing Choice of approach to
performance managing performance
The context of the organization will have a consid-
erable influence on how performance is managed. It The basic choice is between having a formal perfor-
has been said that ‘Rather than manage performance management system or relying on the effec-
mance, manage the context in which performance tiveness of line managers as performance leaders. In
occurs’ (Jones, 1995: 426). He went on to explain the former case, there is a choice of the type of
(page 431) that: system to be adopted and the degree of formality
required. The choices available and the factors to be
In this equation, the role of management focuses considered in making them are reviewed in
on clear, coherent support for employees by Chapter 42. In the latter case, talent management
providing information about organization goals, and leadership development programmes will be
resources, technology, structure, and policy, required to ensure that there are managers available
thus creating a context that has multiplicative who have the skills required to exercise performance
impact on the employees, their individual leadership (see Chapter 43) and the desire to do it.
attributes (competency to perform), and their
The views of two managers interviewed by Dilys
work effort (willingness to perform). In short,
Robinson (2013) are interesting:
managing context is entirely about helping people
understand; it is about turning on the lights. Performance management is seen as something
you do to keep HR quiet. It’s seen as owned by
The context includes the organizational culture, the HR not about how you manage people properly.
people involved at all levels, including top manage-
ment, line managers and employees generally, the This organisation has a very structured
employee relations climate, and the internal envi- performance management framework, as you
ronment in terms of the organization’s structure, its would imagine from a big company. I try and
size and its technology and working practices. avoid using it unless I have to, I would rather
Commentators such as Deming (1986) and Coens try and develop the personal relationship with
and Jenkins (2002) stressed that system factors are someone, to understand their issues and try and
instrumental in governing the level of organiza- improve their performance by working with them,
rather than going through procedural ways of
tional performance. The latter referred to the need
managing performance.
to replace the mechanistic model of managing indi-
vidual performance, ie a performance management
system, with a more dynamic, organic model. Such
a model, according to Coens and Jenkins (page 41):
How managers can manage
… attributes organizational outcomes to the performance
interaction of organizational systems and structures
(sometimes called systems theory) rather than As described by Pulakos et al (2019), the key behav-
individual performance. This model capitalizes iours research has shown that managers need to
on freedom rather than maintaining control. We exhibit to drive high employee performance and

see more and more managers who are willing engagement are:
to experiment with leadership attuned to this
new paradigm. It is based on trust and a greater ●● set clear expectations, priorities, success
belief in people. It assumes that, with less control criteria and standards;
and greater autonomy, commitment and innate
Chapter 41 | The Basis of Performance Management 381
●● revise expectations in real time, so employees ●● check in regularly with employees to stay in
know what to do; touch and provide guidance;
●● provide informal feedback daily to praise, ●● coach employees and help them solve
coach and course-correct employee problems to enable success.
performance;
Key learning points
Performance management defined improvement plans, personal development plans and

coaching.
Performance management is what managers do to But establishing the impact of performance
ensure that the members of their teams achieve the management on organizational performance is
levels of performance expected of them. problematic because of causality issues.
The nature of performance management The ethical dimension

Performance management happens informally as a There is an important ethical dimension to
natural process of leadership. It can also operate performance management. The design of a
formally as a performance management system. performance management system and how it is
operated should be based on values related to the
The purpose of performance management ethical principles of respect for the individual, mutual
respect, justice, procedural fairness and
The fundamental purpose of performance
transparency.
management is to further the achievement of the
organization’s strategic goals. But it also has three
specific purposes: Factors affecting the approach to
managing performance
●● managerial – to provide a framework within which
managers can effectively manage performance; The context of the organization will have a
considerable influence on how performance is
●● developmental – to provide the basis for identifying
managed.
and meeting learning and development needs;
●● administrative – to provide the information required Choice of approach to managing
to administer performance pay and talent
performance
management systems.
The choice is between having a formal performance
The impact of performance management management system or relying on the effectiveness of
line managers as performance leaders.
At organizational level, performance management is
expected to improve performance by creating a
How managers can manage performance
performance culture in which the achievement of high
performance is a way of life. At individual level, it is As described by Pulakos et al (2019), the key
supposed to improve performance by indicating what behaviours research has shown that managers need
good performance looks like, agreeing performance to exhibit to drive high employee performance are:
goals, providing the basis for developing knowledge,
●● set clear expectations, priorities, success criteria
skills and abilities, identifying where performance
and standards;
needs to improve and deciding on the steps required
to achieve that improvement through performance
●● revise expectations in real time, so employees ●● check in regularly with employees to stay in touch
know what to do; and provide guidance;
●● provide informal feedback daily to praise, coach ●● coach employees and help them solve problems to
and course-correct employee performance; enable success.
References
Coens, T and Jenkins, M (2002) Abolishing business results, Compensation & Benefits Review,
Performance Appraisals: Why they backfire and January–February, pp 59–64.
what to do instead, San Francisco, Berrett-Koehler Pulakos, E D, Mueller-Hanson, R and Arad, S (2019)
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MA, Massachusetts Institute of Technology Centre searching for value, Annual Review of
for Advanced Engineering Studies Organizational Psychology and Behavior, 6,
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connection: performance management and
383
42
Performance
management systems
Introduction Features of a performance
Formalized performance management systems tra- management system
ditionally attempt to represent the normal processes
of management – planning, executing, reviewing, A performance management system is a defined set
taking corrective action – as a procedure for manag- of procedures for planning, monitoring, reviewing,
ing performance that managers and employees are evaluating and reporting on performance that
obliged to follow. Each of these processes is covered are interconnected and in sequence constitute an
in the usual version of the performance manage- organization’s formal approach to managing

ment cycle in which managers agree objectives with performance.
the people who report to them, provide feedback, Ideally, the system flows from the organization’s
review and evaluate performance, agree any actions objectives and then operates as a continuous and
required to develop capabilities and manage perfor- self-renewing cycle as shown in Figure 42.1.
mance and complete a report on the outcomes of Examples of the models of a system produced by
these activities. It can therefore be argued that a per- three organizations are given in figures 42.2–42.4.
formance management system is no more than a These models depict an apparently logical sequence
formal description of a natural process. As such, it of activities each of which contributes cumulatively to
has its uses as a framework for managing perfor- the achievement of the objective of improved perfor-
mance but it does not mean that it has to be blown mance. There is nothing wrong with the logic. But the
up into a bureaucratic process that purports to pro- success of the process depends on each stage being
vide all the answers to managing performance. As a conducted properly. And this makes demands on the
framework it may help but it should not be regarded participants – managers and their team members –
as the ultimate answer. The effective management of that can be hard to meet. The nature of these demands
performance is much more about exercising effec- under each of the three headings of the cycle is sum-
tive performance leadership than conforming to the marized below.
requirements of a system.
In this chapter the first section describes the
overall features of a formal performance manage- Performance and
ment system. The next three sections summarize the
main constituents of such a system, namely, perfor-
development planning
mance and development planning, monitoring and
A performance and development plan or agreement
reviewing. A brief summary is then made of the
is the outcome of the decisions made jointly by the
practice of 360-degree feedback. The final sections
manager and the individual during the planning
review the issues and problems surrounding the tra-
part of the performance management sequence. Its
ditional approach to performance management.
purpose is to provide a foundation for managing
F I G U R E 42.1 The performance management cycle
ORGANIZATION’S
STRATEGIC
GOALS
PLAN
Performance and
development agreement
1. Define role
2. Define objectives
3. Agree development plan
REVIEW MONITOR
Joint analysis Manage performance
of performance throughout the year
1. Review performance 1. Monitor performance
2. Evaluate (rate) performance 2. Provide continuous feedback
3. Report on performance 3. Provide coaching
4. Deal with under-performers
F I G U R E 42.2 Model of the performance management system in Astra-Zeneca

Stage 1
Business roles
Plan
Stage 2
Performance
planning
Evaluate
Stage 4 Stage 3
Performance Performance
improvement development
Do
performance throughout the year and for guiding defined as performance and learning objectives, and
development and improvement activities. It can be on action plans to develop performance and abili-
used as a reference point when planning and re- ties. Individual objectives are agreed which flow
viewing performance and is therefore a key compo- from departmental and organizational goals and
nent of an ideal performance management system. support their achievement, a process known as
It contains agreements on expectations in the form ‘cascading’. The alignment of individual objectives
of the results, competencies and actions required, with the organization’s strategic goals is generally
Chapter 42 | Performance Management Systems 385
F I G U R E 42.3 Model of the performance management system in Halifax Bank
Performance planning Personal development planning
Balanced scorecard Development framework

Manager
as coach
Individual performance plan Personal development plan

Individual performance
F I G U R E 42.4 Model of the performance management system in Pfizer Inc

Performance planning
Ongoing
coaching and Development
Total compensation
feedback
Performance review
r egarded as a key feature of a performance manage- Another requirement is to deal with under-perform-
ment cycle. The basis for these agreements is a role ers in good time so that improvements can take
profile that is jointly developed by the two parties. place. The problem is that when, typically, the sys-
tem only calls for one annual review, this dominates
the process and other aspects of performance man-
Monitoring agement are neglected.
Perhaps one of the most important features of an

ideal performance management system is that it is a Reviewing
continuous process which can be described as ongo-
ing performance management or ‘managing perfor- A defining feature of a traditional performance man-
mance throughout the year’. This means regularly agement system is a formal performance review, some-
monitoring outcomes against plans, providing or times called a performance appraisal, which typically
obtaining feedback and ensuring that corrective ac- takes place annually and usually includes a rating.
tion is taken when necessary. The feedback and rec- One of the main purposes performance reviews are
ognition of good work by the manager is provided supposed to serve is to provide a means of conducting
as and when appropriate, which means at the time an historical ‘stock-check’ on how an individual has
or immediately after an event has occurred rather performed and a basis for updating performance
than being saved up for a later formal performance agreements, thus completing the performance man-
review session. Managing performance throughout agement cycle. But they are also used to inform perfor-
the year also means updating objectives and con- mance pay decisions, to identify potential, to provide
tinuous learning on the job or through coaching. an opportunity for coaching and to establish where
action is required to deal with poor performance.
F I G U R E 42.5 Performance management form (part 1)
PERFORMANCE AND DEVELOPMENT: AGREEMENT AND PERSONAL DEVELOPMENT PLAN
Name: Forename(s):
Job title: Department:
Reviewer’s name Job title:
PERFORMANCE AND DEVELOPMENT AGREEMENT
Objectives Performance measures
Competencies Agreed actions
PERSONAL DEVELOPMENT PLAN

Development need How it is to be met Action by whom Target completion date
In a formal performance review a joint analysis of their manager and subordinates but to these may be
performance over the past year takes place to estab- added colleagues and even, rarely, customers. It is
lish the extent to which objectives have been also known as multi-source feedback. Assessors rate
achieved and the development plan implemented. aspects of performance such as leadership, team-
They generally include some form of performance work, communication, organizational skills, deci-
evaluation, typically by means of a rating, The out- siveness, drive and adaptability. Questionnaires are
come is recorded on a performance management normally processed with the help of software devel-
form (online or paper) illustrated in Figures 42.5 oped within the organization or, most commonly,
and 42.6. provided by external suppliers. Feedback is pre-
sented to individuals, often anonymously but some-
times by their manager.
360-degree feedback The advantage of 360-degree feedback is that indi-
viduals can get a more rounded view of their perfor-
360-degree feedback is the assessment of someone’s mance from different perspectives than they can obtain
performance by a number of people which is fed if their only assessment is by their manager. The disad-
back to the individual. The assessors usually include vantages are that the process can be stressful, people do
F I G U R E 42.6 Performance management form (part 2)
PERFORMANCE AND DEVELOPMENT REVIEW

Objectives Achievements
Competencies Actions taken
Development needs Actions taken
Comments by reviewer:
Signed: Date:
Comments by person reviewed:
Signed: Date:
not necessarily give frank or honest feedback and it sive. The performance management cycle closely re-
involves quite a lot of administration. For these rea- sembles the cycle for continuous improvement de-
sons, it has never been very popular fined by William Deming (1986) – ‘plan-do-check-act’.
This is not a coincidence. Performance management
is also concerned with continuous improvement.
The reality of performance However, in practice, the system often probably does
not work according to plan. There are four problems
management with the model.
First, it indicates a steady progression through
The model of a performance management system the stages of performance management, each of
shown in Figure 42.1 is straightforward and persua-
them linked together. This is desirable but in reality mance management that is implied by the model,
it may be difficult to achieve. The natural tendency and instead accept that, within an overall policy
of managers is to compartmentalize these activities, framework, different approaches may be appropri-
if they carry them out at all. They do not always ate in different parts of the organization and for dif-
appreciate how they are connected and what they ferent people. Performance management is applied
should do to ensure that the cycle does work in many ways according to the context in which it is
smoothly. used. These ways will not necessarily conform to
Second, it can encourage an over-elaborate ap- those prescribed by the model. The contextual fac-
proach. Systems designers may be tempted to cover tors include the type of operation and the organiza-
every aspect of the model in detail and turn what tion’s structure. Importantly they also include the
should be a natural and straightforward manage- organization’s culture as expressed in its philosophy
ment process into a bureaucratic nightmare with or norms (explicit or implicit) on how people should
complex procedures and intricate paper- or com- be managed and the prevailing management style,
puter-based forms. When developing a performance for example, the degree to which it is controlling or
management system the watchwords are ‘keep it participative. As Stoskopf (2002: 30) put it: ‘A [per-
simple’. Remember that line managers may be even formance management] system with the most aca-
more reluctant to do it well if they have to follow demically correct competencies or performance
over-elaborate procedures and understand obscure measures may fail if it does not fit with the compa-
jargon. The important thing to do is to ensure that ny’s culture or workforce.’
the basic processes are explained and illustrated in Because of these problems many organizations
communications about the system and in training have a performance management system which
programmes. broadly follows this model and looks good but doesn’t
Third, cascading the organization’s strategic work. Others, however, if they do anything at all, still
goals to individual objectives is more difficult to do use old-style, tick-box, top-down performance ap-
than it sounds. Strategic goals at organizational praisal systems which provide an easy way out (man-
level may not always translate easily into individual agers need do little more than fill up the forms or an-
goals because organizational goals are not defined swer the standardized questions in a web-based
well enough or are too remote from the work of system) and act as a means of exercising control.
individual employees. Many commentators have
extolled the virtue of alignment; few have made
practical suggestions about how to achieve it. Performance management
Strategic goals will probably be determined by top
management without consulting employees, and issues
simply ‘cascading’ goals downwards contradicts the
performance management principle that people Performance management has been by far the most
should be involved in agreeing their own goals. The reviled HRM activity over many years. Some years
answer to this objection is that, although at indi- ago Grint (1993: 62) asserted that ‘Rarely in the his-
vidual level account should be taken of overarching tory of business can such a system have promised so
goals, individuals can usefully take part in discus- much and delivered so little.’ Pulakos (2009: 3)
sions on how they can further the achievement of commented that ‘Performance management is
those goals. known as the “Achilles heel” of human capital man-
Fourth, the successful application of the model agement, and it is the most difficult HR system to
will largely depend on the context in which it oper- implement in organizations.’ And Duncan Brown
ates. Fletcher (1993) noted the evolution in many (2010: 1) observed that
organizations of a number of separate but linked The problems [of performance management] are…
processes applied in different ways according to the not of ambition or intent, but rather practice
needs of local circumstances and staff levels. Some and delivery. Low rates of coverage and even
organizations reject the concept of a bureaucratic, more frequently low-quality conversations and
centrally controlled and uniform system of perfor- non-existent follow-up are commonplace in the
wake of uncommitted directors, incompetent received a ‘good’ or ‘outstanding’ rating. Brown et

line managers, uncomprehending employees al (2010) found that employees who had a poor ex-
and hectoring HR with their still complex and perience with their appraisal interview were more
bureaucratic HR processes. likely to be dissatisfied with their job and to have
Specific performance issues are discussed below. low organizational commitment. A four-year longi-
tudinal study with a sample of more than 6,000
public-sector employees conducted by Linna et al
Performance reviews (2012) established that a poor performance
appraisal experience had a negative effect on

The performance review was described by Helen employees’ perceptions and attitudes.
Murlis (Armstrong and Murlis, 1998) as a ‘dishon-
est annual ritual’. The following summary of the
typical criticisms of traditional approaches to per- Performance ratings
formance reviews was made by the CIPD (2020):
The problem with performance ratings is that be-
●● They aren’t frequent enough. cause the notion of ‘performance’ is often unclear,
●● They focus on past performance with little subjectivity can increase. It is difficult to achieve
attention paid to future performance consistency between the ratings given by different
improvement, learning and development. managers. Performance ratings are unsatisfactory
●● Assessments are too subjective and not a because they are a superficial basis for providing
reliable reflection of actual performance, feedback. A meta-analytic study of the reliability of
especially if they use ‘forced ranking’ or performance ratings by Viswesveran et al (1996)
‘guided distribution’ ratings (that is, a fixed found that on average two supervisors rating the
proportion of employees must be rated as same employee on average correlate at around .5,
high or low performers). implying that only a quarter of their evaluations
would be the same.
●● Feedback often comes from a single source A powerful attack on rating was produced by
(the line manager) which can give too Lee (2005). He made the following points:
narrow a view.
●● The process is excessively bureaucratic, time ●● The rating process is actually a by-product of
consuming and demotivating. the attempt to measure performance
outcomes. An excessive emphasis on
Performance reviews or appraisals are often ex- measurement can be misguided. The desired
pected to fulfil numerous functions including per- end that is lost in measuring performance is
formance improvement, feedback, coaching, goal not measurement at all, but rather
setting, skill development, the assessment of poten- description.
tial, pay determination and the identification of ●● Poor ratings can stigmatize performance and
under-performers. No performance appraisal sys- cause unnecessary resistance to the
tem can meet all these ends. It is no wonder that line acceptance of feedback.
managers do not live up to the expectations of HR
or that the perfunctory training in performance ●● The goal is to have the employee assist us in
management provided by most organizations fails describing, interpreting and redirecting
to produce the multi-skilled, multitasking paragon performance feedback, not reacting to the
the system demands. ratings. Feedback can accomplish the same
Research by Mani (2002) showed that even positive goal as a rating without the negative
when employee experiences are positive, appraisal side effects.
interviews still resulted in negative attitudes and ●● If the goal is performance improvement, then
lower organizational performance – over 40 per feedback – not labelling past efforts – is the
cent of the staff in a public-sector organization were preferred tool.
dissatisfied with their appraisal including those who
●● Although ratings can be positive they can jective or goal. Traditionally, S stands for specific
also be punitive and focus attention on the (sometimes stretching), M for measurable, A for
negative rather than the possible. The only agreed, R for realistic and T for time-related. But an
message the employee gets from a poor emphasis on being SMART may give managers the
rating is ‘Stop doing what you have been impression that everything has to be quantified,
punished for doing.’ This kind of rating may which leads to frustration when they find out that it
not even be an adequate description, since can’t and only results in the setting of unrealistic
many ratings are a summary of a number of targets. And a formulaic approach like this can lead
activities collected over time. It does not to superficial assessments.
focus attention on what to do to get better.
●● Ratings are feedback but feedback of the
worst kind. The role of line managers
In an article in the Human Resource Management However well-designed, the effectiveness of a per-
Journal with the significant title ‘Performance man- formance management system ultimately depends
agement will not die but it should’, it was argued by on the commitment and skills of line managers.
Murphy (2020: 14) that ‘there is a common feature Posthuma and Campion (2008: 47) remarked that
in virtually all performance appraisal and perfor- One of the most dreaded tasks managers face
mance management systems that contributes sub- is meeting with employees to discuss their job
stantially to their failure – that is, they are built performance. These meetings present a dilemma
round subjective evaluations of job performance.’ for managers. On one hand, managers need to
give constructive criticism so that employees can
improve their performance. On the other hand,
Objective-setting managers do not like to give negative feedback
because of the bad feelings that often result.
Latham and Locke (2006) listed potential pitfalls of It is not surprising, then, that managers avoid
goal setting, including using performance goals giving accurate evaluations, give overly generous
when one should use learning goals, competition evaluations or avoid the process altogether.
versus collaboration, goals perceived as threatening,
goals enhancing/reducing risk taking, repeated goal Performance management only works when man-
attainment resulting in reliance on an outmoded agers want it to work and have the skills to make it
strategy, inappropriate goal-reward linkages, tying work. The paradox is that managers with the moti-
goal attainment to self-esteem, ignoring non-goal vation and skills to do that don’t need to be propped
performance dimensions and increases in stress. up by a bureaucratic performance management sys-
They accepted (page 266) that simply urging people tem. The issue is not the design and administration
to do their best rather than setting specific and dif- of such a system. The ‘reinvention’ movement in the
ficult goals can result in better performance: mid-2010s attempted to this by, for example, advo-
‘Focusing on reaching a specific performance out- cating regular performance conversations or ‘check-
come on a new, complex task can lead to “tunnel ins’ rather than annual reviews. But they were only
vision”— a focus on reaching the goal rather than tinkering with the problem. The real issue is the role
on acquiring the skills required to reach it. In such of line managers and the urgent need to find and
cases, the best results are attained if a learning goal develop managers who will act as performance
is assigned—that is, a goal to acquire the requisite leaders with or without a system; managers who
task knowledge.’ hold informal performance conversations rather
The other issue relating to setting objectives is than conduct formal performance reviews. This ap-
the use of the ‘SMART’ acronym, a popular way of proach is described in the next chapter.
getting managers to define a good performance ob-
Key learning points
Performance management system defined process, which reflects normal good management
practices of setting direction, monitoring and
A performance management system is the defined set measuring performance and taking action
of procedures – planning, monitoring and reviewing accordingly.
performance – that in sequence constitute an
organization’s formal approach to performance
Performance reviews
management
Traditionally, formal performance reviews provided an
Models of the performance management annual (usually) focal point for the consideration of key
performance and development issues. They led to the
system completion of the performance management process
Ideally, the system flows from the organization’s by informing performance agreements and often
objectives and then through processes of planning, involved some form of assessment.
monitoring and reviewing operates as a continuous
and self-renewing cycle as modelled in Figure 42.1. 360-degree feedback
360-degree feedback is the assessment of someone’s
Performance and development planning performance by a number of people which is fed back
Performance and development planning is carried out to the individual. The assessors usually include their
within the context of the corporate strategy. It is based manager and subordinates but to these may be added
on performance agreements. These emerge from the colleagues and even, rarely, customers. It is also
analysis of role requirements and from performance known as multi-source feedback.
reviews where assessments of performance lead to
the definition of future requirements. Agreement is Issues and problems
reached during the planning process on how
performance will be measured. There are a number of issues and problems with the
traditional performance management system.
Managing performance throughout the year

Perhaps one of the most important features of
performance management is that it is a continuous
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Consequences of the performance appraisal Development
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393
43
Performance
leadership
tain information on how ‘engaging managers’ – peo-
Introduction ple who inspire and motivate their teams to perform
well – behaved in their dealings with people in their
Managing performance is what managers do all the teams. A selection of the comments made by these
time. It is not something that only happens in an managers and the people they managed is set out
annual appraisal session as part of a performance below.
management system. It is about good management,
not simply holding meetings and ticking boxes on a
form. It is about performance leadership. As Pulakos Comments by managers
et al (2015: 51) commented:
The problem is that formal performance ●● I do give them a bigger picture, a brief
management (PM) systems have reduced PM overview of the company line and how it
to intermittent steps and processes that are affects them, and what their impact on it is.
disconnected from day-to-day work and behaviors This is why we do it, this is what we want to
that actually drive performance: communicating achieve, this is why we want to achieve it and
ongoing expectations, providing informal feedback this is what the result will be if we get to the
in real time, and developing employees through goal that we want to get to.
experience. To deliver on its promise, PM needs to
●● It never really gets to the situation where
shift from focusing on the formal system to focusing
there’s like a really great big formal sit-
on the PM behaviors that matter every day.
down to say let’s review everything you’ve
Good managers ensure that levels of engagement done.
are high in their departments. The outcomes of ●● I ensure that people understand what is
research on how ‘engaging managers’ do this is
expected of them. I try to encourage people
described in the first part of the chapter. The conclu- to think of the wider objectives of [the
sion is reached that they are in effect acting as per- organization] and how they fit in.
formance leaders and what this involves is e xamined
●● To keep the team generally motivated and
in the second part.
performance levels up, I will make sure I’m
speaking to people, praising them when they
What ‘engaging managers’ do a good job, finding out what their
problems are, helping them with whatever
do needs to be done.
Research was conducted for the Institute for

Employment Studies by Dilys Robinson (2013) to ob-
Comments by employees about ●● Managers were good at seeing that team

members knew what they were supposed to
managers be doing. But the managers did not prescribe
activities, go into great detail, or ‘micro
●● ... I feel like I can see anything that we do manage’ in any way. Rather, they explained
does fit with the strategy... I’ve never sat the task, its intended outcome and why the
there and thought, why are we doing this? team was being asked to do it, and then
●● You really know where you are and what allowed people to get on with it.
your goals are. ●● Managers set clear quality and behavioural
●● ... I think it’s just the way she approaches standards, so their teams knew the level at
things, as if she has confidence in your which they should be operating. The teams
ability. She’ll tell you if you’re not on track... appreciated the way in which the managers
so she doesn’t let you go gaily down the acted as role models by following these
road, off on the wrong track. standards themselves.
●● ... it’s that there’s constant feedback as well... ●● Managers were aware of how individuals
you don’t have to wait until the end of the and the team as a whole were doing, and
year to be told what your failings are or gave frequent feedback (both positive and,
what your good points are. when things were not going so well,
remedial). Team members appreciated the
●● She keeps us informed all the time how well
timely and frequent feedback they received.
we’re all doing separately and then as a team
together. All the time, each week she says, The aim of any policy for managing performance is
we’re doing well or we’re not doing well or to have managers who act like this – who lead
what we need to do to improve. rather than simply manage performance. This is the
●● As soon as she came in, she had a plan of concept of performance leadership.
action saying: well, I want to sit in when
you’re doing reviews, your team talks. I want
to see how you address your agents, I want The concept of performance
to see how you facilitate a meeting for
example... she’s given us hints and tips, a way leadership
we can move forward, what we’re doing well,
what we can continue, what we can do Leadership was defined by Stogdill (1950: 3) as ‘an
differently the next time. ‘influencing process aimed at goal achievement.’
This is precisely what performance leadership is. To
●● I think she’s really good at letting you know lead people is to influence, guide and inspire. It is
if you should be doing something that you’re the process of getting people to do their best to
not, or something a bit more in some area or achieve a desired result. Leaders are concerned with
another, without making you feel as if you’ve performance although they must also have the in-
had a lecture from the headmaster. You just terests of their team members in heart. A distinction
suddenly think, mmm, yes, I’d better go and can be made between the processes of management
think about that, and get on with it, or and leadership. Management is about the system-
sometimes in my case, well, I knew that atic achievement of results by effectively utilizing
anyway, so perhaps I’d better go and do and controlling all available resources such as peo-
whatever it was I’ve been putting off, or ple, money, information and equipment. Leadership
whatever. And it’s not meant, or it doesn’t focuses on the most important resource, people.
come out in a, come and see me or anything, Thus performance management is traditionally a
it just comes up in the conversation. system designed to get results by treating people as
This is how Dilys Robinson described the key be- a resource to be organized, controlled and exploited
haviours of such ‘engaging managers’: like any other resource. Alternatively, performance
leadership is the process of enhancing performance
●● Managers were very clear in their by focusing on the motivation, development and
expectations, which gave a focus and a sense wellbeing of people.
of purpose to their teams.
Chapter 43 | Performance Leadership 395
The significance of leadership was emphasized ●● understand that leaders cannot create
by Murphy (2020: 25). He wrote: ‘I believe it would performance themselves but are conduits for
be possible to create successful performance man- performance through their influence on
agement systems by focusing on the behaviours that others;
have been consistently been shown to be essential to ●● conduct performance conversations;
successful leadership.’ He referred to a well-estab-
●● coach individuals both formally and
lished theory of leadership behaviour originally de-
informally.
vised by the Ohio State researchers Halpin and
Winer (1957) and developed by Bass and Bass A competency profile for a performance leader is
(2008). This identified two dimensions of leader- illustrated in Figure 43.1.
ship behaviour:
Initiating structure – specifying ways and
●●
means of achieving the objectives of the
Performance conversations
group and coordinating the activities of its
members. Perhaps the most important of the skills set out
above is the ability to conduct performance conver-
●● Consideration – exhibiting concern for the sations. These should replace the traditional flawed
wellbeing of employees and maintaining annual performance review. Performance conversa-
internal harmony and satisfaction. tions are part of the normal process of management.
Both these behaviours can make a significant con- They take place whenever managers discuss with a
tribution to achieving high performance levels. As member of their team what they are doing, how
Murphy points out, they are applied in the impor- well they are doing it and how they can do even bet-
tant process of cascading organizational and unit- ter. They can include the provision as appropriate of
level goals to become team and individual goals. constructive feedback and can usefully become de-
This is the role of the manager as a translator and velopment conversations when the discussion is
communicator. extended to how skills, knowledge and abilities can
As performance leaders, managers set the direc- be enhanced as a means not only of improving per-
tion, make available the resources needed to get re- formance but also of developing potential and fur-
sults, motivate their team members, help people to thering a career. Research by Ledford et al (2016)
develop their skills (coaching), monitor their pro- established that ongoing feedback through more
gress, provide feedback by means of constructive frequent conversations took centre stage in organi-
performance conversations (not formal annual zations adopting newer approaches.
reviews) and ensure that corrective action is taken This is in line with the argument of Gratton and
when necessary. Ghoshal (2002) that the emphasis should be on the
core of the appraisal and development process, that
is ‘improving the quality of conversations’, rather
Performance leadership than going through ‘dehydrated rituals’. The case
for performance conversations was made by Purse
skills (2017: 50) as follows:
To help line managers build more trusting
Performance leadership skills comprise the ability to:
relationships with their direct reports, it is
●● inspire others; important to have authentic, honest and open
conversations with them. These could include:
●● persuade others willingly to behave
agreeing mutual expectations – making sure
differently;
it’s not just a one-way street; showing genuine
●● clarify what needs to be done and why; appreciation; challenging unhelpful behaviour;
●● communicate a sense of purpose to and importantly, it’s about having conversations in
individuals and their team; which you get to know the people reporting to you
and build trust in the relationship. None of these
●● get people into action so that the task is
actions are complicated, and it’s not that managers
achieved;
F I G U R E 43.1 E xample of competency profile for a p

erformance leader with positive and
negative indicators
Competency heading Act as a performance leader

Competency definition Constantly seeks ways of developing team members and improving their
performance.
Competency requirements ●● Fully understands what the team and individual team members are
expected to do and how they should behave in doing it.
●● Creates a clear structure by explaining what needs to be done and why.
●● Ensures that as far as possible, individual objectives are aligned with the
strategic goals of the organization.
●● Allows people to get on with it.
●● Fully aware of how the team and its members are doing.
●● Provides frequent and timely feedback through informal performance
conversations.
●● Guides and coaches team members so that they develop their skills and
potential and can perform their work effectively.
●● Is considerate when relating to team members.
Positive indicators ●● The team achieves high levels of productivity, quality and customer
service.
●● The levels of engagement of team members are high.
●● Team members are enthusiastic about learning and are actively improving
existing skills or developing new ones.
Negative indicators ●● Inadequate levels of productivity, quality and customer service. Low
levels of morale as indicated by engagement surveys, absenteeism,
employee turnover.
●● No interest in or enthusiasm for learning.
don’t have the skills to do them – it’s that they One-to-ones don’t have to be face-to-face. Once
often haven’t made the emotional commitment you know someone, a phone or video call can be
required. very effective. One- to-ones also encourage the
giving of feedback as events happen. This can
In her report for the Institute for Employment be through a quick word face-to-face or on the
Studies, Wendy Hirsh (2018: 5) illustrated how per- phone, via email, or an app. Once we talk a bit
formance conversations worked (Figure 43.2). She more, it just gets easier to raise issues whenever we
wrote: need to.
As we all know, saving everything up for a once a How often performance conversations are held is a
year ‘big bang’ flouts the principle of continuous matter of choice. There is no ‘right’ frequency. They
improvement and development, which requires can and should arise spontaneously as the occasion
timely feedback and support. The very simple suggests. This means that when and how they take
idea of regular ‘one-to-ones’ has helped many place is left entirely to the discretion of managers
organisations embed relatively more frequent with reliance being placed on their performance
work-related conversations between employees
leadership skills. Line managers would be expected
and their managers… One-to-ones are more than
to be very clear in their expectations and to give
a chat, but not so formal that they constrain the
focus and a sense of purpose to the individuals in
conversation or feel intimidating. What we might
call ‘semi-formal’ conversations are often just right their teams. Performance leadership would be exer-
for addressing performance and development. If cised through the contacts that take place during
one-to-one air time is planned in, it becomes easier the day-to-day flow of work. Informal conversa-
to use different occasions for different purposes. tions may be initiated by remarks such as ‘How are
F I G U R E 43.2 Features of effective performance and development conversations
ACTION
Action agreed and followed up
INSIGHT
Insights and understanding gained by both parties
TIMELY
At the appropriate time, reflect and act
SHARED
Shared ownership of agenda, goals, insight and action
RELEVANT
Relevant to business priorities, job and situation of the individual and/or team
SOURCE Hirsh (2018: 4)
things going?’ ‘Any problems?’ ‘Good work!’ ‘How Providing feedback

did this happen?’ ‘Are there any better ways of get-
ting this done?’ ‘Do you need any help?’ Some man- The provision of constructive feedback is an impor-
agers will do this naturally and the aim will be to tant aspect of performance leadership whether it
identify and select people with those inbuilt abili- takes place formally or spontaneously during the
ties. But even when they are ‘naturals’ they may well normal course of work. Feedback is positive and
benefit from additional training in the skills re- helpful when it recognizes success and constructive
quired to conduct performance conversations, give when it identifies areas for improvement that can
feedback and provide coaching. lead to effective action. It is negative and unhelpful
when perceived failings are dwelt on as matters for
blame.
The following are guidelines on giving feedback:
Performance conversations at ●● build feedback into the job – clarify key
Barts Health Trust performance indicators;
We have developed an appraisal model that is ●● provide feedback on actual events at the
based on an ‘adult-to-adult’ rather than a
time;
‘parent-to-child’ employment model. It’s as ●● describe, don’t judge;
much about the person as the organisation. ●● make it non-threatening;
The appraisal discussion includes a health ●● focus on performance issues – don’t make it
and wellbeing conversation: asking personal;
colleagues how they are as well as their
●● refer to specific behaviours;
friends and family. The conversation is
supported by a menu of health and wellbeing
●● define good work or behaviour;
support in place... We also have a ●● ask questions;
conversation with them about their own risk ●● select key issues;
assessment... and how we can respond to ●● focus on how the task was tackled, not just
that... And then we’ll have a career the results;
conversation including career aspirations,
●● ensure feedback leads to action.
and personal objectives and development.
(Raj Bhamber, Interim Group Director of
People, Barts Health NHS Trust)
Source CIPD (2021: 16)

argue that interventions to improve performance

Conclusion management should cease their exclusive focus
on reinventing formal system features. Although
To achieve high levels of performance it is not well-developed tools and systems can facilitate
enough to tinker around with traditional perfor- performance management, these alone do not
mance management activities such as performance yield effective performance management. In lieu
reviews and rating as advocated by reinvention en- of making further changes to formal performance
thusiasts such as Buckingham and Goodall (2015). management systems, we argue for devoting
The well-established problems and limitations of more attention to improving manager–employee
traditional performance management systems as de- communication and aspects of the manager–
scribed in the last chapter are too deep-rooted for employee relationship and propose an approach we
that. Pulakos and O’Leary (2011: 146) in the intro- believe holds promise for improving performance
duction to their seminal article ‘Is performance man- management processes in organizations.
agement broken?’ stated that As Kevin Murphy (2020: 16) argued in his chal-
We propose that a significant part of the problem lenging Human Resource Management Journal arti-
is that performance management has been reduced cle, performance management will not die but it
to prescribed steps within formal administrative should: ‘The persistent failure of a wide range of
systems that are disconnected from the day-to-day approaches to improving performance appraisal
activities that determine performance management and performance management systems suggests
effectiveness (e.g., communicating clear work that a new strategy is needed.’ That new strategy is
expectations, setting short-term objectives and performance leadership.
deadlines, and providing continual guidance). We
Key learning points
Managing performance formal annual reviews) and ensure that corrective

action is taken when necessary.
Managing performance is what managers do all the
time. It is not something they only do in an annual
Performance leadership skills:
appraisal session as part of a performance
management system. It is about good management, ●● inspire others;
not simply holding meetings and ticking boxes on
●● persuade others willingly to behave differently;
a form. It is about performance leadership.
●● clarify what needs to be done and why;
Performance leadership ●● communicate a sense of purpose to individuals and
As performance leaders, managers set the direction, their team;
make available the resources needed to get results, ●● get people into action so that the task is achieved;
motivate their team members, help people to develop
their skills (coaching), monitor their progress, provide ●● understand that leaders cannot create
feedback by means of constructive conversations (not performance themselves but are conduits for
performance through their influence on others.
References
Bass, B and Bass, R (2008) The Bass Handbook of practices: ongoing feedback, ratingless reviews
Leadership: Theory, Research and Managerial and crowdsourced feedback, World at Work
Implications, New York, Simon & Schuster Journal, Second quarter, pp 8–24
Buckingham, M and Goodall, A (2015) Reinventing Murphy, K R (2020) Performance management will
performance management, Harvard Business not die but it should, Human Resource
Review, April, pp 40–50 Management Journal, 30 (1), pp 13–31
Chartered Institute of Personnel and Development Pulakos, E D and O’Leary, R S (2011) Why is
(2021) Responsible Business Through Crisis, performance management broken? Industrial and
London, CIPD Organizational Psychology, 4 (2), pp 146–64
Gratton, L and Ghoshal, S (2002) Improving the Pulakos, E, Hanson, R M and Moye, N (2015)
quality of conversations, Organizational Performance management can be fixed: an
Dynamics, 31 (3), pp 209–23 on-the-job experiential learning approach for
Halpin, A W and Winer, B J (1957) A factorial study complex behavior change, Industrial and
of the leader behaviour descriptions, in (eds) R M Organizational Psychology, 8 (1) pp 51–76
Stogdill and A E Coons, Leader Behaviour: Its Purse, N (2017: 50) How to construct effective
Description and Measurement, Columbus, Ohio engagement, People Management, April, p 50
State University Robinson, D (2013) The engaging manager and sticky
Hirsh, W (2018) Effective Performance, Development situations. http://www.employment-studies.co.uk/
and Career Conversations at Work, London, system/files/resources/files/493.pdf (archived at
Institute for Employment Studies https://perma.cc/4NW5-GVAP)
Ledford, G E, Benson, G S and Lawler, E E (2016) A Stogdill, R M (1950) Leaders, membership and
study of cutting-edge performance management organization, Psychological Bulletin, 25, pp 1–14
400

401
PART XI
Reward management
PA R T X I CO N T E N T S
44 The basis of reward management

45 Reward strategy
46 The practice of reward management
47 Managing reward for special groups
48 Reducing the gender pay gap
it works; (2) the way in which reward strategy sets

Introduction the direction for reward management; (3) descrip-
tions of the main reward activities of market pricing,
Reward management as described in this part is de-
job evaluation, managing grade and pay structures
fined as how organizations develop and implement a
(base pay management), contingent pay, employee
system of interrelated reward practices that provide
recognition, employee benefits and reward adminis-
financial and non-financial rewards and benefits for
tration; (4) rewarding special groups (executives,
employees.
knowledge workers, sales and customer service staff
The part covers: (1) an analysis of the process of
and manual workers); and (5) the steps required to
reward management – what it is and how, in general,
reduce the gender pay gap.
402

403
44
The basis of reward
management
ing organizational, departmental and team goals is
Introduction recognized and rewarded. It provides answers to
two fundamental questions: (1) How do we value
Reward management can be described as a process people? and (2) How are we going to reward them
for rewarding people that is based on a philosophy according to that value?
and guiding principles and is put into effect by a Reward management in action is about the de-
reward system which consists of a number of inter- sign, implementation and maintenance of reward
related reward practices. The effective management systems. These consist of reward processes, prac-
of reward can make a significant impact on the per- tices and procedures covering: how jobs and people
formance of the organization by helping to attract should be valued; the design and administration of
and retain high-quality people. grade and pay structures (base pay management);
This chapter contains: rewarding and recognizing achievements and per-
●● a definition of reward management; formance; providing employee benefits; and imple-
menting procedures for managing reward. Reward
●● a description of the reward system;
management is not just about pay and employee
●● an analysis of the factors that drive reward; benefits. It is equally concerned with non-financial
●● explanations of the aims, values and beliefs rewards such as recognition, autonomy, learning
of reward management; and development opportunities, and increased job
●● an examination of the nature of reward responsibility.
policy; Reward management is conducted through a re-
ward system as described below. Such systems exist
●● a review of three of the key elements of a
to satisfy the needs of the organization to attract,
reward system: financial rewards, non-
retain and motivate high-quality people and thus
financial rewards and total reward.
improve performance and achieve corporate goals.
Reward strategy is covered in Chapter 45. But importantly, they are also there to recognize the
needs of the people in the organization which in-
clude fair pay and equal pay for work of equal
Reward management value. And they must also meet various external re-
quirements such as complying with government
defined regulations, for example, those requiring certain
organizations to report on the ratio of their chief
Reward management deals with the strategies, poli- executives’ remuneration to the median pay of their
cies, and practices required to ensure that the value UK employees, employment law and taxation.
of people and the contribution they make to achiev-
404 Part 11 | Reward Management
these components combine to achieve the aims of

The reward system reward management, as defined in the next section
of this chapter.
The reward system, as illustrated in Figure 44.1,
consists of the interrelated processes and practices
that combine to ensure that reward management is
carried out effectively to the benefit of the organiza-
Aims of reward
tion and the people who work there. The system is management
driven by the business or corporate and HR strate-
gies from which flow the reward strategy. Its major The aims of reward management are to:
components – financial and non-financial rewards –
are combined to form the system. Performance ●● support the achievement of the
management plays an important part in supporting organization’s goals by developing a
non-financial rewards and may be used to inform performance culture and stimulating high
performance or contribution pay decisions. All performance;
F I G U R E 44.1 The reward system
Non-financial rewards
Market rate
analysis
Job evaluation
Grade and pay

structure
Reward values
Achieve aims:
• Performance
Business and Reward Base pay Total • Define/influence
Total reward
HR strategy/policy management remuneration behaviour
• Attract and
retain
Pay progression • Motivate and
Context through contingent engage
pay
Variable pay
eg bonuses
Pension and
benefits
Allowances
Performance
management
Chapter 44 | The Basis of Reward Management 405
●● attract and retain the high-quality people the factors linked to guaranteeing the delivery of the
organization needs; strategic goals of the organization and ensuring pay
●● motivate and win the engagement of budgets are affordable, as well as rewarding and
employees; recognizing employee performance.
●● reward people according to the value they
create;
Values and beliefs
●● deliver value on the investment in rewards to
both the employer and the employees; Reward policies and practices are affected by the
●● align reward practices with employee needs. values and beliefs of the organization about how
people should be rewarded and how the reward sys-
But Ghoshal and Bartlett (1995) reminded us that
tem should be managed. These may be articulated
reward management is essentially about adding
as a reward philosophy that sets out the broad val-
value to people. It is not just about attaching value
ues of the organization or as a set of guiding princi-
to them.
ples such as:
●● developing reward policies and practices
Reward drivers which support the achievement of business
goals;
Reward is a complicated field, but it can be argued ●● providing rewards which help to develop a
that there are three fundamental determinants of high-performance culture and attract, retain
any reward management system, as illustrated in and motivate staff;
Figure 44.2 below: internal considerations of fair-
●● maintaining competitive rates of pay;
ness and relativities, supported by job evaluation
systems and grading structures; external considera- ●● rewarding people according to their
tions of market rates of pay, to enable the employer contribution;
to recruit and retain people, supported by internal ●● recognizing the value of all staff who are
pay levels and ranges; and performance-related making an effective contribution, not just the
exceptional performers;
F I G U R E 44.2 Reward drivers
Flexibility
Competing for the
Internal External talent that the
relativities relativities business needs
in the recruitment
Reward market, measured
system through external
benchmarking
Fairness
Taking account of: Performance
• Job content
Affordability
• Equal pay issues
Taking account of:
• Grading structures
• Achievement of annual
objectives
• Longer-term contribution
and potential
SOURCE Brown (2018)

●● emphasizing the importance of achieving

equal pay and dealing with gender pay Source review
issues;
●● recognizing the need to enable those in
Colt: Reward philosophy
lower-paid jobs to achieve a reasonable
standard of living; Colt believes that talented and motivated people
●● accepting the need to deal with reward make a difference; talented people put us ahead of
matters ethically; the competition and deliver the results on which
the success of Colt is built. Colt seeks to offer a
●● allowing a reasonable degree of flexibility in
the operation of reward processes and in the compensation and benefits package that rewards
choice of benefits by employees; people for their contribution to the success of
the company and ensures that external market
●● devolving more responsibility for reward
competitiveness and internal relativities are taken
decisions to line managers.
into account.
Reward management can be controversial and prin-
ciples are therefore important to define the desired
state in the organization – what ‘good’ and ‘effec-
tive’ mean from a reward perspective in any
employer setting. Some employers regard paying
Source review
market rates as the be-all and end-all of their pay
systems while others regard internal relativities as
more important. Many employers focus on cash
Reward guiding principles at Diageo
rewards while others believe in offering a good ben- ●● Performance: rewards are developed that
efits package. These policies are driven by their be- reflect team and individual achievements.
liefs and principles about what motivates people,
what the organization stands for and what they ●● Market: rewards reflect the market in which an
think is right. employee is based, whether that be
Guiding principles are often agreed by top man- geographical or functional, and compare
agement with advice from company reward spe- favourably with those of competitors.
cialists or external consultants. But they will be ●● Communication: Diageo aims to explain to
more acceptable if members of the organization
‘everyone the components and value of their
are involved in their definition. Guiding principles
reward package, the criteria that affect it, and
can then be communicated generally to increase
how they can influence it’.
understanding of what underpins reward policies
and practices. However, employees will suspend ●● Effectiveness: the company seeks ‘best
their judgement of the principles until they experi- practice’ and ensures its benefits programmes
ence how they are applied. What matters to them ‘remain effective for the business and our
is not the principles themselves but the pay prac- employees’.
tices emanating from them and the messages about
the employment ‘deal’ that they get as a conse-
quence. It is the reality that is important, not the
rhetoric.
The following are examples of a reward philoso- Reward policy
phy produced by Colt Telecom and the guiding
principles adopted by Diageo. Reward policy sets guidelines for decision making
and action and therefore provides the framework for
managing a reward system. It indicates what the ierarchy may not be required on the grounds that it
h
organization and its management are expected to do does not reflect the way in which work is organized
about managing reward and how they will behave in and will constrain flexibility. Policies also cover em-
given circumstances when dealing with reward issues. ployee benefits – pensions, sick pay, health care, holi-
days and perks such as company cars. Policies on the
level of rewards can be explained in general terms by
Level of rewards the theories summarized in Table 44.1.
The process of determining pay levels and the
The policy on the level of rewards indicates whether
rates of pay for individual jobs within organizations
the company is a high payer, is content to pay me-
are influenced generally by the factors described
dian or average rates of pay or even, exceptionally,
above. Levels of pay are affected by an implicit be-
accepts that it has to pay below the average. Policies
lief in efficiency wage theory – that higher rates of
on pay levels will also refer to differentials, minimum
pay attract good candidates (the sorting effect), en-
rates of pay and the number of steps or grades that
hance performance (the incentive effect) and help to
should exist in the pay hierarchy. This will be influ-
retain employees. There will be policies and prac-
enced by the structure of the company. In today’s
tices on the range or dispersion of pay between
flatter organizations an extended or complex pay
TA BLE 44.1 Theories explaining pay levels

Name of theory Summary of theory Practical significance
The law of supply Other things being equal, if there is a Highlights the role of labour market factors
and demand surplus of labour and supply exceeds in affecting rates of pay and therefore
demand, pay levels go down; if there is emphasizes the importance of market
a scarcity of labour and demand pricing, ie establishing the level of market
exceeds supply, pay goes up. rates.
Efficiency wage Firms will pay above the market rate Firms use efficiency wage theory (although
theory because they believe that high levels of they will not call it that) when they
pay will increase productivity by helping formulate pay policies that place them as
to motivate and retain employees. above the average, eg in the upper quartile
of the distribution of market rates.
Human capital Workers have a set of skills developed Employers and employees each benefit
theory by education and training that generate from investment in creating human capital.
a stock of productive capital. Pay should be fixed at 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 behaviour.
agent theory) agents). The difference can create This process of ‘incentive alignment’
‘agency costs’ because the agents may consists of paying for measurable results
not be so productive as the principals that are deemed to be in the best interests
would like them to be. The latter of the owners. (Agency theory is
therefore have to devise ways of particularly relevant as a means of
motivating and controlling the efforts of explaining the high levels of executive pay.)
the employees.
Tournament theory The motivation of high-quality staff will Provides a rationale for increasingly large
be increased by offering lucrative prizes pay differentials between jobs in the
(ie pay) for a small number of people hierarchy. Is also a justification for high
who are promoted to higher-level jobs, levels of pay for chief executives.
with the highest price of all to the
person who wins the tournament by
getting the top job.
(continued)

Name of theory Summary of theory Practical significance
The effort/reward Workers aim to strike a bargain about Management has to assess what level and
bargain the relationship between what they type of inducement it has to offer in return
regard as a reasonable contribution and for the contribution it requires from its
what their employer is prepared to pay workforce. Pay negotiations in effect centre
to elicit that contribution. on the effort bargain.
different levels in the organization. The organiza- compared with others. This may be a matter of
tion will have a defined or implicit ‘pay stance’ pol- opinion, but attempts can be made to measure rela-
icy, ie the relationship desired between the levels of tive worth through job evaluation, which is essen-
pay within the organization and market rates. tially a comparative process. The aim is to achieve
Specific factors affecting rates of pay are beliefs internal equity which occurs when people are
about the value of the job and the value of the per- rewarded appropriately in relation to others ac-

son, internal relativities, financial considerations cording to the value of their contribution. The case
(the ability to pay), the influence of trade unions for equal pay for work of equal value is based on
and the minimum or living wage. the imperative to achieve internal equity.
Value of the job Financial circumstances of the

The intrinsic value of a job is a measure of what a organization
job (not a person) is worth in terms of what it con-
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
of the impact they make on organizational results do not cost more than the organization can afford
and by reference to the levels of responsibility and and this will influence the level of pay that can be
skill required to perform them. Increases in impact offered to employees. Extra expenditure on pay, eg
and these levels lead to higher rates of pay. This bonus payments, should add value in the sense that
concept provides the theoretical base for job evalu- the benefits resulting from improved performance
ation. However, as an explanation of the value at- outweigh the cost.
tached to jobs it is limited because it ignores exter-
nal relativities (market rates). Trade union influence
Pay levels may be determined through collective
Value of the person bargaining with trade unions. They will want their
Individuals are valued by organizations for three members’ pay to keep ahead of inflation, to match
main reasons: (1) the contribution they make to or- market rates and to reflect any increases in the pros-
ganizational success, (2) their competencies and skills perity of the business. The amount of pressure they
and (3) the experience they bring to their jobs. People can exert on pay levels will depend on the relative
also have their own value in the market place – their bargaining strengths of the employer and the union.
market worth – which has to be taken into account
by employers in setting their rates of pay. The minimum or living wage
Minimum or living wage regulations in the UK set
Internal relativities minimum rates of pay. The amount is increased
It can be argued that the value of anything, includ- from time to time.
ing jobs, is always relative to something else, that is,
other jobs. Views on job values within organizations Example of pay policy
are based on perceptions of the worth of one job An example of a policy on pay levels is given below.
C A S E S T U DY
Pay policy at AEGON UK
The reward system is designed to recognize three core which market forces affect the salaries required to
factors which affect the level of pay individuals should attract and retain quality staff.
receive for their ‘personal commitment and consistent
●● Value of the person – individual employees may be
contribution within their roles’. These are:
rewarded at a higher level because they are making a
●● Internal job value – the bigger the job, the higher the greater contribution, are performing better, meeting
reward. objectives and have achieved a higher level of
skill or competence than their colleagues (measured
●● External job value – the level of reward will be
through the performance management process).
influenced by external market rates and the degree to
External competitiveness versus may, however, allow for the use of market supple-
ments – a payment that reflects market rates in ad-
internal equity dition to the rate for a job as determined by internal
Reward policy is also concerned with the extent to equity. The policy may lay down that these pay-
which rewards are market driven (ie primarily influ- ments should be reviewed regularly and no longer
enced by market rate pressures) rather than equita- offered if they are unnecessary. Market supplements
ble (ie employees are paid fairly in relation to one for those who have them may not be withdrawn
another). The policy will be influenced by the cul- (the people concerned would not have their pay re-
ture and reward philosophies of the organization duced), but adjustments may be made to pay pro-
and the pressures on it to obtain and keep high- gression to bring their rates more into line with
quality staff. Any organizations that have to attract those for comparable jobs. Market pay and market
and retain staff who are much in demand and where supplements can lead to gender inequalities if, as is
market rates are therefore high, may, to a degree, often the case, men in comparable jobs are paid
have to sacrifice their ideals (if they have them) of more generally or more men get market supple-
internal equity to the realism of the market place. ments than women. Equal pay case law has ruled
They will therefore provide ‘market pay’; in other that market pay and market supplements should be
words, they will be ‘market driven’. ‘objectively justified’ by reference to observable
The pay management process must cope as best market pressures, and the requirement to do this
it can when the irresistible force of market pressures should be included in the pay policy.
meets the immovable object of internal equity.
There will always be some degree of tension in these
circumstances, and while no solution will ever be
Segmentation
simple or entirely satisfactory, there is one basic Segmentation involves varying the reward package
principle that can enhance the likelihood of success. for different jobs either to reflect the types and lev-
That principle is to make explicit and fully identifi- els of contribution people make, or to provide re-
able the compromises with internal equity that have wards that are tailored to meet individual needs.
to be made in response to market pressures. A policy on segmentation will recognize that parts
The policy may indicate that market considera- of the workforce and individuals in the successive
tions will drive levels of pay in the organization. It stages of their career may be motivated by different
combinations of rewards. Rewards may be segmented Three basic elements of a reward system – financial
to take account of key employee differences. This rewards, non-financial rewards and total reward – are
could mean individual performance-related pay for described below. The components of the financial
some, team reward for others and other forms of pay reward system are described in the next chapter. These
progression and recognition rather than incentives for are market pricing, job evaluation, the management of
a third group. This is a flexible approach to reward grade and pay structures (base pay management), pay
management although it should be flexibility within a progression through contingent pay (pay for perfor-
framework, the framework being provided by guiding mance, competence or contribution), employee recog-
principles that apply to all aspects of r eward. nition and employee benefit and pension schemes.
C A S E S T U DY
Reward system development in a technology company
This smaller, entrepreneurial technology company evolved a culture and change processes is at least as important as the
more logical, structured approach to its pay and rewards in technical design of reward plans if improvements are to be
order to better align them with its growth plans, rather than achievable and delivered into practice. He stressed the
largely reflecting the history of its development. The Head of need to ‘Pay attention to the organization, its culture and its
Reward and Development emphasized that reward systems’ needs, gather information and evidence for (reward)
development is an evolutionary process that can’t just be change, then establish consistent frameworks to guide
determined on the basis of abstract reward principles and decisions and help managers to understand, support and
hard measures of effectiveness. A subtler understanding of make necessary changes.’
with internal and external relativities and

Financial rewards usually provide for pay progression.
Financial rewards consist of job-based pay, which ●● Contingent pay – planning and managing
provides pay related to the value of the job, and schemes which provide for pay progression
person-based pay, which provides rewards that rec- related to performance, contribution,
ognize the individual’s contribution. They also competence, skill or length of service.
include employee benefits and pensions and finan- Labour economists distinguish between the incentive
cial recognition schemes. The management of job effect of financial rewards (generating more
and person-based pay involves: engagement and effort) and the sorting effect (attract-
●● Pay determination – making decisions on the ing better-quality employees). The fundamental issue is
value of jobs by means of market pricing and the extent to which financial rewards provide an
job evaluation. The factors that affect pay incentive effect. The sorting effect is important but
levels were summarized in Table 44.1 earlier creates less controversy, perhaps because it is more
in this chapter. difficult to pin down.
The case for and against financial rewards as in-
●● Base pay management – developing and
centives and a description of the contingent pay
operating pay structures which group jobs
schemes that provide such awards are dealt with in
into grades, bands or levels in accordance
Chapter 46.
A total reward approach recognizes that it is

Non-financial rewards ecessary to get financial rewards (pay and benefits)
n
right. But it also appreciates the importance of pro-
Non-financial rewards focus on the needs people viding people with rewarding experiences that arise
have for recognition, achievement, personal growth, from their work environment (the job they do and
acceptable working conditions and personal well- how they are managed) and the opportunity to
being. They include the design of fulfilling jobs, develop their skills and careers. It contributes to the
giving people the scope to develop their skills and production of an employee value proposition that
careers, offering a work environment which provides a clear, compelling reason why talented
provides a high quality of working life and an
people should work for a company and is an impor-
appropriate relationship between work and private tant approach to improving the employee experience
life (work–life balance) and taking account of the (see Chapter 29).
needs of lower-paid employees. Non-financial
rewards can be extrinsic, such as praise or recogni-
tion, or intrinsic, associated with job challenge and Critical evaluation of the total
interest and feelings that the work is worthwhile.
reward concept
The basic premise of total reward – that it is impor-
Total reward tant to consider both financial and non-financial
means of rewarding people – is sound. Intrinsic mo-
The concept of total reward indicates that the vari- tivation factors – those that arise from the work it-
ous aspects of reward, namely base pay, contingent self – can have a more powerful affect in the longer
pay, employee benefits and non-financial rewards, term than the short-lived satisfaction resulting from
which include intrinsic rewards from the work it- a pay increase. Why not therefore treat these as re-
self, should be linked together and treated as an in- wards in the sense that they are what people get
tegrated and cohesive whole, as modelled in when they work for an organization and do some-
Figure 44.3. This describes an approach to reward thing about enhancing them in order to make the
management that emphasizes the need to consider best use of both financial and non-financial re-
all aspects of the employee experience, not just a wards? Even if the prescriptions in the models for
few such as pay and employee benefits. It is there- non-financial rewards are simply good HR practices
fore a vehicle for improving that experience. or typical components in a high-performance work
F I G U R E 44.3 Total reward model
Base pay
Financial/extrinsic
Transactional rewards
Contingent pay
rewards (total
remuneration)
Employee benefits
The employee experience Total rewards
Non-financial recognition Non-financial/

Relational
intrinsic
rewards
Performance management rewards

system, they do clarify that these should be associ- While the concept of total reward may be good
ated with the reward system. As Giancola (2009) in theory it is dubious in practice. Duncan Brown
suggested, the main purpose of total reward is to (2019: 4) commented that
consider the standard list of human resource
The boardroom and recruitment website rhetoric
programmes from a reward perspective when devel-
has never matched the shop floor reality on total
oping strategy. It is necessary to consider these rewards. The practical impact never lived up to
elements as well as the more obvious financial
the policy intent. Rather than being genuinely
rewards. Total reward sounds like common sense. motivated by delivering higher levels of choice and
But does it work as it is supposed to work? perceived value to employees in an increasingly tight
Total reward is not an easy option. WorldatWork and diverse labour market, too often the concept
(2000) commented that total reward is ‘simple in was used – as trade unions often alleged – as an
concept but, at best, complex in execution.’ And the alternative to decent pay levels and increases and,
extent to which it is being applied by organizations even worse, as a front to cut pension and benefit
in practice can be questioned. According to Duncan costs and shift risk from employer to employee.
Brown (2014) exaggerated claims for what total re-
Duncan Brown followed this up (2022: 2) arguing
ward can do have led to lots of aspirations but few
that ‘rather than maximising an individual’s total
achievements. He suggested that the terminology
rewards through our policies we should provide se-
and concept of total reward is becoming increas-
curity and protection from declining living stand-
ingly meaningless and outdated in our post-reces-
ards [and] move back to reward as security and
sionary economy of austerity and inequality. Its ge-
welfare, rediscovering “boring benefits”’. He noted
neric and unthinking application in uniform
that one of the outcomes of Covid-19 was a grow-
packages risks isolating the rewards profession into
ing emphasis on collective support and fairness in
an administrative backwater.
pay and conditions.
C A S E S T U DY
McDonald’s: demonstrating reward effectiveness
McDonald’s is a company with a strong culture of measure the business means that reward arrangements are
ment and has built its own people-profit chain methodology reviewed regularly and changed if they are not found to be
to produce impressive evidence that demonstrates how delivering. But the subtler processes of consultation and
rewards can enhance employee engagement and thereby change management are equally vital in maintaining
business performance. The operational and cost focus in and strengthening reward effectiveness.
C A S E S T U DY
The NSPCC: approaches to achieving reward effectiveness
The experience of the NSPCC was that while measures of voluntary organizations. It also shows that limited
organizational and reward effectiveness may differ, the resources need not be a barrier to assessing and
delivery of them is every bit as critical, if not more so, in demonstrating effectiveness. Establishing links to the core
purpose of the organization was the major driver behind considerations, as was ensuring that the values of the
the extensive research undertaken into effectiveness. The people in the organization were aligned to them.
culture of the organization and its values were important
Key learning points
Reward management defined Reward policies can cover:

Reward management deals with the strategies, ●● external competitiveness versus internal equity;
policies and processes required to ensure that the
●● level of rewards;
value of people and the contribution they make to
achieving organizational, departmental and team goals ●● segmentation.
is recognized and rewarded.
Reward strategy
Reward system
Reward strategy defines what an organization wants
A reward system consists of the interrelated processes to do about reward in the next few years and how it
and practices of financial and non-financial rewards intends to do it.
that combine into a total rewards approach to ensure Reward strategy may be a broad-brush affair,
that reward management is carried out to the benefit of simply indicating the general direction in which it is
the organization and the people who work there. thought reward management should go. Additionally,
or alternatively, reward strategy may set out a list of
Aims of reward management specific intentions dealing with particular aspects of
reward management
Reward management provides answers to two
fundamental questions: (1) How do we value people?
and (2) How are we going to reward them according to
Financial rewards
their value? Financial rewards consist of job-based pay, which
provides pay related to the value of the job, and
Values and beliefs person-based pay, which provides rewards that
recognize the individual’s contribution. They also
Reward policies and practices are affected by the include employee benefits and pensions and financial
values and beliefs of the organization about how recognition schemes.
people should be rewarded and how the reward
system should be managed. These may be articulated
as a reward philosophy that sets out the broad values
The management of job- and person-
of the organization or as a set of guiding principles based pay involves:
●● Pay determination – making decisions on the value
Reward policy of jobs by means of market pricing and job
evaluation.
Reward policy sets guidelines for decision making and
action and therefore provides the framework for ●● Base pay management – developing and operating
managing a reward system. It indicates what the pay structures which group jobs into grades,
organization and its management are expected to do bands or levels in accordance with internal and
about managing reward and how they will behave in external relativities and usually provide for pay
given circumstances when dealing with reward issues. progression.
●● Contingent pay – planning and managing schemes Total reward

which provide for pay progression related to
performance, contribution, competence, skill or In total reward the various aspects of reward, namely
length of service. base pay, contingent pay, employee benefits and
non-financial rewards, which include intrinsic rewards
from the work itself, are linked together and treated as
Non-financial rewards
an integrated and cohesive whole.
Non-financial rewards focus on the needs people have The concept of total reward describes an approach
to varying degrees for recognition, achievement, to reward management that emphasizes the need to
personal growth and acceptable working conditions. consider all aspects of the work experience of value to
Non-financial rewards can be extrinsic, such as praise employees, not just a few such as pay and employee
or recognition, or intrinsic, associated with job challenge benefits.
and interest and feelings that the work is worthwhile
References
Brown, D (2014) The Future of Reward rewarding-year (archived at https://perma.cc/
Management: From total reward strategies to DFR3-655V)
smart rewards, Compensation & Benefits Review, Brown, D (2022) ‘Total reward’: a phrase past its
46 (3), pp 147–51 sell-by-date in the post-pandemic economy?
Brown, D (2018) Fairness, flexibility and Brighton, IES
affordability: what are the lessons from pay and Ghoshal, S and Bartlett, C A (1995) Changing the
reward approaches and trends in the UK? Institute role of top management: beyond structure to
for Employment Studies. http://www.employment- process, Harvard Business Review, January–
studies.co.uk/resource/fairness-flexibility-and- February, pp 86–96
affordability (archived at https://perma.cc/7DXS- Giancola, F L (2009) Is total reward a passing fad?
HQR6) Compensation & Benefits Review, 41 (4), pp
Brown, D (2019) 2019: a totally rewarding year? 29–35
Institute for Employment Studies. https://www. WorldatWork (2000) Total Reward: From strategy to
employment-studies.co.uk/resource/2019-totally- implementation, Scottsdale, AZ, WorldatWork
415
45
Reward strategy
Introduction The content of reward
Reward strategy is concerned with the policies and strategy
practices required to ensure that the value of people
and the contribution they make to achieving organi- Armstrong and Murlis (2007: 33) stated that
zational, departmental and team goals is recognized ‘Reward strategy will be characterized by diversity
and rewarded. It provides the impetus for reward and conditioned both by the legacy of the past and
system design and operation in order to achieve the realities of the future.’ Reward strategy evolves,
three major objectives: performance, competitive- it changes and it has sometimes to be reactive rather
ness and fairness. It aims to provide answers to two than proactive. It is not such a clear-cut process as
basic questions: (1) What do we need to do about some believe. It often has to be a balancing act be-
our reward practices to ensure that they are fit for cause of potentially conflicting goals. For example,
purpose? and (2) How do we intend to do it? The it may be necessary to reconcile the competing
aim is to provide a sense of purpose and direction claims of being externally competitive and inter-
and a basis for developing and implementing reward nally equitable – paying a specialist more money to
policies, practices and processes. In the words of reflect market rate pressures may disrupt internal
Duncan Brown (2001: 44), strategic reward ‘is ulti- relativities. Or the belief that a universally applica-
mately a way of thinking that you can apply to any ble reward system is required may conflict with the
reward issue arising in your organization, to see how perceived need to adopt a policy of segmentation.
you can create value from it.’ Reward strategy may be a broad-brush affair,
To develop a reward strategy it is necessary to simply indicating the general direction in which it is
understand the needs of the organization and its thought reward management should go. Additionally,
employees and how they can best be satisfied. As or alternatively, reward strategy may set out a list of
Trevor (2011: 8) observed: specific intentions dealing with particular aspects of
reward management, for example:
Strategic reward is a means of enhancing company
performance and securing competitive advantage, ●● the development of a total reward system;
through the alignment of pay strategies, systems, ●● the introduction of performance pay;
practices and processes to the organizational
●● replacement of an existing contingent pay
strategy. As a management tool, pay is no longer
scheme;
purely a cost of hiring necessary labour, but
a means of aligning a company’s unique and ●● the introduction of a new grade and pay
inimitable asset – their employees – to the strategic structure;
direction of the organization.
●● the replacement of a decayed job evaluation ●● the development of a flexible benefits system;
scheme; ●● the conduct of equal pay reviews with the
●● the introduction of a formal recognition objective of ensuring that work of equal
scheme; value is paid equally.
Examples of key themes in reward strategies

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

Figure 45.1. This incorporates ample provision for
consultation, involvement and communication with
The formulation of reward strategy can be de-
stakeholders, who include senior managers as the
scribed as a process for developing and defining a
ultimate decision makers as well as employees and
sense of direction. There are four key development
line managers.
phases:
In practice, however, the formulation of reward
1 The diagnosis phase, when reward goals are strategy is seldom as logical and linear a process as
agreed, current policies and practices this. Reward strategies evolve; they have to respond
assessed against them, options for to changes in organizational requirements that are
improvement considered and any changes happening all the time. They need to track emerging
agreed. trends in reward management and may modify
2 The detailed design phase, when their views accordingly, as long as they do not leap
improvements and changes are detailed and too hastily on the latest bandwagon.
any changes tested (pilot testing is It may be helpful to record reward strategies for-
important). mally as a basis for planning and communication.
But this should be regarded as no more than a piece
3 The final testing and preparation phase.
of paper that can be torn up when the needs of the
4 The implementation phase, followed by organization change – as they will – not a tablet of
ongoing review and modification. stone.
Chapter 45 | Reward Strategy 417
F I G U R E 45.1 A model of the reward strategy development process
Analyse business
strategy and
business needs
Develop strategy
Analyse present
Assess needs of
reward policies
stakeholders
and practices
Develop and justify

strategy and define
guiding principles Consult, involve
Consult and
and communicate
involve senior
with employees
management
Prepare and test

plan
Final
Brief and train Implement plan
communications
Review and modify

as required
C A S E S T U DY
DSG International: aligning reward with the business plan

In a difficult economic environment DSG simplified their between individual performance, group performance and
complex mix of reward arrangements to establish a close reward. It illustrates the vital role of communications to
alignment between rewards and the five components of a explain the ‘why’ of reward change, what it means for the
new business turnaround plan, primarily through the business and how each component of reward links to the
re-design of executive incentive plans. The change was achievement of the business plan.
designed to enhance the perception of line-of-sight
lever for organizational transformation’ that

Critical evaluation of the appears so seductive in the writing of American
concept of reward strategy commentators.
Trevor (2011) posed the question, to what extent
The problem with a strategic approach to reward is can pay be strategic? He asserted that rationalism
that it can promise more than it achieves. This con- is limited and pointed out that pay systems tend to
tradicts the main message that it provides a powerful be selected for their legitimacy (best practice as ad-
lever for improving business performance delivered vocated by institutions such as the CIPD and by
by US writers such as Lawler (1990) in Strategic Pay management consultants) rather than for purely
and Schuster and Zingheim (1992) in The New Pay. economic reasons. He observed (page 35) that
As Thompson (1998: 70) wrote: ‘What is desired (approach), and what is intended
The most that companies can hope to do in their
(design), may not be reflected in what is achieved
approach to reward is to make sure that it does (operation).’ However, it cannot be denied that to
not distort the relationship [between management have a sense of purpose and direction is a good
and employees]. Managing reward is thus a job of thing and with all its limitations, this justifies a
damage limitation and perhaps not the ‘strategic strategic approach to reward.
C A S E S T U DY
Reward strategy at BT
Reward strategy at BT (British Telecom) is a fairly broad- 3 Market competitiveness

brush affair simply indicating the general direction in which
4 Performance differentiation
it is thought reward management for the 90,000 staff at BT
should go, with an emphasis on adopting a more holistic, 5 Choice and flexibility
total reward approach. It is summarized as follows:
6 Equal pay.
Use the full range of rewards (salary, bonus, benefits and
Broadly speaking, the three principal elements driving
recognition) to recruit and retain the best people, and to
individual reward are:
encourage and reward achievement where actions and
behaviours are consistent with the BT values. 1 The individual’s performance and contribution in the
role – what does it mean to have high individual
Guiding principles performance?
BT’s reward strategy is underpinned by a set of guiding 2 The competitiveness of the individual’s existing salary,
principles defining the approach the organization takes to together with the actual (and anticipated) salary
dealing with reward. These guiding principles are the basis for movement in relevant local markets – how does salary
reward policies and provide guidelines for the actions align to the external market?
contained in the reward strategy. They express the reward 3 The company’s business results and ability to pay –
philosophy of the organization – its values and beliefs about can the company afford to invest money in terms of
how people should be rewarded. The six guiding principles additional reward?
governing the design of the reward system at BT are as follows:
Underpinning these pillars are the principles of clarity (a
1 Business linkage ‘focus on roles’), equal pay and choice.
2 Clarity and transparency
Chapter 45 | Reward Strategy 419
Key learning points
Reward strategy defined alternatively, reward strategy may set out a list of
specific intentions dealing with particular aspects of
Reward strategy is concerned with the policies and reward management
practices required to ensure that the value of people
and the contribution they make to achieving
Formulating reward strategy
organizational, departmental and team goals is
recognized and rewarded. It provides the impetus for The formulation of reward strategy can be described
reward system design and operation in order to as a process for developing and defining a sense of
achieve three major objectives: performance, direction. There are four key development phases:
competitiveness and fairness.
1 The diagnosis phase.
2 The detailed design phase (pilot testing is
Content of reward strategy
important).
Reward strategy may be a broad-brush affair, simply 3 The final testing and preparation phase.
indicating the general direction in which it is thought
4 The implementation phase, followed by ongoing
reward management should go. Additionally or
review and modification.
References
Armstrong, M and Murlis, H (2007) Reward Schuster, J R and Zingheim, P K (1992) The New Pay,
Management, revised 5th edn, London, Kogan New York, Lexington Books
Page Thompson, M (1998) Trust and reward, in (eds)
Brown, D (2001) Reward Strategies: From intent to Stephen Perkins and St John Sandringham, Trust,
impact, London, CIPD Motivation and Commitment: A reader,
Lawler, E (1990) Strategic Pay: Aligning Faringdon, Strategic Remuneration Research
organisational strategies and pay systems, San Centre
Francisco, CA, Jossey Bass Trevor, J (2011) Can Pay be Strategic? Basingstoke,
Palgrave Macmillan
420
46
The practice of
reward management
rate for the job or the person. It helps to develop the
Introduction pay structure – the pay ranges attached to grades.
Information on market rates may lead to the intro-
In this chapter the following reward management duction of ‘market supplements’ for individual jobs
practices are described: or the creation of separate pay structures (market
●● Market pricing (salary surveys) groups) to cater for particular market rate pressures.
●● Job evaluation The aim is to ensure that the rates are competitive.
Market pricing may be associated with formal job
●● Base pay management evaluation, which establishes internal relativities
●● Pay progression through individual and the grade structure. It is referred to as ‘extreme
contingent pay market pricing’ when market rates are the sole
●● Team pay means of deciding on internal rates of pay and rela-
tivities, and conventional job evaluation is not used.
●● Paying for organizational performance
An organization that adopts this method is said to
●● Bonus schemes be ‘market driven’.
●● 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 the quality of the job-to-job matching process,
ie comparing like with like, when looking at exter-
Market pricing is the process of making decisions on nal rates. 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 ‘pay pay discrimination against women, where the mar-
stance’, which may be expressed in such terms as ket has traditionally been discriminatory, and it
matching median (average) rates or paying upper does not satisfy UK equal pay legislation.
quartile rates (loosely, within the top 25 per cent).
The concept of a market rate

Use of market pricing Market pricing attempts to establish the market
Market pricing informs decisions on base rates of rate for jobs, but the notion of a market rate is a
pay, ie, the amount of pay that constitutes the basic more elusive concept than it seems. There is no such
Chapter 46 | The Practice of Reward Management 421
thing as a definitive market rate for any job, even which, respectively, are exceeded by a quarter
when comparing identically sized organizations in of the values in the distribution or below
the same industry and location. Different market which a quarter of the values in a
information sources for the same types of jobs pro- distribution occur). Interpreting the data may
duce different results because of variations in the mean producing a derived market rate from
sample, the difficulty of obtaining precise matches the different sources.
between jobs in the organization and jobs elsewhere 4 Apply the information in line with a policy
(job matching), and timing (the dates on which the decision on market stance – the pay levels
data is collected may differ). required to be competitive and affordable.
This means that market rate analysis is most un-
likely to produce definite information on the rate
for the job. The possibly incomplete data from a
number of sources, some more reliable than others,
Job evaluation
has to be interpreted to indicate what the organiza- Job evaluation is a systematic and formal process
tion should do about it. This may be expressed as a for defining the relative worth of jobs within an or-
‘derived market rate’, which is an average of aver- ganization in order to establish internal relativities.
ages covering a range of pay information – a dubi- It is carried out through either an analytical or a
ous notion. Data may be available for some jobs but non-analytical scheme
not for others that are unique to the organization.
Analytical job evaluation schemes

Market rate analysis
Analytical job evaluation is based on a process of
Market rate analysis involves the following steps: breaking down whole jobs into a number of defined
1 Identify and define the jobs for which market elements or factors and then comparing them factor
rate data is required. These are benchmark by factor, either with a graduated scale of points at-
jobs that are representative of different levels tached to a set of factors, or with grade or role pro-
and occupations and can be compared with files analysed under the same factor headings.
similar jobs. In conducting the survey the The advantages of an analytical approach are that,
aim will be to ‘match’ these jobs as closely as first, evaluators have to consider each of the charac-
possible with jobs elsewhere. teristics of the job separately before forming a conclu-
sion about its relative value; second, evaluators are
2 Identify the sources of information in the
provided with defined yardsticks or guidelines that
form of salary surveys. These can include
help to increase the objectivity and consistency of
published surveys conducted by a pay
judgements. It can also provide a defence in the UK
consultancy or research organization, surveys
against an equal pay claim. The main analytical
conducted specially by the organization, ‘pay
schemes, as described below, are point-factor rating
clubs’ (groups of employers who exchange
and analytical matching.
pay information) and advertisements.
Published surveys are likely to provide the
most convenient source of robust Point-factor rating
information. Special surveys and pay clubs Point-factor schemes are the most common forms
can produce useful data but they are time- of analytical job evaluation. They were used by 70
consuming. More than one source should be per cent of the respondents with job evaluation
used if possible. Advertisements are useless. schemes to the e-reward 2017 job evaluation s urvey.
3 Collect, analyse and interpret the The basic methodology is to break down jobs
information. The pay data for jobs may be into factors. These are the elements in a job such as
presented in the form of a range of pay from the level of responsibility, knowledge and skill or
lowest to highest, the median rate (the decision-making that represent the demands the job
midpoint in a distribution of rates of pay) makes on job holders. For job evaluation purposes
and the upper and lower quartiles (the values it is assumed that each of the factors will contribute
to the value of the job and is an aspect of all the jobs when it is believed that it is not necessary to go
to be evaluated, but to different degrees. through the whole process of point-factor e valuation
Each factor is divided into a hierarchy of levels, for every job, especially where ‘generic’ roles are
typically five or six. Definitions of these levels are concerned. Analytical matching takes much less
produced to provide guidance on deciding the de- time than using a point-factor scheme and the r esults
gree to which the factor applies in the job to be can be just as accurate.
evaluated. A maximum points score is allocated to
each factor. The scores available may vary between
different factors in accordance with beliefs about Non-analytical job evaluation
their relative significance. This is termed ‘explicit
Non-analytical job evaluation schemes enable
weighting’. If the number of levels varies between
whole jobs to be compared in order to place them
factors, this means that they are implicitly weighted
in a grade or a rank order – they are not analysed
because the range of scores available will be greater
by reference to their elements or factors. They can
in the factors with more levels.
operate on a job-to-job basis in which a job is com-
The total score for a factor is divided between
pared with another job to decide whether it should
the levels to produce the numerical factor scale. The
be valued more, less, or the same (ranking and ‘in-
complete scheme consists of the factor and level
ternal benchmarking’ processes). Alternatively, they
definitions and the scoring system (the total score
may function on a job-to-grade basis that involves
available for each factor and distributed to the fac-
comparing a whole job with a defined hierarchy of
tor levels). This comprises the ‘factor plan’.
job grades (job classification) – this involves match-
Jobs are ‘scored’ (ie allocated points) under
ing a job description to a grade description.
each factor heading on the basis of the level of the
Non-analytical schemes are simple to introduce

factor in the job. This is done by comparing the
and operate but provide no defined standards of
features of the job with regard to that factor with
judgement. Differences between jobs are not meas-
the factor level definitions in order to find out
ured and they do not provide a defence in an equal
which definition provides the best fit. The separate
pay case.
factor scores are then added together to give a
total score, which indicates the relative value of
each job and can be used to place the jobs in rank
order, or allocate them into grades in a graded pay
Base pay management
structure that have been defined in terms of job
The management of base pay (the rate for the job or
evaluation points.
the person) uses the information from market pric-
ing and job evaluation to design and operate grade
Analytical job matching and pay structures that cater for job-based pay and
Like point-factor job evaluation, analytical job allow scope for pay to progress within the structure
matching is based on the analysis of a number of through person-based pay. Grade and pay struc-
defined factors. Profiles of roles to be evaluated that tures provide the framework for base pay manage-
have been analysed and described in terms of job ment in order to implement an organization’s pay
evaluation factors are compared with grade, band policies. They enable the organization to determine
or level profiles that have been analysed and de- where jobs should be placed in a hierarchy, define
scribed in terms of the same job evaluation factors. pay levels and the scope for pay progression, and
The role profiles are then ‘matched’ with the range provide the basis upon which relativities can be
of grade or level profiles to establish the best fit and managed, equal pay can be achieved and the pro-
thus grade the job. cesses of monitoring and controlling the implemen-
Analytical matching can be used to grade jobs or tation of pay practices can take place. Grade and
place them in levels following the initial evaluation pay structures also enable organizations to commu-
of a sufficiently large sample of benchmark jobs, ie nicate the career and pay opportunities available to
representative jobs that provide a valid basis for employees. However, many organizations do not
comparisons. This can happen in big organizations have formal grade structures.
Grade and pay structures consistency and transparency in managing

gradings and pay;
A grade structure consists of a sequence or hierar- ●● enable jobs to be graded appropriately and
chy of grades, bands or levels into which groups of not subject to grade drift (unjustified
jobs which are broadly comparable in size are upgradings);
placed. A pay structure consists of pay ranges,
brackets or scales that are attached to each grade, ●● be flexible enough to adapt to pressures
band or level in a grade structure. Pay structures arising from market rate changes and skill
are defined by the number of grades they contain shortages;
and the span or width of the pay ranges attached to ●● facilitate operational flexibility and
each grade. Span is the scope the grade provides for continuous development;
pay progression and is usually measured as the dif- ●● provide scope as required for rewarding
ference between the lowest point in the range and performance, contribution and increases in
the highest point in the range as a percentage of the skill and competence;
lowest point. Thus a range of £20,000 to £30,000 ●● clarify reward, lateral development and
would have a span of 50 per cent. Pay can progress career opportunities;
within the grades on the basis of performance,
competence, contribution or time served in the ●● be constructed logically and clearly so that
grade the basis upon which they operate can
readily be communicated to employees;
enable the organization to exercise control
Guiding principles for grade and ●●
over the implementation of pay policies and
pay structures budgets.
Grade and pay structures should:
●● be appropriate to the culture, characteristics Types of grade and pay structures
and needs of the organization and its
The most typical types of pay structures are illus-
employees;
trated in Figure 46.1.
●● facilitate the management of relativities and The features of the main types of grade and pay
the achievement of equity, fairness, structures and their advantages and disadvantages
are summarized in Table 46.1.
F I G U R E 46.1 Typical grade and pay structures
Multi-graded Broad-graded Broad-banded

TA BLE 46.1 Summary description of different formal grade and pay structures
Type of
structure Features Advantages Disadvantages
Narrow-graded ●● A sequence of job grades – 10 ●● Clearly indicate pay ●● Create hierarchical
or more relativities rigidity
●● Narrow pay ranges eg 20– 40% ●● Facilitate control ●● Prone to grade drift
●● Progression usually linked to ●● Easy to understand ●● Inappropriate in a
performance delayered organization
Broad-graded ●● A sequence of between 6 and As for narrow-graded ●● Too much scope for pay
9 grades structures but in progression
●● Fairly broad pay ranges eg addition: ●● Control mechanisms
40–50% ●● the broader grades can be provided but
●● Progression linked to can be defined more they can be difficult to
contribution and may be clearly manage
controlled by thresholds or ●● better control can be ●● May be costly
zones exercised over grade
drift
Broad-banded ●● A series of, often, 5 or 6 ‘broad’ ●● More flexible ●● Create unrealistic
bands ●● Reward lateral expectations of scope
●● Wide pay bands – typically development and for pay rises
between 50% and 80% growth in ●● Seem to restrict scope
●● Progression linked to competence for promotion
contribution and competence ●● Fit new-style ●● Difficult to understand
organizations ●● Equal pay problems
Job family ●● Separate grade and pay ●● Facilitate pay ●● Can appear to be
structures for job families differentiation divisive
containing similar jobs between market ●● May inhibit lateral
●● Progression linked to groups career development
competence and/or ●● Define career paths ●● May be difficult to
contribution against clear criteria maintain internal equity
between job families
unless underpinned by
job evaluation
Pay spine ●● A series of incremental pay ●● Easy to manage ●● No scope for
points covering all jobs ●● Pay progression not differentiating rewards
●● Grades may be superimposed based on managerial according to
●● Progression linked to service judgement performance
●● May be costly as staff
drift up the spine
Unstructured pay systems Spot rates

A spot rate is a rate for a job which does not define
Many organizations (41 per cent of the respondents
or prescribe any scope for the progression of base
to the CIPD 2017 survey) do not have a graded struc-
pay. This means that there are no pay ranges or sal-
ture at all for any jobs, or for certain jobs such as di-
ary brackets although cash bonuses may be pro-
rectors. Instead they use spot rates or individual job
vided on top of the base rate. There will be scope for
grades as described below. Smaller organizations re-
moving on to higher spot rates as skill, competence
sponding to the survey were more likely to adopt this
or contribution increases. Spot rates may be at-
approach. These arrangements are also common for
tached to a person rather than a job (person-based
manual workers irrespective of the organization’s size.
pay) and thus reflect the perceived value of the indi-
vidual to the organization.
Individual job grades Incidence of pay structures

Individual job grades are spot rates to which a de- The CIPD 2017 reward survey found that 35 per cent
fined pay range of, say, 20 per cent on either side of of respondents had multi- or narrow-graded struc-
the rate has been attached to provide scope for pay tures, 34 per cent had pay spines and 25 per cent had
progression based on performance, competency or broad-banded or broad-graded structures.
contribution. The mid-point of the range may be
fixed by reference to market rates or, less often, by
means of job evaluation. Individual grades are usu-
ally attached to jobs, not persons.
C A S E S T U DY
Broad grading at Bristol-Myers Squibb
Pay is determined in relation to the market, and is pitched D6 First-level manager, head of department.
at the median, though the total reward package is upper D7 Function heads.
quartile. There are eight overlapping bands, each with a
D8 Business heads, eg oncology, finance.
span of between 80 per cent and 100 per cent, covering
everyone apart from the UK’s dozen or so senior These eight bands are used in all the countries in which
executives. The bands are: Bristol-Myers Squibb operates, though the salaries
attached to them are locally determined. But the bands
D1 Basic clerical, factory semi-skilled.
are seen as more of a safety net than anything else and
D2 Clerical and factory semi-skilled. something that the US parent is keen to retain, although
D3 Clerical and factory supervisor. the market is more important in the UK. The company says
D4 Senior supervisor, entry level for professionals (eg the bands are helpful if there is an intention to recruit
scientists), customer-facing sales staff. someone at a salary way over or under the band, which
signals that the job may need to be regraded.
D5 Customer-facing sales staff.
C A S E S T U DY
Broad grading at Camelot
The broad-graded structure at Camelot is market Band C includes supervisors, professionals and specialists.
driven – its focus is on paying the market rate for each Band D is for middle management.
job. Every salary is benchmarked against the market to
Band E is for heads of department.
ensure that jobholders are being ‘paid fairly for the job
that they do’, with base pay set at the median market rate. Band F covers functional directors.
The following six-level banding structure, covering Bands have some overlap, and each job has its own pay
everyone except the chief executive, is used: range within a band. The range is 85 per cent to 115 per
Bands A and B cover administrative support and IT roles. cent, with 100 per cent being the rate for the job. The
ranges are benchmarked against the market twice a year.
Managing pay in grade and pay variable pay. Performance pay can be related to in-
dividual, team or organizational performance as
structures described below. When paid to individuals it is
Research by Incomes Data Services (2014) identified sometimes referred to as merit pay. Individual per-
the following pay management practices adopted by formance-related pay takes the form of a consoli-
respondents: dated increase to base pay linked to performance
that provides for pay progression through a pay
●● The majority of respondents set the ‘market range in a graded structure. Service-related pay
rate’ at the mid-point of the pay range and links increments to service in the role. Contingent
treated that as the ‘target rate’. pay may be provided as a re-earnable cash bonus.
●● Around a fifth of employers appoint new Contingent pay related to performance provides
joiners at the bottom of the range; however, a retrospective reward for past achievements and a
respondents operating salary ranges were forward-looking incentive to motivate people.
more likely to appoint new joiners at the Incentives can work as motivators because in ac-
target rate (38 per cent) compared to those cordance with motivation theory people do things
with incremental scales (14 per cent). in order to achieve desired outcomes and will repeat
that behaviour if they believe that the consequences
●● Respondents with salary ranges said staff can
will be favourable.
either progress to the maximum (69 per cent),
or there is no upper limit to progression
(22 per cent).
Individual contingent pay
●● It takes longer for a standard performer to
progress from entry level to the top of the The features, advantages and disadvantages and the
grade at firms with salary ranges (6.5 years) appropriateness of individual contingent pay
than those with incremental scales (5 years). schemes are set out in Table 46.2.
There is a choice between the different types of
●● The survey showed market rates have a
schemes. A segmented approach might be adopted,
greater impact on progression for those
ie the schemes vary for different categories of staff.
employers using salary ranges, with
Typically, directors and senior executives may have
36 per cent of respondents reporting
separate schemes. In making the choice and then de-
employees progressed at a different rate when
signing and managing the scheme account should
paid above the market rate, compared to only
be taken of the following five criteria for effective
8 per cent of those with incremental scales.
individual contingent pay:
●● Just over half of respondents said they
continue to award cost-of-living increases or 1 Individuals have a clear line of sight between
revalorize pay scales for staff once they reach what they do and what they will get for doing it.
the maximum of the pay range. 2 Rewards are worth having.
●● Around a third award discretionary increases 3 Fair and consistent means are available for
to staff at the maximum and a fifth pay measuring or assessing performance,
one-off, non-consolidated bonuses to staff at competence, contribution or skill.
the maximum. 4 People are able to influence their
●● Performance matrices are used by some performance by changing their behaviour
employers to give the highest pay rises to the and developing their competencies and skills.
highest performers low in their salary range. 5 The reward follows closely to the
Some systems provide managers with the accomplishment that generated it.
discretion to vary pay awards within the
overall pay matrix. These requirements are exacting and few schemes
meet them in full. That is why contingent pay ar-
rangements can often promise more than they de-
Contingent pay liver. Research conducted by Thompson (1992: ix)
into the operation of performance-related pay (by
Contingent pay is pay that varies in relation to far the most popular form of individual contingent
performance or service in a job. It is often called pay) led to the following conclusion:
The benefits most often claimed for PRP However, an evidence review by the CIPD (Cotton
(performance-related pay) are not met in practice. et al, 2022: 4) came to the following conclusion:
Firstly, PRP does not serve to motivate (even those
with high performance ratings) and may do more There is a strong body of research showing
to demotivate employees. Secondly, there was little that, overall, financial incentives have a positive
evidence to suggest that PRP could help to retain effect on employee motivation and consequently
high performers and no evidence to point to poor performance. Studies tend to show that this effect
performers seeking to leave the organizations. is moderate (meaning an expert or careful observer
Thirdly, employees are negative or broadly neutral could easily spot the difference it makes) to large
on its impact on organizational culture even in (anybody can easily see the difference). According
schemes that had been in operation for three more to one high-quality meta-analysis [Condly et al,
years. Lastly, employees are unclear whether PRP 2003], using incentives doubles the improvements
rewards fairly. seen in performance.
TA BLE 46.2 Summary of individual contingent pay schemes

Type of Main
scheme features Advantages Disadvantages When appropriate
Performance- Increases to ●● May motivate (but ●● May not motivate ●● For people who are
related pay basic pay or this is uncertain) ●● Relies on likely to be motivated
(performance bonuses are ●● Links rewards to judgements of by money
pay) related to objectives performance which ●● In organizations with
assessment of ●● Meets the need to may be subjective a performance-
performance be rewarded for ●● Prejudicial to oriented culture
achievement teamwork ●● When performance
●● Delivers message ●● Focuses on can be measured
that good outputs, not quality objectively
performance is ●● Relies on good
important and will performance
be rewarded management
processes
●● Difficult to manage
well
Competency- Pay increases ●● Focuses attention ●● Assessment of ●● As part of an
related pay are related to on need to achieve competency levels integrated approach
the level of higher levels of may be difficult to HRM where
competency competency ●● Ignores outputs – competencies are
●● Encourages danger of paying for used across a number
competency competencies that of activities
development will not be used ●● Where competency is
●● Can be integrated ●● Relies on well- a key factor where it
with other trained and may be inappropriate
applications of committed line or hard to measure
competency-based managers outputs
HR management ●● Where well-
established
competency
frameworks exist
(continued)

Type of Main
scheme features Advantages Disadvantages When appropriate
Contribution- Increases in Rewards people not As for both PRP and When it is believed that
related pay pay or bonuses only for what they do competence-related a well-rounded approach
are related but how they do it pay – it may be hard to covering both inputs and
both to inputs measure contribution outputs is appropriate
(competency) and it is difficult to
and outputs manage well
(performance)
Skill-based Increments Encourages and Can be expensive On the shop floor or in
pay related to the rewards the when people are paid retail organizations
acquisition of acquisition of skills for skills they don’t use
skills.
Service- Increments are It is perceived to be Fails to recognize In public-sector
related pay related to fair and is easy to differences in organizations where it is
service in the manage performance favoured by the unions
grade
Individual bonuses Team pay can:
The cash payments provided by individual bonus ●● encourage team working and cooperative
schemes may be based on ratings that fix the size of behaviour;
the award by reference to the extent to which objec- ●● enhance flexible working within teams and
tives have been achieved. A single criterion for bonus encourage multi-skilling, clarify team goals
payments such as profit before tax may be used for and priorities and provide for the integration
directors, with a threshold performance level to gen- of organizational and team objectives;
erate a bonus and a sliding scale up to a maximum ●● encourage less effective performers to
that determines the size of the bonus. The advan- improve in order to meet team standards;
tages of bonus schemes are that cash sums, as long as
●● serve as a means of developing self-managed
they are sizeable, can make a more immediate im-
or self-directed teams.
pact on motivation than pay increases and they have
to be re-earned; unlike consolidated contingent pay But:
increases, they are not ‘a gift that goes on giving’.
●● the effectiveness of team pay depends on the
existence of well-defined and mature teams
Team pay and they may be difficult to identify and,
even if they can be, do they need to be
Team pay links bonus payments in cash payments motivated by a purely financial reward?
to members of a formally established team to the ●● team pay may seem unfair to individuals
performance of that team. The rewards are shared who could feel that their own efforts are
among the members of the team in accordance with un-rewarded;
a published formula or on an ad hoc basis in the
case of exceptional achievements. Rewards for indi- ●● pressure to conform, which is accentuated by
viduals may also be influenced by assessments of team pay, could result in the team
their contribution to team results. maintaining its output at lowest common
denominator levels – sufficient to gain what
is thought collectively to be a reasonable
reward but no more;
●● it can be difficult to develop performance by the company because of its improved

measures and methods of rating team performance; only 3.6 per cent of the CIPD
performance that are seen to be fair – team 2017 respondents had such schemes.
pay formulae may well be based on arbitrary
assumptions about the correct relationship
between effort and reward;
Critical evaluation of
●● there may be pressure from employees to
migrate from poorly performing teams to contingent pay
high-performing teams which, if allowed, Despite the widespread acceptance of the idea that
could cause disruption and stigmatize the better performance should lead to better pay, serious
teams from which individuals transfer, or if questions have been raised about the effectiveness of
refused, could leave dissatisfied employees in contingent pay in most organizations. Part of the
the inadequate teams, making them even problem is the discrepancy between what organiza-
worse. tions are willing to commit to rewarding merit and
For many organizations, the disadvantages out- what it appears to take to make a real difference.
weigh the advantages. The notion of team pay Research has revealed (Murphy et al, 2018) that
appeals to many people but the number of organi- contingent pay increases are typically in the range
zations using it is relatively small. of 2–3 per cent of annual salary. Evidence quoted
by them shows that pay increases are not seen by
recipients as meaningful unless they are at least
Pay for organizational 7 per cent of their annual salary. Organizations
that give increases in the 2–3 per cent range are
performance more likely to breed cynicism than to motivate
Many organizations consider that their financial re- their employees. This is a major reason for the fre-
ward systems should extend beyond individual con- quent failure of performance pay to make any im-
tingent pay, which does not recognize collective pact on performance.
effort, or team pay, which is difficult. They believe
that their system should help to enhance e ngagement
and commitment and convince employees that they Recognition schemes
have a stake in the business as well as providing
them with additional pay. The response to this be- Recognition involves showing appreciation to indi-
lief is to offer financial rewards which are related to viduals for their achievements, either informally on
business or organizational performance (sometimes a day-to day basis or through formal arrangements.
known as company-wide or factory-wide schemes). It can take place quietly between managers and
The three types of formal business performance their team workers or be a visible celebration of
schemes are: success.
A recognition scheme can be formal and organiza-
1 Profit-sharing – the payment of sums in cash tion-wide, providing scope to recognize achievements
or shares related to the profits of the by gifts or treats or by public applause. Typically, the
business; the 2017 CIPD reward survey awards are non-financial but some organizations
found that 47 per cent of respondents had provide cash awards. Importantly, recognition is also
such a scheme. given less formally when managers simply say, ‘Well
2 Share schemes – employees are given the done’, ‘Thank you’ or ‘Congratulations’ – face to face
opportunity to take out share options or or in a brief note of appreciation.
participate in a save-as-you-earn scheme of a
share incentive plan; 41 per cent of the
respondents to the 2017 CIPD survey had a Employee benefits
share scheme.
3 Gain-sharing – the payment of cash sums to Employee benefits consist of arrangements made by
employees related to the financial gains made employers for their employees that enhance the lat-
ter’s wellbeing. They are provided in addition to pay
and form important parts of the total reward pack- a percentage. The policy value used is the mid-point
age. As part of total remuneration, they may be de- or reference point in a pay range, which represents
ferred or contingent such as a pension scheme, the ‘target rate’ for a fully competent individual in
insurance cover or sick pay, or they may be immediate any job in the grade. This point is aligned with
such as a company car or a loan. Employee benefits market rates in accordance with the organization’s
also include holidays and leave arrangements, which market stance.
are not strictly remuneration. Benefits are sometimes Compa-ratios can be used to define the extent to
referred to dismissively as ‘perks’ (perquisites) or which pay policy is achieved (the relationship be-
‘fringe benefits’, but when they cater for personal se- tween the policy and actual rates of pay). The analy-
curity or personal needs they could hardly be sis of compa-ratios indicates what action may have
described as ‘fringe’. Flexible benefit schemes give em- to be taken to slow down or accelerate increases if
ployees a choice, within limits, of the type or scale of compa-ratios are too high or too low compared
benefits offered to them by their employers. The CIPD with the policy level. This is sometimes called ‘mid-
(2022) reward management survey found that the point management’. Compa-ratios can also be used
five most common benefits were employee assistance to measure where an individual is placed in a pay
programmes (76 per cent of respondents), life assur- range and therefore provide information on the size
ance (69 per cent), occupational sick pay (61 per of pay increases when a pay matrix is used, as de-
cent), pensions (59 per cent) and Christmas bonus scribed later in this chapter. Compa-ratios are
(51 per cent). Only 18 per cent of respondents had a calculated as follows:
financial wellbeing policy (see also Chapter 56).
actual rate of pay
Pension provision has undergone considerable
change recently. The traditional defined benefit mid- or reference point of range
scheme, which provides a pension based on final
A compa-ratio of 100 per cent means that actual
salary, is disappearing rapidly (too costly) and is
pay and policy pay are the same. Compa-ratios
being replaced by defined contribution schemes
higher or lower than 100 per cent mean that, re-
where the retirement pension is whatever annual
spectively, pay is above or below the policy target
payment can be purchased with the money accumu-
rate. For example, if the target (policy) rate in a
lated in the fund for a member (cheaper).
range were £20,000 and the average pay of all the
Employee benefits are a costly part of the remu-
individuals in the grade were £18,000, the compa-
neration package. They can amount to one-third or
ratio would be 90 per cent. Compa-ratios establish
more of basic pay costs and therefore have to be
differences between policy and practice. The rea-
planned and managed with care.
sons for such differences need to be established.
Administering reward General pay reviews

management General reviews take place when employees are
given an increase in response to general market rate
The administration of reward management is con- movements, increases in the cost of living, or union
ducted through three main activities: base pay man- negotiations. General reviews are often combined
agement, general pay reviews and individual pay with individual reviews, but employees are usually
reviews. It is also affected by the legislation for pay informed of both the general and individual compo-
reporting. nents of any increase they receive. Alternatively, the
general review may be conducted separately to en-
able better control to be achieved over costs and to
Base pay management focus employees’ attention on the performance-
Base pay is best managed through compa-ratio related aspect of their remuneration.
analysis. A compa-ratio (short for ‘comparative Some organizations have completely abandoned
ratio’) measures the relationship in a graded pay the use of across-the-board reviews. They argue that
structure between actual and policy rates of pay as the decision on what people should be paid should
be an individual matter, taking into account the One solution is to ‘decouple’ performance manage-
personal contribution people are making and their ment and the pay review by holding them several
‘market worth’ – how they as individuals are valued months apart. There is still a read-across but it is not
in the marketplace. This enables the organization to so immediate. Some try to do without formulaic ap-
adopt a more flexible approach to allocating pay proaches (ratings and pay matrices) altogether, al-
increases in accordance with the perceived value of though it is impossible to dissociate merit pay com-
individuals to the organization. pletely from some form of assessment.
The steps required to conduct a general review Guidelines should be issued to managers on how
are: they should conduct reviews. Guidelines define the
maximum and minimum increases that can be
1 Decide on the budget.
awarded and indicate how awards should be distrib-
2 Analyse data on pay settlements made by uted. They emphasize that managers must keep
comparable organizations and rates of within their budgets. For example, when the budget
inflation. is 4 per cent overall, it might be suggested that a 2.5
3 Conduct negotiations with trade unions as per cent increase should be given to the majority of
required. staff and the others given higher or lower increases
4 Calculate costs. as long as the total percentage increase does not ex-
ceed the budget. Managers in some companies are
5 Adjust the pay structure – by either
instructed that they must follow a forced pattern of
increasing the pay brackets of each grade by
distribution (a forced choice s ystem).
the percentage general increase or by
The steps required to conduct an individual pay
increasing pay reference points by the overall
review are:
percentage and applying different increases
to the upper or lower limits of the bracket, 1 Agree the budget.
thus altering the shape of the structure. 2 Prepare and issue guidelines on the size,
6 Inform employees. range and distribution of awards and on
methods of conducting the review.
3 Provide advice and support.
Individual pay reviews 4 Review proposals against budget and
Individual pay reviews determine contingent pay guidelines and agree modifications to them if
increases or bonuses. The most common practice is necessary.
for managers to propose increases on the basis of 5 Summarize and cost proposals and obtain
performance management ratings within a given approval.
pay review budget and in accordance with pay
6 Update the payroll.
review guidelines.
There is a choice of methods. The simplest way is 7 Inform employees.
to have a direct link between the rating and the pay
increase. An example is given in Figure 46.2.
A more sophisticated approach is to use a pay Reporting pay information:
matrix, as illustrated in Figure 46.3. This indicates government regulations
the percentage increase payable for different perfor-
mance ratings according to the position of the The following government regulations require or-
individual’s pay in the pay range (the individual
ganizations to report on certain details of their pay
‘compa-ratio’). arrangements.
The essential developmental nature of performance
management is prejudiced if it is linked too explicitly The Equality Act 2010 (Gender Pay
to pay through ratings prejudices. However, decisions
on performance-related or contribution-related in-
Gap Information) Regulations 2017
creases have to be based on some form of a ssessment. These require organizations with 250 or more em-
ployees to publish statutory calculations every year
F I G U R E 46.2 A direct link between ratings and pay increases
Rating Percentage increase
A 6
B 4
C 3
D 2
E 0
F I G U R E 46.3 A pay matrix
Percentage pay increase according to performance rating and position in pay range
(compa-ratio)
Rating Position in pay range
80–90% 91–100% 101–110% 111–120%
Excellent 12% 10% 8% 6%
Very effective 10% 8% 6% 4%
Effective 6% 4% 3% 0
Developing 4% 3% 0 0
Ineligible 0 0 0 0
showing how large the pay gap is between their London Stock Exchange with more than 250 staff
male and female employees. to disclose the ratio of their chief executives’ remu-
neration to the median pay of their UK employees
The Companies (Miscellaneous every year, and to justify the difference. They will
also need to explain how directors take staff and
Reporting) Regulations 2018 other stakeholder interests into account when they
A section of these regulations makes it a statutory decide on salaries and bonuses.
requirement from 2020 for companies listed on the
Key learning points
Market pricing ●● cash bonuses related to individual, team or

organizational performance.
Market pricing is the process of making decisions on
pay structures and individual rates of pay and
Team pay
obtaining information on market rates (market rate
analysis). Team pay links payments to members of a formally
established team to the performance of that team.
Job evaluation
Pay for organizational performance
Job evaluation is a systematic and formal process for
defining the relative worth or size of jobs within an The provision of financial rewards that are related to
organization in order to establish internal relativities. business or organizational performance (sometimes
known as ‘company-wide’ or ‘factory-wide’ schemes).
Base pay management They include profit-sharing, share schemes and
gain-sharing.
The management of base pay uses the information
from market pricing and job evaluation to design and
Recognition schemes
operate grade and pay structures that cater for
job-based pay and allow scope for pay to progress Recognition schemes as part of a total reward
within the structure through person-based pay. package enable appreciation to be shown to
individuals for their achievements, informally on a
Grade and pay structures day-to-day basis or through formal recognition
arrangements.
Grade and pay structures provide a framework within
which an organization’s pay policies can be
Employee benefits
implemented.
A grade structure consists of a sequence or Employee benefits consist of arrangements made by
hierarchy of grades, bands or levels into which groups employers for their employees that enhance the
of jobs that are broadly comparable in size are placed. latter’s wellbeing. They are provided in addition to pay
A grade structure becomes a pay structure when pay and form important parts of the total reward package.
ranges, brackets or scales are attached to each grade,
band or level. The main types of grade and pay Administering reward management
structures are narrow-graded, broad-graded,
broad-banded and pay spines. The administration of reward management is
conducted through three main activities: base pay
management through compa-ratio analysis,
Contingent pay conducting general pay reviews and conducting
Contingent pay provides financial rewards in two individual pay reviews.
forms: Government regulations require all organizations
with 250 or more employees to report on their gender
●● consolidated increases to base pay that are related
pay gap and all organizations listed on the Stock
to individual performance, competence,
Exchange with 250 or more employees to report on the
contribution, skill or length of service and provide
ratio between the pay of their chief executive and the
for pay progression through a pay range or an
average pay of their employees.
increase to a spot rate;
References
Chartered Institute of Personnel and Development summary and recommendations, London,
(2017) Reward Management Survey, London, Chartered Institute of Personnel and Development
CIPD e-reward (2017) Survey of Job Evaluation, Stockport,
Chartered Institute of Personnel and Development e-reward
(2022) Reward Management Survey, London, Incomes Data Services (2014) Private sector practice
CIPD on progression: A research report for the Office of
Condly, S J, Clark, R E and Stolovitch, H D (2003) Manpower Economics, London, IDS
The effects of incentives on workplace Murphy, K R, Cleveland, J N and Hanscom, M
performance: a meta-analytic review of research (2018) Performance Appraisal and Management:
studies, Performance Improvement Quarterly, 16 Why does it fail and how can it be fixed?
(3), pp 46–63 Thousand Oaks, CA, Sage
Cotton, C, Gifford, J and Young, J (2022) Incentives Thompson, M (1992) Pay and Performance: The
and recognition: an evidence review, Practice employee experience, Brighton, IMS
435
47
Managing reward for
special groups
In the opinion of the CIPD (2019: 10), high execu-
Introduction tive pay awards are a major driver of economic in-
equality across the UK economy as a whole, with
Many organizations have one reward system ap- negative consequences for the incomes of low and
plied to all categories of staff below the levels of middle earners.
chief executive and executive directors. However,
others find it necessary to cater for the needs of spe-
cial groups of staff by adopting different reward The elements of executive
practices. This is called reward segmentation and, as
described in this chapter, frequently applies to the remuneration
methods used for directors and senior executives The main elements of executive remuneration are
(executive remuneration), knowledge workers, sales basic pay, short- and long-term bonus or incentive
and customer service staff and manual workers. The schemes, share option and share ownership schemes,
remuneration of expatriates is considered in benefits and service contracts. Executive pay is
Chapter 63. heavily incentivized, with 74 per cent of the average
FTSE 100 CEO pay awards produced by variable
pay in the form of bonus or short- or long-term in-
Executive remuneration centive plans. The salary is usually a one-off, negoti-
ated rate and commonly incorporates a golden hello
Chief Executive Officers are well paid and so are the or pay-off deal. Decisions on executive pay are af-
directors and executives associated with them. The fected by the recommendations of remuneration
CIPD/High Pay Centre (2020) reported that the me- committees, as described later.
dian FTSE 100 CEO annual reward package in
2019 was £3.61 million, 119 times the median UK
full-time worker salary of £30,353 and 145 times Basic pay
the median salary of all UK workers (£24,897). The Decisions on the base salary of directors and senior
views of the CIPD (2019: 6) on high levels of execu- executives are usually founded on views about the
tive pay were: market worth of the individuals concerned.
Remuneration on joining the company is commonly
The myth of ‘super talent’ continues to drive
settled by negotiation, often subject to the approval
excessive pay – remuneration committees continue
of a remuneration committee. Reviews of base sala-
to fear that executives will walk out on the
ries are then undertaken by reference to market
company if their pay demands are refused, and
worry about stock market reactions to an abrupt movements and success as measured by company
departure. This is despite questionable evidence performance. Decisions on base salary are impor-
of the impact of a single executive on company tant not only in themselves but also because the
performance. level may influence decisions on the pay of both
senior and middle managers. Bonuses are expressed
as a percentage of base salary, share options may be earn back an element of base pay placed at risk. If
allocated as a declared multiple of basic pay and, they do not succeed against the objectives, some or
commonly, pension will be a generous proportion all of the earn-back pay will be lost.
of final salary.
Long-term bonuses
Bonus schemes Cash bonus schemes can be extended over periods
Virtually all major employers in the UK have incen- of more than one year on the grounds that annual
tive (bonus) schemes for senior executives. Bonus bonuses focus too much on short-term results. The
schemes provide directors and executives with cash most common approach to providing longer-term
sums or shares based on the measures of company rewards is through share ownership schemes as de-
and, frequently, individual performance. They are scribed later.
often paid annually but can be deferred for a longer
period. Deferred bonus schemes
Typically, bonus payments are linked to achieve-
ment of profit and/or other financial targets. Much Some companies have adopted deferred bonus
less commonly they are related to company perfor- schemes under which part of the executive’s annual
mance in terms of ESG (environmental, social and bonus is deferred for, say, two years. The deferred
governance) metrics. They are sometimes ‘capped’; element is converted into shares, each of which is
that is, a restriction is placed on the maximum matched with an extra, free share on condition the
amount payable. There may also be elements re- executive remains employed by the company at the
lated to achieving specific goals and to individual end of the deferral period. Such a scheme is de-
performance. Bonuses tend to be high – 70 per cent signed to reward performance and loyalty to the
of base salary or more. They are ostensibly intended company.
to motivate directors to achieve performance im-
provements for the business. A more common al- Share option schemes
though not always disclosed reason for bonuses is Many companies have share option schemes that
to ensure that what is believed to be a competitive give directors and executives the right to buy a
remuneration package is available: ‘Everyone else is block of shares on some future date at the share
doing it so we must too.’ price ruling when the option was granted. They are
One of the problems with high bonus expecta- a form of long-term incentive on the assumption
tions is that of the ‘moral hazard’ involved. For ex- that executives will be motivated to perform more
ample, directors might be tempted to manipulate effectively if they can anticipate a substantial capi-
reported profits to drive up the share price, fre- tal gain when they sell their shares at a price above
quently an important determinant of bonuses. Or that prevailing when they took up the option.
they may go for high returns in risky short-term
projects, ignoring the possible downside of longer-
term losses. Performance share schemes
Executives may benefit by receiving bonuses for Some companies have performance share schemes
performance which meets objectives but they do under which executives are provisionally awarded
not lose pay when their objectives are not achieved. shares. The release of the shares is subject to the
They only gain, they never lose. It can be argued company’s performance, typically determined on a
that they should get their base salary for doing their sliding scale by reference to the company’s total
jobs, ie achieving their objectives, and only receive shareholder return (a combination of share price
more in the shape of a bonus if they exceed expecta- growth and dividend yield) ranking against its cho-
tions. It could also be argued that if they fail to meet sen peer companies over a three-year period. Release
their objectives they should be penalized by not re- is also conditional on the executive remaining em-
ceiving a portion of their base salary which would ployed by the company at the vesting date. Such a
then truly be pay-at-risk. Earn-back pay schemes scheme rewards loyalty to the company and the
try to remedy this situation. Such schemes require value delivered to shareholders in the form of share
executives to meet agreed objectives in order to price performance and dividends but does not link
directly to business performance.
Chapter 47 | Managing Reward for Special Groups 437
Executive restricted share schemes entitlements and contract provisions for executive
directors. Such committees are accountable to
Under such schemes free shares are provisionally
shareholders for the decisions they take and the
awarded to participants. These shares do not belong
non-executive directors who sit on them should
to the executive until they are released or vested;
have no personal financial interests at stake. The
hence they are ‘restricted’. The number of shares ac-
Code states that when determining executive direc-
tually released to the executive at the end of a de-
tor remuneration policy and practices, the remu-
fined period (usually three or, less commonly, five
neration committee should address the following:
years) will depend on performance over that period
against specific targets. Thereafter there may be a ●● clarity – remuneration arrangements should
further retention period when the shares must be be transparent and promote effective
held although no further performance conditions engagement with shareholders and the
apply. workforce;
●● simplicity – remuneration structures should
Benefits avoid complexity and their rationale and
Employee benefits for executives may amount to operation should be easy to understand;
over 20 per cent of the total reward package. The ●● risk – remuneration arrangements should
most important element is the pension scheme, and ensure reputational and other risks from
directors may be provided with a much higher ac- excessive rewards, and behavioural risks that
crual rate than in a typical final salary scheme. This can arise from target-based incentive plans,
means that, typically, the maximum two-thirds pen- are identified and mitigated;
sion can be achieved after 20 years’ service or even ●● predictability – the range of possible values
less, rather than the 40 years it takes in a typical of rewards to individual directors and any
one-sixtieth scheme. Pensions are easily inflated, as other limits or discretions should be
in a recent notorious case, by presenting the depart- identified and explained at the time of
ing director with a last-minute substantial increase approving the policy;
in pensionable salary. ●● proportionality – the link between individual
awards, the delivery of strategy and the
Service contracts long-term performance of the company
Long-term service contracts for directors have been should be clear. Outcomes should not reward
fairly typical, but they are disliked in the City be- poor performance;
cause of the high severance payments to departing ●● alignment to culture – incentive schemes
chief executives and directors that are made if the should drive behaviours consistent with
contract is two or three years, even when it was sus- company purpose, values and strategy.
pected or actually the case that they had been voted
Remuneration committees often seek the advice of
off the board because of inadequate performance.
remuneration consultants. But as Perkins and
Rolling contracts for directors are now more likely
Hendry (2005) observed following their discussions
to be restricted to one year.
with remuneration committee members, these con-
sultants tend to adopt a ‘pernicious process of choos-
ing comparators that just leads to the ratcheting up
Remuneration committees of top pay... The problem becomes particularly acute
A remuneration committee (RemCo) is a group, when companies all strive to achieve the statistically
usually made up of non-executive directors, which impossible feat of setting reward levels to locate
advises on the remuneration of chief executives and themselves in the upper quartile of their benchmark
directors. The Financial Reporting Council group.’ They also noted the ambiguities and weak-
Corporate Governance Code (2018) contains a pro- nesses of the non-executive directors who were com-
vision for remuneration committees to provide an mittee members. The CIPD (2019: 22) commented
independent basis for setting the salary levels and that ‘Remuneration committees’ conceptions of
the rules covering incentives, share options, benefit company performance are… too narrow and they
place too much importance on external benchmarks will depend on or at least be improved by financial
while giving too little consideration to internal fair- incentives. Many companies believe that the special
ness.’ They recommended that companies should nature of selling and the type of person they need to
consider establishing a formal ‘people and culture’ attract to their sales force requires some form of
committee in place of their remuneration committee. additional bonus or commission to be paid. The
nature of the work of sales staff means that it is usu-
ally easy to specify targets and measure perfor-
Reward management for mance against them, and sales incentive schemes are
therefore more likely to meet the line of sight
sales and customer service requirement (ie that there should be a clear link
between effort and performance) than schemes for
staff other staff such as managers and administrators.
Sales staff, including those in retail establishments,
Sales and customer service staff make an immediate
are often paid spot rates with a commission on
impact on business results. This has led to an em-
sales. A summary of pay arrangements for sales
phasis on financial incentives, especially for sales
staff is given in Table 47.1.
representatives and sales staff in retailers, who are
often treated quite differently from other employ-
ees. The reward system for sales and service staff Rewarding customer service staff
also has to take account of the fact that they are the
people who are in direct contact with customers, Customer service staff work mainly in retail estab-
and this also applies to people in call centres. lishments and in call or customer contact centres.
There are no hard-and-fast rules governing how Their rewards need to reflect the nature of their du-
sales representatives or customer service staff ties, ie enhancing levels of customer service as well
should be paid. It depends on the type of company, as selling.
the products or services it offers its customers and Research conducted by West et al (2005) estab-
the nature of the sales process – how sales are lished that most employees in the researched organ-
organized and made. izations had the opportunity to progress their base
pay on the basis of their performance or compe-
tence, either through a range or up a pay spine, or
Rewarding sales representatives between grades/levels of job. Such arrangements
have generally supplanted spot rates for service
Sales representatives are more likely to be eligible
roles in call centres and retail shops. Low base pay/
for commission payments or bonuses than other
high commission arrangements were rare.
staff on the grounds that their sales performance
TA B L E 47.1 Summary of payment and incentive arrangements for sales staff

Method Features Advantages Disadvantages When appropriate
Salary only Straight Encourage customer No direct motivation When representing the
salary, no service rather than through money; may company is more
commission high-pressure selling; attract under- important than direct
or bonus. deal with the problem achieving people selling; staff have little
of staff who are who are subsidized influence on sales volume
working in a new or by high achievers; (they may simply be ‘order
unproductive sales increases fixed costs takers’); customer service
territory; protects of sales because pay is all important.
income when sales costs are not flexed
fluctuate for reasons with sales results.
beyond the
individual’s control.
(continued )
Chapter 47 | Managing Reward for Special Groups 439
Method Features Advantages Disadvantages When appropriate
Salary plus Basic salary Direct financial Relating pay to the When it is believed that
commission plus cash motivation is provided volume or value of the way to get more sales
commission related to what sales sales is too crude an is to link extra money to
calculated as staff are there to do, approach and may results but a base salary is
a percentage ie generate sales; but result in staff going still needed to attract the
of sales they are not entirely for volume by many people who want to
volume or dependent on concentrating on the be assured of a
value. commission – they easier-to-sell reasonable basic salary
are cushioned by products, not those which will not fluctuate
their base salary. generating high but who still aspire to
margins; may increase that salary by
encourage high- their own efforts.
pressure selling as in
some financial
services firms in the
‘80s and ‘90s.
Salary plus Basic salary Provide financial Do not have a clear When flexibility in
bonus plus cash motivation but targets line of sight between providing rewards is
bonus based or objectives can be effort and reward; important; it is felt that
on achieving flexed to ensure that may be complex to sales staff need to be
and exceeding particular sales goals administer; sales motivated to focus on
sales targets are achieved, eg representative may aspects of their work
or quotas and high-margin sales, find them hard to other than simply
meeting other customer service. understand and maximizing sales volume.
selling resent the use of
objectives. subjective
judgements on
performance other
than sales.
Commission Only Provide a direct Lead to high- When sales performance
only commission financial incentive; pressure selling; may depends mainly on selling
based on a attract high- attract the wrong ability and can be
percentage of performing sales sort of people who measured by immediate
sales volume staff; ensure that are interested only in sales results; staff are not
or value is selling costs vary money and not involved in non-selling
paid, there is directly with sales; customer service; activities; continuing
no basic little direct focus attention on relationships with
salary. supervision required. high volume rather customers are relatively
than profitability. unimportant.
Additional Incentives, Utilize powerful May be difficult to When it is believed that
non-cash prizes, cars, non-financial administer; do not other methods of
rewards recognition, motivators. provide a direct payment need to be
opportunities incentive. enhanced by providing
to grow. additional motivators.
At Boots the Chemists shop staff can progress up Time rates may take the form of what are often
through a number of pay points according to their called high day rates. These are higher than the min-
level of performance and skill – from entry level, to imum time rate and may contain a consolidated
experienced, to advanced, to expert/specialist. At bonus rate element. The underlying assumption is
B&Q, customer advisors are paid on one of six dif- that higher base rates will encourage greater effort
ferent spot rates. Pay progression is based on the without the problems created when operating an
acquisition – and application – of skills and knowl- incentive scheme. High day rates are usually above
edge. There are four additional spot rates beyond the local market rates to attract and retain workers.
the established rate designed to reward high perfor-
mance. Each additional level represents an hourly
increase up to a maximum rate. At House of Fraser, Grade and pay structures
employees are allocated to one of four competency
Grade and pay structures, like those described in
bands – training, bronze, silver and gold – with staff
Chapter 46, are seldom used for manual workers
assessed for a ‘promotion’ every six months. At
unless their conditions have been harmonized, ie
Lands’ End, there is a six-grade pay structure for
brought into line with salaried staff. But a person-
hourly-paid staff, with spot rates for starters.
based graded pay system may be adopted, often
with three basic rates of pay attached to people –
unskilled, semi-skilled and skilled – above which
Paying manual workers there might be special rates for highly skilled occu-
pations such as toolmakers. Earnings from pay-
The basic pay of manual workers takes the form of ment-by-result schemes are added to these rates.
time rates, also known as base rates, day rates, day Other arrangements include the use of a more dis-
work, flat rates or hourly rates. These are typically cerning hierarchy of rates linked to skill levels (a
paid as spot rates (fixed rates for a job or an indi- type of skills-based pay), a job-based pay system
vidual which are not fitted into a conventional with different rates for different jobs, or individual
grade structure). Incentive payments by means of job grades which are, in effect, spot rates to which a
payment-by-results schemes may be made on top of defined pay is attached to provide scope for pay
a base rate. progression based on performance.
Time rates Payment-by-result schemes

Time rates provide workers with a predetermined Payment-by–result (PBR) schemes provide incen-
rate for the actual hours they work. They are com- tives to workers by relating their pay or, more usu-
monly used when it is thought that it is impossible ally, part of their pay to the number of items they
or undesirable to use a payment-by-results system, produce or the time taken to do a certain amount of
for example in maintenance work. From the view- work. The main types of PBR or incentive schemes
point of employees the advantage of time rates is for individuals are piece work, work measured
that their earnings are predictable and steady and schemes, measured day work and performance-re-
they do not have to engage in endless arguments lated pay. Team bonus schemes are an alternative to
with rate fixers and supervisors about piece rate or individual PBR and plant-wide schemes can pro-
time allowances. The argument against them is that duce bonuses which are paid instead of individual
they do not provide a direct incentive relating the or team bonuses or in addition to them. Each of
reward to the effort or the results. Two ways of these methods is described below in Table 47.2 to-
modifying the basic time rate approach are to adopt gether with an assessment of their advantages and
high day rates as described below or measured day disadvantages for employers and employees and
work as described in Table 47.2. when they are appropriate.
TA B L E 47.2 Comparison of shop floor payment-by-result schemes
For employers For employees
Main When
Scheme features Advantages Disadvantages Advantages Disadvantages appropriate
Piece work Bonus directly Direct Lose control over Predict and More difficult to Fairly limited
related to motivation; output; quality control earnings predict and application to
output. simple, easy to problems. in the short control earnings work involving
operate. term; regulate in the longer unit
pace of work term; work may production
themselves. be stressful and controlled by
produce RSI. the person eg
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
schemes used to ‘scientific’ time-consuming objective subjective work where
determine method of and difficult to method of judgement and changes in the
standard relating reward run and can too relating pay to earnings can work mix or
output levels to performance; easily performance; fluctuate because design
over a period can produce degenerate and employees can of changes in changes are
or standard significant cause wage drift be involved in work infrequent,
times for job/ increases in because of loose the rating requirements down time is
tasks; bonus productivity, at rates. process to outside the restricted, and
based by least in the ensure fairness. control of management
reference to short term. employees. and
performance supervision
ratings are capable of
compared with managing and
actual maintaining
performance the scheme.
or time saved.
(continued )
441
442
Main When
Measured day Pay fixed at a Employees are Performance High predictable No opportunities Everyone
work high rate on under an targets can earnings are for individuals to must be
the obligation to become easily provided. be rewarded in totally
understanding work at the attained norms line with their committed to
that a high specified level and may be own efforts. making it
level of of performance difficult to work; high
performance change. standards of
against work
work- measurement
measured are essential;
standards will good control
be maintained. systems to
identify
shortfalls on
targets.
Performance- Payments on Reward Measuring Opportunity to Assessment As part of a

related pay top of base individual performance can be rewarded for informing reward
rate are made contribution be difficult; no own efforts performance pay harmonization
related to without direct incentive without having decisions may be (shop floor
individual resource to provided. to submit to a biased, and staff)
assessments work pressured PBR inconsistent or programme;
of measurement; system. unsupported by as an
performance. relevant in evidence. alternative to
high-technology work
manufacturing. measured
schemes or
an
enhancement
of a high day
rate system.
Main When
Group or team Groups or Encourage Direct incentive Bonuses can be Depend on When team
basis teams are paid team co- may be limited; related clearly to effective work working is
bonuses on operation and depends on good the joint efforts measurement, important and
the basis of effort; not too work of the group; which is not team efforts
their individualized. measurement or fluctuations in always available; can be
performance the availability of earnings individual effort accurately
as indicated by clear group minimized. and contribution measured and
work output or not recognized. assessed; as
measurement productivity an alternative
ratings or the targets. to individual
achievement PBR if this is
of targets. not effective.
Factory-wide Bonuses Increase No direct Earnings Bonuses often As an addition

bonuses related to plant commitment by motivation. increased small and to other forms
performance – sharing without unpredictable. of incentive
added value or success. individual when
productivity. pressure. increasing
commitment
is important.
443
Key learning points
Segmentation Payment and incentive schemes for sales

Many organizations have one reward system applied staff
to all categories of staff below the level of chief Summarized in Table 47.1.
executive. However, others find it necessary to cater
for the needs of special groups of staff by adopting
different reward practices. This is called reward
Pay for customer service staff
segmentation. Customer service staff usually have the opportunity to
progress their base pay on the basis of their
Executive pay levels performance or competence, either through a range or
up a pay spine, or between grades/levels of job.
The level of executive pay is excessive. The main
reason for this is the perceived need to compete in the
marketplace for executives by offering high levels of
Pay for manual workers
remuneration. The pay of manual workers takes the form of time
rates, also known as day rates, day work, flat rates or
Elements of directors’ and senior hourly rates. Incentive payments by means of
payment-by-results schemes as summarized in
executives’ pay
Table 47.2 may be made on top of a base rate.
Basic pay, bonus schemes, share options, executive
restricted share schemes.
References
Chartered Institute of Personnel and Development d2f4f48069a2/2018-UK-Corporate-Governance-
(2019) RemCo Reform: Governing successful Code-FINAL.PDF (archived at https://perma.cc/
organisations that benefit everyone, London, CIPD Z396-GTXS)
CIPD/High Pay Centre (2020) CEO pay and the Perkins, S and Hendry, P (2005) Ordering top pay:
workforce: how employee matters impact interpreting the signals, Journal of Management
performance-related pay in the FTSE 100, London, Studies, 42 (7), pp 1443–68
CIPD 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
445
48
Reducing the gender
pay gap
is key to the maintenance of gender disparities. The
Introduction lack of women in higher-pay roles was noted by
Brown and Rickard (2018), who reported that be-
The gender pay gap is the difference between the
cause of the vertical segregation of the UK labour
average hourly earnings (excluding overtime) of
market, two-thirds of the UK’s low-paid employees
men and women as a proportion of the average
are female while over 80 per cent of high-earning
hourly earnings (excluding overtime) of men. As re-
executives are men.
ported by the Office of National Statistics the gen-
Brown and Rickard (2018), commented that
der pay gap for all employees in April 2021 was
‘Our research and consulting experience at IES
15.4 per cent in favour of men.
(Institute for Employment Studies) points to the
The gender pay gap is an overall figure and
complex, deeply-rooted historical, cultural and so-
should be distinguished from equal pay which deals
cial causes of gender pay gaps.’ Unequal pay may
with the pay differences between men and women
not be the major cause in many cases but it is still an
who carry out the same jobs, similar jobs or work
important factor. An analysis of the other main
of equal value. Unequal pay does contribute to a
causes is set out below.
pay gap but, as explained below, there are other im-
portant factors. This chapter starts with an
explanation of why the gender pay gap occurs and Lack of transparency
continues with suggestions on what can be done
about it. Being secretive about pay structures allows gender
gaps to flourish. A study by the Equality and Human
Rights Commission in 2016 revealed that employ-
Reasons for the gender pay ers with greater pay transparency have narrower
gender pay gaps. And the research by Brown (2017)
gap showed how the gender gap is reduced or at least
controlled when employers are transparent about
Contrary to popular belief it seems that unequal pay ranges.
pay is not the principal reason for gender pay gaps.
The equal pay legislation does seem to have had
some effect on pay practice. In the 49 years since the Pay increase decisions
original UK Equal Pay Act was introduced gender
Brown (2017) found that when there is considera-
pay gaps have been virtually halved as obviously
ble flexibility for managers to make individual and
discriminatory structures were outlawed, and the
discretionary decisions on pay increases, men seem
minimum wage has reduced disparities amongst
to be better than women in exploiting such flexibil-
lower-paid employees.
ity to their advantage.
Research by Brown (2017) indicated that the un-
even distribution of jobs between men and women
Recruitment potential, which can restrict pay increases and

reduce promotion prospects.
A number of studies, for example Parken et al
(2014), have identified that the uneven distribution
of jobs between men and women is key to the main- Learning and development
tenance of gender disparities. Gender bias against
A limitation of learning opportunities for women can
women can limit those shortlisted for interview,
contribute to a gender pay gap by restricted access to
lead to selection decisions that favour men, and re-
more skilled and therefore better-paid jobs. An analy-
sult in men being offered higher starting salaries.
sis was made in 2017 by the Knowledge Academy
(cited by Brown and Rickard, 2018). This covered
Return to work after maternity data from Eurostat alongside a survey of more than
6,000 adults conducted by the UK Commission for
leave Employment and Skills and the National Institute of
A major problem for women returning to work Adult Continuing Education (NIACE). It revealed
after maternity leave is that they may have missed that just 6 in 10 women were offered training by their
out on opportunities for promotion and to gain employer, compared with 8 in 10 men. This appeared
more experience and acquire additional skills. The to be related to its finding that 32 per cent of full-time
combined effect of these is that they will have lost staff said that they had accessed both on- and off-the-
ground with their male colleagues who have re- job training in the last year, compared with just 19
mained at work. This problem is exacerbated by the per cent of predominately female part-time workers
likelihood that the pay of those colleagues will have (Kirton, 2017). Olsen et al (2010) found that training
been increased during the leave period, especially paid for by employers was associated with 6 per cent
when incremental pay scales are in operation. higher hourly wages.
The problem starts at school where fewer girls tend
to opt for A level ‘STEM’ (science, technology, engi-
Under-representation of women on neering and maths) subjects. This can restrict earning
opportunities. Research by London Economics (2015)
boards showed that pay is greater when a STEM A level is
The under-representation of women on boards con- undertaken – girls taking one such A level can expect
tributes directly to gender pay gaps. But it also makes annual wages to be £4,500 higher, on average, than if
a difference to how organizations respond to the they had not.
gap. Cardoso and Winter-Ebmer (cited by Hensvik,
2014) found that female earnings increased when
organizations appointed a female chief executive Careers advice
and Bell (also cited by Hensvik) found that the earn- Careers advice to girls can lead them towards oc-
ings of female executives were higher and women cupations or industries that are believed by advisors
were more likely to be among the highest-paid to be more suitable for women. This reinforces high
executives in female-led firms. occupational gender skews in industries such as en-
In 2015, as reported by the Department for gineering and IT and increases gender gaps in those
Business, Innovation and Skills, the proportion of industries.
women directors on the boards of FTSE 100 com-
panies was 28.5 per cent but of the 263 women di-
rectors only 24 were executive directors; the Actions to reduce gender
remaining 239 held non-executive and therefore

less influential posts. pay gaps
It was concluded by O’Reilly et al (2015) on the
Performance management basis of their research that ‘progress towards clos-
ing the gender pay gap will not be easy, will require
There may be bias, conscious or unconscious, by
a collective effort of various actors, and will not be
men against women when rating performance and
Chapter 48 | Reducing the Gender Pay Gap 447
quick.’ It was also concluded by Brown and Rickard claims in an Employment Tribunal when they
(2018) that ‘There is no magic “silver bullet” solu- believed that their work, despite being different in
tion and that only multiple actions over sustained nature from that of a comparator of the opposite
periods of time involving all key stakeholders can sex, was nonetheless of ‘equal value to his or hers’.
be effective in addressing such a complex, deep- The relevant law is now all found in the Equality
rooted and intractable social, cultural and economic Act 2010. It applies equally to men and to women,
phenomenon.’ But attempts are being made, as de- but in practice the large majority of cases are
scribed below, through government legislation and brought by women using men as their comparators.
initiatives and within organizations. Aside from these three headings under which a
claim can be brought (ie like work, work that has
been rated as equivalent and work of equal value),
Reporting gender pay gaps the Equality Act sets out the major defences that are
available to employers. The most widely deployed is
Various parts of the public sector have been re-
known as the ‘material factor defence’, which in-
quired to promote equality and report on their gen-
volves satisfying the tribunal that the difference in
der pay gaps for some time. But in the private sector
the level of payment between the claimant and her
the issue has generally been given low priority. At
comparator is genuinely explained by factors that
first the government tried to encourage companies
have nothing to do with gender. The most common
to report on and address their gaps voluntarily. But
examples are situations in which a man works
while more than 250 major employers initially
longer hours or takes on a less desirable shift pat-
signed up to the UK government’s ‘Think, Act,
tern than the woman and those in which there are
Report’ voluntary initiative, only 11 of these com-
marked differences in relative levels of skill, perfor-
panies had voluntarily published their gaps by the
mance or experience. It is also common for employ-
start of 2016.
ers to pay more to people who have achieved certain
This lack of progress led the government to com-
formal qualifications and also to pay London-based
pel employers to report. The Equality Act 2010
employees more than those living elsewhere in the
(Gender Pay Gap Information) Regulations 2017
UK. These are both accepted as ‘material factors’
require all UK-based employers with 250 or more
provided that they genuinely explain the difference
employees to calculate and publicly report on the
in pay. The same is true of situations in which a
gaps in pay between their female and male employ-
group of employees enjoys a higher level of ‘pro-
ees each year on a fixed date.
tected pay’ following a merger or acquisition that
The results must be published on the employer’s
brings together two groups of people who were
website and a government website. Employers have
previously employed by different employers.
the option to provide a narrative with their calcula-
tions. This should generally explain the reasons for
the results and give details about actions that are
being taken to reduce or eliminate the gender pay gap.
Minimum pay
The introduction of the UK’s National Minimum
Wage, followed by the more rapidly increasing
Equal Pay National Living Wage, benefited women, as they
hold the majority of minimum wage jobs. However,
The Equal Pay Act (1970) ended the previous com-
the impact on the national gender pay gap has been
mon practice of employers paying men and women
limited by the preponderance of low-paid females
different amounts of money for doing jobs that
in part-time work.
were either the same or very similar. It became un-
lawful to operate separate male and female pay
scales or to pay men and women differently for
doing jobs that should have been paid at the same
Educational opportunities and
grade when a job evaluation system was in opera- careers advice
tion. Later, in 1983 after the UK joined the European
Government action is needed to encourage girls to
Union, it became possible for employees to pursue
take STEM subjects at A level and to ensure that
c areers advice covers the whole spectrum of occupa- a pproach is required. Appointing a diversity man-
tions rather than those in which women predominate. ager with the responsibility for initiating and co-
ordinating actions to reduce the gap will be a
great help. But perhaps the most important thing
Narrowing the gap at to do is to develop a culture that supports, indeed
drives, initiatives to reduce a gap and maintain
organizational level any reductions achieved. The two case studies at
the end of this chapter illustrate this point per-
There are a number of initiatives that can be taken fectly. But changing an embedded culture can be a
to narrow gender pay gaps at organizational level long haul.
as summarized in Table 48.1. A multi-pronged
TA B LE 48.1 Actions that can be taken by organizations to reduce a gender pay gap
Area Possible actions by the organization
Unequal pay Conduct an equal pay audit, communicate the results to employees and take
action to deal with any equal pay problems it reveals.
Ensure job evaluation scheme is unbiased.
Ensure pay structure is unbiased.
Lack of transparency Adopt a policy of complete transparency on pay structures and use it as the basis
upon which pay decisions are made.
Pay increase decisions Provide awareness training on avoiding bias in making pay decisions.
Monitor proposed increases to detect and correct any bias.
Recruitment issues Ensure that a good proportion of women are included in shortlists.
Introduce ‘blind’ applications, ie interviewers are not told the name, sex, age or
race group of applicants.
Issue clear guidelines on recruitment salaries which emphasize that all applicants
have to be treated the same.
Monitor proposed starting salaries and question any apparent bias.
Use structured interviews with prepared and gender-neutral questions.
Return to work after Provide enhanced support for maternity returners including flexible working
maternity leave 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 Talent management – plan and manage the talent pipeline to ensure that women
on boards and in more have the same opportunities as men to benefit from career development
senior roles programmes and to be classified as potential senior management.
Review all board and senior appointments to ensure that eligible women are given
a fair share of positions.
Learning and Monitor distribution of learning and development opportunities to ensure that
development women get their fair share.
Flexible working Educate all employees on the right to request flexible working arrangements and
ensure that it is available whenever possible.
Provide unconscious bias training to assessors.
Performance Ensure criteria for assessment are unbiased, clear and understood.
management Monitor ratings to identify possible bias and take corrective action where needed.
CASE STUDIES
Managing the gender pay gap in the FDM group
The FDM Group is a global professional services provider The firm supports career labs in schools and runs about
with a focus on IT. The firm had almost 2,000 UK employees 600 events on university campuses each year. It also spon-
in 2017 and over 1,500 in the rest of the world. The FDM sors the FDM Everywoman in Technology awards, champi-
Group’s 2017 gender pay report indicated that the median oning the advances and achievements of women in STEM
pay gap was 0.0 per cent and the mean pay gap was and technology careers. FDM was one of the Guardian’s
6.0 per cent. A contributory factor to the achievement of a Most Popular Graduate Employers in 2017/18.
zero 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 selected
Culture by the firm. Specific practices to support this include:
The culture is deliberately managed by FDM because the
●● unconscious-bias training for recruiters;
company sees it as important for both a positive employee
experience as well as the customer experience. To communicate ●● use of ‘blind CVs’ that omit personal and university
and practice this culture in a dispersed organization, extensive detail so that only the specific job and skill
staff communications refer to its initiatives around diversity, requirements are considered;
inclusion and gender balance through employee newsletters,
●● use of structured, strength-based interviewing
company events and digital screens in the office to ensure that
techniques;
all employees are aware of the strong commitment to diversity.
Gender pay reporting as it takes place at FDM is a manifestation ●● game-based testing at assessment centres.
of an open, high-communications culture in which relevant
gender and other diversity data is regularly circulated and Learning and development
discussed.
The company operates a mentoring scheme aimed at all
new and developing employees with an equal male/female
Recruitment policy senior management team taking part as mentors. This is
First, the firm recruits people who have the aptitude, skills thought to be particularly important in helping to role-model
and potential required, regardless of background, creed or and prepare women for future senior management roles.
colour. Second, FDM has a very strong ‘grow your own’
staffing policy, rather than trying to recruit in a tight labour Pay structure
market for large numbers of experienced and, still, mostly
male IT consultants, A key feature of the FDM pay structure is that base pay is
FDM has clear and well-written policies on pay, equal the same for all individuals in the same role. There are no
opportunities, development, diversity and inclusion, based pay ranges around these rates and therefore no scope for
on a principle ‘of being open and transparent’ and fully ac- managers and employees to bargain over base pay level,
cessible on its intranet. Diversity Champions are spread which research studies suggest may contribute to gender
across the business to publicize and promote the benefits pay disparities.
that stem from diversity, as well as ensuring that these SOURCE Brown (2017)
principles are put into practice day to day.
Managing the gender pay gap in Lewisham Council
Lewisham Council had 6,912 employees in 2018 of whom 60 The Council’s pay policy is to balance reward and fair-
per cent were women. The average pay for women has ness. The reward policy has been used to drive gender par-
exceeded that of men since at least 2010. 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. Those 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 regular
gress made, with senior managers setting the example and people management metrics on pay, attendance, learning
signalling and monitoring its importance, and then a range and appointments, analysed by under-represented areas
of HR policies reinforcing it, particularly in terms of talent including gender. Annually, each management team is
management and development. asked to consider the profile of their workforce, particularly
Management and career development was the key HR by gender, as part of their workforce planning process. The
activity to achieving gender parity. The approach to achiev- data has been used to change people management prac-
ing parity was pragmatic rather than a hard adherence to tises such as recruitment and job evaluation, which have
set targets and quotas. Opportunities were seized to make the greatest impact on gender parity.
‘signalling appointments’ in key areas when a female SOURCE Brown (2016)
appointment would be very noticeable in the Council.
Key learning points
The gender pay gap ●● Recruitment.
The gender pay gap is the difference between the ●● Return to work after maternity leave.
average hourly earnings (excluding overtime) of men ●● Under-representation of women on boards.
and women as a proportion of the average hourly
earnings (excluding overtime) of men.
Actions at national level
Reasons for the gender pay gap ●● Equal pay.
A lack of women in high-paid jobs is the major cause ●● Minimum pay.

of the gender gap, not unequal pay. In detail, the ●● Representation of women on boards.
reasons are a failure to give sufficient attention to
gender equality in the following areas: ●● Educational opportunities.
●● Lack of transparency.
Actions at organizational level
●● Pay increase decisions.
See Table 48.1.
References
Brown, D (2016) The Power of Parity: A study of https://www.peoplemanagement.co.uk/news/
how Lewisham Council achieved gender equality articles/men-more-likely-sent-on-training-courses
at senior levels, the learning and implications, (archived at https://perma.cc/QX6A-4JC3)
Institute for Employment Studies, Research London Economics (2015) The earnings and
Report 110 employment returns to A levels: a report to the
Brown, D (2017) Gender pay: How do you achieve Department for Education. https://
and report parity? The Institute for Employment londoneconomics.co.uk/wp-content/uploads/
Studies. http://www.employment-studies.co.uk/ 2015/03/London-Economics-Report-Returns-to-
resource/gender-pay-how-do-you-achieve-and- GCE-A-Levels-Final-12-02-2015.pdf (archived at
report-parity (archived at https://perma.cc/ https://perma.cc/P4LN-ZK8K)
J3RS-WXFD) Office of National Statistics (2018) Gender Pay Gap
Brown, D and Rickard, C (2018) Gender pay gaps Bulletin. https://www.ons.gov.uk/
and solutions, in ed S J Perkins, The Routledge employmentandlabourmarket/peopleinwork/
Companion to Reward Management, Abingdon, earningsandworkinghours/bulletins/
Routledge genderpaygapintheuk/2018 (archived at https://
Department for Business, Innovation and Skills perma.cc/V7PB-WMFV)
(2015), Women on Boards. https://www.gov.uk/ Olsen W, Heuvelman H, Gash V, Vandecasteele L
government/uploads/system/uploads/attachment_ (2010) The Gender Pay Gap in the UK 1995–
data/file/415454/bis-15-134-women-on-boards- 2007: Part 2 – Policy-related factors offsetting
2015-report.pdf (archived at https://perma.cc/ women’s low pay in the UK, 2004–07,
Y9WJ-35LA) Government Equalities Office
Equality and Human Rights Commission (2016) O’Reilly, J, Smith, M, Deakin, S and Burchell, B
Why equal pay matters, Equality and Human (2015) Equal pay as a moving target: international
Rights Commission. www.equalityhumanrights. perspectives on forty years of addressing the
com/en/advice-and-guidance/business-case-equal- gender pay gap, Cambridge Journal of Economics,
pay (archived at https://perma.cc/AN56-U3RA) 39 (2), pp 299–317
Hensvik, L (2014), Manager impartiality: worker – Parken, A, Pocher, E and Davies, R (2014) Working
firm matching and the gender wage gap, Industrial Patterns in Wales: Gender, occupations and pay,
and Labor Relations Review, 67 (2) Wave Wales
Kirton, H (2017) Men more likely than women to be
sent on training courses, People Management.
452

453
PART XII
PA R T X I I CO N T E N T S
49 The basis of employment relations

50 Employment relations strategy
51 The employment relationship
52 The psychological contract
53 The practice of industrial relations
54 Employee voice
55 Employee communications
move away from collectivism towards individualism

Introduction in the ways in which employees relate to their
employers.
Employment relations, also known as employee re- This part starts with a review of the basis of em-
lations, are concerned with managing the employ- ployment relations including the approaches used
ment relationship and the psychological contract, by organizations to managing with or without trade
and relating to employees either collectively through unions. This is followed by a chapter on employ-
trade unions or other formal groups, or individu- ment relations strategies. The next two chapters
ally. Employment relations also involve providing examine the fundamental concepts that affect em-
employees with a voice and developing communica- ployment relations – the employment relationship
tions between them and management. and the psychological contract. These chapters pro-
Employment relations cover a wider spectrum of vide the background to Chapter 53, which deals
the employment relationship than industrial rela- with the practice of industrial relations, covering
tions, which are essentially about what goes on union recognition, the concept of mutual gains and
between management and trade union representa-
the processes of collective bargaining and dispute
tives and officials involving collective agreements, col- resolution. The last two chapters deal respectively
lective bargaining and dispute resolution. This wider with employee voice (participation and involve-
definition of employment relations recognizes the ment) and communications.
454

455
49
The basis of
employment relations
to the greater good of all. Partnership agreements
Introduction try to put this idea into practice.
In contrast, the pluralist viewpoint is that the in-
This chapter deals with: the meaning of employ- terests of employees will not necessarily coincide
ment relations, the approaches organizations can with their employers and that the unitary view is
adopt to managing them, including their manage- naive, unrealistic and against the interests of em-
ment style, and the content of employment relations ployees. In the radical pluralist view, as pointed out
policies. by Dundon et al (2017: 67), ‘the employer-worker
relationship is fundamentally grounded in coercive
relations and arises in a context of power and de-
The meaning of employment pendence.’ This was called ‘structural antagonism’
relations by Edwards (1986), which means that employers
and workers are locked into a relationship of de-
pendency that is compounded by contradictory ten-
Employment relations are concerned with manag-
sions. People who believe this say that partnership
ing and maintaining the employment relationship –
agreements can never work. Perhaps the difference
how managements and employees live together and
between the unitarist and the pluralist views is that
what can be done to make that work. This includes
the former is idealistic while the latter is realistic.
relating to people individually and also dealing with
The meaning of employment relations can be de-
them collectively through trade unions where they
scribed somewhat simplistically in terms of the
exist (industrial relations). The employment rela-
pay–work bargain – the agreement made between
tions climate of an organization consists of the
employers and employees whereby the former un-
perceptions of management, employees and their
dertakes to pay for the work done by the latter.
representatives about the ways in which employ-
According to this notion, many employers simply
ment relations are conducted and how the various
want employees who will do what they are told
parties (managers, employees and trade unions)
without costing too much. They want engagement
behave when dealing with one another.
and commitment on their own terms. But employ-
There are two views about the relationship. The
ees want a ‘fair day’s pay for a fair day’s work’ and
first is the unitarist viewpoint which is the belief
a say in their terms and conditions of employment
that management and employees share the same
and the way in which their work is organized. They
concerns and it is therefore in both their interests to
want security of employment, good working condi-
cooperate – ‘what is good for the firm is good for
tions, a healthy and safe working environment and
the worker’. This was referred to by Walton (1985:
the scope to raise and resolve grievances. Conflicts
64) as the principle of mutuality. A similar belief is
of interest can arise between employers and em-
expressed in the idea of social partnership, which
ployees on these issues, and where there are unions
states that as stakeholders, the parties involved in
these conflicts are resolved by the various industrial
employment relations should aim to work together
relations procedures described in Chapter 53.
456 Part 12 | Employment Relations
Because of this, employment relations need to be unilaterally by management and if they not
managed by reference to understood and communi- organized, employees have to like it or lump
cated policies and strategies. A basic issue in it or walk.
employment relations is the extent to which the or- 2 Traditional-consultative: management retains
ganization manages with or without trade unions. its prerogative but is prepared to consult
with employees and listen to their views on
issues that directly affect them.
Managing with trade unions 3 Adversarial: management decides what it
Managements and trade unions can learn to live to- wants to do and employees are expected to
gether, often on a give-and-take basis, the presump- fit in. But through their union, employees
tion being that neither would benefit from a climate reserve the right to object to management’s
of hostility or by generating constant confrontation. proposals and to take action if they do not
It would be assumed in this situation that mutual get a satisfactory answer.
gains would be achieved by acting in accordance 4 Partnership: both parties (management and
with the spirit as well as the letter of agreed joint the trade union) undertake to work together
regulatory procedures. However, both parties may to their mutual advantage and to achieve a
adopt a realistic pluralist viewpoint. This means climate of more cooperative and therefore
recognizing the inevitability of differences of opin- less adversarial industrial relations.
ion, even disputes, but believing that with goodwill
5 Power sharing: employees are involved in
on both sides they could be settled without recourse
both day-to-day and strategic decision-
to industrial action.
making.
Adversarial approaches are much less common now
Managing without unions than they used to be. The traditional approaches are
Some firms, especially larger ones, manage without still the most typical but more interest is being ex-
trade unions by adopting what is in effect a union pressed in partnership. Power sharing is very rare.
substitution policy which offers employment policies
and pay packages that employees will see as an at-
tractive alternative to trade union membership. They Management style in
go in for communications and information sharing
(or at least pay lip service to them) and may consult
employment relations
(or go through the motions of consulting) but not
Management style in employment relations was de-
negotiate with a staff association. Basically, however,
fined by Purcell (1987: 535) as ‘a guiding set of
they approach relationships on an individual rather
principles which delineate the boundaries and
than a collective basis. Other firms, especially smaller
direction of acceptable management action in deal-
ones, simply deal with employees individually –
ing with employees.’ He described two major
sometimes well, sometimes not – and make no at-
dimensions: (1) individualism, which refers to the
tempt to provide substitute arrangements.
extent to which personnel policies are focused on
the rights and capabilities of individual workers,
and (2) collectivism, which is concerned with the
Approaches to employment extent to which management policy is directed to-
relations wards encouraging the development of collective
representation by employees and allowing employ-
There are five approaches to employment relations: ees a collective voice in management decision mak-
ing. He suggested that style is a deliberate choice
1 Traditional-directive: a reasonably good linked to business policy. Organizations may choose
day-to-day working relationship is to focus on one or both aspects. Not all firms have
maintained but, as is sometimes said, a distinctive preferred management style.
‘management must manage’. Action is taken
Chapter 49 | The Basis of Employment Relations 457
de-recognized, which union or unions the

Employment relations organization would prefer to deal with and
policies whether or not it is desirable to recognize
only one union for collective bargaining and/
Employment relations policies define how the or employee representational purposes.
organization believes relationships between manage- ●● Collective bargaining – if it exists, the extent
ment and employees and, when they exist, their to which it should be centralized or
unions, should be handled. They are put into practice decentralized and its scope in terms of the
by employment relations strategies as described in aspects of the employment relationship it
the next chapter. covers.
The objectives of employment relations policies ●● Employment relations procedures – the
may include the maintenance of good relations with nature and scope of procedures for
employees and, where present, their unions, the redundancy, grievance handling and
construction of a cooperative and constructive em- discipline.
ployment relations climate, the effective manage-
●● Social partnership – the creation of a
ment of the work process, and the development of
positive, productive, cooperative and
an engaged and committed workforce. When these
trusting climate of employment relations.
policies are articulated, they provide guidelines for
This is characterized by the overall approach
taking action on employment relations issues and
to employment relations but it can be
can help to ensure that these issues are dealt with
formalized in partnership agreements.
consistently. They provide the basis for defining
management’s intentions (its employment relations ●● Participation and involvement – how far the
strategy) on key matters such as union recognition, organization is prepared to go in giving
collective bargaining and partnership. employees a voice on matters that concern
The areas covered by employment relations policies them.
are: ●● Harmonization - the provision of the same
terms and conditions of employment for staff
●● The employment relationship – the extent to
and manual workers.
which terms and conditions of employment
should be governed by collective agreements ●● Working arrangements – the degree to which
or based on individual contracts of management has the prerogative to
employment (ie collectivism versus determine working arrangements without
individualism). reference to trade unions or employees
(this includes job-based or functional
●● Trade union recognition – whether trade
flexibility).
unions should be recognized or
Key learning points
Employment relations The employment relations climate

Employment relations are concerned with managing The employment relations climate of an organization
and maintaining the employment relationship – how consists of the perceptions of management,
managements and employees live together and what employees and their representatives about the ways
can be done to make that work. This includes relating in which employment relations are conducted and
to people individually and dealing with them how the various parties (managers, employees and
collectively through trade unions where they exist trade unions) behave when dealing with one
(industrial relations). another.
An employment relations climate may be created
by the management style adopted by management, by
the behaviour of the trade unions or employee Employment relations policies

representatives (cooperative, hostile, militant, etc), or
by the two interacting with one another. Employment relations policies define how the
organization believes relationships between
management and employees and, when they exist, their
Managing without trade unions unions, should be handled. The areas covered are:
Some firms, especially larger ones, manage without
●● the employment relationship;
trade unions by adopting a union substitution policy
that offers employment policies and pay packages that ●● trade union recognition;
employees will see as an attractive
●● collective bargaining;
Managing with unions ●● employment relations procedures;
Ideally, managements and trade unions learn to live ●● social partnership;

together, often on a give-and-take basis, the ●● participation and involvement;
presumption being that neither would benefit from a
climate of hostility or by generating constant ●● harmonization;
confrontation. However, both parties could adopt a ●● working arrangements.
realistic pluralist viewpoint. This means recognizing the
inevitability of differences of opinion, even disputes, but
believing that with goodwill on both sides they could be
settled without resource to industrial action.
References
Dundon, T, Cullinane, N and Wilkinson, A (2017) A Purcell, J (1987) Mapping management styles in
Very Short, Fairly Interesting and Reasonably employment relations, Journal of Management
Cheap Book About Employment Relations, Studies, 24 (5), pp 78–91
London, Sage Walton, R E (1985) From control to commitment in
Edwards, P K (1986) Conflict at Work, Oxford, the workplace, Harvard Business Review,
Blackwell March–April, pp 77–84
459
50
strategy
Support happens when relationships between the
Introduction organization and its employees recognize the im-
portance of achieving mutual gains and acting in
Employment relations strategy defines the inten- partnership so that high levels of trust, cooperation
tions of the organization about what needs to be and, ultimately, productivity are achieved.
done about how it handles relationships with em- Overall, employment relations strategy is con-
ployees and, if any, their trade unions. It involves cerned with building stable and cooperative relation-
deciding on the steps required to implement em- ships with employees that minimize conflict. More
ployment relations policies such as the examples specifically the strategy covers matters such as:
given in Chapter 49.
This is an area of people management where a ●● the achievement of increased levels of
strategic approach is particularly appropriate. commitment through involvement or
Organizations need to have a clear idea of the route participation – giving employees a voice;
they want to follow in developing a cooperative and ●● developing a ‘partnership’ with trade unions,
productive employment relations climate. recognizing that employees are stakeholders
This chapter includes a description of the nature and that it is to the advantage of both parties
of employment relations strategy and notes on the to work together – this could be described as
following strategy areas: a unitary strategy, the aim of which is to
●● employment relations; increase mutual commitment (a unitary
approach is based on the belief that
●● achieving mutual gains; management and employees share the same
●● partnership; concerns and it is therefore in both their
●● building trust; interests to work together);
●● employee voice; ●● changing forms of recognition, including
●● trade union recognition. single union recognition, or derecognition;
●● changes in the form and content of
procedural agreements which define the rules
that regulate relationships between
The nature of employment management;
relations strategy ●● new bargaining structures, including
decentralization or single-table bargaining
Like all other aspects of people strategy, employ- (negotiations are conducted simultaneously
ment relations strategy takes account of the busi- between management and more than one
ness or corporate strategy and aims to support it. trade union).
policies to employees, and commitment increased

Strategy for creating a by involvement and participation processes.
constructive and positive Importantly, as discussed below, the organization
can address its obligations to the employees as
employment relations stakeholders and formulate strategies for mutual
gains and building trust.
climate
The employment relations climate of an organiza- Strategy for achieving
tion consists of the perceptions of management, em-
ployees and their representatives about the ways in mutual gains
which employment relations are conducted and
how the various parties (managers, employees and A strategy for mutual gains will be based on the
trade unions) behave when dealing with one an- proposition that management and workers are still
other. An employment relations climate may be held to maintain their own separate interests, but
created by the management style adopted by
ultimately seek to satisfy such contiguous interests
management or by the behaviour of the trade
through cooperation. The concept of mutual gains
unions or employee representatives (cooperative,
was originated by Kochan and Osterman (1994)
hostile, militant, etc) or by the two interacting with who argued that rather than being blockages to
one another. It can be good, bad or indifferent productivity improvements, worker representatives,
according to perceptions about the extent to which: in collaboration with management and under-
pinned with institutional supports, could engage in
●● management and employees trust one
joint problem-solving to improve both firm perfor-
another;
mance and returns for workers. They suggested that
●● management treats employees fairly and with ‘Employees must commit their energies to meeting
consideration; the economic objectives of the enterprise. In return,
●● management is open about its actions and owners (stakeholders) must share the economic re-
intentions – employment relations policies turns with employees and invest those returns in
and procedures are transparent; ways that promote the long-run economic security
●● harmonious relationships are generally of the workforce’ (page 46).
maintained on a day-to-day basis; As described by Cullinane et al (2014: 810), the
idea of mutual gains ‘outlines that whilst manage-
●● conflict, when it does arise, is resolved
ment and workers’ interests may diverge, there is
without resort to industrial action and
ample opportunity, through problem-solving ar-
resolution is achieved by integrative
rangements, to create shared benefits for both par-
processes that result in a ‘win-win’ solution;
ties.’ They also observed that ‘Mutual gains rotates
●● employees are generally committed to the on an assumption that, in the process of problem-
interests of the organization and, equally, solving, both sides exchange information to ad-
management treat them as stakeholders vance interests that are deemed beneficial to both
whose interests should be protected as far as parties, with the subsequent generation of options
possible. and finally, the choosing of those that offer the high-
A strategy for improving the climate may involve est joint returns’ (page 819).
developing fair employment relations policies and Boxall (2013: 5) set out three conditions under
procedures and making plans to implement them which the quality of employment relationships may
consistently. Line managers and team leaders who facilitate the achievement of mutual gains: (a)
are largely responsible for the day-to-day conduct capability match – fit between employer’s need for a
of employment relations need to be educated and competent workforce and employees’ need for a

trained on the approaches they should adopt. conducive work environment, (b) commitment

Transparency can be achieved by communicating match – fit between employer’s need for employees’
Chapter 50 | Employment Relations Strategy 461
commitment and employees’ need for job security A strategy for building trust must focus on how
and fair treatment from the employer and (c) contri- it can be created and maintained by managerial be-
bution match – the extent to which the employer and haviour and by the development of better mutual
employees perceive that their respective needs are understanding of expectations – employers of em-
being met. ployees, and employees of employers. The sort of
The concept of mutual gains is associated with behaviour by managers that should be fostered by
the notion of mutuality as formulated by Walton the strategy is being honest with people, keeping
(1985). Mutuality was defined by Guest and Peccei their word (delivering the deal) and practising what
(2001: 212) as ‘the idea of focusing on the shared they preach. Managements that espouse values
interests and shared goals of two or more interde- (‘people are our greatest asset’) and then proceed to
pendent parties while recognizing that they have ignore them will be low-trust organizations. More
other potentially differing interests.’ But the term specifically, trust will be developed if management
mutual gains is used more nowadays, perhaps be- acts fairly, equitably and consistently, if a policy of
cause it conveys more clearly the outcomes of mu- transparency is implemented, if intentions and the
tuality by defining what happens when the principle reasons for proposals or decisions are communi-
of mutuality is applied, for example, as a basis for cated both to employees generally and to individu-
negotiation. als, if there is full involvement in developing reward
processes, and if mutual expectations are agreed
through performance management. Approaches to
Partnership agreement building trust are discussed in more detail in
Chapter 51.
strategy
A partnership agreement strategy aims to get man- Employee voice strategy
agement and a trade union to collaborate to their
mutual advantage and to achieve a climate of more The term ‘employee voice’ refers to the say em-
cooperative and therefore less adversarial industrial ployees have in matters of concern to them in their
relations. Management may offer job security organization. It describes a form of two-way dia-
linked to productivity and the union may agree to logue that allows employees to influence events at
more flexible working. work and includes the processes of involvement,
The perceived benefits of partnership agreements participation, upward problem solving and up-
are that management and unions will work together ward communication. An employee voice strategy
in a spirit of cooperation and mutuality, which is will indicate what voice arrangements are to be
clearly preferable to an adversarial relationship. made, if any.
Provision is made for change to be introduced The voice strategy appropriate for an organiza-
through discussion and agreement rather than by tion depends upon the values and attitudes of man-
coercion or power. agement and, if they exist, trade unions, and the
current climate of employee relations. Strategic
planning should be based on a review of the exist-
Strategy for building trust ing forms of voice, which would include discussions
with stakeholders (line managers, employees and
Trust is a firm belief that a person may be relied on. trade union representatives) on the effectiveness of
A climate of trust is an essential ingredient in a pos- existing arrangements and any improvements
itive employment relationship. It has been suggested required. In the light of these discussions, new or
by Herriot et al (1988) that trust should be regarded revised approaches can be developed but it is neces-
as social capital – the fund of goodwill in any social sary to brief and train those involved in the part
group that enables people within it to collaborate they should play.
with one another.
C A S E S T U DY
Employee relations at Capgemini UK
Capgemini UK is part of a global IT services company in the Netherlands. This is seen as a problem-solving model
providing management consulting, outsourcing and encouraging two-way communication, as opposed to the
professional services, with 112,000 employees across the more adversarial approach characteristic of consultation in
world and 9,000 employees in the UK. France. Local forums have been established covering
Capgemini’s principal consultative mechanism is the individual business areas; the UK National Works Council
‘forum’, which includes both union and non-union (NWC) is made up of nominated representatives from each
representatives. The forum approach was established of the local forums and an international works council
in 1999 using the works council model adopted by Capgemini operates from the global company headquarters in Paris.
the perceived value or lack of value of having

Trade union recognition ●●
a process for regulating collective bargaining;
strategy ●● if there is an existing union, the extent to
which management has freedom to manage;
An organization may have to decide on a strategy for example to change working arrangements
for recognizing or derecognizing a trade union. An and introduce flexible working or multi-
employer fully recognizes a union for the purposes skilling;
of collective bargaining when pay and conditions of ●● the history of relationships with the existing
employment are jointly agreed between manage- union;
ment and trade unions. Unions can be derecognized
●● the proportion of employees who are union
although this is happening less frequently.
members and the degree to which they
Employers in the private sector are in a strong
believe they need the protection their union
position now to choose whether they recognize a
provides;
union or not, which union they want to recognize
and the terms on which they would grant recogni- ●● any preferences as to a particular union,
tion, for example a single union agreement. because of its reputation or the extent to
When setting up on greenfield sites employers may which it is believed a satisfactory relationship
refuse to recognize unions. Alternatively, they can can be maintained;
hold ‘beauty contests’ to select the union they prefer ●● if derecognition is contemplated, the extent
to work with, one that will be prepared to reach an to which the perceived advantages of not
agreement in line with what management wants. having a union outweigh the disadvantages
An organization deciding whether or not to rec- of upsetting the status quo.
ognize or derecognize a union should take some or
all of the following factors into account:
Key learning points
Employee relations strategy be done and what needs to be changed in the ways
in which the organization handles relationships
●● Employment relations strategy defines the with employees and, if any, their trade unions.
intentions of the organization about what needs to
Chapter 50 | Employment Relations Strategy 463
●● Overall, employment relations strategy is ●● A partnership agreement strategy aims to get

concerned with developing the employment management and a trade union to collaborate to
relationship as discussed earlier in this chapter in their mutual advantage and to achieve a climate of
order to build stable and cooperative relationships more cooperative and therefore less adversarial
with employees that minimize conflict. industrial relations.
●● An employee voice strategy will indicate what voice
Employee relations strategy areas arrangements are to be made, if any. These can take
the form of representative participation (collective
●● A strategy should be developed to achieve mutual representation through trade unions or staff
gains through the employment relationship. associations or joint consultation) and/or upward
●● A strategy for mutual gains will be based on the communication through established channels
proposition that management and workers are still (consultative committees, grievance procedures,
held to maintain their own separate interests, but ‘speak-up’ programmes etc) or informally.
ultimately seek to satisfy such contiguous interests ●● An organization may have to decide on a strategy
through cooperation. for recognizing or derecognizing a trade union.
References
Boxall, P F (2013) Mutuality in the management of Herriot, P, Hirsh, W and Riley, P (1988) Trust and
human resources: assessing the quality of Transition: Managing the employment
alignment in employment relationships, Human relationship, Chichester, Wiley
Resource Management Journal, 23 (1), pp 3–17 Kochan, T A and Osterman, P (1994) The Mutual
Cullinane, N, Donaghey, J, Dundon, T, Hickland, E Gains Enterprise: Forging a winning partnership
and Dobbins, T (2014) Regulating for mutual among labor, management and government,
gains? non-union employee representation and the Boston, MA, Harvard University Business Press
Information and Consultation Directive, Walton, R E (1985) Towards a strategy of eliciting
International Journal of Human Resource employee commitment based on principles of
Management, 25 (6), pp 810–28 mutuality, in (ed) R E Walton and P R Lawrence,
Guest, D and Peccei, R (2001) Partnership at work: HRM Trends and Challenges, Boston MA,
Mutuality and the balance of advantage, British Harvard Business School Press, pp 35–65
Journal of Industrial Relations, 39 (2), pp 207–36
464
51
The employment
relationship
Underpinning the employment relationship is the
Introduction psychological contract (see Chapter 52), which ex-
presses certain assumptions and expectations about
The employment relationship describes how em- what managers and employees have to offer and are
ployers and employees work together. A positive willing to deliver. The dimensions of the employ-
employment relationship is one where there is mu- ment relationship as described by Kessler and Undy
tual trust and in which management and employees (1996) are shown in Figure 51.1.
are interdependent and both benefit from this inter-
dependency. Such a relationship may be difficult to
achieve but it can provide a sound basis for employ-
ment relations policies. This chapter describes the
The basis of the
employment relationship, how it is managed and employment relationship
how a climate of trust can be created.
The starting point of the employment relationship
is an undertaking by an employee to provide skill
The nature of the and effort to the employer in return for which the
employer provides the employee with a salary or a
employment relationship wage (the pay–work bargain). Initially the relation-
ship is founded on a legal contract. This may be a
It is possible to express the employment relation- written contract, but the absence of such a contract
ship formally by what Rubery et al (2002) regarded does not mean that no contractual relationship ex-
as its cornerstone, namely the contract of employ- ists. Employers and employees still have certain im-
ment. It can additionally be defined by such means plied legal rights and obligations even if there is no
as procedure agreements and work rules. But it is formal contract. The employer’s obligations include
essentially an informal and constant process that the duty to pay salary or wages, provide a safe
happens whenever an employer has dealings with workplace, act in good faith towards the employee
an employee, and vice versa. and not to act in such a way as to undermine the
Thus the employment relationship is concerned trust and confidence of the employment relation-
with the employee experience of working in an or- ship. The employee has corresponding obligations,
ganization which covers everything that people en- which include obedience, competence, honesty and
counter, observe and feel during the course of their loyalty. Marsden (2007: 1263) summed up the em-
employment. This includes the effect on employees ployee relationship as follows:
of management practices such as providing leader-
ship, exercising control, performance management, At the heart of the employment relationship lies a
concern for employee wellbeing and dealing with ‘zone of acceptance’ within which employees agree
employment problems. to let management direct their labour. This may
Chapter 51 | The Employment Relationship 465
F I G U R E 51.1 Dimensions of the employment relationship
Parties
• Managers
• Employees
• Employees’ representative
Operation Substance
• Level Individual:
• Process • Job
• Style • Reward
The employment • Career
relationship • Communications
• Culture
Collective:
• Joint agreements
Structure • Joint machinery
• Formal rules/procedures
• Informal understandings,
expectations,
assumptions
SOURCE Kessler and Undy (1996)
relate to the range of tasks that employees are willing An important point to remember about the em-
to undertake at management’s direction, but it may ployment relationship is that generally, it is the em-
also include the priority to be accorded to different ployer who has the power to dictate the contractual
types of work, and the willingness to vary working terms unless they have been fixed by collective bar-
time according to management’s requirements. gaining. Individuals, except when they are in
Depending on how large this zone is, and how its demand, have little scope to vary the terms of the
boundaries are drawn, it provides organizations with
contract imposed upon them by employers.
varying degrees of flexibility to respond to changing
Inevitably there are conflicts of interest, between
production and market requirements.
employers who want to control compliant and
Marsden and Canibano (2010) referred to this as high-performing employees, and the employees
the ‘frontier of control’. who want to maintain their rights to ‘a fair day’s
The employment relationship exists at different pay for a fair day’s work’.
levels in the organization (management to employ-
ees generally, and managers to individual employees
and their representatives or groups of people). The Labour process theory
operation of the relationship will also be affected by
processes such as communications and consulta- and the employment
tion, and by the management style prevailing
throughout the organization or adopted by indi-
relationship
vidual managers.
The employment relationship is sometimes ex-
The contractual terms in the employment rela-
plained by labour process theory. In its original
tionship are defined in the written particulars that
form, as defined by Braverman (1974), this stated
all employees are entitled to receive on starting
that the application of modern management tech-
work (further details in Chapter 60). A staff hand-
niques, in combination with mechanization and au-
book containing details of the policies and proce-
tomation, secures the subordination of labour, and
dures that affect employees is a useful way of
deskilling of work in the office as well as the shop
conveying information on the employment relation-
floor. Thompson and Harley (2007: 149) noted that
ship as well as terms and conditions of employment.
‘The notion of the workplace as contested terrain is the culture of the organization, the prevailing man-
a central motif of labour process theory.’ They agement style, the values (espoused and practised) of
pointed out that what is happening is a process of top management, the existence or non-existence of a
‘capitalizing on humanity’ rather than investing in climate of trust, day-to-day interactions between em-
human capital. However, they did comment that ‘In ployees and line managers, and the HR policies and
the employment relationship there will always be practices of the business.
(actual and potential) conflict, but simultaneously The latter are particularly important. The nature
there will be shared interests’ (page 156). And they of the employment relationship is strongly influenced
suggested that ‘In an environment where employee by HR actions. These cover all aspects of HRM, es-
skills and commitment are central to organizational pecially how people are treated in such areas as re-
success, it is precisely by giving more that organiza- cruitment, performance reviews, promotion, career
tions will gain more’ (page 149). development, reward, involvement and participa-
tion, grievance handling, disciplinary procedures and
redundancy. A significant impact on the employment
Employment relationship relationship is also made by the ways in which peo-
ple are required to carry out their work (including
contracts flexibility and multiskilling), how performance ex-
pectations are expressed and communicated, and
Two types of contracts defining the employment re- how people are managed. HR specialists can contrib-
lationship have been distinguished by Rousseau and ute to the development of a positive and productive
Wade-Benzoni (1994), namely transactional con- employment relationship in the following ways:
tracts and relational contracts. Transactional con-
tracts are formal contracts that have well-described ●● during recruitment interviews – presenting
terms of exchange between employer and employ- the unfavourable as well as the favourable
ees, often expressed financially. They contain speci- aspects of a job in a ‘realistic job preview’;
fied performance requirements. Relational contracts ●● in induction (onboarding) programmes –
are largely informal contracts with more abstract communicating to new starters the
terms and refer to an open-ended membership of organization’s HR policies and procedures
the organization. Performance requirements at- and its core values, indicating to them the
tached to this continuing membership are incom- standards of performance expected in such
plete or ambiguous. There is also the psychological areas as quality and customer service, and
contract, which is implied rather than stated. spelling out requirements for flexibility;
More specifically, the employment relationship is ●● by encouraging the maximum amount of
governed by express agreements between employers contact between managers and team leaders
and employees. These consist of written contracts of and their team members – to achieve mutual
employment but they may be conveyed orally at an understanding of expectations and to
interview or even set out in an advertisement. In ad- provide a means of two-way
dition, express terms may be included in collective communications;
agreements or works rules. The employment rela-
●● by adopting a general policy of
tionship is also affected by the terms implied by
transparency – ensuring that on all matters
common law and statutory requirements.
affecting them, employees know what is
happening, why it is happening and the
impact it will make on their employment,
Managing the employment development and prospects.
relationship These approaches to managing the employment
relationship cover all aspects of people manage-

The dynamic and often nebulous nature of the ment. But as the CIPD (2020) pointed out, they also
employment relationship increases the difficulty of raise questions about job security and potential
managing it. The problem is compounded by the inequalities due to power imbalances between the
multiplicity of factors that influence the contract – organization and its workforce and between
Chapter 51 | The Employment Relationship 467
ifferent employee groups. Some workers with

d Building trust
in-demand skills are in a better position to negotiate
on their terms of work, whereas those with less in- As Thompson (1998: 69) noted, trust is an outcome
demand skills may be forced into work that is un- of good management. He also commented that a
stable and low-skilled with fluctuating working pat- number of writers have generally concluded that
terns, demanding workloads, unfair pay and few trust is ‘not something that can, or should, be di-
employee benefits. rectly managed’. He cited Sako (1994) who wrote
The effective management of the relationship that ‘Trust is a cultural norm which can rarely be
means ensuring that values are upheld and that a created intentionally because attempts to create
transparent, consistent and fair approach is adopted trust in a calculative manner would destroy the
in dealing with all aspects of employment. It is also effective basis of trust.’
important to remember that perhaps the best way In the end, trust is about relationships and mutual
of improving the employment relationship is to de- support. Trust is created and maintained by manage-
velop a climate of trust in the organization. rial behaviour and by the development of better mu-
tual understanding of expectations – employers of
employees, and employees of employers. The sort of
Developing a climate behaviour that is most likely to engender trust is
when management is honest with people, keeps its
of trust word (delivers the deal) and practises what it
preaches. Organizations that espouse core values
As explained by Alfes et al (2012: 412): (‘people are our greatest asset’) and then proceed to
Trust in one’s employer relates to an employee’s
ignore them will be low-trust organizations. More
belief about the likelihood that the employer’s specifically, trust will be developed if management
future actions will be beneficial, favourable or at acts fairly, equitably and consistently; if a policy of
least not harmful to an employee’s own interest, transparency is implemented; if intentions and the
and is therefore a crucial factor influencing an reasons for proposals or decisions are communicated
employee’s behaviour. both to employees generally and to individuals; if
there is full involvement in developing HR processes;
A climate of trust in the shape of a high-trust or- and if mutual expectations are agreed through per-
ganization is an essential ingredient in a positive formance management. Leaders have a crucial role.
employment relationship. Trust should be regarded As O’Toole and Bennis (2009: 54) commented: ‘We
as social capital – the fund of goodwill in any social won’t be able to rebuild trust in institutions until
group that enables people within it to collaborate leaders learn how to communicate honestly – and
with one another. create organizations where that’s the norm.’
Key learning points
The employment relationship defined to the employer in return for which the employer
provides the employee with a salary or a wage. The
The employment relationship describes how employer’s obligations also include the duty to provide
employers and employees work together and relate to a safe workplace, to act in good faith towards the
one another. employee and not to act in such a way as to
undermine the trust and confidence of the employment
Basis of the employment relationship relationship. The employee has corresponding
obligations, which include obedience, competence,
The basis of the employment relationship is an
honesty and loyalty.
undertaking by an employee to provide skill and effort
Employment relationship contracts (including flexibility and multiskilling), how

performance expectations are expressed and
The three types of employment relationship contracts communicated, how work is organized and how
are transactional, relational and psychological. people are managed will also make a significant
impact on the employment relationship.
Managing the employment relationship
The nature of the employment relationship is strongly Developing a high-trust organization
influenced by HR actions. These cover all aspects of A high-trust organization exists when management is
HRM. Of particular importance are how people are honest with people, keeps its word (delivers the deal)
treated in such areas as recruitment, performance and practises what it preaches. Trust is created and
reviews, promotion, career development, reward, maintained by managerial behaviour and by the
involvement and participation, grievance handling, development of better mutual understanding of
disciplinary procedures and redundancy. The ways in expectations – employers of employees, and
which people are required to carry out their work employees of employers.
References
Alfes, K, Shantz, A and Truss, C (2012) The link O’Toole, J and Bennis, W (2009) What’s needed next:
between perceived HRM practices, performance a culture of candor, Harvard Business Review,
and wellbeing: the moderating effect of trust in the June, pp 54–61
employer, Human Resource Management Journal, Rousseau, D M and Wade-Benzoni, K A (1994)
22 (4), pp 409–27 Linking strategy and human resource practices:
Braverman, H (1974) Labour and Monopoly Capital, how employee and customer contracts are created,
New York, Monthly Review Press Human Resource Management, 33 (3), pp 463–89
Chartered Institute of Personnel and Development Rubery, J, Earnshaw, J, Marchington, M, Cooke, F L
(2020) People Profession 2030, London, CIPD and Vincent, S (2002) Changing organizational
Kessler, S and Undy, R (1996) The New Employment forms and the employment relationship, Journal of
Relationship: Examining the psychological Management Studies, 39 (5), pp 645–72
contract, London, IPM Sako, M (1994) The informational requirement of
Marsden, D (2007) Individual employee voice: trust in supplier relations: evidence from Japan,
renegotiation and performance management in the UK and the USA, unpublished
public services, International Journal of Human Thompson, M (1998) Trust and reward, in (eds) S
Resource Management, 18 (7), pp 1263–78 Perkins and St J Sandringham, Trust, Motivation
Marsden, D and Canibano, A (2010) An economic and Commitment: A reader, Faringdon, Strategic
perspective on employee participation, in (eds) A Remuneration Research Centre, pp 66–71
Wilkinson, P J Gollan, M Marchington and D Thompson, P and Harley, B (2007) HRM and the
Lewins, The Oxford Handbook of Participation in worker: labour process perspectives, in (eds) P
Organizations, Oxford, Oxford University Press, Boxall, J Purcell and P Wright, Oxford Handbook
pp 131–63 of Human Resource Management, Oxford,
Oxford University Press, pp 147–65
469
52
The psychological
contract
contracts represent how people interpret promises
Introduction and commitments, both parties in the same
employment relationship (employer and employee)
The concept of the psychological contract provides can have different views regarding specific terms.
an explanation of how employers work together
and guidance on how this relationship can be im- Within organizations, as Katz and Kahn (1966)
proved. This chapter explains its significance and pointed out, every role is basically a set of behav-
describes how a positive contract can be developed. ioural expectations. These expectations are often
implicit – they are not defined in the employment
contract. Basic models of motivation such as expec-
The psychological contract tancy theory (Vroom, 1964) maintain that employ-
ees behave in ways that they expect will produce
defined positive outcomes. But they do not necessarily
know what to expect, although they are likely to
A psychological contract is a set of unwritten expec- believe that they should be treated fairly as human
tations that exist between individual employees and beings, be provided with work that uses their abili-
their employers. It underpins the employment rela- ties, be rewarded equitably in accordance with their
tionship. As Guest (2007: 133) explained, it is con- contribution, be able to display competence, have
cerned with ‘The perceptions of both parties to the opportunities for further growth, know what is re-
employment relationship, organization and individ- quired of them and be given feedback (preferably
ual, of the reciprocal promises and obligations im- positive) on how they are doing. Employers may
plied in that relationship.’ It is a system of beliefs expect employees to do their best on behalf of the
that encompasses the actions employees believe are organization – ‘to put themselves out’ – to be fully
expected of them and what response they expect in engaged and committed to its values, to be compli-
return from their employer, and, reciprocally, the ac- ant and loyal, and to enhance the image of the or-
tions employers believe are expected of them and ganization with its customers and suppliers.
what response they expect in return from their Sometimes these assumptions are justified – often
employees. they are not. Mutual misunderstandings can cause
The following is an expanded definition by friction and stress and lead to recriminations and
Rousseau and Wade-Benzoni (1994: 464): poor performance, or eventually to a termination of
the employment relationship. As observed by Guest
Psychological contracts refer to beliefs that
and Conway (1998: ix), the psychological contract
individuals hold regarding promises made,
lacks many of the characteristics of the formal con-
accepted and relied upon between themselves
and another. (In the case of organizations, these
tract: ‘It is not generally written down, it is some-
parties include an employee, client, manager, and/ what blurred at the edges, and it cannot be enforced
or organization as a whole.) Because psychological in a court or tribunal.’
The CIPD (2012: 16) suggested that to build trust

The significance of the leaders need to tell the truth and be willing to admit
psychological contract mistakes. They must share information openly, sup-
port transparency and seek information from mul-
The concept of the psychological contract high- tiple sources, not merely relying on what they are
lights the fact that employee/employer expectations told by their close advisers. Finally, and impor-
take the form of unarticulated assumptions. tantly, they should be candid in their dealings with
Disappointments on the part of management as followers.
well as employees are therefore inevitable. These From the employer’s point of view, the psycho-
disappointments can, however, be alleviated if man- logical contract covers such aspects of the employ-
agements appreciate that one of their key roles is to ment relationship as competence, effort, compliance,
manage expectations, which means clarifying what commitment and loyalty. The research conducted by
they believe employees should achieve, the compe- Guest and Conway (1998: 22) led to the following
tencies they should possess and the values they conclusion:
should uphold. This is a matter not just of articulat- The management of the psychological contract
ing and stipulating these requirements but of dis- is a core task of management and acknowledged
cussing and agreeing them with individuals and as such by many senior HR and employment
teams. relations managers, and shows that it has a
positive association with a range of outcomes
within the employment relationship and is a useful
The psychological contract way of conceptualizing that relationship.
and the employment

relationship How psychological contracts
develop
As described by Guest et al (1996), the psychologi-
cal contract may provide some indication of the Psychological contracts are not developed by means
answers to the two fundamental employment rela- of a single transaction; they evolve over time and
tionship questions that individuals pose: ‘what can I can be multifaceted. There are many contract mak-
reasonably expect from the organization?’ and ers who exert influence over the whole duration of
‘what should I reasonably be expected to contribute an employee’s involvement with an organization.
in return?’ But it is unlikely that the psychological This process was explained by Spindler (1994: 326)
contract, and therefore the employment relation- as follows:
ship, will ever be fully understood by either party.
The aspects of the employment relationship cov- Every day we create relationships by means
other than formal contracts... As individuals
ered by the psychological contract will include,
form relationships they necessarily bring
from the employees’ point of view:
their accumulated experience and developed
●● how they are treated in terms of fairness, personalities with them. In ways unknown to them
equity and consistency; what they expect from the relationship reflects
the sum total of their conscious and unconscious
●● security of employment;
learning to date.
●● scope to demonstrate competence;
●● career expectations and the opportunity to
develop skills; The problem with
involvement and influence;
●●
●● trust in the management of the organization

psychological contracts
to keep their promises. The problem with psychological contracts is that
employees are often unclear about what they want
Chapter 52 | The Psychological Contract 471
from the organization or what they can contribute 2 Communicate and agree expectations as part
to it. Some employers are equally unclear about of the continuing dialogue implicit in good
what they expect from their employees. performance management practices.
Because of these factors, and because a psycho- 3 Adopt a policy of transparency on company
logical contract is essentially implicit, it is likely to policies and procedures and on
develop in an unplanned way with unforeseen con- management’s proposals and decisions as
sequences. Anything that management does or is they affect people.
perceived as doing that affects the interests of em-
4 Generally treat people as stakeholders,
ployees will modify the psychological contract.
relying on consensus and cooperation rather
Similarly, the actual or perceived behaviour of em-
than control and coercion.
ployees, individually or collectively, will affect an
employer’s concept of the contract. Guest and Conway (2002), following their research,
emphasized the importance of communications in
shaping the psychological contract, especially at the
Developing and maintaining recruitment and induction stage when promises and
commitments can be made by employers on such
a positive psychological matters as interesting work, learning and develop-
contract ment opportunities, not making unreasonable de-
mands on employees, feedback on performance,
fair treatment, work–life balance, a reasonable de-
As Guest et al (1996: v) explained, ‘A positive psy-
gree of security and a safe working environment. At
chological contract is worth taking seriously be-
this stage it is advisable to provide what is called a
cause it is strongly linked to higher commitment to
‘realistic job preview’, which means communicat-
the organization, higher employee satisfaction and
ing to candidates any special demands that will be
better employment relations. Again, this reinforces
made on them in the job for which they are apply-
the benefits of pursuing a set of progressive HRM
ing, such as the standards they will be expected to
practices.’ They also emphasized the importance of
achieve, the working conditions, the hours they
a high-involvement climate and suggested in par-
may have to work, the travelling they have to do
ticular that HRM practices such as the provision of
and any requirement for mobility in the UK or
opportunities for learning, training and develop-
abroad.
ment, focus on job security, promotion and careers,
Guest and Conway concluded that following
minimizing status differentials, fair reward systems
the recruitment and induction stage, communica-
and comprehensive communication and involve-
tions are most effective if they are personal and
ment processes will all contribute to a positive psy-
job-related. Top-down communications are less
chological contract. The steps required to develop
important. They also stressed that a positive psy-
such a contract are:
chological contract can only be achieved if man-
1 Define expectations during recruitment and agement keeps its word – if it does not breach the
induction programmes. contract.
Key learning points
The psychological contract defined expected of them and the response they expect in
return from their employer, and, reciprocally, the
A psychological contract is a set of unwritten actions employers believe are expected of them and
expectations that exist between individual employees the response they expect in return from their
and their employers. It is a system of beliefs employees.
encompassing the actions employees believe are
The significance of the psychological From the employer’s point of view, the psychological
contract covers such aspects of the employment
contract relationship as competence, effort, compliance,
The concept of the psychological contract highlights commitment and loyalty.
the fact that employee/employer expectations take the
form of unarticulated assumptions. Disappointments How psychological contracts develop
on the part of management as well as employees may
therefore be inevitable. Psychological contracts are not developed by means
of a single transaction; they evolve over time and can
be multifaceted. The steps required to develop a
The psychological contract and the positive psychological contract are:
employment relationship
1 Define expectations during recruitment and
The aspects of the employment relationship covered induction programmes.
by the psychological contract will include, from the
employees’ point of view: 2 Communicate and agree expectations as part of
the continuing dialogue implicit in good
●● how they are treated in terms of fairness, equity performance management practices.
and consistency;
3 Adopt a policy of transparency on company
●● security of employment; policies and procedures and on management’s
●● scope to demonstrate competence; proposals and decisions as they affect people.
●● career expectations and the opportunity to develop 4 Generally treat people as stakeholders, relying on
skills; consensus and cooperation rather than control and
coercion.
●● involvement and influence;
●● trust in the management of the organization to
keep their promises.
References
Chartered Institute of Personnel and Development Guest, D E, Conway, N and Briner, T (1996) The
(2012) Where Has all the Trust Gone? http://www. State of the Psychological Contract in
cipd.co.uk/hr-resources/research/where-trust-gone. Employment, London, IPD
aspx (archived at https://perma.cc/M2AC-CNZC) Katz, D and Kahn, R (1966) The Social Psychology of
Guest, D (2007) HRM and the worker: towards a Organizations, New York, John Wiley
new psychological contract, in (eds) P Boxall, Rousseau, D M and Wade-Benzoni, K A (1994)
J Purcell and P Wright, Oxford Handbook of Linking strategy and human resource practices:
Human Resource Management, Oxford, Oxford how employee and customer contracts are created,
University Press, pp 128–46 Human Resource Management, 33 (3), pp 463–89
Guest, D E and Conway, N (1998) Fairness at Work Spindler, G S (1994) Psychological contracts in the
and the Psychological Contract, London, IPD workplace: a lawyer’s view, Human Resource
Guest, D E and Conway, N (2002) Communicating Management, 33 (3), pp 325–33
the psychological contract: an employee Vroom, V (1964) Work and Motivation, New York,
perspective, Human Resource Management Wiley
Journal, 12 (2), pp 22–39
473
53
The practice of
industrial relations
facturing firms, the rise in the service industries
Introduction and the growing numbers of part-time workers.
Trade unions remain strong in the public sector.
Industrial relations is concerned with how
managements and trade unions relate to one an-
other in concluding collective agreements, collective
bargaining, disputes resolution and dealing with is-
Union recognition
sues concerning the employment relationship and
An employer fully recognizes a union for the pur-
the working environment. This chapter begins with
poses of collective bargaining when pay and condi-
an analysis of trade union membership and the fac-
tions of employment are jointly agreed between
tors affecting union recognition. It continues with a
management and trade unions. Partial recognition
description of the formal procedures and arrange-
takes place when employers restrict trade unions to
ments that take place when unions are recognized.
representing their members on issues arising from
But industrial relations are also conducted on a
employment (representational rights). Full recogni-
daily informal and semi-formal basis, and this is
tion provides unions with negotiating and represen-
considered in the last section. The employment rela-
tational rights; partial recognition only gives unions
tions processes of providing employees with a voice
representational rights. The following discussion of
and communicating with employees, which can take
union recognition is only concerned with the more
place in either a unionized or a non-unionized envi-
common practice of full recognition. Unions can be
ronment, are covered in the next two chapters.
derecognized although this does not happen often.
Trade union membership Factors influencing recognition or

The Department for Business, Energy and Industrial derecognition
Strategy (2021) reported that trade union member- Employers in the private sector are in a strong posi-
ship in the UK in 2020 was 6.56 million. Of these, tion now to choose whether they recognize a union
4 million were in the public sector and 2.56 million or not, which union they want to recognize and the
in the private sector. The numbers in the private sec- terms on which they would grant recognition: for
tor continue to fall (by 110,00 in the year prior to example, a single union and a no-strike agreement.
April 2020). Union density (ie the proportion of When setting up on greenfield sites employers
those in employment who are union members) was may refuse to recognize unions. Alternatively, they
23.7 per cent of employees. can hold ‘beauty contests’ to select the union they
Overall union membership has declined signifi- prefer to work with, one that will be prepared to
cantly in the UK from its peak of some 12 million reach an agreement in line with what management
in 1979. This has been largely in the private sector wants.
for structural reasons – the demise of large manu-
An organization deciding whether or not to Above all, collective bargaining is a power

recognize a union will take some or all of the fol- relationship that takes the form of a measure of
lowing factors into account: power-sharing between management and trade un-
ions (although recently the balance of power has
●● the perceived value or lack of value of having
shifted markedly in the direction of management in
a process for regulating collective bargaining;
the private sector). Bargaining power is the ability
●● if there is an existing union, the extent to to induce the other side to make a decision or take
which management has freedom to manage; a course of action that it would otherwise be un-
for example, to change working willing to make. Each side is involved in assessing
arrangements and introduce flexible working the bargaining preferences and bargaining power of
or multiskilling; the other side. The process of collective bargaining
●● the history of relationships with the existing as described below takes account of the concept of
union; mutual gains and takes different forms. Dundon
●● the proportion of employees who are union et al (2017: 80, 81) made the following interesting
members and the degree to which they points about collective bargaining:
believe they need the protection that their The relevance of collective bargaining lies in
union provides; a decision on derecognition accepting that divergent interests and concerns
has to weigh the extent to which its need to be ‘worked out’. Employers and employees
perceived advantages outweigh the should negotiate the terms on which cooperation
disadvantages of upsetting the status quo; is provided. Negotiations involve not just the
●● any preferences as to a particular union, art of persuasion and force of argument but the
because of its reputation or the extent to effective threat of power and sanction… Unions
and collective bargaining need to be packaged as a
which it is believed that a satisfactory
sort of cooperative adjunct to the employers’ quest
relationship can be maintained.
for increased profit, competitiveness and effective
In considering recognition arrangements employers management of change.
may also consider entering into a ‘single union deal’,
ie recognizing only one union.
Forms of collective bargaining
Collective bargaining Walton and McKersie (1965) made the distinction
between distributive bargaining, defined as the
Relationships with unions involve collective bar- complex system of activities instrumental to the at-
gaining – the establishment by negotiation and tainment of one party’s goals when they are in basic
discussion of agreements on matters of mutual con- conflict with those of the other party, and integra-
cern to employers and unions covering the tive bargaining, defined as the system of activities
employment relationship and terms and conditions that are not in fundamental conflict with those of
of employment. Collective bargaining is a joint reg- the other party and which therefore can be inte-
ulating process, dealing with the regulation of man- grated to some degree. Wilkinson et al (2014: 740–
agement in its relationships with work people as 41) explained the function of distributive bargain-
well as the regulation of conditions of employment. ing as follows:
It was described by Flanders (1970) as a social pro- Distributive bargaining has the function of
cess that continually turns disagreements into resolving pure conflicts of interests and aims to
agreements in an orderly fashion. allocate fixed sums of resources (dividing the pie)
Collective bargaining can also be seen as a po- and hence often has a ‘zero-sum’, or conflictual,
litical relationship in which trade unions, as outcome. Tactics centre on developing the
Chamberlain and Kuhn (1965) noted, share with negotiators relative power, convincing the other
managements industrial sovereignty or power over party of the first party’s power and resolution,
those who are governed – the employees. The sover- modifying the other party’s expectations, closely
eignty is held jointly by management and union in guarding information and preventing the other
the collective bargaining process. side from using the same tactics. Integrative
Chapter 53 | The Practice of Industrial Relations 475
bargaining, by contrast, aims to identify common ment of industrial disputes. Their purpose is to reg-
or complementary interests and fosters a problem- ulate the behaviour of the parties to the agreement,
solving collaboration between both parties. The but they are not legally enforceable and the degree
aim is to work towards achieving joint gains to which they are followed depends on the goodwill
(expanding the size of the pie) and identifying of both parties or the balance of power between
opportunities for ‘win-win’ outcomes. them. Like substantive agreements, procedural
Another analysis of collective bargaining forms was agreements are seldom broken and, if so, never
made by Chamberlain and Kuhn (1965), who dis- lightly – the basic presumption of collective bar-
tinguished between conjunctive bargaining in which gaining is that both parties will honour agreements
both parties are seeking to reach agreement, and that have been made freely between them.
cooperative bargaining, in which it is recognized The scope and content of such agreements vary
that each party is dependent on the other and can widely. Some provide for full negotiating rights but
achieve its objectives more effectively if it wins the others allow representational rights only. Most have
support of the other. provisions for dispute resolution as described below.
Collective agreements Partnership agreements

In partnership agreements both parties (manage-
The formal outcomes of collective bargaining are ment and the trade union) agree to collaborate to
agreements between management and unions deal- their mutual advantage and to achieve a climate of
ing with terms and conditions of employment or more cooperative and therefore less adversarial in-
other aspects of the relationships between the two dustrial relations. Management may offer job secu-
parties. The different types of agreements are sub- rity linked to productivity and the union may agree
stantive agreements, procedural agreements and to more flexible working. The perceived benefits of
partnership agreements. partnership agreements are that management and
unions will work together in a spirit of cooperation
and mutuality. This is clearly preferable to an adver-
Substantive agreements sarial relationship. Glover et al (2014) noted that
Substantive agreements set out agreed terms and the distinction between employee gains from part-
conditions of employment covering pay, allowances nership compared with gains from traditional col-
and overtime, working hours and holidays. They lective bargaining is that employees will come to
may be single union deals that provide for one enjoy a higher level of influence in day-to-day deci-
union to represent all employees. In line with the sion-making processes. Partnership agreements
development in the 1990s of the so-called ‘new were described by Freeman and Medoff (1984:
style’ agreements, they might include a no-strike 165) as ‘management and unions working together
clause to the effect that issues should be resolved to produce a bigger pie as well as fighting over the
without recourse to industrial action. They might size of their slices’.
also provide for agreements on flexibility arrange- Guest and Peccei (2001) described partnership
ments and the achievement of single status (ie no as a hybrid that draws on both pluralist and unita-
differences in basic conditions of employment) or rist perspectives of employment relations. They
the harmonization of terms and conditions by, for suggested that the role of partnership within a mu-
example, placing all employees in the same grade tual gains model was to combine integrative sys-
and pay structure. tems of employee representation with direct forms
of employee participation. They also argued that
the distinctive feature of the partnership process
Procedural agreements was the nurturing of trust between managers,
workers and their representatives. Guest et al
Procedural agreements set out the methods to be (2008: 128) later noted that an essential condition
used and the procedures or rules to be followed in for successful partnership is not just the establish-
the processes of collective bargaining and the settlement of high-trust relationships between the ‘cham-
pions of partnership among management and em- Conciliation

ployee representatives’ but also the creation of
‘positive attitudes towards, and enthusiasm for the Conciliation is the process of reconciling disagree-
principles and practices associated with partnering parties. It is carried out by a third party in the
ship among a wider section of management and the UK, often an ACAS conciliation officer, who acts in
workforce’. Glover et al (2014) stated that the dis- effect as a go-between, attempting to get the em-
tinction between employee gains from partnership ployer and trade union representatives to agree on
compared with gains from traditional collective terms. Conciliators can only help the parties to
bargaining is that employees will come to enjoy a come to an agreement. They do not make recom-
higher level of influence in day-to-day decision- mendations on what that agreement should be: that
making processes. is the role of an arbitrator or a mediator.
But research findings on partnership have been The incentives to seek conciliation are the hope
mixed. Guest and Peccei (2001) found that what that the conciliator can rebuild bridges and the be-
they called ‘constrained mutuality’ meant that de- lief that a determined, if last minute, search for
spite employees enjoying some benefits, the balance agreement is better than confrontation, even if both
of advantage was likely to be skewed towards em- parties have to compromise.
ployers. Analysis by Guest et al (2008) of evidence
from the Workplace Employee Relations Survey
suggested that partnership practice remains rela- Arbitration
tively undeveloped and that it is only weakly related Arbitration is the process of settling disputes by get-
to trust between management and employee repre- ting a third party, the arbitrator, to review and
sentatives and to employees’ trust in management. discuss the negotiating stances of the disagreeing
They observed that direct forms of participation parties and make a recommendation on the terms
generally have a more positive association with of settlement, which is binding on both parties, who
trust than representative forms. therefore lose control over the settlement of their
In contrast, data gathered by Roche (2009) from differences. The arbitrator is impartial and the role
a large representative sample of employees in is often undertaken in the UK by ACAS officials,
Ireland showed that some mutual gains are associ- although it is sometimes carried out by industrial
ated with partnership. Employees gained from en- relations academics. Arbitration is the means of last
hancement to the intrinsic aspects of their work, eg resort for reaching a settlement, where disputes can-
autonomy, but they did not gain more security or not be resolved in any other way. Procedure agree-
pay and did not seem to be more willing to accept ments may provide for either side unilaterally to
change. Employers gained more commitment, an invoke arbitration, in which case the decision of the
improved climate of employee relations and better arbitrator is not binding on both parties. The pro-
supervisor/employee relationships. Unions gained cess of arbitration in its fullest sense, however, only
influence and more members. takes place at the request of both parties, who agree
in advance to accept the arbitrator’s findings. ACAS
will not act as an arbitrator unless the consent of
Dispute resolution both parties is obtained, conciliation is considered,
any agreed procedures have been used to the full
The aim of dispute resolution is to resolve differ- and a failure to agree has been recorded.
ences between management and a trade union. The notion of ‘pendulum’ or ‘final offer’ arbitra-
Grievance or negotiating procedures provide for tion emerged in the 1980s. It increases the rigidity
various stages of ‘failure to agree’ and often include of the arbitration process by allowing an arbitrator
a clause providing for some method of reaching no choice but to recommend either the union’s or
agreement in the event of the procedure being ex- the employer’s final offer – there is no middle
hausted. The types of dispute resolution are concili- ground. The aim is to get the parties to avoid adopt-
ation, arbitration and mediation. ing extreme positions. But it has not been popular.
Chapter 53 | The Practice of Industrial Relations 477
Mediation issue in contact with a union representative, an

individual employee or a group of employees. The
Mediation takes place when a third party (often issue may concern methods of work, allocation of
ACAS) helps the employer and the union by making work and overtime, working conditions, health and
recommendations that they are not, however, bound safety, achieving output and quality targets and
to accept. It is a cheap and informal alternative to standards, discipline, or pay. A payment-by-results
an employment tribunal and offers a quick resolu- scheme can generate continuous arguments about
tion to problems, privacy and confidentiality. times, standards, re-timings, payments for waiting
time or for carrying out new tasks and fluctuations
or reductions in earnings because of alleged mana-
Informal employee relations gerial inefficiency.
Line managers and supervisors handle day-to-
processes day grievances arising from any of these issues and
are expected to resolve them to the satisfaction of
The formal processes of union recognition, collec- all parties without involving a formal grievance
tive bargaining and dispute resolution described procedure or allowing the issue to become a formal
above provide the framework for industrial rela- dispute. The thrust for devolving responsibility to
tions in so far as this is concerned with agreeing line managers for HR matters has increased the
terms and conditions of employment and working onus on them to handle employee relations effec-
arrangements and settling disputes. But within or tively. A good team leader will establish a working
outside that framework, informal employee rela- relationship with the union representative of his or
tions processes are taking place continuously. her staff that will enable issues arising on the shop
Informal employee relationships happen when- floor or with individual employees to be settled am-
ever a line manager or team leader is handling an icably before they become a problem.
Key learning points
Union recognition Mutual gains

An employer fully recognizes a union for the purposes The mutual gains perspective indicates that
of collective bargaining when pay and conditions of organizations should pursue employment policies
employment are jointly agreed between management that produce benefits for both employees and
and trade unions. Partial recognition is when themselves.
employers restrict trade unions to representing their
members on issues arising from employment. Disputes resolution
The processes of dispute resolution are conciliation,
Collective bargaining arbitration and mediation.
Collective bargaining is a joint regulating process,
establishing by negotiation and discussion agreements Informal industrial relations
on matters of mutual concern to employers and unions
covering the employment relationship and terms and Informal industrial relations processes take place
conditions of employment. whenever a line manager or team leader is handling
The formal outcomes of collective bargaining are an issue in contact with an individual employee, a
substantive, procedural and partnership agreements group of employees or an employee representative.
and dispute resolution procedures.
References
Chamberlain, N W and Kuhn, J (1965) Collective Employment Relations Survey, Industrial Relations
Bargaining, New York, McGraw-Hill Journal, 39 (2), pp 124–52
Department for Business, Energy and Industrial Guest, D and Peccei, R (2001) Partnership at work:
Strategy (2021), Trade Union Membership 2020, mutuality and the balance of advantage, British
London, DBPIS Journal of Industrial Relations, 39 (2), pp 207–36
Dundon, T, Cullinane, N and Wilkinson, A (2017) A Roche, W K (2009) Who gains from workforce
Very Short, Fairly Interesting and Reasonably partnership? International Journal of Human
Cheap Book About Employment Relations, Resource Management, 20 (1), pp 1–33
London, Sage Walton, R E and McKersie, R B (1965) Behavioural
Flanders, A (1970) Management and Unions: The Theory of Labour Negotiations, New York,
theory and reform of industrial relations, London, McGraw-Hill
Faber and Faber Wilkinson, A, Dundon, T, Donaghey, T and
Freeman, R and Medoff, J (1984) What Do Unions Townsend, K (2014) Partnership, collaboration
Do? New York, Basic Books and mutual gains: evaluating context, interests and
Glover, L, Tregaskis, O and Butler, P (2014) Mutual legitimacy, International Journal of Human
gains? The workers’ verdict: a longitudinal study, Resource Management, 25, (6), pp 737–47
The International Journal of Human Resource Workplace Employee Relations Survey (2011).
Management, 25 (6), pp 895–914 https://www.gov.uk/government/publications/
Guest, D E, Brown, W, Peccei, R and Huxley, K the-2011-workplace-employment-relations-
(2008) Does partnership at work increase trust? study-wers (archived at https://perma.cc/69FH-
An analysis based on the 2004 Workplace XFKF)
479
54
Employee voice
sufficient in itself for voice to be a means of
Introduction employee self-determination.’
The CIPD (2019: 2) research showed that voice
Employee voice is ‘a means by which employees’ in- and job satisfaction are strongly linked. The r esearch
dependent, and often collective, concerns are articu- provided the basis for the following definition of
lated at work.’ (Dundon et al, 2017: 121). The CIPD the purposes of voice:
(2019: 3) defined it as ‘the ability of employees to
express their views, opinions, concerns and sugges- Two potential purposes of voice are highlighted
tions, and for these efforts to influence decisions at in the management literature. First, the
work.’ ‘organisational voice’ perspective focuses on
The chapter covers in turn the need for voice, the the positive benefits that voice can bring to
degrees of voice and the forms of direct and indirect the organisation, such as higher innovation, a
voice. more engaged workforce and lower absenteeism
Initiatives such as suggestion schemes, for
example, enable this type of voice by allowing
The need for employee voice organisations to benefit from employees’ ideas.
A second purpose of voice flows from the so-
called social justice perspective. According to
Boxall and Purcell (2016: 147) observed that em- this view, voice is a fundamental individual right
ployee voice institutions are important for reasons required for work to have meaning, allowing
of social legitimacy. The importance of employee worker involvement in decision-making through
voice was emphasized by Woodfield (2022: 1) as deepening industrial democracy
follows:
But Boxall and Purcell (2016: 143) observed that
Capturing employee voice is a critical component ‘the quality of employee voice is extremely variable’
of modern organisational life that is only set and Dundon et al (2017: 100) argued that
to grow as employers navigate the changing
expectations of employees. What employees say, Most businesses (at least in the private sector) are
as well as how their voice is enabled, listened and designed to produce profits and wealth for the
responded to, is integral to how well organizations firm’s owners, not to provide employee voice. This
function. harsh reality in turn is echoed in the sentiments
of employers who simply view workers as a
Employee voice is an expression of the desire of disposable means to a profitable end and see
workers to have their own say over matters that af- worker involvement, participation and voice as
fect their working lives (Dundon and Rollinson, irksome and unnecessary.
2011). As explained by Boxall and Purcell (2003:
164), employee voice is important because ‘it was
necessary to recognize a plurality of interests and
interest groups which would need to learn to live Degrees of employee voice
together and resolve their differences without the
use of force.’ Budd (2004: 23) asserted that ‘voice There are degrees to which employee voice can be
does not need to fulfil a constructive purpose; it is expressed and to which managements are prepared
to give up their prerogative to command and c ontrol
F I G U R E 54.1 Stages of employee voice
Management joins
with employees in
Degree to which making decisions
management prerogative
is preserved
Management consults
with employees before
making final decision
Management
communicates
decisions to
employees Degree to which
employees have a voice
Management decides
unilaterally
as shown in Figure 54.1. At one end of the scale, gathered together to hear from m anagement and
management makes decisions unilaterally and exer- discuss issues, ‘speak-up’ programmes that provide

cises its full prerogative; at the other end, decisions channels for individual employees to raise points with
are made jointly. Between these extremes there are management and, as described in more detail below,
three intermediate points. The point on this scale at employee surveys, social media, team briefing, sugges-
which arrangement for the expression of employee tion schemes and quality circles. As established by the
voice should or can take place depends on the atti- CIPD (2019) research, the most important channel for
tudes, willingness and enthusiasm of both manage- employee voice is the informal one of day-to-day con-
ment and employees. Management may be reluctant tacts with line managers.
to give up much of its authority except under pres- Managements often prefer to use direct voice
sure from a trade union (which is less likely today, rather than adopt collective approaches through
at least in the private sector). trade unions or works councils (indirect voice).
Where managements and managers are at least
prepared to listen and respond employee voice can
be expressed in two forms: direct voice and indirect Employee surveys
voice.
Employee surveys, also known as attitude or opin-
ion surveys, seek the views of employees on matters
affecting their work and are used extensively by
Direct voice managements to measure levels of engagement, but
they can also address particular issues such as pay
Direct voice takes place when individuals or work and benefits. Pulse surveys measure employee feel-
teams communicate directly to management or indi- ings on a quarterly, monthly or even weekly basis
vidual managers rather than through some form of rather than the more usual annual survey. Surveys
representative body. This may involve informal face-to- typically include about 20 or 30 questions or items.
face communications on matters of interest or concern, Respondents may be invited to indicate the extent
workforce meetings when a number of e mployees are to which they agree or disagree with statements
Chapter 54 | Employee Voice 481
such as ‘My work is very satisfying’. The response able people to ‘speak up’ more readily than in the
can be on a five-point ‘Likert’ scale: ‘Strongly agree’, face-to-face sessions used in traditional speak-up
‘Inclined to agree’, ‘Neither agree nor disagree’, programmes.
‘Inclined to disagree’ and ‘Strongly disagree’. The Communication is no longer one-way or two-
responses are scored 5 for the most positive option, way but multidimensional. This involves ‘crowd-
1 for the most negative option. Totalling these item sourcing’ which encourages groups of people to
scores produces an overall score for, say, engage- exchange knowledge and generate ideas and ena-
ment, which can be used to assess trends as measured bles these to be aggregated so that the organization
by successive surveys or, as part of an HR analytics acquires comprehensive and current information
exercise to assess the impact of an HR innovation about what people are thinking. Internal social
or policy. But there are drawbacks, as the CIPD media platforms can also be used by management
(2013) observed: to hold regular question and answer sessions online,
thus giving scope for immediate responses, which
Because senior managers love the simplicity
are not constrained by the tick boxes in employee
of numbers, there’s a huge over-reliance on
standardised tick boxes, particularly the notorious surveys.
agree/disagree Likert scale. The focus on
quantitative scores means that leaders can often
get distracted by historical, sub-group and external Team briefing
comparisons, rather than focus on the real task Team briefing (sometimes called cascade briefing),
at hand: acting on the results. Moreover, survey as described in more detail in Chapter 55, aims to
reports solely comprising metrics often make it overcome the limited scope for communication
very difficult for leaders to obtain any meaningful through individuals or even joint consultative com-
insight to initiate an effective action plan.
mittees by involving everyone in an organization,
The CIPD also referred to the problem of the time it level by level, in face-to-face meetings to present,
takes surveys to be distributed, completed and ana- receive and discuss information.
lysed. Organizational trends can develop quickly if
left undetected, and no matter how frequently sur-
veys are conducted they will never be able to pro- Suggestion schemes
vide feedback in real time. The CIPD suggested that Suggestion schemes are procedures for submitting
the use of social media as a channel for voice can and evaluating ideas from employees for increased
overcome these objections in that it is immediate productivity or efficiency with tangible recognition
and allows much more scope for employees to for those that have merit. They have traditionally
express their views. used ‘suggestion boxes’ but can now be part of a
social media arrangement. The founder and
Chairman of Richer Sounds has made the following
Social media suggestions on how one should be run based on the
Social media has become such an important fea- successful arrangements in his business (Richer,
ture of many people’s personal lives that employees 2017: 37–41):
are ready to use it in their working lives.
●● the most senior person in the organization
Organizations are responding to this by establish-
should be involved in the scheme;
ing internal social networks (enterprise social net-
works such as those provided by Yammer, Chatter ●● make it easy for people to enter their
and Jive). These function in the same way as social suggestions;
networks like Facebook. They allow people to post ●● answer all the suggestions;
opinions, join in discussions and respond to ques- ●● answer questions quickly;
tions. This has moved voice on from giving em-
●● encourage people to meet in small groups to
ployees a say behind closed doors to enabling them
generate ideas;
to engage in an open forum. Social media can en-
●● reward little and often;
●● measure and publish the results; Relations Survey (Van Wanrooy et al, 2013) estab-
●● use the ideas; lished that the latter existed in 74 per cent of work-
places with between 200 and 999 workers and 80 per
●● remember that suggestions are not just about
cent of workplaces with 1,000 or more employees
saving money – they should cover such
(Adam et al, 2014). But it was also found that there
things as customer service.
was a fall in their use of from 67 per cent in 2004 to
44 per cent in companies with 10,000 or more em-
ployees.
Quality circles For joint consultation to work well it is initially
A quality circle or improvement group is a number necessary first to discuss, define and agree its objec-
of volunteers engaged in related work who meet tives. These should be concerned with tangible and
regularly to discuss and propose ways of improving significant aspects of work and the policies and
working methods under a trained leader. The idea plans of management that affect the interests of em-
was imported from Japan in the 1970s but quality ployees. They should not focus on peripheral mat-
circles were difficult to manage and maintain and ters such as social amenities and such things as the
have largely faded away. quality of the sausages in the canteen, which can
happen. Management must believe in and be seen to
believe in involving employees. It should listen, aim
Indirect voice to achieve consensus decisions and take action ac-
cordingly. Equally, employees should be prepared to
Indirect voice takes place when representatives are listen and respond. But although consultative com-
collectively involved in discussions with manage- mittees can serve a useful purpose, direct involve-
ment, either through joint consultation or their ment with the line manager can be a more effective
trade unions. This can take the form of participa- means of exercising voice.
tion or involvement, although as Wilkinson and
Dundon (2010: 168) noted, ‘Employee participa-
tion, involvement and voice are somewhat elastic Trade unions
terms with considerable width in the range of defi- Trade unions with representational rights can ex-
nitions.’ However, an attempt to define the differ- press the views of their members on terms and con-
ence between them was made by Brewster et al ditions of employment, health and safety, learning
(2007: 1248) as follows: opportunities and any other issues that affect em-
At the most modest level involvement entails ployees. But private sector workers are not very in-
consultation, or soliciting of opinions that may terested in trade unions. This raises a problem for
or may not be acted on, rather than bargaining. managements on how they should deal with joint
In contrast, participation accords employees a consultation in situations when union membership
genuine – clearly demarcated – input into how the and influence is declining and when unions have the
firm is governed, even if this input is limited. monopoly of consultative rights, thus leaving a
large proportion of the workforce out of the consul-
tation process. It was suggested by Boxall and
Joint consultation Purcell (2016) that one solution to this problem
would be for management to set up a joint consul-
Joint consultation involves management and em- tative body for all employees while preserving col-
ployee representatives meeting regularly to exchange lective bargaining on pay and conditions with the
views and deal with matters of common interest that union. An alternative would be to get the union to
are not the subject of collective bargaining. It can sit on joint consultative committees alongside non-
take place in works councils or joint consultative union members although trade unions might not
committees (JCCs). The 2011 Workplace Employment want to do this.
C A S E S T U DY
Cougar Automation: Creating effective voice

mechanisms
Involvement of staff in the decisions that impact the Since then transparency and employee involvement in
organization is a distinctive feature of the way Cougar decision making are principles for Cougar Automation.
Automation, a medium-sized software engineering The leadership team commented on the value that
company, is run. This way of working was demonstrated employee voice brings to making the right decisions for
at a particularly difficult time during the recession. At the the organization:
time, the company was struggling to maintain cash flow
This doesn’t mean we always give a ‘yes’ answer on the
and was forced by the creditor to make more cuts to
suggestions that are made. But we must explain why
remain in operation. One of the current employees said:
we’re taking the decision we’re taking, and how we
When the recession came, we were at the lowest came to that decision. The question might get referred
point of the spend cycle in the water industry [that the to the company council, so a selection of employees
business relied on] so it hit us quite heavily financially. across the company will discuss it, and then there might
And the management team put a proposal together: be a resounding ‘no’. So we have to be consistent.
‘Either the whole company sinks or we have to make
There have been a couple of occasions where things
some changes’. The two options were making
were put on for discussion at the company council
colleagues redundant or everybody tightening their
[and the leadership team thought] people were going
belts and we ride it through.
to love this, but the discussion showed they didn’t. So,
It was put up for a vote, and everybody decided that they had we decided as a leadership team to go ahead with
would take a salary sacrifice. I think that was the first big that, without asking the staff, it would have been hated
vote that we had in the organization, where it could affect within the company.
the business as a whole. It was spelled out that everybody
SOURCE CIPD (2015)
had to vote, and unless it was unanimous, unfortunately
we’d have to go down the redundancy route.
work although they have something to say. But just

Employees’ experience over a fifth stated that they had plenty of opportu-
of voice nity to speak up and express new ideas. It was
established that employee voice is encouraged by
The CIPD (2019) survey found that only a quarter leadership and is most likely to flourish in an or-
of employees felt they were able to express them- ganization climate of innovation and flexibility. The
selves at work and that this was particularly low in survey established the importance of informal
the public sector. One-quarter of the respondents mechanisms, especially one-to-one conversations
reported that they often choose not to speak up at with line managers which were the main voice
channel for employees.
Key learning points
Employee voice ●● ‘speak up’ programmes that provide channels for

individual employees to raise points with senior
Employee voice is the say employees have in matters management;
of concern to them in their organization.
●● employee surveys;
Direct voice ●● social media;
Direct voice takes place when individuals or work ●● team briefing;

teams communicate directly to management or
●● suggestion schemes;
individual managers rather than through some form of
representative body. This may involve: ●● quality circles.
●● informal face-to-face communications on matters
of interest or concern; Indirect voice
●● workforce meetings when a number of employees Indirect voice takes place when representatives are
are gathered together to hear from management collectively involved in discussions with management,
and discuss issues; either through joint consultation or their trade unions.
References
Adam, D, Purcell, J and Hall, M (2014) Joint employee-voice_2013-current-landscape-sop.pdf
Consultative Committees Under the Information (archived at https://perma.cc/EK8B-TFF9)
and Consultation of Regulations, a WERS Chartered Institute of Personnel and Development
Analysis, Research Paper 04/14, London, ACAS (2015) Best to Good Practice HR: Developing the
Boxall, P F and Purcell, J (2003) Strategy and Human principles. http://www.cipd.co.uk/hr-resources/
Resource Management, Basingstoke, Palgrave research/best-good-practice-hr-developing-
Macmillan principles-profession.aspx (archived at https://
Boxall, P F and Purcell, J (2016) Strategy and Human perma.cc/QW3F-UVJV)
Resource Management, 4th edn, Basingstoke, Chartered Institute of Personnel and Development
Palgrave Macmillan (2019) Talking About Voice: An employee
Brewster, C, Croucher, R, Wood, G and Brookes, M perspective. www.cipd.co.uk/knowledge/work/
(2007) Collective and individual voice: future-voice/employee-experiences (archived at
convergence in Europe? International Journal of https://perma.cc/WAL5-ZM2Z)
Human Resource Management, 18 (7), pp Dundon, T, Cullinane, N and Wilkinson, A (2017) A
1246–62 Very Short, Fairly Interesting and Reasonably
Budd, J (2004) Employment with a Human Face: Cheap Book About Employment Relations,
Balancing efficiency, equity, and voice, Ithaca, NY, London, Sage
ILR Press Dundon, T and Rollinson, D (2011) Understanding
Chartered Institute of Personnel and Development Employment Relations, London, McGraw-Hill
(2013) Social media and employee voice. http:// Richer, J (2017) The Richer Way, London, Business
www.cipd.co.uk/binaries/social-media-and- Books
Van Wanrooy, B, Bewley, H, Bryson, A, Forth, J, Marchington and D Lewins, The Oxford
Stokes, I and Wood, S (2013) Employment Handbook of Participation in Organizations,
Relations in the Shadow of Recession: Findings Oxford, Oxford University Press, pp 167–85
from the 2011 Workplace Employment Relations Woodfield, R (2022) Maximising Employee Voice in a
Study, Basingstoke, Palgrave Hybrid Working World, London, CIPD
Wilkinson, A and Dundon, T (2010) Direct employee
participation, in (eds) A Wilkinson, P J Gollan, M
486
55
Employee
communications
employment, HR processes such as
Introduction performance pay, working methods,
technologies, products and services, or
Employee communication processes and systems organization (including mergers and
are used by managements to inform employees on acquisitions) – employees need to know what
matters that concern them and to persuade employ- is proposed and how it will affect them.
ees to accept a management initiative or request. Resistance to change often arises simply
They also provide for upward as well as downward because people do not know what the
communication by giving employees a voice – ‘two- change is or what it implies for them.
way communication’. Voice can be provided either
to individuals through workforce meetings, ‘speak- 2 Commitment to the organization will be
up’ programmes, social media and team briefing or enhanced if employees know what the
collectively through trade unions or joint consulta- organization has achieved or is trying to
tion. These ‘upward’ means of communication were achieve and how this benefits them.
described in the last chapter. This chapter therefore 3 Effective communication generates trust as
focuses mainly on the process of ‘downward’ com- organizations take the trouble to explain
munication from management to employees. It what they are doing and why.
starts with an assessment of the importance of com-
It should be emphasized, however, that these three
municating and then considers what should be com-
benefits of good communications will only be real-
municated, the approach to communication and
ized in full if employees are given a voice – the
methods of communicating. It is completed with a
opportunity to comment and respond to the infor
discussion of employee communications strategy.
mation they obtain from management.
The importance of What should be

communications communicated
As Bowen and Ostroff (2004: 208) stated, ‘In order
Managements need to communicate to employees
to function effectively in a social context and make
about the objectives, strategies, policies, perfor-
accurate attributions about a situation, an employee
mance and HR practices of the organization. They
must have adequate and unambiguous informa-
need to inform employees on what they are expected
tion.’ Good communications from management to
to do, about learning and development opportuni-
employees are important for three reasons:
ties and on any proposed changes to conditions of
1 They are a vital part of any change employment, and working arrangements.
management programme. If any change is Employees need the opportunity to communi-
proposed – in terms and conditions of cate upwards their comments on proposals and
Chapter 55 | Employee Communications 487
practices in areas that affect them, for example, pay mix of face-to-face, written and digital communica-
and other terms of employment, working condition as described below.
tions, work–life balance, equal opportunity, job
security, health and safety, and learning and devel
opment programmes. Individual face-to-face
communication
Approach to This is, of course, the most common method of
communication but it can be the most problematic.
communications The quality, accuracy and acceptability of the infor-
mation depend largely on the skill of the managers
To be effective, communications need to be clear, or team leaders involved and on their commitment
easily understood and concise. Information should to doing it well. Information can be distorted or
be presented systematically on a regular basis and be plain wrong. Briefing notes are helpful but they will
as relevant, local and timely as possible. Empathy is not necessarily be used well. Individual communica-
required by management in the sense of appreciating tions are inevitable and necessary but should not be
the concerns of employees and what they want and relied upon by themselves when the subject matter
need to hear. Possible reactions to proposed changes is important.
should be assessed and anticipated in the communi-
cation. Employee surveys can be used to find out
what information employees want and where they Intranet
feel there are any gaps that need to be filled.
The purpose of communication can simply be to An internal email system (the intranet) can be used
provide information but it is also a means of what to communicate information, especially in work-
is called ‘message-based persuasion’. This takes the places where all or most of the employees have ac-
form of a two-step process of ‘reception’ – encoding cess to a computer. The advantage of intranet
of the message (exposure to the message, attention communications is that they can be transmitted
to its content, comprehension of the content) – and swiftly to a wide audience.
‘yielding’ – acceptance of the message (agreeing
with the message and storing it in memory). For a
message to have its desired effect, both reception
Enterprise social network
and yielding are necessary. Enterprise social networks (ESNs) that operate
within an organization and function in the same
way as social networks such as Facebook are in-
Communication channels creasingly being used instead of the intranet for
communicating to employees. Their advantages are
A variety of communication channels will be that they provide for more interaction, facilitate the
needed. They can be spoken or written and pre- sharing of information and avoid cluttering up
sented digitally via an intranet or an enterprise computers with emails. As the CIPD (2014) ob-
social network (see below). Face-to-face communi- served, by drawing people into conversations (a
cation to individuals or groups is both direct and ‘pull’ style of communications) rather than simply
swift and it provides an opportunity to gauge the broadcasting messages (a ‘push’ style), an ESN can
reactions of people who can respond on the spot be used to engage people who are interested.
and ask questions. But it should be supplemented
by written and digital communication when the in-
formation is important or complex, when the audi- Team briefing
ence is widespread or large and when there is need
Team briefing (sometimes called cascade briefing) aims
for a permanent record or a back-up to face-to-face
to overcome the limited scope for communication
communication. Judicious use should be made of a
through individuals or even joint consultative com- Magazines

mittees by involving everyone in an organization,
level by level, in face-to-face meetings to present, re- Glossy magazines or house journals are obvious
ceive and discuss information. It operates as follows: ways to keep employees informed about the activi-
ties and achievements of the organization. There is,
●● Organization – covers all levels in the however, a danger of such magazines being more
business with the fewest possible steps from about public relations than about matters of real
top to bottom. There should be between 4 interest to employees.
and 18 in each group and the group should
be run by its team leader or manager (who
must be given training). Newsletters and bulletins
●● Subjects – policies, plans, progress and
people. Newsletters can appear more frequently than maga-
zines and can angle their contents more to the con-
●● Operation – work to a brief prepared by the cerns of employees. They may be distributed in
board on key issues. The brief is written up addition to a house magazine, treating the latter
and cascaded down the organization. Briefs mainly as a public relations exercise. Bulletins can
are discussed at meetings and comments are be used to give employees immediate information
fed back to the top to provide for two-way that cannot wait for the next issue of a newsletter.
communication. They can be issued as hard copy or on the intranet.
●● Timing and duration – meet when there is
something to discuss. Meetings last no more
than 20–30 minutes. Employee communication
strategy
Consultative committees
A strategy for employee communications will deal
Joint consultation provides a channel for two-way
with what information the organization wants to
communication. But committees are not always ef-
give to employees and how it wants to provide it.
fective. Their discussions can be confined to rela-
Provision should also be made for upward commu-
tively trivial issues and there is still the problem of
nications. The strategy should be based on an anal-
disseminating information around the organiza-
ysis, on a regular basis, of what management wants
tion – committee members cannot do this on their
to say and what employees want to hear. It could
own. Minutes can be posted on notice boards or
cover the mix of methods that will be used to con-
through the intranet but may not be read. It is better
vey the information – face-to-face (individual or
to highlight key points either on notice boards or
team), notice boards, intranet, social media and
through other channels.
magazines, newsletters or bulletins.
It may also be necessary to develop a specific
communications strategy for any proposed major
Notice boards changes to terms and conditions, working arrange-
Notice boards are the most obvious and familiar ments such as downsizing, or organization structure,
means of communication but they can too easily be including mergers and acquisitions. For example,
cluttered up with redundant information. It is neces- the introduction of a new pay structure is a major
sary to control what goes on to boards and ensure change exercise and will need to be supported by a
that out-of-date or unauthorized notices are removed. planned communications strategy.
Chapter 55 | Employee Communications 489
Key learning points
The importance of employee The approach to communication

communications Communication needs to be clear, easily understood
Communications are a vital part of a change and concise. Information should be presented
management programme and also help to increase systematically on a regular basis and be as relevant,
commitment and generate trust. local and timely as possible. More than one medium
should be used.
What should be communicated

Communication methods
Managements and individual managers need to
communicate to employees about terms and Individual face-to-face communication, intranet,
conditions of employment; what they are expected to employee social networks, team briefing, consultative
do; learning and development opportunities; the committees, notice boards, speak-up programmes,
objectives, strategies, policies and performance of the magazines, newsletters and bulletins.
organization; and any proposed changes to conditions
of employment, working arrangements and Employee communication strategy
requirements, or the structure and policies of the
A strategy for employee communications will deal with
organization. Employees need the opportunity to
what information the organization wants to give to
communicate upwards their comments and reactions
employees and how it wants to provide it. Provision
to what is proposed will happen or what is actually
should also be made for upward communications.
happening in matters that affect them.
References
Bowen, D E and Ostroff, C (2004) Understanding Chartered Institute of Personnel and Development
HRM-firm performance linkages: the role of the (2014) Putting Social Media to Work: Lessons for
‘strength’ of the HRM system, Academy of employers, London, CIPD
Management Review, 29 (2), pp 202–21
490

491
PART XIII
Employee wellbeing
PA R T X I I I CO N T E N T S
56 The principles and practice of employee wellbeing

57 Health and safety
It is about both their physical wellbeing (working

Introduction conditions and safety) and, importantly, their men-
tal wellbeing, including the extent to which they are
Wellbeing is defined by the Oxford English subject to stress.
Dictionary as ‘the state of being comfortable, The first chapter of this part (Chapter 56) covers
healthy or happy’. Wellbeing at work is a broader the case for paying close attention to wellbeing, the
concept than happiness. For people in work the dimensions of wellbeing, the factors affecting well-
level of wellbeing is related to how satisfied they are being and the steps that can be taken to promote
with their job and how the organization treats wellbeing including the provision of individual and
them, the quality of relationships with their line group employee services. The focus is on subjective
manager and their colleagues, the working condi- experiences arising from work and the psychologi-
tions and benefits provided by their organization, cal aspects of wellbeing. The physiological aspects
the extent to which they have a sense of purpose of wellbeing – occupational health and safety – are
and how much they feel in control of what they do. dealt with in Chapter 57.
492

493
56
Principles and practice
of employee wellbeing
Two dimensions of wellbeing were identified by
Introduction Peccei et al (2013: 18). The first is the individuals’
subjective experiences of work, including elements
Wellbeing is about how people feel and function, such as job satisfaction and positive and negative
and how they evaluate their lives. Employee wellbe- responses to the work environment. It is sometimes
ing is concerned with what people experience at called ‘happiness wellbeing’. The second covers the
work in terms of their physical, mental and finan- physiological and psychological aspects of em-
cial situation, work–life balance, relationships with ployee health at work including, for example, job-
their line manager and colleagues and the extent to related anxiety and burnout (exhaustion). The latter
which they have a sense of purpose and feel in con- is sometime referred to as mental wellbeing as de-
trol of what they do. Warr (1987) defined employee scribed by the National Institute for Healthcare
wellbeing as ‘the overall quality of an individual’s Excellence (2009):
subjective experience and functioning at work.’
A long time ago, Martin (1967: 21) put up a Mental wellbeing is a dynamic state in which the
good case for welfare, as it was then known, as fol- individual is able to develop their potential, work
lows: ‘People [at work] are entitled to be treated as productively and creatively, build strong and
full human beings with personal needs, hopes and positive relationships with others and contribute
anxieties.’ There has been no change in this require- to their community. It is enhanced when an
ment since then. individual is able to fulfill their personal and social
This chapter deals with the basis of employee goals and achieve a sense of purpose in society.
Mental wellbeing at work is determined by the
wellbeing, the case for caring about it, the factors
interaction between the working environment, the
that affect wellbeing and, taking account of these
nature of the work and the individual.
factors, the practice of wellbeing in terms of what
organizations can do to develop a wellbeing strategy. The CIPD (2016) listed the following domains of
wellbeing:
The basis of wellbeing ●● Health – occupational health support, safe

working practices and equipment, stress
management, employee assistance
Wellbeing can be described as hedonic, eudaimonic
programme.
and evaluative. The hedonic aspect refers to peo-
ple’s feelings or emotions, such as happiness or anx- ●● Work – the working environment including
iety. The eudaimonic aspect refers to leading ‘a life job quality, work–life balance, ergonomically
well lived’ – how people interact with the world designed working areas, good line
around them to meet basic psychological needs. The management, financial wellbeing.
evaluative aspect refers to the assessments people ●● Values/principles – ethical standards,
make on how their life is going. values-based leadership, management of
diversity and inclusion.
494 Part 13 | Employee Wellbeing
●● Collective/social – employee voice and An assessment of 55 wellness programmes

communication. throughout industry by PricewaterhouseCoopers
●● Personal growth – performance and career (2008) established that on average the interventions
development grammes, technical and skills resulted in a 45 per cent reduction in sickness ab-
training, life-long learning. sence, 18 per cent reduction in staff turnover, 16 per
cent reduction in accidents/injuries, an increase in
employee job satisfaction of 14 per cent, an 8 per cent
The case for caring about increase in productivity and a drop of 7 per cent in
health and employer liability claims.
wellbeing David Guest (2017: 22–23) made a strong ethi-
cal case for focusing on employee wellbeing. He
Employers have a duty of care. This means adopting noted the following wellbeing issues:
a socially responsible approach to looking after
●● changes in technology can increase demand
their people by creating a good work environment.
and create work overload (Derks and Bakker,
and enhancing the employee experience. As Brown
2010), lead to work–home interference
et al (2019: 5–6) pointed out: ‘Employers seem to be
(Derks et al, 2014);
becoming more, not less, focused on the wellbeing
of their employees, recognising that high perfor- ●● new technologies contribute to skill
mance in a service and knowledge-based economy obsolescence and associated job insecurity;
generally can’t be programmed and regulated into ●● Felstead et al (2015) found that in the UK,
people; that they have to be engaged, supported and average levels of autonomy have declined
enabled by leaders and HR professionals to deliver while work demands have increased, notably
it.’ Cary Cooper wrote (CIPD, 2019: 3) that in low-skill jobs;
Compassionate leadership is a far from fluffy ●● Bryson and Forth (2015) found widespread
concept. It is supported by a hard business case increases in workload alongside static wages.
showing desired outcomes such as improved This has reduced fairness and threatened
relationships as well as higher motivation and wellbeing but failed to improve productivity;
job satisfaction levels, all of which can lead to ●● countries with less dispersion of wealth show
enhanced performance and productivity. Not higher wellbeing among their populations;
surprisingly, there is also a strong association
●● growth of temporary employment has
with better health and wellbeing because a
compassionate culture is one which engenders increased the numbers within what Standing
trust and openness, and where people feel more (2011) describes as the ‘precariat’ and
confident to discuss any health issues and receive created employment insecurity. Research on
the support they need. Employers who are intent job insecurity convincingly demonstrates its
on creating a healthy workplace could therefore negative impact on wellbeing (De Witte et al,
benefit from considering how to integrate 2016);
compassion as part of their wellbeing strategy. ●● wellbeing may also be affected by lack of
The moral case for caring about wellbeing is strong optimism about the future; at work, this is
but there is also a business case. The CIPD (2017: 2) reflected in threats to career prospects, to
reported that academic and practitioner evidence employment security and to the long-term
demonstrates that employee health, wellbeing and economic security of a decent pension.
engagement are important for organizational suc- Krekel et al (2019) of the Saïd Business School sur-
cess. For example, in a meta-analysis, Peccei (2004) veyed the evidence in a meta-analysis of 339 inde-
suggested that wellbeing had a key role in enhanc- pendent research studies, including the wellbeing of
ing organizational performance. Donald et al (2005) 1,882,131 employees and the performance of 82,248
found that almost a quarter of the variance in em- business units, originating from 230 independent or-
ployee productivity is explained by psychological ganizations across 49 industries in the Gallup data-
wellbeing. Ford et al (2011) established links be- base. A significant and strong positive correlation
tween employee psychological health and wellbeing was found between employees’ satisfaction with
and overall performance.
Chapter 56 | The Principles and Practice of Employee Wellbeing 495
their company and employee productivity and cus- take account of the pressures their employees have
tomer loyalty, and a strong negative correlation with to face outside the organization; these are maintain-
staff turnover. Ultimately, higher wellbeing at work ing a reasonable balance between life and work,
is positively correlated with more business-unit level taking care of children and dependents, health is-
profitability. sues and financial problems.
Factors affecting wellbeing Employee wellbeing

The internal factors that affect wellbeing and strategy
possible actions to deal with them are set down in
Table 56.1. As the CIPD (2019: 9) emphasized, ‘Building and in-
The external factors affecting employee wellbe- tegrating a health and wellbeing strategy for the
ing are the pressure on organizations from the gov- organisation that is contingent on its specific require-
ernment, regulatory authorities and the media to ments is how employers can avoid the pitfall of devel-
behave responsibly in the way they treat their peo- oping a “menu” of initiatives that are not joined up
ple. But there is also a need for organizations to or closely linked to the needs of employees.’
TA B L E 56.1 Wellbeing factors and actions

Wellbeing
factor Description Possible actions
The work Physical and mental wellbeing resulting Provide a good work environment in
environment from the system of work, working terms of working conditions and take
conditions and health and safety account of the need to provide a
considerations. healthy and safe 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 child care
facilities.
Job design The extent to which the jobs people have Review job design practices to ensure
and demands match their abilities and allow individuals that the principles of good design are
to control their work (self-determination) being met. Account needs to be taken
and use their skills and abilities. The of the principle of self-determination
physical and mental demands involved in and the job demands-resources model
meeting job requirements especially (see Chapter 20).
when work intensification has taken Review job demands to ensure that
place. they are not excessive and therefore
negatively affect work–life balance and
lead to undue stress and even burnout.
Review working conditions and
ergonomic factors to ensure that they
provide for the physical wellbeing of
employees.
(continued )
Wellbeing
factor Description Possible actions
Relationships How people are treated at work by their Select people as managers who are
with line managers can strongly affect wellbeing. likely to have the leadership qualities to
managers Research by Pfeffer and Sutton (2006) create and maintain good working
found that 60 per cent to 75 per cent of relationships with their team members.
the employees in the organization Make responsibility for employee health
surveyed reported that the worst or most and wellbeing an important part of the
stressful aspect of their job was their line manager’s role so that they help to
immediate supervisor. ensure employees feel valued, content
Line managers are in regular contact with and able to discuss any concerns before
the employees they are responsible for, they reach a crisis point (NICE, 2009).
so they are in a good position to identify Provide training and coaching in
the early signs of stress. A line manager approaches to managing stress
can have a significant influence on including the leadership skills needed
employee attitudes and behaviours. and the skills required to plan tasks and
design jobs.
Relationships The quality of social relationships and the Provide facilities for socializing at work.
with extent to which negative behaviour such Introduce robust bullying and
colleagues as bullying and harassment exist. harassment policies and ensure that
they function effectively.
Work–life The achievement of a satisfying Introduce family-friendly policies

balance equilibrium between work and non-work providing for a reasonable degree of
(eg family) activities. A survey by flexibility (see Chapter 32). Minimize
Eurofound (2013) established that poor excessive job demands.
ratings of work–life balance were the
strongest predictor of stress.
Financial Financial wellbeing was defined by the Pay people fairly. Provide education on
wellbeing CIPD (2021: 9) as follows: ‘Financial how to manage money and counselling
well-being can be defined as a state of for employees with financial worries,
emotional and physical well-being, especially debt counselling.
produced by a set of conditions and
capabilities. 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
caused by problems in any of the areas areas set out above. Introduce an
set out above. Employee Assistance programme (EAP)
to provide counselling and advice. (See
the B&Q case study in this chapter).
Dealing with stress is considered in
more detail in Chapter 57.
The purpose of an employee wellbeing strategy is to 3 The creation of a positive social and physical
provide a framework for the introduction of poli- environment – prioritizing employee health
cies and practice designed to increase the level of and safety, providing opportunities for social
wellbeing amongst the employees of an organiza- interaction at work, avoiding bullying and
tion. The following case for developing and imple- harassment, promoting equal opportunities
menting one was made by Professor Sir Cary and diversity, ensuring fair rewards, often
Cooper and Ian Hesketh (2019: 1): linked to high basic pay rather than incentive
schemes, and providing employment security,
Stress at work is rising year on year with long
including steps to maintain employability.
working hours seemingly becoming the norm.
This is not only having a detrimental effect on 4 Enhancing the role of voice – extensive
employee health, happiness and productivity, but two-way communication, opportunities for
also impacting on the organization’s bottom line. individual expression of voice, including
Human resources (HR) professionals are uniquely attitude surveys, and relevant forms of
placed to manage this modern workplace crisis by collective representation.
implementing a wellbeing strategy. 5 The provision of organizational support –
The strategy should also take into account the fol- participative, supportive management, an
lowing factors affecting wellbeing as established by organization climate that facilitates employee
Guest (2017: 27). He noted that Warr (1987) has involvement, participative and developmental
identified 10 antecedents of work-related wellbeing: rather than judgemental and potentially
opportunity for control, opportunity for skill use, punitive performance management and
variety at work, opportunity for interpersonal con- family-friendly and flexible working
tact, externally generated goals, environmental clar- arrangements.
ity, availability of money, supportive supervision, The strategy should be evidence-based. Pulse sur-
physical security and a valued social position. The veys should be conducted, possibly through an en-
job demands-resources model (Bakker and terprise social network (ESN), to measure the
Demerouti, 2007) proposed that wellbeing is a func- reactions of employees to key aspects of wellbeing:
tion of balancing the demands of work and the re- the work environment, their jobs, relationships with
sources available to do the work. The quality of their managers and work–life balance. HR analytics
working life (QWL) concept – Walton (1974) – sum- should be used to analyse the causes of any sickness
marized eight core conditions for a high QWL cov- absence to identify the incidence of stress and to
ering a safe and healthy working environment, the examine indicators of employee dissatisfaction such
development of human capacities, growth and secu- as absenteeism and disputes.
rity, social integration, rights and representation, the The evidence should indicate any areas in which
social relevance of work, consideration of the total prioritized action is required. Consideration should
life space and adequate and fair compensation. be given to possible developments in consultation
On this basis, Guest (pages 30–31) suggested five with employees at meetings and/or through the ESN.
sets of practices that might be included in a wellbe- When decisions have been agreed, the work of devel-
ing strategy: oping policy and practices such as those set out in
1 Investment in employees – enhancing Table 50.1 can begin. Account should be taken not
competence through training and only of the form and contents of the policy or practice
development and providing a sense of an but also of how it is to be implemented.
attractive career future leading to a feeling of Proposals should be discussed with those affected
security and the development of self-efficacy, by them and managers and employees enlisted to
an important antecedent of wellbeing. support their detailed development and implemen-
tation. A change management programme may have
2 Engaging work – the provision of
to be drawn up with provision for communications,
opportunities for autonomy, control, skill use
further involvement and any training required for
and variety at work through the core HR
those concerned. The implementation plan may be
practice of job design.
phased or test runs could be carried out. The whole
implementation process should be carefully moni- 1 Employees will demand more flexible and
tored to ensure that it is going according to plan. hybrid work.
The wellbeing strategy should be aware of the im- 2 Organizations will do more to address
plications of research conducted by Alfes et al (2012: employee metal health.
422) which found that employees who perceive
3 Organizations will develop and implement a
HRM practices positively experience higher levels of
holistic employee leave strategy.
wellbeing. This shows the advisability of reviewing
all the key HR policies practices that may affect 4 Further investments will be made in
wellbeing including learning and development, per- enrolment technology to help employees
formance management and reward to identify any make the best of their benefit options.
areas where changes may enhance wellbeing. 5 Addressing diversity, equity and inclusion
Attention should be paid to trends in wellbeing will be essential to organizational culture.
practice. A survey by Guardian Life (2022) indi-
cated that the top five trends for 2022 were:
CASE STUDIES
B&Q’s employee assistance programme
The aims of the B&Q employee assistance programme ●● Offer information and support to managers and HR staff
are to: with their personal issues, and issues facing their staff.
●● Support employees of all ages and backgrounds ●● Raise employee morale and commitment by showing
through the full spectrum of life experiences by the caring face of the employer.
offering advice, information, practical help and
emotional support free of charge and in confidence. ●● Improve customer service and productivity by saving
employees’ time and solving and avoiding work–life
●● Support carers of the chronically sick, disabled or conflicts.
elderly by offering advice and information; locate care
options and community resources.
Nuffield Health Support Centre
●● Save time for working parents by helping them find and
arrange good-quality, affordable and reliable care The Nuffield Health support centre includes an onsite
arrangements for children of all ages. fitness and wellbeing centre, dedicated clinical and
relaxation rooms, a bespoke learning and development
●● Support parents through a wide range of parenting
academy, and a modern wellbeing café with a series of
issues, including understanding and choosing
breakout points encouraging employees to share
education options, and understanding and monitoring
initiatives and ideas on a regular basis.
behaviour of children.
●● Reduce unplanned absence by encouraging
employees with personal, practical, emotional and
financial problems to seek early help and advice.
Key learning points
Employee wellbeing defined ●● Job design and demands.
Wellbeing is about how people feel and function, and ●● Relationships with line managers.
how they evaluate their lives. Employee wellbeing is a ●● Relationships with colleagues.
function of what people experience at work in terms
of their physical, mental and financial situation, ●● Financial wellbeing.
work-life balance, relationships with their line ●● Stress.
manager and colleagues and the extent to which they
have a sense of purpose and feel in control of what
Employee wellbeing strategy
they do.
The purpose of an employee wellbeing strategy is to
The case for wellbeing provide a framework for the introduction of policies
and practice designed to increase the level of
The moral case for caring about wellbeing is strong wellbeing amongst the employees of an organization.
but there is also a business case. The strategy should be evidence-based.
Factors affecting wellbeing

●● The work environment.
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501
57
Health and safety
indeed go beyond the high standard in health and
Introduction safety matters required by the legislation – the
Health and Safety at Work etc Act 1974 and the
Health and safety policies and programmes provide various regulations and Codes of Practice.
for employee wellbeing by protecting employees – The importance of healthy and safe policies and
and other people affected by what the company practices is, sadly, often underestimated by those
produces and does – against accidents and risks of concerned with managing businesses and by indi-
ill-health arising from their employment or their vidual managers within those businesses. But the
links with the company. achievement of the highest standards of health and
Safety programmes deal with the prevention of safety in the workplace is important because of the
accidents and with minimizing the resulting loss duty of care – the elimination, or at least minimiza-
and damage to people and property. They relate tion, of health and safety hazards and risks is the
more to systems of work than the working moral as well as the legal responsibility of employ-
environment. ers. Close and continuous attention to health and
Occupational health programmes deal with the safety is important because ill-health and injuries
prevention of ill-health and the reduction of stress created by the system of work or working condi-
arising in the working environment. tions cause suffering and loss to individuals and
This chapter starts with a general discussion on their dependents. In addition, accidents and ab-
the importance of paying attention to health and sences through ill-health or injuries result in losses
safety at work as an important element in an em- and damage for the organization. This ‘business’
ployee wellbeing programme. It then deals in turn reason is much less significant than the ‘human’ rea-
with the following aspects of health and safety: health sons, but it is still a consideration, albeit a tangen-
and safety policies, risk assessments, audits, inspec- tial one.
tions, accident prevention, occupational health, man-
aging stress, measuring performance, communica-
tions, training and organizing health and safety
management.
Health and safety policies
Written health and safety policies are required to
demonstrate that top management is concerned
Managing health and safety about the protection of the organization’s employ-
at work ees from hazards and risks to health at work and to
indicate how this protection will be provided. The
The achievement of a healthy and safe place of policies are, therefore: (1) a declaration of intent;
work and the elimination to the maximum extent (2) a definition of the means by which that intent
possible of hazards to health and safety are the re- will be realized; (3) a statement of the guidelines
sponsibility of everyone employed in an organiza- that should be followed by everyone concerned –
tion, as well as those working there under contract. which means all employees – in implementing the
But the onus is on management to achieve and policy.
The policy statement should consist of four The role of safety representatives and safety com-
parts: mittees should be defined, and the duties of special-
ists such as the safety adviser and the medical o
fficer
1 The general policy statement.
should be summarized.
2 Details of specific health and safety policies.
3 The description of the organization of health
and safety. Implementing health and safety
4 Details of arrangements for implementing policies
the policy.
The basis for implementing health and safety poli-
cies is provided by three review methods:
The general policy statement 1 Risk assessments, which identify the
The general policy statement should be a declara- existence of hazards.
tion of the intention of the employer to safeguard 2 Health and safety audits, which provide for a
the health and safety of employees. It should em- comprehensive review of all aspects of health
phasize four fundamental points: and safety policies, procedures and practices.
●● that the health and safety of employees and 3 Health and safety inspections, which locate
the public is of paramount importance; and define any faults in the system,
equipment, plant or machines, or any
●● that health and safety takes precedence over
operational errors that might be a danger to
expediency;
health or the source of accidents.
●● that every effort will be made to involve all
managers, team leaders and employees in the
development and implementation of health Conducting risk assessments
and safety procedures;
●● that health and safety legislation will be Risk assessments are concerned with the identifica-
complied with in the spirit as well as the tion of hazards and the analysis of the risks attached
letter of the law. to them. A hazard is anything that can cause harm
(working on roofs, lifting heavy objects, chemicals,
electricity, etc). A risk is the chance, large or small,
Specific policies of harm being actually done by the hazard.
The purpose of risk assessments is to initiate pre-
Specific policies should cover the main areas of ac-
ventative action. They enable control measures to
cident prevention and occupational health. They
be devised on the basis of an understanding of the
should specify the main requirements in each area
relative importance of risks. Risk assessments must
as described in this chapter.
be recorded if there are five or more employees.
Organization Types of risk assessment

This section of the policy statement should describe
There are two types of risk assessment. The first is
the health and safety organization of the business
quantitative risk assessment, which produces an ob-
through which high standards are set and achieved
jective probability estimate based upon risk infor-
by people at all levels in the organization.
mation that is immediately applicable to the
This statement should underline the ultimate re-
circumstances in which the risk occurs. The second
sponsibility of top management for the health and
is qualitative risk assessment, which is more subjec-
safety performance of the organization. It should
tive and is based on judgement backed by general-
then indicate how key management personnel are
ized data. Quantitative risk assessment is preferable
held accountable for performance in their areas.
if the specific data is available. Qualitative risk
Chapter 57 | Health and Safety 503
a ssessment may be acceptable if there is little or no ‘low’, ‘moderate’ and ‘high’, or ‘negligible’, ‘marginal’
specific data, as long as it is made systematically on and ‘critical’.
the basis of an analysis of working conditions and
hazards and an informed judgement of the likeli-
hood of harm actually being done. Assessing the risk
Typical hazards that can be identified by risk as-
When the hazards have been identified it is neces-
sessments include:
sary to assess how high the risks are. This involves
●● lifting and carrying, eg heavy or unwieldy answering three questions:
objects;
1 What is the worst result?
●● stacking and storage, eg falling materials;
2 How likely is it to happen?
●● movement of people and materials, eg falls,
3 How many people could be hurt if things go
collisions;
wrong?
●● processing of raw materials, eg exposure to
toxic substances; A probability rating system can be used such as:
●● maintenance of buildings, eg roof work, 1 Probable – likely to occur immediately or
gutter cleaning; shortly.
●● maintenance of plant and machinery, eg 2 Reasonably probable – probably will occur
lifting tackle, installation of equipment; in time.
●● using electricity, eg using hand tools, 3 Remote – may occur in time.
extension leads; 4 Extremely remote – unlikely to occur.
●● operating machines, eg operating without
sufficient clearance or at an unsafe speed; not
using safety devices;
Taking action
●● failure to wear protective equipment, eg hats,
boots, clothing; Risk assessment should lead to action. The type of
action can be ranked in order of potential effective-
●● distribution of products or materials, eg
ness in the form of the following safety precedence
movement of vehicles;
sequence:
●● dealing with emergencies, eg spillages, fires,
explosions; ●● Hazard elimination – use of alternatives,
design improvements, change of process.
●● health hazards arising from the use of
equipment or methods of working, eg VDUs, ●● Substitution – for example, replacement of
repetitive strain injuries from badly designed one chemical with another that is less risky.
work stations or working practices. ●● Use of barriers – removing the hazard from
the worker or removing the worker from the
Most accidents are caused by a few key activities.
hazard.
Assessors should concentrate initially on those that
could cause serious harm. Operations such as roof ●● Use of procedures – limitation of exposure,
work, maintenance and transport movement cause dilution of exposure, safe systems of work
far more deaths and injuries each year than many (these depend on human response).
mainstream activities. ●● Use of warning systems – signs, instructions,
When carrying out a risk assessment it is also labels (these also depend on human
necessary to consider who might be harmed. This response).
means both employees and visitors (including clean- ●● Use of personal protective clothing – this
ers and contractors and the public when calling in depends on human response and is used as a
to buy products or enlist services). side measure only when all other options
Hazards should be ranked according to their po- have been exhausted.
tential. A simple three-point scale can be used such as
Monitoring and evaluation ●● Are senior managers committed to health

and safety?
Risk assessment is not completed when action has ●● How committed are other managers, team
been initiated. It is essential to monitor the hazard leaders and supervisors to health and safety?
and evaluate the effectiveness of the action in elimi-
nating it or at least reducing it to an acceptable level. ●● Is there a health and safety committee? If
not, why not?
●● How effective is the committee in getting
Health and safety audits things done?
Risk assessments identify specific hazards and Procedures

quantify the risks attached to them. Health and
How effectively do the procedures:
safety audits provide for a much more comprehen-
sive review of all aspects of health and safety ●● support the implementation of health and
policies, procedures and practices. They should be safety policies?
distinguished from safety inspections which check ●● communicate the need for good health and
on specific aspects of safety, for example machine safety practices?
operation.
●● provide for systematic risk assessments?
●● ensure that accidents are investigated
Who carries out a health and thoroughly?
record data on health and safety that is used
safety audit? ●●
to evaluate performance and initiate action?
Safety audits can be conducted by safety advisers ●● ensure that health and safety considerations
and/or HR specialists, but managers, employees and are given proper weight when designing
employee representatives should also be involved. systems of work or manufacturing and
Audits are often carried out under the auspices of a operational processes (including the design
health and safety committee, with its members tak- of equipment and work stations, the
ing an active part in conducting them. Some organi- specification for the product or service, and
zations also use outside agencies such as the British the use of materials)?
Safety Institute to conduct independent 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
What is covered by a health and in all areas of the organization conform to
the general requirements of the Health and
safety audit? Safety at Work etc Act and the specific
A health and safety audit should cover policies, pro- requirements of the various regulations and
cedures and safety practices, as outlined below. Codes of Practice?
●● What risk assessments have been carried
Policies out? What were the findings? What actions
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
or negative? If the latter, what is being done ●● Use the checklists as the basis for the
about it? inspection.
●● How thoroughly are accidents investigated? ●● Carry out sample or spot checks on a
What steps have been taken to prevent their random basis.
recurrence? ●● Carry out special investigations as necessary
●● What is the evidence that managers and to deal with special problems, such as
supervisors are really concerned about health operating machinery without guards to
and safety? increase throughput.
●● Set up a reporting system (a form should be
used for recording the results of inspections).
What should be done with the ●● Set up a system for monitoring that safety
audit? inspections are being conducted properly and
on schedule.
The audit should cover the questions above but its
purpose is to generate action. Those conducting the ●● Ensure that corrective action is taken where
audit will have to assess priorities and costs and necessary.
draw up action programmes for approval by top
management.
Accident prevention
Health and safety The prevention of accidents is achieved by the fol-
lowing actions:
inspections ●● Identify the causes of accidents and the
Health and safety inspections are designed to exam- conditions under which they are most likely
ine a specific area of the organization – an opera- to occur.
tional department or a manufacturing process – to ●● Take account of safety factors at the design
locate and define any faults in the system, equip- stage – build safety into the system.
ment, plant or machines, or any operational errors ●● Design safety equipment and protective
that might be a danger to health or the source of devices and provide protective clothing.
accidents. Health and safety inspections should be ●● Carry out regular risk assessments, audits,
carried out on a regular and systematic basis by line inspections and checks and take action to
managers and supervisors with the advice and help eliminate risks.
of health and safety specialists. The steps to be
taken in carrying out health and safety inspections ●● Investigate all accidents resulting in damage
are as follows: or harm in order to establish the cause and
to initiate corrective action.
●● Allocate the responsibility for conducting the ●● Maintain good records and statistics in order
inspection. to identify problem areas and unsatisfactory
●● Define the points to be covered in the form trends.
of a checklist. ●● Conduct a continuous programme of
●● Divide the department or plant into areas education and training on safe working
and list the points to which attention needs habits and methods of avoiding accidents.
to be given in each area. ●● Encourage approaches to leadership and
●● Define the frequency with which inspections motivation that do not place excessive
should be carried out – daily in critical areas. demands on people.
hazards and regular examinations for anyone

Occupational health at risk. Particular attention needs to be
programmes exercised in the control of noise, fatigue and
stress. The management and control of stress
Occupational health programmes are designed to should be a major part of any occupational
minimize the impact of work-related illnesses. The health programme.
control of occupational health and hygiene prob- ●● Use stress management approaches to deal
lems can be achieved by taking the following with the major problem of the effects of
actions: stress at work as described below.
●● Eliminate the hazard at source through
design and process engineering.
Managing stress
●● Isolate hazardous processes and substances
so that workers do not come into contact Stress is a state of mental or emotional strain or ten-
with them. sion resulting from adverse or demanding circum-
●● Change the processes or substances used in stances. Undue stress can seriously affect mental
order to promote better protection or health. In the workplace it can impact significantly
eliminate the risk. on productivity, performance and happiness. The
●● Provide protective equipment, but only if UK Health and Safety Executive (2021) reported
changes to the design, process or that 822,000 workers suffered from work-related
specification cannot completely remove the stress, depression or anxiety (new or long-standing)
hazard. in 2020/21. The average prevalence of work-related
cases of stress was 1,780 per 100,000 workers. It
●● Train workers to avoid risk.
varied significantly between different occupations:
●● Maintain plant and equipment to eliminate for skilled trades workers it was 860 per 100,000
the possibility of harmful emissions, workers; for managers it was 1,770 per 100,000
controlling the use of toxic substances and and for professionals it was 2,530 per 100,000. The
eliminating radiation hazards. stress rates for women workers were much higher
●● Adopt good housekeeping practices to keep than for men.
premises and machinery clean and free from Research by the Institute for Employment Studies
toxic substances. (Bevan, 2018) found that over 60 per cent of UK
●● Conduct regular inspections to ensure that manufacturers surveyed intervened to assess the
potential health risks are identified in good risk of physical injury and to promote better physi-
time. cal safety, but the majority of investment remained
in traditional areas of risk assessment, prevention
●● Carry out pre-employment medical and rehabilitation for those exposed to physical
examinations and regular checks on those hazards. Fewer than 15 per cent assessed the risk
exposed to risk. that work will damage mental health and only one
●● Ensure that ergonomic considerations (ie in five invested in measures to reduce the risk. Yet,
those concerning the design and use of productivity increases are most likely when the
equipment, machines, processes and work mental health of employees is positive and when
stations) are taken into account in design employees operating in ‘lean’ production environ-
specifications, establishing work routines and ments are given appropriate support, training and a
training – this is particularly important as a ‘voice’ in the way production processes are run.
means of minimizing the incidence of There are many causes of stress, as indicated by
repetitive strain injury (RSI). the factors affecting employee wellbeing set out in
●● Maintain preventive medicine programmes Chapter 56 (Table 56.1), and individuals vary
that develop health standards for each job hugely in their resilience – their ability to withstand
and involve regular audits of potential health pressure, cope with adversity and bounce back.
Good levels of personal resilience are required to ●● Job design – clarifying roles, reducing the
cope physiologically and psychologically with danger of role ambiguity and conflict, and
stress. Evidence quoted by Cooper and Hesketh giving people more autonomy within a
(2019) shows that that higher levels of resilience defined structure to manage their
can improve performance and enhance psychoso- responsibilities.
cial functioning. Southwick and Charney (2012: 7) ●● Job placement – taking care to place people
defined the following factors affecting resilience: in jobs that are within their capabilities.
●● a positive attitude; ●● Career development – planning careers and
●● cognitive flexibility; promoting staff in accordance with their
capabilities, taking care not to over- or
●● moral compass;
under-promote.
●● role models;
●● Targets and performance standards – setting
●● facing fears; reasonable and achievable targets that may
●● coping skills; stretch people but do not place impossible
●● supportive networks; burdens on them.
●● physical wellbeing; ●● Performance management processes –
encouraging a dialogue to take place between
●● regular training;
managers and individuals about the latter’s
●● signature (character) strengths. work problems and ambitions.
There are four reasons why organizations should be ●● Counselling – giving individuals the
concerned about stress and do something about it. opportunity to talk about their problems
First, they should act in a socially responsible way with someone, preferably a trained
to provide a good quality of working life; second, counsellor reached through an employee
because excessive stress causes illness; third, be- assistance programme.
cause it can result in inability to cope with the de- ●● Anti-bullying campaigns – bullying at work
mands of the job, which of course creates more is a major cause of stress.
stress; and fourth, because excessive stress can re-
●● Management training – training in what
duce employee effectiveness and therefore organiza-
managers can do to alleviate their own stress
tional performance.
and reduce it in others.
The overall approach to managing stress proposed
by Cooper and Hesketh (2019: 45) is as follows: ●● Resilience training – helping to cope with
stress.
Employees should feel that their working
●● Mindfulness programmes involving
environment is one that, to a large extent,
meditation which focus the attention of
increases or enhances their ability to cope with the
work… A supportive, well-planned, well-thought- people on their current experiences – ‘the
out and well-led working environment should present moment’.
feature highly and, of course, be subject to regular
review and/or evaluation.
Measuring health and safety
The specific ways in which stress can be man-
aged are: performance
●● Work design – when designing or modifying
It is essential to measure health and safety perfor-
work systems, paying close attention to
mance as a means of identifying in good time where
health and safety requirements: minimizing
actions are necessary. Account should be taken not
the risk of accidents, ensuring that
only of current and recent figures but also trends.
satisfactory ergonomic conditions exist and
The most common measures are:
eliminating as far as possible the stress that
working requirements may generate.
The frequency rate: ●● Messages must point the way to action – the
most effective messages call for positive
number of injuries actions that can be achieved by those who
×100, 000 receive them and will offer them a tangible
number of hours worked
benefit.
The incidence rate:
number of injuries Approaches to briefing staff on the

×100, 000
average number employed importance of health and safety
during the period Advice to a group of staff on the importance of
health and safety in the workplace must be based
Some organizations adopt a ‘total loss control’ on a thorough understanding of the organization’s
approach, which covers the cost of accidents to the health and safety policies and procedures and an
business under such headings as ‘pay to people off appreciation of the particular factors affecting the
work’, ‘damage to plant or equipment’ and ‘loss of health and safety of the group of people concerned.
production’. A cost severity rate can then be calcu- The latter can be based on information provided by
lated, which is the total cost of accidents per 1,000 risk assessments, safety audits and accident reports.
hours worked. But the advice must be positive – why health and
safety is important and how accidents can be pre-
vented. The advice should not be overweighted by
Communicating the need for unpleasant warnings. The points to be made i nclude:
A review of the health and safety policies of
better health and safety ●●
the organization with explanations of the
practices reasoning behind them and a positive
statement of management’s belief that health
It is necessary to deliver the message that health and and safety is a major consideration because:
safety is important; this should supplement rather (1) it directly affects the wellbeing of all
than replace other initiatives. The following steps concerned; and (2) it can, and does, minimize
can be taken to increase the effectiveness of safety suffering and loss.
messages: ●● A review of the procedures used by the
organization for the business as a whole, and
●● Avoid negatives – successful safety in the particular area, to assess risks and
propaganda should contain positive audit the safety position.
messages, not warnings of the unpleasant
consequences of actions. ●● An explanation of the roles of the members
of the group in carrying out their work safely
●● Focus correctly – address the message to the and giving full consideration to the safety of
right people at the point of danger. others.
●● Use attention-getting techniques carefully – ●● A reiteration of the statement that one of the
lurid images may only be remembered for core values of the organization is the
what they are, not for the message they are maintenance of safe systems of work and the
trying to convey. promotion of safe working practices.
●● Maximize comprehension – messages should
be simple and specific.
●● Messages must be believable – they should Health and safety training
address real issues and be perceived as being
delivered by people (ie managers) who Health and safety training is a key part of the pre-
believe in what they say and are doing ventative programme. It should start as part of the
something about it. induction course. It should also take place follow-
ing a transfer to a new job or a change in working
methods. Safety training spells out the rules and affect them and their fellow workers. While
provides information on potential hazards and how management and managers have the duty to
to avoid them. Further refresher training should be communicate and train, individuals also have
provided and special courses laid on to deal with the duty to take account of what they have
new aspects of health and safety or areas in which heard and learnt and apply it in the ways
safety problems have emerged. that they carry out their work.
●● Health and safety advisers advise on policies
and procedures and on healthy and safe
Organizing health and methods of working. They conduct risk
assessments, safety audits and investigations
safety into accidents (in conjunction with managers
and health and safety representatives),
Health and safety concerns everyone in an establish-
maintain statistics and report on trends and
ment, although the main responsibility lies with
necessary actions.
management in general and individual managers in
particular. Specific roles should be defined as follows: ●● Health and safety representatives deal with
health and safety issues in their areas and
●● Management develops and implements are members of health and safety
health and safety policies and ensures that committees.
procedures for carrying out risk assessments,
●● Medical advisers have two functions:
safety audits and inspections are
preventative and clinical. The preventative
implemented. Importantly, management has
function is most important, especially on
the duty of monitoring and evaluating health
occupational health matters. The clinical
and safety performance and taking corrective
function is to deal with industrial accidents
action as necessary.
and diseases and to advise on the steps
●● Managers can exert a greater influence on necessary to recover from injury or illness
health and safety. They are in immediate arising from work. They do not usurp the
control and it is up to them to keep a role of the family doctor in non-work-related
constant watch for unsafe conditions or illnesses.
practices and to take immediate action. They
●● Safety committees consisting of health and
are also directly responsible for ensuring that
safety representatives advise on health and
employees are conscious of health and safety
safety policies and procedures, help in
hazards and do not take risks.
conducting risk assessments and safety
●● Employees should be aware of what audits, and make suggestions on improving
constitute safe working practices as they health and safety performance.
Key learning points
Managing health and safety at work by the legislation – the Health and Safety at Work etc
Act 1974 and the various regulations laid down in the
The achievement of a healthy and safe place of work, Codes of Practice.
and the elimination to the maximum extent possible of
hazards to health and safety, is the responsibility of
Health and safety policies
everyone employed in an organization, as well as
those working there under contract. But the onus is on Written health and safety policies are required to
the management to achieve and indeed go beyond the demonstrate that top management is concerned about
high standard in health and safety matters required the protection of the organization’s employees from
hazards at work and to indicate how this protection ●● Isolate hazardous processes and substances so
will be provided. that workers do not come into contact with them.
●● Change the processes or substances used to
Risk assessments promote better protection or eliminate the risk.
Risk assessments are concerned with the ●● Provide protective equipment, but only if changes
identification of hazards and the analysis of the risks to the design, process or specification cannot
attached to them. The purpose is to initiate completely remove the hazard.
preventative action.
●● Train workers to avoid risk.
Health and safety audits ●● The control of stress is a major part of a
programme.
Health and safety audits provide for a much more
comprehensive review of all aspects of health and
safety policies, procedures and practices. Measuring health and safety performance
This is important as a guide to action using the
Health and safety inspections
standard measures of frequency, incidence and
Health and safety inspections should be carried out on severity rate.
a regular and systematic basis by line managers and
supervisors, with the advice and help of health and Communicating the need for better health
safety advisers.
and safety practices
Accident prevention It is necessary to deliver the message that health and
safety is important as long as this supplements rather
Checklist: than replaces other initiatives.
●● Identify the causes of accidents.
●● Take account of safety factors at the design stage.
Health and safety training
Health and safety training is a key part of the
●● Design safety equipment and protective devices
preventative programme. It should start as part of the
and provide protective clothing.
induction course. It should also take place following a
●● Carry out regular risk assessment audits and transfer to a new job or a change in working methods.
inspections and take action to eliminate risks.
●● Investigate all accidents. Organizing health and safety
●● Maintain good records and statistics in order to Health and safety concerns everyone in an
identify problem areas and unsatisfactory trends. establishment, although the main responsibility lies
with management in general and individual managers
●● Conduct a continuous programme of education and in particular. The specific roles should be defined for
training on safe working habits. managers and employees, health and safety advisers,
medical advisers and the health and safety
committee.
Occupational health programmes
Implementing occupational health programmes can:
●● Eliminate the hazard at source through design and
process engineering.
References
Bevan, S (2018) Unlocking Employee Productivity: Southwick, S and Charney, D (2012) Resilience: The
The role of health and wellbeing in manufacturing, science of mastering life’s greatest challenges,
EEF – The Manufacturers’ Organisation Cambridge, Cambridge University Press
Cooper, C and Hesketh, I (2019) Wellbeing at Work,
London, Kogan Page
512

513
PART XIV
HR practices
PA R T X I V CO N T E N T S
58 HR policies
59 HR procedures
60 Dealing with the legal aspects of employment
Introduction
This part describes four areas of HRM that are
concerned with administering the employment

relationship.
514

515
58
ers do not generally care for abstractions. But they
do want to know where they stand – people like
structure – and formalized HR policies can provide
HR policies
the guidelines they need.
Formalized HR policies can be used in induction,
team leader and management training to help par-
ticipants understand the philosophies and values of
the organization and how they are expected to be-
have within that context. They are a means for
defining the employment relationship and the psy-
chological contract. HR policies can be expressed
Introduction formally as overall statements of the values of the
organization or in relation to specific areas, as dis-
HR or people policies set out the approaches that cussed in this chapter.
the organization adopts to dealing with key aspects
of people management and provide guidelines on
how these approaches should be applied. They de- Overall HR policy
fine the philosophies and values of the organization
on how people should be treated, and from these Overall HR policy defines how the organization ful-
are derived the principles upon which managers are fils its social responsibilities for its employees and
expected to act when dealing with HR matters. sets out its attitudes towards them. It is an expres-
Policies should be distinguished from proce- sion of its values or beliefs about how people should
dures. An HR policy provides generalized guidance be treated. The values expressed in an overall state-
on how HR issues should be dealt with. An HR pro- ment of HR policies may explicitly or implicitly
cedure spells out precisely what steps should be refer to the following concepts:
taken to deal with major employment issues such as Wellbeing – paying close attention to all aspects
grievances, discipline, capability and redundancy. In of the work experience that contribute to
this chapter consideration is given to the reason for feelings of satisfaction fulfilment and
HR policies, the areas in which general and specific happiness at work. This includes concern
policies are formulated and the development and with the quality of working life and working
implementation of policies. conditions.
Quality of working life – consciously and
Why have HR policies? continually aiming to improve the quality of
working life. This involves increasing the
HR policies define how the organization wants to sense of satisfaction that people obtain from
handle key aspects of people management. As their work by – so far as possible – reducing
guidelines the aim is to ensure that any HR issues monotony; increasing variety, autonomy and
are dealt with consistently in accordance with the responsibility; avoiding placing people under
values of the organization and in line with certain too much stress; providing for an acceptable
defined principles. All organizations have HR poli- balance between work and life outside work.
cies. Some, however, exist implicitly as a philosophy Working conditions – providing healthy, safe
of management and an attitude to employees that is and – so far as practicable – pleasant
expressed in the way in which HR issues are han- working conditions.
dled; for example, the introduction of a new grade
and pay structure. The advantage of explicit policies Equity – treating employees fairly and justly by
in terms of consistency and understanding may ap- adopting an ‘even-handed’ approach. This
pear to be obvious, but there are disadvantages: includes protecting individuals from any
written policies can be inflexible, constrictive, plati- unfair decisions made by their managers,
tudinous, or all three. To a degree, policies have providing equal opportunities for
often to be expressed in abstract terms and manag-
516 Part 14 | HR Practices
employment and promotion, and operating employment relationship, employee development,

an equitable payment system. employee voice, equal opportunity, grievances, health
and safety, industrial relations, new technology, pro-
Consideration – taking account of individual
motion, redundancy, reward, sexual harassment, sub-
circumstances when making decisions that
stance abuse, whistle-blowing and work–life balance.
affect the prospects, security or self-respect
of employees.
Organizational learning – a belief in the need to Age and employment
promote the learning and development of all
The policy on age and employment should take into
the members of the organization by providing
account the UK legislation on age discrimination
the processes and support required.
and the following facts:
Performance through people – the importance
●● Age is a poor predictor of job performance.
attached to developing a performance culture
and to continuous improvement; the ●● It is misleading to equate physical and
significance of performance management as a mental ability with age.
means of defining and agreeing mutual ●● More of the population are living active,
expectations; the provision of fair feedback healthy lives as they get older.
to people on how well they are performing.
These values are espoused by many organizations in Bullying
one form or another. But to what extent are they prac-
ticed when making ‘business-led’ decisions (which An anti-bullying policy will state that bullying will
can, of course, be highly detrimental to employees if, not be tolerated by the organization and that those
for example, they lead to redundancy)? One of the who persist in bullying staff will be subject to disci-
dilemmas facing all those who formulate HR policies plinary action, which could be severe in particularly
is: how can we pursue policies focusing on business bad cases. The policy will make it clear that indi-
success and at the same time fulfil our obligations to viduals who are being bullied should have the right
employees in such terms as equity, consideration, qual- to discuss the problem with another person, a rep-
ity of working life, security and working conditions? resentative or a member of the HR function, and to
To argue, as some do, that HR policies should be en- make a complaint. The policy should emphasize
tirely business-led implies that human considerations that if a complaint is received it will be thoroughly
are unimportant. Yet organizations have obligations investigated.
to all their stakeholders, not just their owners.
It may be difficult to express these overall p
olicies
in anything but generalized terms, but employers Discipline
increasingly have to recognize that they are subject The disciplinary policy should state that employees
to external as well as internal pressures and moral have the right to know what is expected of them
imperatives, which act as constraints on the extent and what could happen if they infringe the organi-
to which they can disregard the higher standards of zation’s rules. It should also make the point that, in
behaviour towards their employees that are ex- handling disciplinary cases, the organization will
pected of them. What needs to be done to avoid ac- treat employees in accordance with the principles of
cusations that general HR policy statements are natural justice. It should be supported by a discipli-
mere rhetoric is to convert them into reality through nary procedure (see Chapter 59).
specific HR policies and enforce their application.
Diversity and inclusion

Specific HR policies
A policy on managing diversity and inclusion sets
The most common areas in which specific HR policies out the ways in which the organization, while recog-
exist are age and employment, bullying, discipline, nizing the differences between people, ensures that
diversity management, emails and the internet, the those of different ethnic backgrounds, religions,
Chapter 58 | HR Policies 517
gender and age groups are brought together to work Employee voice
in cohesive and productive organizational units. The
policy will indicate how a culture is developed and The employee voice policy should spell out the
maintained in which individuals of all backgrounds organization’s belief in giving employees an oppor-
are fairly treated and valued for who they are. This tunity to have a say in matters that affect them. It
was considered in more detail in Chapter 31. should define the mechanisms for employee voice
such as joint consultation and suggestion schemes.
Emails and use of the internet

The policy on emails could state that the sending or
Equal opportunity
downloading of offensive emails is prohibited and The equal opportunity policy should spell out the
that the senders or downloaders of such messages organization’s determination to give equal opportu-
are subject to disciplinary procedures. The policy nities to all, irrespective of sex, sexual orientation,
may also prohibit internet browsing, for example of race, creed, disability, age or marital status. The
social networks, or downloading material not re- policy should also deal with the extent to which the
lated to the business, although this can be difficult organization wants to take ‘affirmative action’ to
to enforce. Some companies have always believed redress imbalances between the numbers employed
that reasonable use of the telephone is acceptable according to sex or race or to differences in the lev-
and that policy may be extended to the internet. els of qualifications and skills they have achieved.
If it is decided that employees’ emails should be The policy could be set out as follows:
monitored to check on excessive or unacceptable
●● We are an equal opportunity employer. This
use, this should be included in an email policy,
means that we do not permit direct or
which would therefore be part of the contractual
indirect discrimination against any employee
arrangements. A policy statement could be included
on the grounds of race, nationality, sex,
to the effect that ‘The company reserves the right to
sexual orientation, disability, religion, marital
access and monitor all email messages created, sent,
status or age.
received or stored on the company’s system.’
●● Direct discrimination takes place when a
person is treated less favourably than others
The employment relationship are or would be treated in similar
circumstances.
Employment policies should be concerned with fun-
●● Indirect discrimination takes place when,
damental aspects of the employment relationship.
whether intentional or not, a condition is
They should take account of the requirements of
applied that adversely affects a considerable
relevant legislation and case law, as covered in
proportion of people of one race, nationality,
Chapter 60.
sex, sexual orientation, religion or marital
status, or those with disabilities or older
employees.
Employee development
●● The firm will ensure that equal opportunity
The employee development policy could express the principles are applied in all its HR policies
organization’s commitment to the continuous de- and in particular to the procedures relating
velopment of the skills and abilities of employees in to the recruitment, training, development and
order to maximize their contribution and to give promotion of its employees.
them the opportunity to enhance their skills, realize
●● Where appropriate and where permissible
their potential, advance their careers and increase
under the relevant legislation and codes of
their employability, both within and outside the or-
practice, employees of under-represented
ganization. The policy could also express the belief
groups will be given positive training and
that age should not be a barrier to learning oppor-
encouragement to achieve equal
tunities from which everyone can benefit, irrespec-
opportunity.
tive of how old they are.
Grievances advertised jobs and will not be held back from pro-
motion by their managers, however reluctant the
The policy on grievances could state that employees latter may be to lose them. The policy should define
have the right to raise their grievances with their the approach that the organization adopts to engag-
manager, to be accompanied by a representative if ing, promoting and training older employees. It
they so wish, and to appeal to a higher level if they should emphasize that the only criterion for selec-
feel that their grievance has not been resolved satis- tion or promotion should be ability to do the job.
factorily. The policy should be supported by a griev-
ance procedure (see Chapter 59).
Redundancy
Health and safety The redundancy policy should state that the aim of
the organization is to provide for employment secu-
Health and safety policies cover how the organiza- rity. It is the organization’s intention to use its best
tion intends to provide healthy and safe places and endeavours to avoid involuntary redundancy
systems of work (see Chapter 57). through its redeployment and retraining pro-
grammes. However, if redundancy is unavoidable,
those affected will be given fair and equitable treat-
Industrial relations ment, the maximum amount of warning and every
The employment relations policy will set out the or- help that can be provided to obtain suitable alterna-
ganization’s approach to the rights of employees to tive employment. The policy should be supported
have their interests represented to management by a redundancy procedure.
through trade unions, staff associations or some
other form of representative system. It will also
cover the basis upon which the organization works
Reward
with trade unions, eg emphasizing that this should The reward policy could cover such matters as:
be regarded as a partnership.
●● providing an equitable pay system;
●● equal pay for work of equal value;
New technology ●● paying for performance, competence, skill or
A new technology policy statement could state that contribution;
there will be consultation about the introduction of ●● sharing in the success of the organization
new technology and the steps that would be taken (gain sharing or profit sharing);
by the organization to minimize the risk of compul- ●● the relationship between levels of pay in the
sory redundancy or adverse effects on other terms organization and market rates;
and conditions or working arrangements.
●● the provision of employee benefits, including
flexible benefits, if appropriate;
Promotion ●● the importance attached to the non-financial
rewards resulting from recognition,
A promotion policy could state the organization’s accomplishment, autonomy and the
intention to promote from within wherever this is opportunity to develop.
appropriate as a means of satisfying its require-
ments for high-quality staff. The policy could, how-
ever, recognize that there will be occasions when the Sexual harassment
organization’s present and future needs can only be
met by recruitment from outside. The point could The sexual harassment policy should state that:
be made that a vigorous organization needs infu- ●● Sexual harassment will not be tolerated.
sions of fresh blood from time to time if it is not to
●● Employees subjected to sexual harassment
stagnate. In addition, the policy might state that em-
will be given advice, support and counselling
ployees will be encouraged to apply for internally
as required.
●● Every attempt will be made to resolve the employee for whistle-blowing is deemed in law as
problem informally with the person an automatic unfair dismissal if a ‘protected disclo-
complained against. sure’ is made, for example referring to a criminal
●● Assistance will be given to the employee to offence by the employer and the employee ‘reason-
complain formally if informal discussions ably believes’ that the disclosure is in the ‘public in-
fail. terest’. Obviously, employers want to avoid that
situation and employees need guidance on what
●● A special process will be available for
they can and can’t do and how they should act. This
hearing complaints about sexual harassment.
is the reason for a whistle-blowing policy that will:
This will provide for employees to bring
their complaint to someone of their own sex ●● Explain that the organization believes that it
if they so wish. is important to deal with any wrongdoing,
●● Complaints will be handled sensitively and especially those malpractices specifically
with due respect for the rights of both the referred to in the Public Interest Disclosure
complainant and the accused. Act 1998, including criminal offences, risks
to health and safety, failure to comply with a
Sexual harassment is regarded as gross misconduct legal obligation, a miscarriage of justice and
and, if proved, makes the individual liable for in- environmental damage. Specific examples of
stant dismissal. Less severe penalties may be unacceptable behaviour could be given.
reserved for minor cases, but there will always be a
●● Indicate that if anyone becomes aware of an
warning that repetition will result in dismissal.
issue that needs to be dealt with, they should
raise the matter inside the organization,
either with their line manager or, if the
Substance abuse allegation is about their line manager, to a
A substance abuse policy could include assurances more senior manager.
that: ●● State that employees will not be penalized
●● employees identified as having substance for informing management about a
abuse problems will be offered advice and malpractice.
help;
any reasonable absence from work necessary
●●
to receive treatment will be granted under
Work–life balance
the organization’s sickness scheme, provided Work–life balance policies define how the organiza-
there is full cooperation from the employee; tion intends to allow employees greater flexibility in
●● an opportunity will be given to discuss the their working patterns so that they can balance
matter once it has become evident or what they do at work with the responsibilities and
suspected that work performance is being interests they have outside work. The policy will in-
affected by substance-related problems; dicate how flexible work practices can be developed
and implemented. It will emphasize that the num-
●● the right to be accompanied by a friend or
bers of hours worked must not be treated as a
employee representative in any such
criterion for assessing performance. It will set out
discussion;
guidelines on the specific arrangements that can be
●● agencies will be recommended to which the made, such as flexible hours, compressed working
employee can go for help if necessary; week, term-time working contracts, working at
●● employment rights will be safeguarded home, special leave for parents and carers, career
during any reasonable period of treatment. breaks and various kinds of child care.
A flexibility policy will need to take account of
the Work and Families Act 2006, as described in
Whistle-blowing Chapter 60.
Whistle-blowing takes place when someone reports
a suspected wrongdoing at work. Dismissal of an
and where they think they could be

Developing HR policies improved.
HR or people policies need to address the key HR ●● Seek the views of employees about the HR
issues that have been identified in the organization. policies, especially the extent to which they
They must also take account of external factors are inherently fair and equitable and are
such as legislation. The maximum amount of con- implemented fairly and consistently.
sultation should take place with managers, employ- Consider doing this through an attitude
ees and their representatives and the policies should survey.
be communicated widely with guidelines on their ●● Seek the views of union representatives.
application. The following steps should be taken ●● Analyse the information obtained in the first
when formulating HR policies: seven steps and prepare draft policies.
●● Gain understanding of the corporate culture ●● Consult, discuss and agree policies with
and its shared values. management and union representatives.
●● Analyse existing policies – written and ●● Communicate the policies with guidance
unwritten. HR policies will exist in any notes on their implementation as required
organization, even if they are implicit rather (although they should be as self-explanatory
than expressed formally. as possible). Supplement this communication
●● Analyse external factors. HR policies are with training.
subject to the requirements of UK
employment legislation, and the official
Codes of Practice issued by bodies in the UK, Implementing HR policies
such as ACAS (the Advisory, Conciliation
and Arbitration Service), the Equality and The aim will be to implement policies fairly and con-
Human Rights Commission (EHRC) and the sistently. Line managers have an important role in
Health and Safety Executive (HSE). The doing this. It is they who will be largely responsible
Codes of Practice issued by relevant for policy implementation. Members of the HR
professional institutions, such as the CIPD, function can give guidance, but it is line managers
should also be consulted. who are on the spot and have to make decisions
about people. The role of HR is to communicate and
●● Assess any areas where new policies are
interpret the policies, convince line managers that
needed or existing policies are inadequate.
they are necessary and provide training and support
●● Check with managers, preferably starting at that will equip managers to implement them.
the top, on their views about HR policies
Key learning points
The reasons for having HR policies sets out its attitudes towards them. It is an expression
of its values or beliefs about how people should be
HR policies provide guidelines on how key aspects of treated.
people management should be handled. The aim is to
ensure that any HR issues are dealt with consistently
Specific HR policies.
in accordance with the values of the organization and
in line with certain defined principles. Specific HR policies cover age and employment, bullying,
discipline, emails and the internet, the employment
Overall HR policy relationship, employee development, employee voice,
equal opportunity, grievances, health and safety,
The overall HR policy defines how the organization industrial relations, new technology, promotion,
fulfils its social responsibilities for its employees and
redundancy, reward, sexual harassment, substance should take place with managers, employees and their
abuse, whistle-blowing and work–life balance. representatives, and the policies should be
communicated widely with guidelines on their
Formulating HR policies application.
HR policies need to address the key HR issues that

have been identified in the organization. They must
Implementing HR policies
also take account of external factors such as The aim will be to implement policies fairly and
legislation. The maximum amount of consultation consistently. Line managers have a key role in doing this.
522
59
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 in misconduct cases. An example of a capa-
They should be distinguished from HR policies, bility procedure is given below.
as described in Chapter 58, 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 employ-
tain significant and possibly recurring employment ee’s 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
to the employee and help will be offered to
obtain conformity with the standards;
Chapter 59 | HR Procedures 523
●● it is apparent that the poor performance Employees may appeal against their dismissal. The
constitutes misconduct, the disciplinary appeal must be made within three working days.
procedure will be invoked.
Should the employee show no (or insufficient) im-
provement over a defined period (weeks/months), a
Disciplinary procedure
formal interview will be arranged with the em-
A disciplinary procedure sets out the stages through
ployee (together with a representative if so desired).
which any disciplinary action should proceed. An
The aims of this interview will be to:
example is given below.
●● explain clearly the shortfall between the
employee’s performance and the required
standard; Policy
●● identify the cause(s) of the It is the policy of the company that if disciplinary
unsatisfactory performance and to determine action has to be taken against employees it should:
what – if any – remedial treatment (training,
retraining, support, etc) can be given; ●● be undertaken only in cases where good
reason and clear evidence exists;
●● obtain the employee’s commitment to
reaching that standard; ●● be appropriate to the nature of the offence
that has been committed;
●● set a reasonable period for the employee to
reach the standard and agree on a ●● be demonstrably fair and consistent with
monitoring system during that period; previous action in similar circumstances;
●● tell the employee what will happen if that ●● take place only when employees are aware of
standard is not met. the standards that are expected of them or
the rules with which they are required to
The outcome of this interview will be recorded in conform;
writing and a copy will be given to the employee.
●● allow employees the right to be represented
At the end of the review period a further formal
by a representative or colleague during any
interview will be held, at which time:
formal proceedings;
●● if the required improvement has been made, ●● allow employees the right to know exactly
the employee will be told of this and what charges are being made against them
encouraged to maintain the improvement; and to respond to those charges;
●● if some improvement has been made but the ●● allow employees the right of appeal against
standard has not yet been met, the review any disciplinary action.
period will be extended;
●● if there has been no discernible improvement
and performance is still well below an Disciplinary rules
acceptable standard this will be indicated to
The company is responsible for ensuring that up-to-
the employee and consideration will be given
date disciplinary rules are published and available
to whether there are alternative vacancies
to all employees. These will set out the circum-
that the employee would be competent to fill;
stances in which an employee could be dismissed
if there are, the employee will be given the
for gross misconduct.
option of accepting such a vacancy or being
considered for dismissal;
●● if such vacancies are available, the employee Procedure
will be given full details of them in writing
before being required to make a decision; The procedure is carried out in the following stages:
●● in the absence of suitable alternative work, 1 Informal warning. A verbal or informal
the employee will be informed and invited to warning is given to the employee in the first
give his or her views on this before the final instance or instances of minor offences. The
decision is taken.
warning is administered by the employee’s the HR manager and the appeal procedure has been
immediate manager or team leader. carried out. To enable this review to take place,
2 Formal warning. A written formal warning is employees should be suspended pending further in-
given to the employee in the first instance of vestigation, which must take place within 24 hours.
more serious offences or after repeated
instances of minor offences. The warning is
administered by the employee’s immediate Appeals
manager or team leader. It states the exact In all circumstances, an employee may appeal
nature of the offence and indicates any against suspension, dismissal with notice or sum-
future disciplinary action that will be taken mary dismissal. The appeal is conducted by a mem-
against the employee if the offence is ber of management who is more senior than the
repeated within a specified time limit. A copy manager who initially administered the disciplinary
of the written warning is placed in the action. The HR manager should also be present at
employee’s personal record file but is the hearing. If he or she wishes, the employee may
destroyed 12 months after the date on which be represented at the appeal by a fellow employee
it was given, if the intervening service has of his or her own choice. Appeal against summary
been satisfactory. The employee is required dismissal or suspension should be heard immedi-
to read and sign the formal warning and has ately. Appeals against dismissal with notice should
the right to appeal to higher management if be held within two days. No disciplinary action that
he or she thinks the warning is unjustified. is subject to appeal is confirmed until the outcome
The HR manager should be asked to advise of the appeal.
on the text of the written warning. If an appeal against dismissal (but not suspen-
3 Further disciplinary action. If, despite previous sion) is rejected at this level, the employee has the
warnings, an employee still fails to reach the right to appeal to the chief executive. The head of
required standards in a reasonable period of HR and, if required, the employee’s representative
time, it may become necessary to consider should be present at this appeal.
further disciplinary action. The action taken
may be up to three days’ suspension without
pay, or dismissal. In either case the Grievance procedure
departmental manager should discuss the
matter with the HR manager before taking A grievance procedure spells out the policy on han-
action. Staff below the rank of departmental dling grievances and the approach to dealing with
manager may only recommend disciplinary them. An example of a grievance procedure is given
action to higher management, except when below.
their manager is not present (for example, on
night-shift), when they may suspend the
employee for up to one day pending an Policy
inquiry on the following day. Disciplinary
It is the policy of the company that employees
action should not be confirmed until the
should:
appeal procedure has been carried out.
●● be given a fair hearing by their immediate
supervisor or manager concerning any
Summary dismissal grievances they may wish to raise;
An employee may be summarily dismissed (ie given ●● have the right to appeal to a more senior
instant dismissal without notice) only in the event manager against a decision made by their
of gross misconduct, as defined in company rules. immediate supervisor or manager;
Only departmental managers and above can recom- ●● have the right to be accompanied by a fellow
mend summary dismissal, and the action should not employee of their own choice when raising a
be finalized until the case has been discussed with grievance or appealing against a decision.
The aim of the procedure is to settle the grievance are surplus to requirements in a particular occupation
as nearly as possible to its point of origin. and cannot be offered suitable alternative work.
Employees may be surplus to requirements be-
cause changes in the economic circumstances of the
Procedure company mean that fewer employees are required,
or because changes in methods of working mean
The main stages through which a grievance may be
that a job no longer exists. An employee who is
raised are as follows:
given notice because he or she is unsuitable or inef-
1 The employee raises the matter with his or ficient is not regarded as redundant and would be
her immediate manager or team leader and dealt with in accordance with the usual disciplinary
may be accompanied by a fellow employee or capability procedure.
of his or her own choice.
2 If the employee is not satisfied with the
decision, the employee requests a meeting Objectives
with a member of management who is more The objectives of the redundancy procedure are to
senior than the manager or team leader who ensure that:
initially heard the grievance. This meeting
takes place within five working days of the ●● employees affected by redundancy are given
request and is attended by the manager, a fair and equitable treatment;
HR manager or business partner, the ●● the minimum disruption is caused to
employee appealing against the decision, and, employees and the company;
if desired, his or her representative. The HR ●● as far as possible, changes are affected with
manager records the results of the meeting in the understanding and agreement of the
writing and issues copies to all concerned. unions and employees concerned.
3 If the employee is still not satisfied with the
decision, he or she may appeal to the
appropriate director. The meeting to hear this
appeal is held within five working days of
Principles
the request and is attended by the director, The principles governing the procedure are as
the head of HR, the employee making the follows:
appeal and, if desired, his or her
●● The trade unions concerned will be informed
representative. The manager responsible for
as soon as the possibility of redundancy is
HR records the result of this meeting in
foreseen.
writing and issues copies to all concerned.
No further appeal can be made beyond ●● Every attempt will be made to:
this stage. ❍❍ absorb redundancy by the natural wastage
of employees;
find suitable alternative employment
Redundancy procedure ❍❍
within the company for employees who
might be affected, and provide training if
A redundancy procedure aims to meet statutory, this is necessary;
ethical and practical considerations when dealing
❍❍ give individuals reasonable warning of
with this painful process. An example of a proce-
pending redundancy in addition to the
dure is given below.
statutory period of notice.
●● If alternative employment in the company is
Definition not available and more than one individual is
affected, the factors to be taken into
Redundancy is defined as the situation in which
management decides that an employee or e mployees
consideration in deciding who should be selected by the departmental manager with the
made redundant will be: advice of the HR manager on the principles that
❍❍ length of service with the company; should be adopted.
The HR manager should explore the possibilities
❍❍ value to the company;
of transferring affected employees to alternative
❍❍ other things being equal, length of service work. The HR manager should inform management
should be the determining factor. of proposed action (either redundancy or transfer)
●● The company will make every endeavour to to obtain approval.
help employees find alternative work if that The union(s) will be informed of the numbers af-
is necessary. fected, but not of individual names.
The departmental manager and the HR manager
The procedure for dealing with employees who are
will jointly interview the employees affected either
surplus to requirements is set out below.
to offer a transfer or, if a suitable alternative is not
available, to inform them that they will be redun-
dant. At this interview, full information should be
Review of employee requirements available to give to the employee on the following,
Management will continuously keep under review as appropriate:
possible future developments that might affect the
●● the reasons for being surplus;
number of employees required, and will prepare
overall plans for dealing with possible redundancies. ●● the alternative jobs that are available;
●● the date when the employee will become
surplus (that is, the period of notice);
Measures to avoid redundancies ●● the entitlement to redundancy pay;
If the likelihood of redundancy is foreseen, the com- ●● the employee’s right to appeal to an
pany will inform the union(s), explaining the rea- appropriate director;
sons, and in consultation with the union(s) will give ●● the help the company will provide.
consideration to taking appropriate measures to
prevent redundancy. An appropriate director will hear any appeals with
Departmental managers will be warned by the the HR manager.
management of future developments that might af- The HR manager will ensure that all the required
fect them so that detailed plans can be made for administrative arrangements are made.
running down the numbers of employees by allow- If the union(s) have any points to raise about the
ing natural wastage to take place without replace- selection of employees or the actions taken by the
ments, retraining, or transfers. company, these should be discussed in the first place
Departmental managers will be expected to keep with the HR manager. If the results of these discus-
under review the work situation in their departments sions are unsatisfactory, a meeting will be arranged
so that contingency plans can be prepared and the with an appropriate director.
HR manager is informed of any likely surpluses.
Alternative work within the

Consultation on redundancies company
If all measures to avoid redundancy fail, the com- If an employee is offered and accepts suitable alter-
pany will consult the union(s) at the earliest oppor- native work within the company, it will take effect
tunity in order to reach agreement. without a break from the previous employment and
will be confirmed in writing. Employees will receive
appropriate training and will be entitled to a four-
Selection of redundant employees week trial period to see if the work is suitable. This
In the event of impending redundancy, the individu- trial period may be extended by mutual agreement
als who might be surplus to requirements should be to provide additional training. During this period,
employees are free to terminate their employment Alternative employment

and, if they do, would be treated as if they had been
made redundant on the day their old job ended. Employees for whom no suitable work is available
They would then receive any redundancy pay to in the company will be given reasonable opportuni-
which they are entitled. ties to look for alternative employment.
Key learning points

●● HR procedures set out the ways in which certain certain significant and possibly recurring
actions concerning people should be carried out by employment issues.
the management or individual managers. In effect,
●● The introduction or development of HR procedures
they constitute a formalized approach to dealing
should be carried out in consultation with
with specific matters of policy and practice.
employees and, where appropriate, their
●● They should be distinguished from HR policies, representatives.
which serve as guidelines on people management
●● It is essential to brief everyone on how the
practices but do not necessarily lay down precisely
procedures operate, and they should be published
the steps that should be taken in particular
either in an employee handbook or as a separate
situations. Procedures are more exacting: they
document.
state what must be done as well as spelling out
how to do it. ●● Line managers may need special training on how
they should apply the procedures and the HR
●● It is desirable to have the key HR procedures
department should provide guidance wherever
written down to ensure that HR policies are applied
necessary. HR will normally have the responsibility
consistently and in accordance with both legal
of ensuring that procedures are followed
requirements and ethical considerations.
consistently.
●● The existence of a written and well-publicized
●● Procedures are required to deal with capability and
procedure ensures that everyone knows precisely
disciplinary issues, grievances and redundancy.
what steps need to be taken when dealing with
528
60
Dealing with
the legal aspects
of employment
higher standards of employment practice under-
Introduction pinned by law.
For employers in the UK the adjustment required
Dealing with the legal aspects of employment means by the introduction of extensive employment law
ensuring that the organization complies with the has often been problematic as the UK’s labour mar-
legal requirements affecting employment and that ket was historically one of the least regulated in the
any legal issues that arise are dealt with satisfacto- world. There thus remains a strong tendency for
rily. It is a typical and demanding part of the role of employers and their representatives to resist the in-
HR professionals who handle matters affecting the troduction of new regulation and to campaign for a
employment relationship and how employees be- reduction in the existing ‘regulatory burden’ on the
have and are treated at work. To carry it out they grounds that it both deters organizations from tak-
have to understand the main provisions of employing new staff on, while also making the UK econ-
ment law, ensure compliance with its requirements omy as a whole less globally competitive than it
and deal with employment law issues. These areas would otherwise be. Despite these misgivings, it is
of responsibility are examined in turn in this chapter. clear that employment law is here to stay and that it
makes good business sense to comply with its re-
quirements. Most employers have to face employ-
Employment law provisions ment tribunal claims from time to time and most
HR professionals have to deal with their conse-
The employment relationship is subject to a great quences on a fairly regular basis.
deal of regulation in all industrialized counties and
is increasingly a feature of HRM practice in devel-
oping economies too. While the details and extent The purpose of employment law
of regulatory protection vary from country to coun-
try as well as the enforcement mechanisms, the aims There has never been any grand strategy behind the
of employment legislation are remarkably similar construction of modern employment law. Instead, it
(Ashiagbor, 2005; Slattery and Broadbent, 2013). It has been built up steadily over more than 50 years,
is also the case that in all countries the trend in re- step by step, new laws being introduced in response
cent years has been towards greater levels of em- to political pressure of one kind or another, and only
ployment regulation, not least due to the actions of rarely being repealed. Sometimes the impetus for
supra-national bodies such as the International new regulation has come from European institu-
Labour Organization (ILO) and the European tions, such as the transfer of undertakings regula-
Union (EU) which have persistently promoted tions which protect employees’ terms and conditions
when their organizations are acquired by others,
Chapter 60 | Dealing with the Legal Aspects of Employment 529
outsourced or merged. On other occasions govern- criminating against them for no good reason,
ments have used employment law to increase their underpaying and overworking them or causing

popularity and try to ensure re-election. A good ex- them to risk their health, safety and welfare while at
ample was the introduction by the government of work. In the early and middle years of the 20th cen-
substantially improved maternity and paternity tury trade unions tended to offer employees a much
rights in April 2015 just ahead of the general. New greater level of protection than they are now able
employment law can be introduced in response to to, and so to a considerable extent the state has had
events (eg stricter laws on industrial action follow- to step in to provide protection of the kind that
ing major strikes) or campaigns by trade unions and strong unions with high levels of membership once
other groups (eg the National Minimum Wage and were able to provide.
disability discrimination laws). There are, however, two major further reasons
Despite this apparent lack of coherence in its de- behind employment regulation in today’s economic
velopment, it is nonetheless possible to identify a context. First, governments have sought to use em-
number of key aims that governments hope to ployment law to promote good practice in the em-
achieve by regulating the labour market. In 2013 ployment relationship. Ministers are always mindful
the UK government issued a progress report on its of the presence of skills shortages and of the pres-
programme of employment regulation in which ence in our labour market of large numbers of peo-
three distinct objectives were set out (DBIS, 2013a). ple (typically 20 per cent) who are economically
Here ministers stated that they sought to create a inactive despite being of working age. One aim is to
labour market that was: encourage people off welfare and into work, an-
other is to encourage people who could work but
●● flexible – encouraging job creation and
who choose not to (eg early retirees) to put their
making it easy for people to stay in work
skills at the disposal of the economy. Governments
and find work;
have also wanted to make their countries an attrac-
●● effective – enabling employers to manage tive destination to highly skilled migrants from
staff productivity; and overseas who might otherwise choose to settle else-
●● fair – employers competing on a level playing where. Ensuring that employers operate fairly and
field and workers benefiting from core promoting partnership approaches both serve to
employment protections. help meet these objectives. Secondly, governments
are keen to promote flexibility and competition in
The idea of a level playing field was particularly im-
the labour market. They want to ensure that em-
portant in the context of European Union employ-
ployees are free to leave their employment and join
ment regulation. The aim here was to help ensure
another organization easily and that they are not
that defined minimum standards were observed
prevented from working because of domestic com-
across all member states so that no one country was
mitments. They also want to ensure that when peo-
able to undercut its labour costs in order to steal an
ple persistently perform their jobs poorly or when
unfair competitive march on the others. It is to be
their jobs are genuinely redundant employers are
hoped that the UK will continue to adhere to these
able to terminate their contracts swiftly and cheaply.
high standards for the foreseeable future, and min-
Above all, ministers want to avoid a situation in
isters have stated that while there may be advantage
which employers are deterred from creating new
in doing so, they have no intention of weakening
jobs due to fear of employment legislation. There is
employment protection in significant ways.
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
has always been difficult and controversial, and the Information should also be given on discipline and
position varies considerably from country to coun- grievance procedures and other key employment
try. In the UK, for example, our law makes it very policies such as equal opportunities and health and
difficult for an employer to dismiss someone for a safety, but the detail can be contained in a staff
trade union reason or to prevent a union from or- handbook
ganizing a strike which its members have voted for
in sufficient numbers. On the other hand, the way
that unions are governed and the extent to which Discrimination law
they can gain power over an employer are limited
The UK, like most industrialized countries, has a
very effectively by the law, for example by requiring
long tradition of legislating to protect minority, dis-
pre-strike balloting with a reasonable level of par-
advantaged and under-represented groups from un-
ticipation before industrial action can go ahead
fair discrimination in workplaces. Most of our law
lawfully.
is now contained within the Equality Act 2010, al-
though in most cases it dates from a number of
years before this. The Act aims to deter four distinct
Contracts of employment types of discrimination, a term which is defined
A contract of employment is a legally binding agree- quite broadly as a situation in which an individual
ment between an employer and an employee that worker suffers a detriment such as financial loss, in-
sets out the latter’s employment conditions, rights, jury to feelings or loss of dignity. The four headings
responsibilities and duties. It provides legal protec- under which a claim can be taken to an Employment
tion for both employee and employer. All workers Tribunal are as follows:
have the right to a written statement of employment
Direct discrimination: When a worker suffers a
particulars when they start work. The principal
detriment on account of a protected
‘written particulars’ to be included in a contract are:
characteristic (see below). When this found
●● date when the employment began; by the tribunal to have occurred there are
●● job title or a brief description of the work; very few defences available to employers.
The case is thus lost. More defences are,
●● the place of work including any
however, available in the case of
arrangements for home or hybrid working;
discrimination on grounds of age and
●● rates of pay, the timing and method of disability.
payment and any other benefits;
Indirect discrimination: When a worker suffers
●● hours of work and working days;
from discrimination on account of some
●● period of notice to be given by the employer generally applied rule, policy or practice
and the employee; which has the effect (even if not intended) of
●● holiday entitlement; favouring one group over another. An
●● sick pay entitlement; example would be a shift rostering system
that made more it difficult for women with
●● how variable pay is calculated;
child caring responsibilities to work than
●● details of all benefits provided in addition men. Indirect discrimination can be defended
to pay; if the employer has a good, genuine business
●● any periods of probation that need to be reason to justify its approach. The
formally ‘passed’; requirement is to satisfy the Tribunal that it
●● mandatory training that has to be completed; amounts to ‘a proportionate means of
achieving a legitimate aim’.
●● any paid leave that is available in addition to
annual leave (eg contractual maternity leave). Harassment: When a worker is subjected to
physical or verbal treatment in respect of a
protected characteristic which is unwanted
and leads either to material detriment or
which creates a working environment which sex, was nonetheless of ‘equal value’ to ‘his or hers’.
is intimidating, hostile or humiliating. The relevant law is now all found in the Equality
Employers can defend themselves in such Act 2010. It applies equally to men and to women,
cases when the perpetrator is a fellow but in practice the large majority of cases are
worker and it can demonstrate that it had brought by women using men as their comparators.
taken all possible, reasonable steps to Aside from these three headings under which a
prevent unlawful harassment from occurring claim can be brought (ie like work, work that has
and had responded swiftly and appropriately been rated as equivalent and work of equal value),
when the matter was reported. the Equality Act sets out the major defences that are
available to employers. The most widely deployed is
Victimization: When a worker suffers a
known as the ‘material factor defence’ which in-
detriment on account of a decision to pursue
volves satisfying the tribunal that the difference in
a grievance that relates to discrimination.
the level of payment between the claimant and her
This may be bringing a tribunal claim, but it
comparator is genuinely explained by factors that
could also simply be considering doing so,
have nothing to do with gender. The most common
pursuing the matter using internal
examples are situations in which a man works
procedures or assisting someone else in doing
longer hours or takes on a less desirable shift pat-
these things.
tern than the woman and those in which there are
At present there are nine protected characteristics marked differences in relative levels of skill, perfor-
listed in the Equality Act 2010. These are age, disa- mance or experience. It is also common for employ-
bility, gender reassignment, marriage and civil part- ers to pay more to people who have achieved certain
nership, pregnancy and maternity, race (including formal qualifications and also to pay London-based
ethnicity and national origin), religion or belief, sex employees more than those living elsewhere in the
and sexual orientation. In some respects the law op- UK. These are both accepted as ‘material factors’
erates somewhat differently in each case, but the provided that they genuinely explain the difference
general principles in respect of the four headings in pay. The same is true of situations in which a
and the need for a detriment to have been suffered group of employees enjoys a higher level of ‘pro-
are the same across all nine protected characteris- tected pay’ following a merger or acquisition that
tics. Various campaign groups regularly put the case brings together two groups of people who were pre-
for an expansion in the list of protected characteris- viously employed by different employers.
tics to reflect the fact that unfair discrimination oc- Partly, if not largely as a result of this law the
curs on other grounds too. Examples are paternity, hourly ‘gender pay gap’ between male and female
regional accent, menopause and people who have workers in the UK has declined from 37 per cent in
grown up in care. the early 1970s to around 9 per cent today depend-
ing on how it is measured. The reasons for its per-
sistence despite the presence of equal pay law are
Equal pay law widely debated, a number of distinct and plausible
explanations having been put forward (see Rubery
The Equal Pay Act (1970) ended the previous com-
and Grimshaw, 2014). One possibility simply arises
mon practice of employers paying men and women
from the requirement that the law places on women
different amounts of money for doing jobs that
to challenge their employers either by threatening
were either the same or very similar. It became un-
or actually taking legal action. This is a difficult
lawful to operate separate male and female pay
path for any employee to take and one which, quite
scales or to pay men and women differently for
understandably, most are reluctant to embark on.
doing jobs that should have been paid at the same
Moreover, in many workplaces quite strict confi-
grade when a job evaluation system was in opera-
dentiality rules have the effect of deterring people
tion. Later, in 1983, after the UK joined the
from telling their colleagues about the true level of
European Union, it became possible for employees
their earnings. As a result, even if someone was will-
to pursue claims in the Employment Tribunal when
ing to challenge unequal payments between men
they believed that their work, despite being different
and women, their ability to do so effectively has
in nature from that of a comparator of the opposite
been seriously curtailed.
Important reforms aimed at reducing this barrier this means that an employee must be invited to a
and putting pressure on employers to act proac- formal meeting, given a formal warning in writing,
tively in respect of equalizing pay have been estab- allowed an opportunity to appeal, given a reasona-
lished since 2017. These require all organizations ble opportunity to improve and, only then, dis-
employing more than 250 people to publish specific missed following a further formal meeting with a
statistics about their own gender pay gaps on their right to appeal. Formal warnings are also required
website. This serves to alert senior managers, em- in cases of long-term ill-health (where disability dis-
ployees and potentially clients about the issue. crimination law can also be highly relevant) and
Negative publicity is generated when pay gaps are relatively minor acts of misconduct. Only when an
particularly high or when they grow rather than re- employee is guilty of gross misconduct such as steal-
tract in a given year. Large pay gaps are mainly ex- ing, fighting, serious insubordination or some other
plained by the presence of so many men in the breach of trust and confidence is an employer enti-
highest-paying job groups, and the pay gap report- tled to dismiss summarily without notice. Here too
ing system highlights this very clearly. Over time it though, a fair procedure must always be followed,
will hopefully lead to the appointment of more the employee being given every opportunity to de-
women to senior roles. fend themselves and to appeal the dismissal. A fur-
ther requirement is that employees facing hearings
at which they may be dismissed must always be al-
Dismissal law lowed to be accompanied by a work colleague and
represented by a trade union official.
Former employees who have completed more than
Aside from unfair dismissal, UK law provides
two years’ service are entitled to seek compensation
that employees cannot be wrongfully dismissed or
or re-instatement when they have been unfairly dis-
constructively dismissed. Wrongful dismissals occur
missed. This means that they have either been
when the manner of a dismissal breaches the con-
sacked for an unfair reason (eg pregnancy, refusal to
tract of employment. It occurs most commonly
work in unsafe conditions) or for a lawful reason
when an employee’s contract stipulates a notice pe-
(eg misconduct, incapability, redundancy) but in an
riod which is not then observed when notice is
unreasonable manner. In practice the large majority
given. So if someone with the right to eight weeks’
of cases concern the manner in which someone has
notice is dismissed with one week’s notice, they
been dismissed, and here the law is very helpful
would be able to bring a claim for compensation.
from an employer’s point of view. The test which is
Constructive dismissals are actually resignations.
used to judge ‘reasonableness’ is known as ‘the band
The law in this area was introduced alongside un-
of reasonable responses test’. When applying this a
fair dismissal law in 1971 in order to prevent em-
tribunal is required to refrain from judging the mat-
ployers from circumventing the new rights by
ter with reference to what the judge would have
treating their employees so badly that they resigned
done in similar circumstances, or even from making
without needing to be dismissed. The test that is
a general judgement as to what most people would
now used is contractual. This means that an em-
consider ‘reasonable’. Instead, the requirement is to
ployee resigns in response to (and soon after) their
ask the question:
employer has breached their contract. In such cir-
Could the employer’s actions in dismissing the cumstances the tribunals treat the incident as if it
employee be said to have been reasonable? were a dismissal and order that appropriate com-
pensation is paid. Importantly relevant breaches of
This means that dismissals which 90 per cent of
contract can involve either express or implied terms.
people would consider to have been unreasonable
Express terms are those that the parties agree at the
can nonetheless be found to have been reasonable
time they first form their relationship. So, for exam-
in law, simply because a case for their reasonable-
ple, if an employer was to cut someone’s contrac-
ness can be put. In practice this means that many
tual pay and the employee was to resign in protest,
dismissals fall into the ‘harsh but fair’ category.
that would generally constitute a constructive dis-
That said, in order to be lawful, it is essential
missal. Implied terms are many and varied, but are
that any dismissal is managed in accordance with a
deemed to be present in every contract. The most
fair procedure. In a case of poor work performance
significant is the ‘duty to maintain a relationship of
mutual trust and confidence’. If that is broken by an Where hire and fire is contemplated ‘meaningful
employer, as happens for example in cases of seri- consultation’ must take place with individual em-
ous bullying at work, the employee is entitled to ployees or collectively when 20 or more employees
resign and claim constructive dismissal. are affected as provided for in redundancy legisla-
tion (see above).
Many argue that ‘fire and rehire’ should be made
Redundancy law unlawful in all circumstances simply on the grounds
that it is very unfair on employees who may, for
Collective dismissals of 20 or more employees are
example, find that their employer cuts their pay sig-
covered by specific statutory procedures. If 20–99
nificantly hence circumventing the principles of the
employees are affected, the minimum consultation
law of contract discussed above. The problem is
period is 30 days. If 100 or more employees are af-
that some fire/rehire episodes are genuinely neces-
fected, the minimum consultation period is 45 days.
sary for an organization’s future commercial viabil-
There is still an obligation to consult individually
ity. So the law probably needs to be reformed to
as well as collectively, so employers must be able to
ensure that it only ever occurs as a last resort and in
demonstrate that the employee has had an opportu-
a proportionate manner.
nity to discuss in a meeting the reasons for the re-
dundancy, the pool for selection, the criteria, and
any alternative employment. Statutory redundancy
payments are also provided for.
TUPE
TUPE is an acronym for the Transfer of Undertakings
(Protection of Employment) Regulations, 2006. It
The legal aspects of fire and rehire covers the transfer of an undertaking, or part of
one, from one business to another. TUPE protects
‘Fire and rehire’ is the dubious process sometimes
employees by entitling them to the same terms and
used by employers to enforce contractual amend-
conditions, with continuity of employment, as they
ments on their workforce by terminating employ-
had before the transfer. TUPE applies only to situa-
ment and then offering to hire staff back on the new
tions where a business or part of one ‘retains its
terms. It is not covered specifically by UK law (un-
identity’ after a relevant transfer. It does not apply
like the Republic of Ireland where it is prohibited).
where there is a change of business identity, ie when
But the provisions of dismissal and redundancy law
the nature of the work or the organizational struc-
do apply in the UK as explained below.
ture changes radically.
In the UK, hire and rehire is lawful if the dis-
The transferee (the employer buying the busi-
missal can be shown to be for ‘some other substan-
ness) cannot pick and choose which employees to
tial reason’ (SOSR), which is one of the five
take on and must maintain all rights and obliga-
potentially fair reasons for dismissal. Such a dis-
tions arising from the transferred employees’ con-
missal would have to be with notice. The reason for
tracts of employment. The transferor (the employer
dismissal may be regarded as ‘substantial’ by an em-
selling the business) must conduct a full and mean-
ployment tribunal in one or other of the following
ingful consultation with employees at the earliest
circumstances:
feasible time.
●● Where a company faces potential insolvency If an employee is dismissed because of a relevant
through increased costs and where transfer, their dismissal is automatically unfair.
redundancy is not an option, as there is not a However, this will not be the case if the employer
reduction in workload. can show an ‘economic, technical or organizational’
●● When there is an urgent and pressing need to (ETO) reason entailing a change in the workforce.
reduce salary or benefit costs for business
survival, in conjunction with other business-
wide cost-cutting measures being Health and safety law
implemented. UK health and safety law can be divided into two
●● Where the cost of contractual redundancy very distinct parts. On the one hand, we have the
pay is prohibitive and would have an impact criminal law which is enforced by health and safety
on the need to make more jobs redundant. inspectors employed by local authorities and, at
ational level, by the Health and Safety Executive

n most important statute covering hours of work is
(HSE). On the other hand, we have personal injury the Working Time Regulations 1998. This is
law under which a worker who suffers an injury at European law which has always been controversial
work or falls ill as a result of their work can sue in the UK where we have a tradition of working
their employer for damages. long hours and claiming overtime payments in re-
Health and safety inspectors carry out routine in- turn. The key right here is not to be required to
spections of employers’ premises without warning, work in excess of 48 hours a week. However, in
following which they can issue improvement notices practice, many employees continue to do so. This is
requiring that changes are made to operations or partly because actually the law only limits working
prohibition notices which prevent the employer from time to 48 hours averaged over 17 weeks. So em-
using a piece of equipment or operating a system ployers can lawfully require their staff to work
until recommended changes have been made. In ei- many more hours in particularly busy weeks, pro-
ther case a failure to make the required changes can vided on average over any 17-week period the 48-
result in a criminal prosecution. Such prosecutions hour rule is observed. In the UK there is also an
are also brought when an employer’s negligence or opt-out system in place, under which employees can
recklessness leads either to a death or a serious injury. remove themselves from the right not to work more
In the most serious cases, charges of corporate man- than 48 hours a week. This is common because em-
slaughter can be brought against an organisation. ployers can lawfully require new starters to sign
Most personal injury claims also involve demon- opt-out agreements as a condition of being offered
strating that an employer or a fellow employee has a job. There is also a right to opt back in to the
acted negligently. Importantly the doctrine of vicar- regulations without suffering any detriment, but
ious liability applies here, meaning that employers this is not widely known. The Working Time
are deemed to be legally responsible for the actions Regulations also provide that minimum rest breaks
of their employees while at work. So if an accident are provided during a day’s work and between
is caused as result of a fellow employee’s negligence, shifts. Moreover, they give all workers the right to
the injured person brings the case against the em- take 28 days paid holiday a year (pro rata for part-
ployer rather than the colleague whose fault the ac- timers) comprising eight bank holidays and 20 fur-
cident was. There are a number of defences that ther days statutory annual leave.
employers can deploy when faced with personal The National Minimum Wage regulations also
injury claims. The most common involves satisfying date from 1998. These require that all workers are
the court that the accident ‘was not reasonably fore- paid a minimum amount for every hour that they
seeable’. In practice this requires an employer to work, rates being set by the government each year
have carried out formal risk assessments and to after consulting with the Low Pay Commission. The
have recorded these. Managers then need to show main adult rate is now called the National Living
that the injury was sustained in spite of the fact that Wage. In 2022 this was £9.50 per hour. In addition,
the risks were low, that full training had been pro- there is a lower hourly rate for workers between the
vided and that safe systems of work were always ages of 21 and 22 (£9.18 in 2022), another for peo-
observed. ple aged 18–20 (£6.83), a youth rate for 16 and 17
In recent years many claims of this kind have re- year olds (£4.81) and an apprentice rate (£4.81).
lated to mental breakdowns brought about through Failure to pay the NMW is not only a civil offence
stressful work situations. These are not at all easy which can result in any back pay that is owed being
for workers to win because unless they have suf- paid to a claimant, but also a criminal offence which
fered two breakdowns, the second after returning to can result in large fines being paid as well.
work, it is difficult to show that an excessive work- Another significant area of employment law con-
load was the main trigger for the illness. cerns the situations in which an employer can and
cannot make deductions from a worker’s pay packet.
These are fairly limited, in most cases requiring prior
Hours and wages consent on the part of an employee (eg trade union
dues), authorization via statute (eg tax) or a court
A variety of laws regulate working time and the
order (eg in order to pay a fine). Importantly this
amount of money that workers should be paid. The
means that as a rule employers cannot deduct wages
as part of a disciplinary process. If suspended from share some of the ‘parental leave’ currently allocated
work for any reason an employee must continue to to fathers and mothers.
be paid while a matter is investigated. Moreover, if
found to have committed an act of misconduct, the
employer cannot lawfully fine a worker by way of a Whistle-blowing
punishment.
The Public Interest Disclosure Act 1998 protects in-
dividuals who ‘blow the whistle’ in the public inter-
est. Examples of the situations covered include
Family-friendly employment law financial malpractice, criminal offences, risks to
In recent years it is in the area of family-friendly health and safety, failure to comply with a legal ob-
employment rights that the biggest changes in regu- ligation, a miscarriage of justice and environmental
lations have been made. Every two or three years damage. Workers who make a ‘protected disclosure’
since the mid-1990s new rights have been intro- can make a claim to an employment tribunal if
duced, while existing rights have been extended. they’re treated badly or dismissed. For a disclosure
This step-by-step approach has disguised the radi- to be protected, it must meet the test for being in the
cal improvement in employment rights which has public interest and the worker must follow the pro-
occurred over time. The major family-friendly rights cedures set out in the legislation. The disclosure
that applied in 2022 were as follows for most must usually be made to an appropriate external
employees: body. For example, disclosing a health and safety
issue to the Health and Safety Executive is likely to
●● up to one year of shared parental, maternity
be protected. Disclosures to the media will be pro-
or adoptive leave;
tected only in certain cases, for example if there is
●● nine months of shared parental, maternity or no prescribed regulator or where less public disclo-
adoptive pay; sures didn’t get a reasonable response.
●● the right to paid time off to attend antenatal
appointments;
●● two weeks’ statutory paternity leave; Data protection
●● the right to time off to deal with family The General Data Protection Regulation (GDPR) is
emergencies; a regulation on data protection and privacy for in-
●● 18 weeks’ unpaid parental leave during the dividual employees. It was originally an EU law but
first five years of a child's life; is still applicable in the UK. The rights of individuals
(known as data subjects) under the Regulation are:
●● the right to request a change of contract in
order to work more flexibly. 1 To give consent
Since 2014 all employees with six months’ service Employers are required to obtain the consent of em-
have been able formally to request flexible working. ployees or job candidates to process their personal
Employers can only lawfully turn down a request data. The consent must be ‘freely given, specific, in-
when one of eight straightforward business reasons formed and unambiguous’. There must be a lawful
apply, and must in any event handle requests rea- purpose for processing such as:
sonably. In 2015 new regulations were introduced
●● the legitimate interest of the employer, eg
allowing parents to opt for ‘shared parental leave’
processing attendance records for the
in place of established maternity leave. Under such
purposes of providing statutory sick pay;
an arrangement the allocation of paid and unpaid
leave previously available only to mothers can now ●● the need to perform a contract;
be shared by both parents. Importantly, this can be ●● compliance with a legal obligation.
taken concurrently, allowing both a new mother
and father to take six months’ leave together when 2 To be informed
their new baby is born. Further extensions of fam- Under the right to access provision, individuals
ily-friendly employment rights are being discussed have the right to be informed about the collection
for the future, including a right for grandparents to
and use of their personal data. This is a key trans- where the criminal law plays a much greater role in
parency requirement under the GDPR. Individuals employment matters. Here local labour officials or
must be provided with information in the shape of inspectors have a central place in the administration
a privacy notice at the time the personal data is col- of the law. In some jurisdictions, such as the
lected from them. The information must be concise, Netherlands, employers are obliged to seek their ap-
transparent, intelligible, easily accessible and it proval before dismissing staff. Elsewhere, officials
must use clear and plain language. The privacy no- bring criminal prosecutions when they have evi-
tice should detail exactly what information is col- dence that an employer has acted unlawfully. In
lected, why it is being collected and how long it will France, for example, even when an employer settles
be stored for. It should set out the employee’s rights a discrimination claim with an employee, it can still
under the GDPR to: find itself having to defend its actions in the crimi-
nal courts.
●● have access to their records;
In the UK the inspectorate model is used in the
●● have the data erased (the right to be enforcement of health and safety law in matters con-
forgotten); cerning the illegal employment of overseas migrants
●● rectification (correcting errors); and, to an extent, in the enforcement of the National
●● object to the processing of data. Living Wage. But in most areas of employment law
criminal sanctions play no role. The onus is over-
There are a few circumstances when privacy infor- whelmingly on aggrieved employees and, more com-
mation need not be provided, such as if an individ- monly, former employees to bring their cases before
ual already has the information or if it would the civil courts. When a complaint relates to the al-
involve a disproportionate effort to provide it to leged breach of an employment statute such as un-
them. fair dismissal or unlawful discrimination, claimants
3 Privacy by Design bring their cases before their local Employment
Tribunal. Here the case will either be heard by an
This calls for the inclusion of data protection from Employment Judge sitting alone, or sometimes by a
the onset of the designing of systems, rather than an panel of three in which the judge is assisted by two
addition. lay members who have industrial experience. In
most cases the burden of proof lies with the claim-
ant (ie the person bringing the case), but on some
How is employment law questions of law it can reverse so that the respond-
enforced? ent (ie the employer) must satisfy the tribunal that it
did not act unlawfully as is alleged. Employment
tribunals then decide cases ‘on the balance of prob-
It is in the area of enforcement and remedies that
abilities’ having weighed the evidence that is pre-
employment law varies most from country to coun-
sented to them by each party or its representatives.
try (Slattery and Broadbent, 2013). In many coun-
Employment tribunals operate in a relatively in-
tries, including Australia, Germany, India and
formal way. Anyone can carry out the duty of repre-
Japan, specialized employment tribunals are charged
senting a party, the role being in no way restricted
with deciding cases that are brought by aggrieved
to professional lawyers. Sometimes claimants repre-
employees or ex-employees who believe that an em-
sent themselves or are represented by a family mem-
ployer has treated them in an unlawful manner.
ber or a friend. Trade union officials increasingly
Sometimes these institutions take an arbitration ap-
carry out this kind of work too. Respondents are
proach, seeking to promote a settlement to the dis-
more likely to employ lawyers to represent them,
pute between the parties. In other jurisdictions
but sometimes represent themselves too. As a result,
tribunals are more clearly part of a court system,
the Employment Tribunal provides a relatively swift
simply deciding cases in favour of one party or the
and low-cost forum in which a case can be decided.
other after hearing evidence. Elsewhere, notably in
Appeals on questions of law can be taken to the
the USA, cases are heard by standard civil courts
Employment Appeals Tribunal and, subsequently,
with no specialist brief in the field of employment. A
on to the Court of Appeal and Supreme Court. But
rather different type of system operates in c ountries
appealing a case is usually more costly.
Employment tribunals do not, in the main, hear The extent to which employment law influences
cases that relate to breaches of contract or alleged the way that people are managed in organizations
committing of torts such as negligence. So people thus varies considerably. Larger corporations with
wanting to pursue wrongful dismissal cases or per- high-profile reputations to defend have a tendency
sonal injury claims must instead take their case to to settle claims ahead of any tribunal hearing. The
the County Court or High Court. In practice this estimated costs associated with defending a claim
requires them to hire lawyers and to be represented typically dwarf the size of the award that the claim-
by a barrister. Costs are awarded against losing par- ant can hope to win. So rather than tie up days of
ties too, making this a riskier and potentially expen- management time defending a case, claimants are
sive route to take. simply paid off on condition that they sign a settle-
In practice awards against losing respondents are ment agreement which precludes them from publi-
rarely very high. Ahead of a case, solicitors repre- cizing the case (CBI, 2012: 29). The advantage of
senting claimants often set out a schedule of losses such a policy is that it effectively enables managers
which is a good deal inflated and does not realisti- to run their organizations without taking too much
cally represent the actual sum that would be won notice of the expectations of employment law. The
following a successful hearing in court. This is done disadvantage, of course, is that it encourages people
in a bid to frighten unwary employers into settling whose claims are not strong in law to bring cases in
the case for a higher sum than they need to in order any event in the hope of securing a payout. The
to avoid the hassle of defending the case in court. strategy can also fail to protect an employer from
The truth, according to the annual statistics pub- negative publicity as in the juicier cases journalists
lished by the Employment Tribunal Service, is that tend to get hold of the story in any event.
the sums awarded are typically much lower than A rather different approach is typically taken in
claimants might in theory hope to gain. the public and third sectors where considerable ef-
forts are made to comply with employment legisla-
Unfair dismissal £6,646
tion. Here HR departments often gain a reputation
Race discrimination £8,040 for being over-cautious in the way that they handle
employee grievances, so great is their wish to avoid
Sex discrimination £14,073
having to defend a case in the Employment Tribunal.
Disability discrimination £13,000 This means that, in practice, the vast majority of
tribunal hearings involve smaller private sector en-
Sexual orientation discrimination £9,245 terprises that neither have the resources available to
Age discrimination £11,791 pay people off as a matter of routine, nor to ensure
that they are complying with the requirements of
SOURCE ETS Annual Report 2021 the law. Managers in smaller enterprises also tend
to prefer an informal management style which can
make legal challenges more likely (DBIS, 2013b).
HRM and employment law Published evidence suggests that in practice em-
ployment law has a major impact on the way that
It is important for HR managers to have a good, HR managers approach their work. As long ago as
basic understanding of the principles of employment 2002, when the volume of employment legislation
law because this enables them to take an informed was a good deal less than it is now, the Chartered
view of the balance of risk associated with taking dif- Institute of Personnel and Development established
ferent courses of action. If the outcome of a decision that two-thirds of HR specialists were spending in
is likely to be a tribunal claim, a substantial payout excess of 20 per cent of their time ‘dealing with em-
and negative press coverage, it makes sense to avoid ployment law issues’, while a quarter reported that
taking it. Often, though, it is far from clear whether a over 40 per cent of their working days were being
course of action does in fact pose any significant legal spent in this way (CIPD, 2002). A further CIPD sur-
risk. Sometimes there is a theoretical risk, as is the vey of HR professionals carried out five years later,
case when jobs are filled without any advertising or reported that 40 per cent of respondents rated
when casual staff receive their paid holiday pay in a ‘securing compliance with employment regulations’
‘rolled up’ form, but this is very small. as one of their top five objectives, while 90 per cent
saw employment regulation as likely to become sons given above, simply to minimize the risk of a
more important for their organizations in the future tribunal. It is, of course, necessary to ensure that the
(CIPD, 2007). These findings are unsurprising when organization is law-abiding. But the provisions of
it is considered that around half a million people employment law incorporate the values that are ap-
are dismissed for one reason or another in the UK propriate in a number of key areas of the employ-
each year (DBIS, 2013b). ment relationship. And compliance is as much
Surveys of employer opinion regularly report about ensuring that these become ‘values in use’ as
that managers find the volume of employment regu- about enforcing the letter of the law. The following
lation that they have to comply with to be burden- are the ways in which compliance can be achieved.
some, but it is not generally the principles that cause
them to complain. The aims of the law are generally Training
supported by employers. What they dislike is its
complexity and the time that they are obliged to Formal compliance training for managers and staff
devote to keeping up with changes (CIPD, 2005). As during management development or induction pro-
a result, particularly in the case of smaller firms, grammes means providing basic information about
managers have a strong tendency to worry that they the employment laws and the data protection legisla-
may be found not to be complying with the all ex- tion that affects them, together with specific informa-
pectations of the law. It is the fear of the tribunal tion about the organization’s policies and procedures
that causes them to consider employment law to be and how they should be implemented. The training
a burden as much as their personal experience should also cover the skills managers need to deal
(DBIS, 2013b). with performance and disciplinary problems, handle
In fact, the chances that any job applicant, em- grievances and conduct challenging conversations. It
ployee or former employee will win a claim against could be provided face to face in brief formal courses
an employer are slim. Employers end up winning (bite-sized training) or alternatively or additionally
four out of five of the claims that are heard in the UK through e-learning modules. There is much to be said
employment tribunals, while over 30 per cent of for the latter approach which is in fact the most pop-
those that are lodged are withdrawn without a settle- ular method of using e-learning.
ment before the case ever comes to court. Avoiding
tribunal claims which have any serious prospect of Employee handbook
winning is thus not at all difficult. It is really just a An employee handbook can be prepared and main-
question of adhering to the major principles of the tained to include details of all the relevant policies
law, such as paying staff the National Living Wage and procedures and set out the responsibilities of
and avoiding unlawful discrimination, while also individual managers and employees to understand
taking care to handle dismissals in a procedurally fair and apply them.
manner. Moreover, in 90 per cent of situations that
arise in the workplace, there is no need for managers
to pay for legal advice. Free guidance is available on Employment law audit
numerous websites, including the government’s own HR should conduct a regular employment law
employment webpages (www.gov.uk/browse/em- audit to ensure that all aspects of the legislation are
ploying-people) and those provided by the Advisory, covered in the policies and procedures as set out in
Conciliation and Arbitration Service (ACAS) (www. the employee handbook or elsewhere with particu-
acas.org.uk/index.aspx?articleid=1339). ACAS also lar reference to recent changes and additions. The
provide a free, confidential telephone helpline staffed audit should also review how recent issues and
by advisors who give excellent advice about all cases have been tackled and identify any lessons to
employment law issues. be learnt.
Ensuring compliance Providing advice and support

The responsibility of HR for ensuring compliance The provision of day-to-day advice and support to
to employment law requirements is not, for the rea- senior management, line managers and individual
employees is perhaps the most important part HR ossible problem and can keep the situation under
p
can play to ensure that employment law require- review. Individuals can be advised that they can get
ments and issues are handled properly. It is also the advice directly from ACAS.
most time-consuming.
Senior managers need to be advised on policies
and procedures. They should be informed of the Dealing with Employment
legal aspects of any actions they propose, particu-
larly in a takeover or merger situation (TUPE law), Tribunal claims and cases
handling redundancies, the use of fire and rehire ex-
pedients and dealing with whistle-blowers. This is As mentioned earlier, in the UK employment law is
an aspect of the role of HR professionals where de- enforced by giving complainants the right to refer
termination and courage may be required in dealing their case to an Employment Tribunal, but before
with top management. It is one of the reasons why this can happen an attempt is typically made by of-
HR professionals should have a good working ficers working for ACAS (the Advisory, Conciliation
knowledge of employment law. In exceptional cases and Arbitration Service) to explore a possible out-
(eg a major claim leading possibly to a complex and of-court settlement. They will call representatives of
potentially highly damaging employment tribunal the two parties to the dispute and discuss the
case), it is advisable to get advice from professional strengths and weaknesses of their cases. Where they
lawyers. Many HR professionals, especially in find a willingness to settle on both sides, they will
larger organizations, seek professional legal advice draw up the agreement and complete the required
in any case which involves or may involve an paperwork so that the case can be withdrawn. No
Employment Tribunal. But it is always possible to charge is made for this work as ACAS is a govern-
get free advice from organizations such as ACAS ment-funded body. Settlements, whether brokered
and the CIPD. by ACAS or not, are often the preferred outcome for
Line managers will need advice and support on both employers and employees. The main advan-
dealing with individual cases, especially those that tage is that the stress and expense of tribunal pro-
may involve disciplinary action or dismissal. The ceedings are minimized or avoided. Tribunal cases
advice should be on what they can and can’t do (the can take many months while most out-of-court set-
latter must be firm when it involves keeping to tlements are concluded much more swiftly.
the provisions of the law and the requirements of Moreover, most tribunal hearings are public and
the organization’s policies and procedures). For ex- can result in adverse publicity for the organization
ample, managers must be told that they have to fol- even if it wins the case.
low the staged sequence of actions in a discipline or As part of a negotiated settlement the employer
capability case. They should be advised on the will pay a sum to the worker or former worker, as
approach to adopt and how to tackle a difficult in- part of a full and final settlement. Agreed wording
terview. An HR professional may accompany a of references are commonly agreed as part of such
manager when the latter is issuing a final warning settlements and they will almost always include a
or taking more drastic disciplinary action. Many or- ‘non-disclosure agreement’ preventing either party
ganizations require this to happen and it will gener- from discussing the settlement or publicizing details
ally be necessary if trade unions are involved. about it in the media.
HR professionals have to be prepared to give in- In 2019/20 ACAS were sent 140,000 cases ahead
dividual employees advice when requested. This can of employment tribunal proceedings, 77 per cent of
be a delicate and difficult business. Confidentiality which were subsequently either withdrawn or settled
is important but judgement is required on what ad- out-of-court (ACAS, 2020). They also offer a distinct
vice can be given, especially if relationships with the arbitration service in cases relating to unfair dis-
individual’s line manager are involved. It may be missal and flexible working. This scheme operates as
that the best way of resolving the issue is to take it an alternative to the Employment Tribunal. Instead
up with the line manager but this should only be of going to court, if both sides agree, an arbitrator
done with the agreement of the individual. However, will be appointed to decide the case more quickly
even if a direct approach to the manager is not and in private. There has, however, been very limited
agreed, HR will at least have been alerted to a use of this scheme since it was established in 1998.
If a case proceeds to an employment tribunal, a The role of HR in such cases will be to provide the
decision needs to be made on whether or not pro- information required by the solicitor and any ex-
fessional lawyers should be engaged to prepare the pert witness that may be engaged. HR also attends
case and the response to the claim and represent the the hearing to deal with on-the-spot issues, eg the
organization in a Tribunal hearing. There are strong provision of more information or the interpretation
arguments for doing so in any large or complex of existing information, and discuss the progress of
case, especially one in which trade unions are in- the case with their solicitor or advocate.
volved who will probably have legal representation.
CASE STUDIES
Jenkins v Legoland Windsor Park Ltd (2003)

Mr Jenkins was employed at the Legoland theme park in West Bromwich Building Society Ltd
Windsor Great Park as an ‘attractions team leader’. Due to
a motorbike accident he had suffered at the age of 16, Mr
v Townsend (1983)
Jenkins’ left arm was very seriously injured. This required A building society branch in Wolverhampton was
him to use a sling at all times. In March 2001 the company subjected to a routine health and safety inspection by a
held a ceremony at which long service awards were given local authority environmental health officer called Mr
to all employees who had completed over three years’ Townsend. Following his inspection, Mr Townsend took
service. Mr Jenkins was one of the 58 employees who the decision to use the branch as a test case and to issue
received awards at this ceremony. Each award took the an improvement notice requiring the building society to
form of a human model made out of Lego. Most of the install ‘anti-bandit screens’ to protect staff from the
employees received models which related directly in possibility of a violent robbery. The notice stated that it
some way to their work. Cafe staff, for example, were was Mr Townsend’s opinion that the employer was
given models of people eating pizzas or drinking coffee, contravening the Health and Safety at Work Act (HSWA)
parking attendants got models of people holding traffic 1974 by not providing such screens:
cones and managers got models holding clipboards. Mr
The reasons for my said opinion are that staff engaged
Jenkins, however, was presented with a model of a man
in the handling of money and in general office duties in
with his right arm in a sling. The day after the ceremony
the premises are not protected as far as is reasonably
Mr Jenkins was absent and never returned to work. He
practicable from the risk of attack or personal injury
was diagnosed by a consultant psychologist as ‘suffering
from persons frequenting the area of the premises
from a depressive episode triggered by an insensitive
normally open to the general public and I hereby
experience at his place of work’. He then brought a
require you to remedy the said contraventions or, as
disability discrimination claim to the employment tribunal.
the case may be, the matter occasioning them by
He argued that he had suffered a detriment as he had
September 22nd 1982, in the manner stated in the
been singled out at a presentation ceremony and
schedule which forms part of this notice.
identified by a wrongly characterized disability. Mr
Jenkins won his case in the Employment Appeals Tribunal The employer appealed against the improvement notice in
(EAT), having lost in the tribunal. It was found that he had the employment tribunal. In doing so it made the following
been subjected to a detriment for a reason related to his points:
disability. The employer had not been unable to objectively
1 The building society had considered how it could best
justify its actions. He won damages of over £30,000 to
protect its employees and included such
compensate him for financial losses and injury to feelings.
considerations in risk assessments that were regularly
kept under review.
2 The cost of installing protective screens in all its 86 equal pay claims made by some 35,000 female store-
branches would be over £500,000, yet the amount of based staff using mainly male warehouse workers as
cash kept on any one of its premises at any one time their comparators. The company had sought to argue
was only £3,500 maximum. that they could not use these men as their comparators
as they did not work under ‘common terms and
3 The improvement notice merely stated that it was
conditions’. The Supreme Court rejected this argument.
Mr Townsend's opinion that the building society was in
The terms were sufficiently common to permit a claim
contravention of the HSWA 1974. No particulars were
for equal value to proceed. Where establishments
given about which clause in the Act was being
operated by the same company are located in
contravened and no justification given to back up the
geographically dispersed locations the Tribunal should
general opinion.
ask if the terms under which comparators are employed
4 The improvement notice was not really concerned with would be substantially the same if they were working
bringing about necessary improvements in health and on the same site. In other words, would the warehouse/
safety at the particular branch concerned. Its real aim distribution workers be employed on common terms
was to create a precedent that would apply to all with the store-based staff if they worked together on
building society branches across the whole country. the same premises? The answer was ‘yes’. This ruling
means that around 35,000 claimants can now proceed
The appeal was successful. The tribunal considered that
with their equal value claim and, if they win it, will be in
the costs associated with complying with the order would
line for significant pay rises and a great deal of
be disproportionate given the level of risk from a health and
back-pay too. The potential costs to Asda and other
safety point of view.
large retailers who operate a similar pay policy may
well run into billions of pounds.
Asda Stores Ltd v Brierley and others (2021)
In this recent prominent case, Asda lost its appeal to
the Supreme Court in a long-running case concerning
Key learning points
The purpose of employment law Enforcing employment law

The major purpose of employment law is to deter Enforcement is mainly something employees do for
employers from treating their employees unfairly or themselves by bringing claims to the Employment
from exploiting them unjustly. However, governments Tribunal. However, in the field of health and safety, the
also use employment regulation to help make work government employs inspectors to carry out the main
more attractive to people and to promote flexibility in enforcement duties.
the labour market.
Employment law and HRM
How are these objectives achieved? Published evidence demonstrates that employment
In most jurisdictions employment laws give employees law can have a major impact on the way that
a strong measure of protection from unfair employers carry out HRM activities. It consumes a
discrimination and unfair dismissal. Regulation also great deal of HR professionals' time and is high on
helps ensure that high levels of health and safety their agendas. A variety of good sources of free advice
practice are observed and that workers are paid about the expectations of employment law are
reasonably and are not overworked. Family-friendly available to managers.
employment law helps people to achieve an effective
work–life balance.
References
ACAS (2020) Annual Report, London, HMSO DBIS (2013a) Employment Law 2013: Progress on
Ashiagbor, D (2005) The European Employment reform, London, Department for Business,
Strategy: Labour market regulation and new Innovation and Skills
governance, Oxford, Oxford University Press DBIS (2013b) Employment regulation: Employer
CBI (2012) Facing the Future, Confederation of perceptions and the impact of employment
British Industry regulation, London, Department for Business,
Chartered Institute of Personnel and Development Innovation and Skills
(2002) Employment Law: Survey report, London, ETS (2021) Annual report and statistics, London,
CIPD Employment Tribunals Service
Chartered Institute of Personnel and Development Rubery, J and Grimshaw, D (2014) The 40-year
(2005) Employment and the Law: burden or pursuit of equal pay: a case of constantly moving
benefit?, London, CIPD goalposts, Cambridge Journal of Economics,
Chartered Institute of Personnel and Development pp 1–25
(2007) The Changing HR Function. A survey Slattery, E and Broadbent, J (2013) The International
report, London, CIPD Comparative Legal Guide to Employment and
Labour Law, 3rd edn, London, Global Legal Group
543
PART XV
International HRM
PART XV CONTENTS
61 The basis of international HRM

62 The practice of international HRM
63 Managing expatriates
Introduction function. Chapter 63 focuses on the management of

expatriates.
International human resource management is about Note: the inclusion of international HRM towards
the management of people employed in other coun- the end of the handbook does not in any way imply
tries by multinational companies (MNCs). It is con- that it is regarded as less important than other as-
cerned with everyone employed in those countries, pects of HR dealt with earlier. It is placed here be-
not just the management of expatriates – individuals cause, although there may be significant differences
placed by a parent company on foreign assignments. between the overall approach to HRM in an inter-
In this part, the framework of international national company’s overseas enterprises, and al-
HRM is dealt with in Chapter 61, which covers the though HR practices used in headquarters may have
crucial issue of the degree to which international to be modified to suit the international context,
HRM policies and practices should converge or di- those international practices are likely to be broadly
verge. Chapter 62 deals with the international based on those used in parent companies as de-
HRM practices of workforce planning, resourcing, scribed in earlier parts of this handbook. A familiar-
talent management, reward management and perity with them is therefore necessary when considering
formance management. It also refers to multicul- how they might be modified and applied in the
tural working and the role of an international HR context of an international operation.
544

545
61
The basis of
international HRM
practices, ensuring an adequate corporate culture,
Introduction establishing the necessary networks, and ensuring
all parts of the organization are sensitive to the
International HRM is concerned with human needs of international staff.’
resource management policies and practices in mul-
tinational enterprises. Its aim is to ensure that an
international organization attracts, deploys, devel-
ops and engages the quality of people it requires. It
The international scene
takes place in a framework consisting of the inter-
Internationalization is the process of international
national scene in general, the implications of the
economic integration in worldwide markets. Isidor
different approaches to international strategy and
et al (2011: 2167) noted that ‘Internationalization
the specific contextual factors associated with dif-
offers firms manifold advantages such as realizing
ferences in culture and institutions.
economies of scale and scope, learning from inter-
A key issue in international HRM is the extent to
national markets, exploiting interrelations between
which HR policies and practices should converge or
business segments and geographic areas, achieving
diverge. Bartlett and Ghoshal (2002) proposed that
risk diversification, and cost reduction.’
strategies in an international context are character-
According to Theodore Levitt (1983), techno-
ized by conflicting pressures of global standardiza-
logical, social and economic developments have
tion (ie internal consistency with the rest of the
combined to create a unified world marketplace in
multinational company) and local differentiation
which companies must capture global-scale econo-
(ie external consistency with local environments).
mies to remain competitive. It encompasses globali-
Convergence or standardization refers to the degree
zation – the development of single international
to which an international parent company’s HR
markets for goods or services accompanied by an
policies and practices are adopted by each of its
accelerated growth in world trade. Any company
subsidiaries. Divergence or localization refers to the
that has economic interests or activities extending
extent to which subsidiaries operate their own HR
across a number of international boundaries is a
policies and practices and act and behave as local
global company.
firms.
Globalization raises a number of issues not pre-
It was stated by Brewster et al (2005: 949) that
sent when the activities of the firm are confined to
‘A critical challenge for organizations from both the
one country. As Ulrich (1998: 126) observed, it re-
public and private sectors in the 21st century is the
quires organizations
need to operate across national boundaries.’ As
Sparrow et al (2011: 50) commented: ‘The ultimate … to move people, ideas, products, and
aim of multinational companies (MNCs) is to build information around the world to meet local
a core competence of being able to transfer capabil- needs. They must add new and important
ity across multiple countries, which involves moni- ingredients to the mix when making strategy:
toring the implementation of relevant policies and volatile political situations, contentious global
546 Part 15 | International HRM
trade issues, fluctuating exchange rates, and that adopting the transnational mode allowed com-
unfamiliar cultures. They must be more literate in panies such as Unilever to deal effectively with these
the ways of international customers, commerce, demands. They mentioned that Unilever has devel-
and competition than ever before. In short, oped a philosophy of management built around in-
globalization requires that organizations increase dependent operating companies whose managers
their ability to learn and collaborate and to were given maximum responsibility and freedom.
manage diversity, complexity, and ambiguity. The role of the Unilever board is to approve plans
Brewster et al (2005) identified five distinct, but and budgets, control capital expenditures and ap-
linked, organizational drivers of this process: effi- point and develop executives. At an operating level,
ciency orientation, global service provision, infor- local managers have great latitude to develop and
mation exchange, core business processes and implement strategies that reflected the opportunities
localization of decision making. The outcome has and constraints of their particular environments. The
been pressure on international businesses to create watchwords that became corporate dogma were
a federation of global units (in the sense of working ‘local initiative and decentralized control’.
together to achieve global strategic goals) rather In contrast, Procter and Gamble, although re-
than national units (in the sense of taking a paro- garded by Bartlett and Ghoshal as a transnational
chial interest in local concerns and ignoring global organization, link international operations back to
requirements). This in turn has increased the move the parent company in two important respects: not
towards the convergence of HRM policies and pro- only do foreign subsidiaries depend on the parent
cedures and decreased interest in divergence. for advanced technology and marketing expertise,
Globalization has encouraged the development of but they are also structured to operate as replicas of
international HRM, enhancing the role and author- the US company, immersed in the same principles
ity of international HR functions. and guided by the same policies.
International HRM Contextual factors

strategies All HR activities are affected by the context in
which they operate, but the variety of contexts in
International HRM has to operate strategically in which international HRM functions are particu-
order to support the achievement of international larly significant. They strongly influence decisions
business strategies. Bartlett and Ghoshal (2002: on the dissemination of parent company policies
18–19) identified four types of business strategies: and practices (convergence or divergence) and on
the employment of expatriates. As Sparrow et al
1 Multinational – building strong local
(1994: 269) asserted, ‘For global firms to be suc-
presence through sensitivity and
cessful in managing their worldwide work-forces,
responsiveness to local needs.
they need to have an understanding and sensitivity
2 Global – building cost advantages through to several local environments. They must utilize
controlled global-scale operations. local information and adapt it to a broader set of
3 International – exploiting parent company human resource policies that reflect the firm itself.’
knowledge and capabilities through Cultural differences in local environments are often
worldwide diffusion and adaptation. treated as the most significant factor to be taken
4 Transnational – creating a new into account in managing globally, but differences
organizational model by simultaneously in local institutions and practices such as collective
developing global competitiveness, bargaining can also be important.
multinational flexibility and worldwide
learning capacity.
Cultural differences
They suggested that the transnational organization
‘is a feasible and necessary response to the changes in Variations in national cultures are reflected in peo-
the international environment’ (page 19) and claimed ple’s values, beliefs and behaviour patterns and
Chapter 61 | The Basis of International HRM 547
these need to be taken into account when framing Hofstede’s study that pertains to individual-level
international HRM policies. Briscoe et al (2012: “behaviours”. Therefore, Hofstede’s work should
114) commented that ‘Many of the most important not be interpreted as showing that national culture
and difficult challenges to the conduct of interna- explains 50 per cent of behaviours’ (page 977).
tional human resource management stem from the They also established from Hofstede’s data that cul-
differences encountered in various countries’ and ture varies more between organizations than be-
MNE’s (Multinational Enterprise) cultures.’ tween countries. In their view, cross-country cultural
Hiltrop (1995) noted the following HRM areas differences, while real, have been overestimated and
that may be affected by national culture: may not explain the effectiveness of HR practices
compared with other unique country features such
●● decisions of what makes an effective
as the character of local institutions. But they ac-
manager (performance management);
cepted that national culture differences can be criti-
●● giving face-to-face feedback; cal and that insensitivity to national culture
●● readiness to accept international differences can and does result in business failure
assignments; (as well as failure and career consequences for indi-
●● different concepts of social justice; vidual expatriate managers).
On the basis of research conducted in 30 multina-
●● pay systems (reward management);
tional companies by the Global HR Research
●● approaches to organizational structuring. Alliance, Stiles (2007: 37) commented that ‘While
To which could be added employee relations and national cultural differences were not insignificant,
communications. they were less important than we had imagined.
Gerhart and Fang (2005: 974) stated that ‘A mis- Organizational culture actually had more influence
fit between national culture and management prac- on HR practice.’ The conclusion reached by Stiles
tice will reduce effectiveness. For example, using a from the research was that ‘To think there is one best
pay for individual performance plan in a country way to manage human resources is simplistic and
having a highly collectivist culture will not work wrong, but the variation and contextualization of
well.’ HR, at least for the companies we studied, owes little
The significance of cultural differences was the to national culture’ (page 41). This dismissal of the
influential message delivered by Hofstede (1980) importance of national culture is difficult to accept.
based on his research using worldwide data on IBM
employees. He suggested that culture consisted of
shared values and involved ‘the collective mental Institutional differences
programming of people in an environment and Institutional differences include the role of the state
broad tendencies to prefer certain states of affairs and financial sectors, employment law, national sys-
over others’ (page 19). One of the conclusions tems of education and training, and employment
Hofstede reached was that the cultural values expectations. As described by Gerhart and Fang
within a nation are substantially more similar than (2005: 971), other local factors in the environment
the values of individuals from different nations. include ‘differences in the centrality of markets, in-
This view has been taken up by subsequent com- stitutions, regulation, collective bargaining and la-
mentators such as Adler (2002), who claimed that bour-force characteristics.’ For example: in Western
Hofstede’s study explained 50 per cent of the differ- Europe, collective bargaining coverage is much
ence between countries in employees’ attitudes and higher in some countries such as the UK, Germany
behaviours. and Italy than in the United States. Works councils
But this view has been challenged by Gerhart are mandated by law in Western European coun-
and Fang (2005). They subjected Hofstede’s find- tries such as Germany, but not in Japan or the
ings to further analysis and established that at the United States. In China, Eastern Europe and Mexico,
level of the individual, as distinct from the country, labour costs are lower than in Western Europe,
Hofstede’s results show that ‘Roughly 2 to 4 per Japan and the United States.
cent of the variance in individual values is explained
by national differences. And there is nothing in
ways of aligning local pay with the market.’ They

Convergence and divergence concluded that ‘It is the essential processes, popula-
tions and tools that are the ones to control from the
In international HRM it is necessary to judge the centre, not a crude imposition of one size fits all
extent to which, on the one hand, an organization across the piece’ (page 31).
should implement standardized policies and prac- Harris and Brewster (1999) listed the following
tices across the world (convergence), or, on the factors affecting the degree of convergence:
other hand, that it should allow overseas subsidiar-
ies to adopt their own practices or at least modify ●● The existence of well-defined local norms.
the policies and practices of the parent company to ●● The extent to which an operating unit is
suit local requirements (divergence). embedded in the local environment.
Festing and Eidems (2011: 163) reported that ‘In
●● The strength of the flow of resources –
the course of increasing globalization, more and
finance, information and people – between
more MNEs are being forced to compete globally
the parent and the subsidiary.
and simultaneously adapt their business strategies to
changing local demands.’ They also suggested that ●● The orientation of the parent to control.
‘firms tend not to standardize a whole HRM system ●● The nature of the industry – the extent to
but rather focus on single practices’ (page 165). which it is primarily a domestic industry at
But the choice is not between total convergence local level.
and total divergence. Frenkel and Peetz (1998: 537) ●● The specific organizational competencies,
described a globalization-induced trend towards in- including HRM, which are critical for
creasing convergence. Brewster and Suutari (2005) achieving competitive advantage in a global
remarked that strategic alignment (convergence) environment.
and localization (divergence) can be regarded as op-
posite extremes on a continuum. As Brewster et al (2005: 951) pointed out, ‘Where
It was argued by Reilly and Williams (2012: 30) global integration and coordination are important,
that ‘What HR might need to do is more carefully subsidiaries need to be globally integrated with
decide what is common and global, versus what is other parts of the organization and/or strategically
different and local, against some well thought coordinated by the parent. In contrast, where local
through criteria. This might mean, for instance, a responsiveness is important, subsidiaries will have
common HR information system, but local resourc- far greater autonomy and there is less need for
ing, or one method of executive reward, yet m ultiple integration.’
Key learning points
International HRM accelerated growth in world trade. Any company that

has economic interests or activities extending across a
International HRM is concerned with human resource number of international boundaries is a global company.
management policies and practices in multinational
enterprises. It has to function strategically in order to
Contextual factors affecting
support the achievement of international business
strategies. international HRM
All HR activities are affected by the context in which
Internationalization and globalization they operate, but the variety of contexts in which
international HRM functions are particularly significant
Internationalization is the process of international
in the way in which they influence decisions on the
economic integration in worldwide markets.
dissemination of parent company policies and
Globalization is the development of single international
practices (convergence or divergence) and on the
markets for goods or services accompanied by an
employment of expatriates.
Chapter 61 | The Basis of International HRM 549
Cultural differences should implement similar policies and practices across

the world (convergence) or, on the other, it should
Briscoe et al (2012: 114) commented that ‘Many of the allow overseas subsidiaries to adopt their own
most important and difficult challenges to the conduct practices or at least modify the policies and practices
of international human resource management stem of the parent company to suit local requirements
from the differences encountered in various countries’ (divergence).
and MNE’s cultures.’
Factors affecting convergence
Institutional differences and divergence
Institutional differences include the role of the state
The factors affecting convergence and divergence
and financial sectors, employment law, national
consist of the orientation of international firms as
systems of education and training, and employment
expressed by their attitudes on the role and place of
expectations.
subsidiaries, the drivers of global integration and the
institutional and cultural issues influencing the
Convergence and divergence approach to the dissemination of the policies and
International HRM involves the need to judge the practices of the parent company and to divergence.
extent to which, on the one hand, an organization
References
Adler, N J (2002) International Dimensions of evidence, International Journal of Human
Organizational Behaviour, Cincinnati, OH, Resource Management, 16 (6), pp 971–86
South-Western Harris, H and Brewster, C (1999) International
Bartlett, C A and Ghoshal, S (2002) Managing Across human resource management: the European
Borders: The transnational solution, Boston MA, contribution, in (eds) C Brewster and H Harris,
Harvard Business School Press International HRM: Contemporary issues in
Brewster, C, Sparrow, P and Harris, H (2005) Europe, London, Routledge
Towards a new model of globalizing HRM, Hiltrop, J M (1995) The changing psychological
International Journal of Human Resource contract: the human resource challenge of the
Management, 16 (6), pp 949–70 1990s, European Management Journal, 13 (3),
Brewster, C and Suutari, V (2005) Global HRM: pp 286–94
Aspects of a research agenda, Personnel Review, Hofstede, G (1980) Cultural Consequences:
34, pp 5–21 International differences in work-related values,
Briscoe, D, Schuler, R and Tarique, I (2012) Beverley Hills, CA, Sage
International Human Resource Management, 4th Isidor, R, Scwens, C and Kabst, R (2011) Human
edn, New York, Routledge resource management and early internationalization:
Festing, M and Eidems, J (2011) A process is there a leapfrogging in international staffing?
perspective on transnational HRM systems – a International Journal of Human Resource
dynamic capability-based analysis, Human Management, 22 (10), pp 2167–84
Resource Management Review, 21, pp 162–73 Levitt, T (1983) The globalization of markets,
Frenkel, S and Peetz, D (1998) Globalization and Harvard Business Review, May–June, pp 92–102
industrial relations in East Asia: A three-country Reilly, P and Williams, T (2012) The challenges of
comparison, Industrial Relations, 3, pp 282–310 global HR: one way to go? People Management,
Gerhart, B and Fang, M (2005) National culture and September, pp 28–31
human resource management: assumptions and
Sparrow, P, Schuler, R S and Jackson, S E (1994) Collings, Global Talent Management, London,
Convergence or divergence: human resource Routledge, pp 40–55
practices and policies for competitive advantage Stiles, P (2007) A world of difference? People
worldwide, International Journal of Human Management, 15 November, pp 36–41
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 (eds) H Scullion and D G
551
62
The practice of
international HRM
are similar to those described elsewhere in this
Introduction book. However, they will be affected by local cus-
toms and cultures, employment practices and legis-
International HRM deals with what multinational lation. The members of an international HR
companies (MNC) do about managing people. This function will have to be aware of local practices and
includes headquarters staff and those in foreign the local contexts that influence these practices in
subsidiaries, home country nationals (HCNs – em- order to be in a position to provide advice and guid-
ployees who are nationals of the country in which ance, especially where they affect the employment
the subsidiary is based), third country nationals of expatriates. HQs will probably not get involved
(TCNs – employees in a subsidiary who are nation- in detailed employee relations but they may issue
als of a country other than the parent company’s policy guidelines on union recognition and negotia-
country) and expatriates (employees assigned to a tions and monitor local decisions to ensure that the
subsidiary who are nationals of the parent compa- guidelines are followed, or that there is good reason
ny’s country). This chapter starts with analyses of to ignore them because of local industrial relations
the nature of HR in an MNC and the differences practices.
between international and domestic HRM.
There are, however, a number of HRM areas in
Consideration is then given to international HRM which the parent company may play a bigger part.
practice in the major areas of resourcing, talent Workforce planning for more senior staff may be
management, performance management and re- centralized, as may be resourcing decisions that af-
ward management. The chapter ends with sections fect the deployment of parent company or third
on multicultural working and the role of the inter- country nationals. Talent management processes
national HRM function. and the remuneration of senior staff and expatriates
may also be centralized. While performance man-
agement systems will be administered by subsidiar-
HR in international ies, the centre may want to ensure that the processes
subsidiaries involved conform to what is regarded as best prac-
tice within the organization and provide the infor-
mation required for talent management and staffing
The basic HR practices carried out in international
decisions. An international HR function may also
subsidiaries – recruitment and selection, training,
be concerned with encouraging the actions required
the payment of junior staff and operatives, day-to-
to promote multicultural working throughout the
day employee relations and HR administration –
organization.
Differences between Workforce planning

international and Workforce planning assesses how many people are
domestic HRM needed throughout the MNC (demand forecasting),
sets out the sources of people available (supply fore-
casting) and, in the light of these forecasts, prepares
The fundamental differences between international
action plans for recruitment, selection or assign-
and domestic HRM are that in an international
ment. It is linked to talent planning and talent man-
organization:
agement. It may be carried out by the parent
●● HRM is more complex because operating company HR function which is likely to focus
across national boundaries rather than mainly on managers and professional and technical
within only one boundary means that staff throughout the global organization. Workforce
account has to be taken of different cultures planning for junior staff and operatives is usually
and institutions. carried out by subsidiaries, although the centre may
●● It is necessary to manage a wider mix of require information on their plans.
people – foreign subsidiaries may employ
local staff (home country nationals) and
expatriates from either the parent company Resourcing
(parent company nationals) or other
countries (third country nationals). Resourcing in an international organization is based
on systematic workforce planning. It means making
●● HR professionals have to exercise a broader
policy decisions on how the staffing requirements of
range of expertise covering knowledge about
the headquarter’s international function and the
foreign countries, their cultures and their
foreign subsidiaries can be met, especially for man-
institutions.
agers, professionals and technical staff. Sparrow
●● Choices have to be made on the extent to et al (2011: 42) emphasized that ‘MNCs increas-
which parent company HRM policies and ingly demand highly-skilled, highly flexible, mobile
practices should be adopted by subsidiaries – employees who can deliver the required results,
the issue of the degree of convergence sometimes in difficult circumstances.’
required and how it is to be achieved. Paik and Ando (2011: 3006) suggested, on the
●● Choices have to be made on the extent to basis of their research, that ‘To effectively integrate
which HR decisions on matters such as and coordinate activities of foreign affiliates, MNCs
appointments, promotions, redeployments need to maintain a higher level of control at head-
and talent management should be centralized quarters. MNC headquarters want foreign affiliates
or decentralized. to act as if they were the headquarters’ agents. In
●● The management of expatriates involves this situation, MNCs are inclined to staff foreign
different approaches to selection, training affiliates with managers who understand and ap-
and career management and special concerns preciate headquarters’ directives.’
about the adjustment of expatriates to An important choice required in staffing subsidi-
working in foreign countries and to the aries in an international firm is between employing
problems of repatriation. the parent company or home company nationals or
an appropriate combination of the two. Dowling
●● Firms become more involved in the personal
et al (2008) listed the advantages and disadvantages
lives of their expatriate employees.
of each approach, as summarized in Table 62.1.
These differences apply in each of the aspects of
HRM examined below.
Chapter 62 | The Practice of International HRM 553
TA B L E 62.1 Advantages and disadvantages of using PCNs or HCNs

Employment of Advantages Disadvantages
Parent company ●● Facilitates control and ●● Limits the promotional opportunities

nationals (PCNs) coordination of HCNs
●● Provides managers with ●● Expatriates may find it hard to adapt
international experience to the characteristics of the host
●● Provides people with country’s culture and institutions
the best skills for the job ●● Expatriates may impose an
●● Promotes the dissemination inappropriate management style
of the MNC’s policies and based on that of their parent company
values ●● The remuneration of PCNs and HCNs
may differ
●● Lack of continuity
●● The host country may resent and
even limit the deployment of
foreigners
Home country ●● Familiar with local culture, ●● Unfamiliar with parent company’s
nationals (HCNs) institutions and legal practices and systems
requirements ●● Dissemination of HQ practices more
●● No language barrier difficult
●● Provides continuity ●● May not have the immediate skills
●● Morale improved as HCNs required
see career potential ●● More difficult to exercise control from
●● Fits local government policy the centre
for employing nationals
●● Reduces employment costs
SOURCE Adapted from Dowling et al (2008: 85)
Additionally, or alternatively, a decision may be ●● Commuter assignments which include special

made to employ third country nationals (TCNs) in arrangements where the person commutes on
certain posts. TCNs might be easier to obtain than a weekly or bi-weekly basis to the place of
home country nationals and could cost less. But work in another country.
Dowling et al (2008) suggested that they might not ●● Rotational assignments in which employees
want to return to their own countries after assign- commute from the home country for a short
ment, the host government may resent the hiring of set period followed by a break in the home
TCNs, and national animosities would have to be country.
considered.
●● Virtual assignments where the employee does
However, there are other ways of meeting staff
not move to a host location but manages
requirements in foreign subsidiaries, for example:
from home some aspect or aspects of the
●● Short-term assignments which may be for operations in the foreign subsidiary. Use is
trouble-shooting, project management or a made of communication technologies such as
stopgap measure until a more permanent video conferencing although the home-based
arrangement can be made. employee may have to visit the host country
●● Extended assignments which may last up to frequently.
one year and involve similar activities as These alternatives are becoming increasingly popu-
those for short-term assignments. lar, especially in companies finding it difficult to
btain satisfactory expatriates for more conven-

o
tional assignments. But they can be difficult to man-
International performance
age and stressful for those involved. management
Performance management systems in subsidiaries
International talent covering home and third country nationals are the
management area of HRM where there is likely to be the most
convergence. This means that a system based on the
one used in the parent company is applied com-
International talent management was defined by
pletely or partly worldwide. As Briscoe et al (2012:
Mellahi and Collings (2010: 143–44) as:
347) observed, ‘There are some valid reasons which
The systematic identification of key positions suggest that... a standardized approach may be war-
which differentially contribute to the ranted for the sake of global integration, culture
organization’s sustainable competitive advantage cohesiveness, fairness, mobility of global employ-
on a global scale, the development of a talent pool ees, and as a control mechanism.’ But difficulties in
of high performing incumbents to fill these roles getting performance management to work well, as
which reflects the global scope of the multinational described in Chapter 42, are compounded when an
enterprise, the development of a differentiated attempt is made to impose a headquarters system
human resource architecture to facilitate filling on subsidiaries. This is because of the complexity of
these positions with the best available incumbent international business and the distance separating
and to ensure their continued commitment to the
headquarters and subsidiaries, not to mention cul-
organization.
tural differences.
The conduct of international talent management in- There is a spectrum of choice from total conver-
volves basically the same methods as those used in gence to total divergence:
a domestic setting as described in Chapter 28,
●● Total convergence (standardization) – the
namely, the processes of talent planning, talent pool
parent company’s scheme is adopted
definition, identifying talent internally, recruiting
throughout the international organization.
talent, performance management, career planning
This usually means imposing a formal
and management development and assignment or
performance system, as described in
promotion.
Chapter 42, with all the problems that such a
Cheese et al (2008: 9) argued that ‘talent has be-
system can create.
come a precious resource fought over by competi-
tors in a global war for talent’. Isidor et al (2011: ●● Partial convergence – foreign subsidiaries use
2168) claimed that ‘The success of global business a version of the parent company’s system,
depends on recruiting the quality of management modified to take account of local factors
[required] in the multinational companies.’ Mellahi such as culture and work systems. They are
and Collings (2010: 44) suggested that enabling required to ensure that their own systems
high-performing HCNs to become senior managers conform to policy guidelines issued by
improves the performance of an international busi- headquarters which may include certain
ness by being better able to respond effectively to requirements such as how and when
the demands of local stakeholders, legitimizing the performance reviews should be conducted,
firm in the host country and providing incentives methods of rating and the design of forms.
for retaining and motivating talents. ●● Partial divergence – subsidiaries are free to
But a study of 40 global organizations by Ready develop their own way of managing
and Conger (2007) found that virtually all the sur- performance approach but they are advised
veyed companies identified a lack of a sufficient tal- to adopt a relatively informal performance
ent pipeline to fill strategic positions within the leadership approach as described in
organization. This severely constrained their ability Chapter 43. Subsidiaries would be guided on
to grow their business. how this should be done.
●● Total divergence (localization) – foreign ●● balancing corporate and national cultures;

subsidiaries are free to adopt their own ●● the sustainability and span of global
approach although they may be encouraged compensation policies;
to have some form of performance
●● the choice of compensation instruments to be
management.
included in global compensation policies;
A dual system might be adopted using the head- ●● global benchmarking;
quarters scheme for expatriates (parent company
●● measuring the efficiency of a global
nationals) and local, possibly partly converged or
compensation approach.
diverged schemes, for home country and third coun-
try nationals (the special considerations affecting The factors that are likely to impact on the design
performance management for expatriates are dealt of reward systems are the corporate culture of the
with in Chapter 63). multinational enterprise, expatriate and local la-
But there are a number of issues, namely, cultural bour markets, local cultural sensitivities, and legal
differences, difficulties in influencing and control- and institutional factors. A choice has to be made
ling line managers in far-off subsidiaries, the prob- between, on the one hand, seeking internal consist-
lem of achieving consistent rating results if a formal ency by developing common reward policies in
scheme is used and variable levels of maturity order to facilitate the movement of employees
among subsidiaries, which affect relative perfor- across borders and preserve internal equity, and, on
mance. These issues need to be taken into account the other hand, responding to pressures to conform
when deciding on the extent to which standardized to local practices. But studies of cultural differences
performance management systems are desirable suggest that it is best to tailor reward systems to
and, in so far as they are standardized, how they local conditions.
should be managed. There are no easy solutions. Briscoe et al (2012: 291–93) gave the following
objectives for a typical MNC global compensation
and benefits programme:
International reward ●● Attraction and retention of the best-qualified
management talent to staff the MNC in all its locations.
●● Attraction and retention of employees who
International reward management involves the are qualified for international assignments.
management of all aspects of rewards in organiza- ●● Facilitation of transfers between different
tions operating worldwide or a least in a number of locations within the MNC.
countries. It is not just the management of expatri-
●● Establishment and maintenance of consistent
ate remuneration.
and reasonable relationships between the
Traditionally, discussions of international re-
compensation of employees at home and
ward strategies and practices have tended to focus
abroad.
on an elite of expatriate workers, sourced from
headquarter locations and rewarded in isolation ●● Maintenance of compensation which is
from local country staff. Today, a diverse and com- reasonable in relation to the practices of
plex pattern is emerging, requiring a more strategic competitors yet minimizes costs to the extent
approach than simply copying the practices of other possible.
multinationals. They noted that national and organizational cul-
Achieving the right balance between global and tures influence how people perceive the value of the
local requirements in international rewards is an various reward available, and commented that ‘The
issue for HR and reward managers. Baeten and culture may be performance-driven (and pay-for
Leuven (2010) listed the following main concerns in performance is an established norm) or it may be
global compensation: entitlement-oriented (with longevity of service re-
●● the extent of centralization or warded). In some cultures people are more willing
decentralization of compensation policies to accept risk in their compensation while in others
and practices; people are quite risk-averse’ (page 93).
which was defined by Festing and Eidems (2011:

Multicultural working 162) as ‘the sum of HRM policies and practices that
a multinational enterprise uses to attract, develop
A fundamental feature of international operations is and maintain its human resources including globally
that multinational and therefore multicultural teams standardized and locally adapted structures and
have to work together in foreign subsidiaries. Haas processes’. Briscoe et al (2012: 413) indicated that
and Nüesch (2012) conducted research which showed the role of an international HR department should
that, on the one hand, multinational teams may have be to:
access to a greater variety of task-relevant experience.
On the other hand, national diversity may complicate ●● contribute as an integral partner in
team collaboration and increase team conflict. formulating the global strategy for the firm;
Evidence was found that multinational teams per- ●● develop processes and concepts for top
form worse than teams with less national diversity. It management as they develop the global
is therefore necessary for international organizations strategy;
to develop ways of improving multicultural working.
●● help top management to understand the
people implications of globalization;
Role of the international ●● identify the key skills required in the global
organization – both line and HR
HR function management;
●● share the responsibility for HRM with line
An international HR function is responsible for de- managers.
veloping and operating a transnational HR system,
C A S E S T U DY
IBM
IBM has over 300,000 employees in more than 160 circumstances varies. This is affected by the need to
countries. It has evolved in recent years from a conform to different legal requirements in each company,
predominately IT manufacturing and sales company to which particularly affects employee relations policies.
become a business services company. The company is However, total reward and performance management
structured into three regions and describes itself as a policies and practices are common across the world. The
globally integrated company. Strategy is global but the company claims that it acts on its values, for example equal
human front-end of HR is local, staffed with local nationals. opportunities, even when they may prove controversial
A generally integrated approach to HR is adopted, although locally. Levels of international mobility are high, especially
the extent to which HR policies are tailored to local staff working in HR, finance and IT.
Key learning points
The practice of international HRM nationals of the country in which the subsidiary is
based), third country nationals (TCNs – employees in a
The practice of international HRM is concerned with subsidiary who are nationals of a country other than
the HR activities conducted by a multinational the parent company’s country) and expatriates
company (MNC) in managing people throughout the (employees assigned to a foreign subsidiary who are
organization. These include headquarters staff, home nationals of the parent company’s country).
country nationals (HCNs – employees who are
Workforce planning The effectiveness of international performance

management is affected overall by the sheer
International resourcing is based on workforce complexity of international business and the distance
planning processes, which assess how many people separating headquarters and subsidiaries.
are needed throughout the MNC (demand forecasting), The particular issues affecting international
set out the sources of people available (supply performance management are the increased difficulty
forecasting) and, in the light of these forecasts, prepare in influencing and controlling line managers, cultural
action plans for recruitment, selection or assignment. differences, the problem of achieving consistent rating
results, and variable levels of maturity among
Resourcing subsidiaries, which affect relative performance.
Resourcing in an international organization means

making policy decisions on how the staffing Reward management
requirements of headquarters and the foreign International reward management involves the
subsidiaries can be met, especially for managers, management of all aspects of rewards in organizations
professionals and technical staff. operating worldwide, or at least in a number of
An important choice required in staffing countries.
subsidiaries in an international firm is between The factors that are likely to impact on the design
employing parent company or home company of reward systems, as suggested by Bradley et al
nationals or an appropriate combination of the two. (1999), are the corporate culture of the multinational
enterprise, expatriate and local labour markets, local
Talent management cultural sensitivities and legal and institutional factors.
International reward strategy is concerned with the
Talent management is the process of ensuring that the
development of an integrated approach to building
organization has the talented people it needs to attain
reward policies and practices across international
its business goals.
boundaries.
The conduct of international talent management
involves basically the same methods as those used in
a domestic setting, namely, a pipeline consisting of Multicultural working
processes for talent planning, talent pool definition, A fundamental feature of international operations is
identifying talent internally, recruiting talent, that multinational and therefore multicultural teams
performance management, management development have to work together in foreign subsidiaries.
and career planning, assignment or promotion.
Role of the international HR function
International performance management
An international HR function is responsible for developing
systems and operating a transnational HR system, which was
International performance management systems defined by Festing and Eidems (2011: 162) as ‘the sum of
basically contain the following elements, which HRM policies and practices that a multinational
correspond to those found in domestic systems: enterprise uses to attract, develop and maintain its
performance agreement, performance management human resources including globally standardized and
throughout the year, performance review. locally adapted structures and processes.’
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559
63
Managing expatriates
to work in a foreign environment and enable them to
Introduction gain a deeper understanding of how an international
organization functions.
An expatriate was defined by Lee and Donohue Pinto et al (2012: 2295–96) observed that
(2012: 1198) as ‘any individual who relocates from
his/her home base to an international location for In the age of globalization, the management
business or work purposes and sets up temporary of an international workforce is increasingly
residence in the host country’. central to both the competitive advantage of the
The management of expatriates on international organization and the mission of international
assignments is a major factor determining success or human resource management (IHRM)
failure in a global business. Expatriates are expen- departments... Organizations use international
sive. They can be difficult to manage because of the assignments mainly for: (1) subsidiary control and
coordination; (2) skills and knowledge transfer;
problems associated with adapting to and working
and (3) managers’ development.
in unfamiliar environments and cultures, concerns
about their development and careers, difficulties en-
countered when they re-enter their parent company
after a foreign assignment and questions about how
The process of managing
they should be remunerated. It is therefore necessary
to consider why expatriates should be employed and
expatriates
how the costs and benefits of using them can be eval- The process of managing expatriates has been sum-
uated. In this chapter these issues are dealt with first. marized by Sparrow et al (2004: 145) as a global
The rest of the chapter is devoted to an examination assignment cycle, the three phases of which are:
of the various policies and practices required to man-
age expatriates. 1 Pre-departure – planning the assignment,
selecting the individual, administering the
relocation programme and conducting
Why use expatriates? preparatory training and development.
2 Assignment – performance management, pay
Altman and Baruch (2012) defined the strategic and benefits, family support and preparation
value of international assignments as being: for repatriation or reassignment.
●● to transfer business and technological 3 Post-assignment – retention by reintegrating
know-how; returning international assignees into
organizational career systems.
●● to develop personnel;
●● to facilitate and improve communications Doherty and Dickmann (2012: 3438) explained that
between subsidiaries and headquarters; ‘The task for HR practitioners is the development
and use of congruent HR policies which will activate
●● to further a unified organizational policy.
the successful completion of an assignment and re-
They noted that international assignments, from the patriation into the home organization to engender a
point of view of individual expatriates, could widen willingness among employees to go on assignment.’
their career perspectives and choice through exposure
However, carrying out this task is not easy. The Expatriates may be required to provide the experi-
following questions need to be answered: ence and expertise that local nationals lack, at least
for the time being. But there is much to be said for
●● How do we decide on our expatriate
a long-term resourcing policy which states that the
resourcing policy – the extent to which we
aim is to fill all or the great majority of posts with
need to assign parent company nationals to
local people. Parent companies who staff their over-
positions in foreign subsidiaries as
seas subsidiaries with local nationals always have
expatriates?
the scope to ‘parachute in’ specialist staff to deal
●● How do we select expatriates who are with particular issues such as the start-up of a new
willing and able to undertake assignments in product or service.
foreign subsidiaries? Talent management programmes can create a tal-
●● How do we prepare people for their ent pool from which people could be selected for for-
assignments? eign assignments. If a talent pool does not exist it will
●● How do we provide the support that be necessary to identify people who are potential as-
expatriates need when on assignment? signees and, in effect, create a special pool for them.
●● How do we manage the careers of
expatriates? Qualities and behaviours
●● How do we manage and measure the
performance of expatriates? The qualities and behaviours required for those
who might work internationally need to be speci-
●● How do we assimilate expatriates in the fied. Leblanc (2001) suggested that they should be
parent company when they complete their able to:
assignment?
●● How do we remunerate expatriates? ●● Recognize the diversity of overseas countries.
●● Accept differences between countries as a
There are no easy answers to these questions and fact and adjust to these differences
every international organization will have to de- effectively.
velop its own approach. But in doing so there are
certain considerations that can be taken into ac- ●● Tolerate and adjust to local conditions.
count, as described in the remaining sections of this ●● Cope in the long term with a large variety of
chapter. foreign contexts.
●● Manage local operations and personnel
abroad effectively.
Resourcing policies ●● Gain acceptance as a representative of their
company abroad.
Policies are required on the employment of local na-
tionals and the use of expatriates for long periods ●● Obtain and interpret information about
or shorter assignments. The advantages of employ- foreign national contexts (institutions,
ing local nationals are that they: legislations, practices, market specifics etc).
●● Inform and communicate effectively with a
●● are familiar with local markets, the local foreign environment about the home
communities, the cultural setting and the company’s policies.
local economy;
●● Take into account the foreign environment
●● speak the local language and are culturally when negotiating contracts and partnerships.
assimilated;
●● Identify and accept adjustments to basic
●● can take a long-term view and contribute for product specifications in order to meet the
a long period (as distinct from expatriates needs of the foreign market.
who are more likely to adopt a short-term
perspective); ●● Develop elements of a common framework
for company strategies, policies and
●● do not take the patronizing (neocolonial) operations.
attitude that expatriates sometimes adopt.
Chapter 63 | Managing Expatriates 561
●● Accept that the practices that will operate above, modified to take account of any special con-
best in an overseas environment will not ditions attached to a particular assignment.
necessarily be the same as the company’s It is useful to build a competency framework as
‘home’ practices. a basis for recruitment and, later, for managing per-
formance and management development. The fol-
Of these qualities the first four refer to the critical
lowing list of the competencies required by global
requirement of cross-cultural awareness, ie the abil-
executives was produced by Briscoe and Schuler
ity to understand and work within different n ational
(2004: 277):
cultures.
●● open-minded and flexible in thought and
tactics;
Alternative approaches to ●● cultural interest and sensitivity;
resourcing ●● able to deal with complexity;
The problems involved in the management of expa- ●● resilient, resourceful, optimistic and
triates indicate, as suggested by Pinto et al (2012: energetic;
2312), that ‘organizations should re-evaluate their ●● honesty and integrity;
global staffing options and consider other forms of ●● stable personal life;
talent (locals and self-assigned individuals) and al-
ternative forms of mobility (eg business travel, vir- ●● value-added technical or business skills.
tual teams, short-term assignments and commuting),
often equally effective and more compatible with
individuals’ interests’.
Desire to work abroad
An important recruitment issue is whether or not
people want to work abroad. Research by Mol et al
Recruitment and selection (2009) revealed that employees are often unwilling
to accept an assignment entailing international mo-
policies bility. As Kim and Froese (2012: 3415) explained:
People for international assignments can be recruited An employee’s decision whether to accept an
from a defined pool within the company by identify- expatriate assignment can be a dilemma as the
ing individuals with the required qualifications, or employee must consider both work and family
issues. On the one hand, an expatriate assignment
by internal advertisements. It may be necessary to
might be an important career step. On the
seek recruits outside the firm. It is important to be
other hand, family reasons such as marriage are
clear about what sort of people are required, by ref-
often cited as a major reason for not accepting
erence to role specifications that spell out the special
international assignments... Other critical factors
qualities required for working abroad. It is also ad- related to work-family issues in international
visable to select people who believe that an overseas assignments are host-country attributes;
assignment will be beneficial to them, and who will these attributes include the level of economic
be capable of working in a different culture. To re- development and the country’s language –
duce the assimilation problems that can be faced by employees who value their occupational role have
an expatriate when working in a foreign location, a strong preference for advanced countries.
realistic previews of the conditions they will meet
are necessary. Doherty and Dickmann (2012: 3448) commented
that ‘The attractiveness of career and development
prospects is highly pertinent to an individual’s deci-
Use of role specifications sions to go abroad.’ And research by Pinto et al
(2012: 2300) confirmed that the challenges (both
Selection should be based on role specifications, personal and professional) and career prospects
which might contain some or all of the points in- were the two main motives for accepting an inter-
cluded in the list of qualities and behaviours set out national assignment.
Realistic previews country, not only because the problems they

encounter in the host country are qualitatively dif-
At interviews for candidates from outside the organ- ferent from those they encountered back home but
ization, and when talking to internal staff about the also because the informational and emotional
possibility of an overseas assignment, it is advisable resources they relied on in the home country are no
to have a policy of providing a realistic preview of longer as present or relevant.’
the job. The preview should present information on Studies such as those by Stroh et al (2005) have
the overseas operation, any special features of the shown that even when employees accept an interna-
work, what will need to be done to adjust to local tional assignment, they often return early for rea-
conditions, career progression overseas, re-entry pol- sons such as difficulties in adapting to their host
icy on completion of the assignment, pay, and special countries. Many of those who return early tend to
benefits such as home leave and children’s education. do so after a few months, thus incurring great costs
for their firms. As Wu and Ang (2011: 2689) pointed
out following their research: ‘The ability of expatri-
Preparation policy ates to adjust to their new work environment
greatly affects their success in that particular assign-
The preparation policy for overseas assignments ment.’ They also emphasized that ‘A systems ap-
should include the provision of cultural familiariza- proach to expatriate supporting practices is essential
tion for the country in which the expatriate will for expatriate adjustments and outcomes’ (page
work (sometimes called ‘acculturization’), informa- 2696).
tion on how to work in multicultural teams and the Assimilation and support policies provide for the
business and HR policies that will apply. A pre-as- adaptation of expatriates to overseas posts and for
signment training programme should be provided their progress in them to be monitored and reviewed.
which, as proposed by Tarique and Caligiri (1995), Progress may be monitored by conventional perfor-
could be designed by taking the following steps: mance management processes, but additional infor-
mation may be provided on potential and the ability
1 Identify the type of global assignment, eg
of individuals to cope with overseas conditions.
technical, functional, tactical, developmental
When a number of expatriates are employed it is
or strategic/executive.
customary for people to be appointed at headquar-
2 Conduct a cross-cultural training needs ters to provide support. Briscoe et al (2012) re-
analysis covering organizational analysis and ported that some firms appoint sponsors who look
requirements, assignment analysis of key after the interests and prospects of expatriates while
tasks and individual analysis of skills. they are on assignment, but who also provide an
3 Establish training goals and measures – avenue for keeping them informed about what is
cognitive (eg understanding the role of going on back home.
cultural values and norms) and affective It may be up to expatriates to seek any support
(modifying perception about culture and they need from headquarters or elsewhere by direct
increasing confidence in dealing with approaches and networking. But some expatriates
individual behaviours to form adaptive are better at this than others. As Farh et al (2010:
behaviours such as interpersonal skills). 450) recommended, ‘To ensure that expatriates will
4 Develop and deliver the programme – the actually seek support, organizations should reduce
content should cover both general and the perceived risk associated with support seeking
specific cultural orientation; a variety of by creating a psychologically safe culture, since ask-
methods should be used. ing for help can sometimes be interpreted as a sign
of weakness.’
5 Evaluate training given.
Career experiences and expectations are also im-
portant. According to Haslberger and Brewster
(2009), when expatriates are clear about the career
Assimilation and support benefits generated from international careers, they
are more likely to adjust to their job and the host
Farh et al (2010: 439) observed that ‘Expatriates culture, and will eventually decide to stay on in the
experience high levels of uncertainty in the host assignment.
As suggested by Briscoe et al (2012: 249), sup-

port should be based on ‘clear, consistent and regu-
Performance management
lar communication between the home office and the
expatriates’. The expatriates should be provided Standard performance management systems such as
with opportunities to travel back to their home those described in Chapter 42 can be used for as-
country to share experience and knowledge with sessing expatriate performance. But there are unique
other members of the organization. circumstances surrounding the work of expatriates,
The specific support areas proposed by Wu and including the need for cross-cultural competence,
Ang (2011) were: problems of adjustment and distance from head-
quarters and the support it can provide. These com-
●● Pre-departure preparation should cover bine to suggest that special arrangements should be
cross-cultural training, adequate preparation made for assessing expatriate performance and par-
time and orientation visits to ease the ticular care should be taken to allow for the factors
transition process. that affect performance.
●● Companies need to provide appropriate
financial assistance to compensate for any
hardship involved in expatriation. Assessing performance
●● Companies need to reassure expatriates that Performance management processes for expatriates
a posting will help their career prospects. need to take account of the challenges they face.
Farh et al (2010: 450) advised that These are of a different order to those staying at
‘organizations may want to employ formal home. Expatriate performance has been broken
mentoring programs and ensure that the fit down into four dimensions by Caligiuri (1997):
between the characteristics of the mentor technical performance, contextual/pro-social per-
and mentee is most conducive to the formance, contextual/managerial performance and
exchange of high-quality support’. expatriate specific dimensions.
Kramer and Wayne (2004) listed expatriate suc-
cess constructs as:
Career management ●● performing well on the job;
Special attention has to be paid to managing the ●● remaining in the assignment until the end of
careers of expatriates either as part of their experi- term;
ence overseas or when they return permanently or ●● adjusting to living conditions.
for a period to their home country. As proposed by
Lee and Donohue (2012) developed and tested
Briscoe et al (2012: 248), career management pro-
an expatriate performance scale consisting of six
cesses need to begin prior to an international as-
factors:
signment and be updated regularly. The assignment
should be part of a larger plan for the firm so that 1 Task performance
repatriates return to positions that use their interna- 2 Management and administration
tional learning and experience.
3 Teamwork and leadership
Career management practices in international or-
ganizations may be based on the methods described 4 Demonstrating effort
in Chapter 36. These include the definition of com- 5 Communication performance
mon career paths, career counselling and individual 6 Maintaining self-discipline
career plans based on the outcome of performance
management reviews. The responsibility for ensur-
ing that these activities take place systematically for Factors affecting expatriate
expatriates can be given to whoever is in charge of
talent management or management development at performance
headquarters. Mentors based at head office can be Issues such as culture shock and cross-cultural adjust-
involved by keeping in touch with expatriates before ment may adversely impact on the performance of
they return to the parent company.
expatriates. Pinto et al (2012: 2297) commented that

‘Socio-cultural adjustment and psychological well-
Pay and allowances policies
being of expatriates and their families are precondi-
tions for their success.’ Evidence collected by Solomon The policy of most organizations is to ensure that
(1995) indicated that expatriate failure is largely due expatriates are no worse off because they have been
to firms’ overemphasis on selection based on techni- posted abroad. In practice, various additional allow-
cal expertise rather than cross-cultural competence. ances or payments, such as hardship allowances,
And Dickmann et al (2008) provided evidence that mean that they are usually better off financially than
organizations seem to overestimate financial and if they had stayed at home. The basic choice is
family motives and undervalue career and work–life whether to adopt a home-based or host-based policy.
balance considerations favoured by expatriates.
Kim and Froese (2012: 3415) explained that
‘The individuals’ reluctance to accept an assignment
Home-based pay
might have influenced their efforts to adjust, their The home-based pay approach aims to ensure that
satisfaction with the assignment and ultimately the value of the remuneration (pay, benefits and al-
their withdrawal intention. In contrast, individuals lowances) of expatriates is the same as in their
seeking or willing to accept an assignment are per- home country. The home-base salary may be a no-
haps more likely to overcome adjustment difficul- tional one for long-term assignments (ie the salary
ties, feel more satisfied with the assignment and that it is assumed would be paid to expatriates were
show intentions to remain until the end of the as- they employed in a job of equivalent level at the
signment.’ parent company). For shorter-term assignments it
may be the actual salary of the individual. The no-
tional or actual home-base salary is used as the
Re-entry policies foundation upon which the total remuneration
package is built. This is sometimes called the ‘build-
Re-entry policies should be designed to minimize the up’ or ‘balance sheet’ approach.
problems that can arise when expatriates return to The salary ‘build-up’ starts with the actual or no-
their parent company after a foreign posting. They tional home-base salary. To this is added a cost-of-
want to be assured that they will be given positions living adjustment that is applied to ‘spendable
appropriate to their qualifications, and they will be income’ – the portion of salary that would be used
concerned about their careers, suspecting that their at home for everyday living. It usually excludes in-
overseas experience will not be taken into account. come tax, social security, pensions and insurance
Policies should allow time for expatriates to adjust. and can exclude discretionary expenditure on major
The provision of mentors or counsellors is desirable. purchases or holidays on the grounds that these do
Doherty and Dickmann (2012: 3447) found not constitute day-to-day living expenses.
through their research that turnover rates in the first The expatriate’s salary would then consist of the
period after expatriates return to their parent com- actual or notional home-base salary plus the cost-
pany averaged 15 per cent compared with the nor- of-living adjustment. In addition, it may be neces-
mal rate of 7 per cent for employees permanently sary to adjust salaries to take account of the host
working at headquarters. Turnover risks were due country’s tax regime in order to achieve tax equali-
to repatriates having more marketable skills, lack of zation. Moves of less than one year, which might
recognition by the employer of the skills acquired give rise to double taxation, require particular at-
on assignment or reduced responsibility or status on tention. Some or all of the following allowances
return. The firm with the highest repatriation turno- may be added to this salary:
ver rate in the sample (40 per cent) responded by
●● ‘incentive to work abroad’ premium;
introducing a longer-term career planning process.
Sparrow et al (2011: 48) emphasized that the ●● hardship and location;
problems of managing repatriations are more com- ●● housing and utilities;
plex in highly decentralized MNCs than in the more ●● school fees;
centralized global companies.
●● ‘rest and recuperation’ leave.
Host-based pay Companies using the host-based approach com-

monly pay additional allowances such as school
The host-based pay approach provides expatriates fees, accommodation and medical insurance. They
with salaries and benefits such as company cars and may also fund long-term benefits such as social se-
holidays that are in line with those given to nation- curity, life assurance and pensions from home.
als of the host country in similar jobs. This method The host-based method is certainly equitable
ensures equity between expatriates and host coun- from the viewpoint of local nationals, and it can be
try nationals. It is adopted by companies using the less expensive than home-based pay. But it may be
so-called market rate system, which ensures that the much less attractive as an inducement for employ-
salaries of expatriates match the market levels of ees to work abroad, especially in unpleasant loca-
pay in the host country. tions, and it can be difficult to collect market rate
data locally to provide a basis for setting pay levels.
Key learning points
Expatriates The process of managing expatriates

An expatriate was defined by Lee and Donohue (2012: The process of managing expatriates has been
1198) as ‘any individual who relocates from his/her summarized by Sparrow et al (2004: 145) as a global
home base to an international location for business or assignment cycle, the three phases of which are
work purposes and sets up temporary residence in pre-departure, assignment and post-assignment.
the host country’.
Resourcing
Managing expatriates Policies are required on the employment of local
The management of expatriates on international nationals and the use of expatriates for long periods or
assignments is a major factor determining success or shorter assignments.
failure in a global business. Expatriates are expensive. Expatriates may be required to provide the
They can be difficult to manage because of the experience and expertise that local nationals lack, at
problems associated with adapting to and working in least for the time being. But there is much to be said
unfamiliar environments and cultures, concerns for a long-term resourcing policy which states that the
about their development and careers, difficulties aim is to fill all or the great majority of posts with
encountered when they re-enter their parent company local people.
after a foreign assignment and questions about how
they should be remunerated. Recruitment and selection policies
People for international assignments can be recruited
Use of expatriates from within the company from a defined pool, by
Organizations use international assignments mainly for identifying individuals with the required qualifications,
(1) subsidiary control and coordination; (2) skills and or internal advertisements. It may be necessary to
knowledge transfer; (3) managers’ development. seek recruits outside the firm.
Other sources of people (locals and self-assigned
RoI on international assignments individuals) and alternative forms of mobility (eg
business travel, virtual teams, short-term assignments
International assignments are investments in the use and commuting) should be considered.
of human capital, which involve costs as well as The critical requirement that expatriates should
benefits. It is therefore advisable to calculate the meet is cross-cultural awareness, ie the ability to
return on investment (RoI) that they generate. understand and work within different national cultures.
Preparation policy experience overseas or when they return permanently

or for a period to their home country.
The preparation policy for overseas assignments
should include the provision of cultural familiarization
Expatriate performance
for the country in which the expatriate will work,
information on how to work in multicultural teams and Standard performance management systems can be
the business and HR policies that will apply. A used for assessing expatriate performance. But there
pre-assignment training programme should be are unique circumstances surrounding the work of
provided. expatriates, including the need for cross-cultural
competence, problems of adjustment and distance
Assimilation and support policies from headquarters and the support it can provide.
These combine to suggest that special arrangements
Assimilation and support policies provide for the should be made for assessing their performance and
adaptation of expatriates to overseas posts and their particular care should be taken to allow for the factors
progress in them to be monitored and reviewed. that affect performance.
Progress may be monitored by conventional
performance management processes, but additional
Pay and allowances policies
information may be provided on potential and the
ability of individuals to cope with overseas conditions. The policy of most organizations is to ensure that
Mentors may be appointed to look after the expatriates are no worse off because they have been
interests of expatriates. posted abroad. In practice, various additional
allowances or payments, such as hardship
Career management allowances, mean that they are usually better off
financially than if they had stayed at home. The basic
Special attention has to be paid to managing the choice for expatriate pay is whether to adopt a
careers of expatriates, either as part of their home-based or host-based policy.
References
Altman, Y and Baruch, Y (2012) Global self-initiated perspectives on the factors influencing the decision
corporate expatriate careers: a new era in to accept an international assignment,
international assignments, Personnel Review, International Journal of Human Resource
41 (2) pp 233–55 Management, 39 (1), pp 116–34
Briscoe, D and Schuler, R (2004) International Doherty, N T and Dickmann, M (2012) Measuring
Human Resource Management, London, the return on investment in international
Routledge assignments: an action research approach,
Briscoe, D, Schuler, R and Tarique, I (2012) International Journal of Human Resource
International Human Resource Management, 4th Management, 23 (16), pp 3434–54
edn, New York, Routledge Farh, C I, Bartol, K M, Shapiro, D L and Shin, J
Caligiuri, P (1997) Assessing expatriate success: (2010) Networking abroad: a process model of
Beyond just being there, in (ed) Z Aycan, New how expatriates form support ties to facilitate
Approaches to Employee Management – Theory adjustment, Academy of Management Review,
and Research, Greenwich, JAI Press, pp 117–40 35 (3), pp 434–54.
Dickmann, M, Doherty, N, Mills, T and Brewster, C Haslberger, A and Brewster, C (2009) Capital gains:
(2008) Why do they go? Individual and corporate expatriate adjustment and the psychological
contract in international careers, Human Resource International Journal of Human Resource

Management, 48 (3), pp 379–97 Management, 23 (11), pp 2295–314
Kim, J and Froese, J (2012) Expatriate willingness in Solomon, C M (1995) Success abroad depends on
Asia: the importance of host-country more than just job skills, Personnel Journal, 73 (4),
characteristics and employees’ role commitments, pp 51–54
International Journal of Human Resource Sparrow, P, Brewster, C and Harris, H (2004)
Management, 23 (16), pp 3414–33 Globalizing Human Resource Management,
Kramer, M L and Wayne, S J (2004) An examination London, Routledge
of perceived organizational support as a Sparrow, P, Scullion, H and Farndale, E (2011) Global
multidimensional construct in the context of an talent management: new roles for the corporate
expatriate assignment, Journal of Management, 30, HR function? in (eds) H Scullion and D G
pp 209–37 Collings, Global Talent Management, London,
Leblanc, B (2001) European competitiveness – some Routledge, pp 40–55
guidelines for companies, in (ed) M H Albrecht, Stroh, L K, Black, J S, Mendenhall, M E and
International HRM, Oxford, Blackwell Gregersob, H B (2005) International Assignments:
Lee, L and Donohue, R (2012) The construction An integration of strategy, research and practice,
and validation of a measure of expatriate Mahwah NJ, Lawrence Erlbaum Associates
job performance, International Journal of Tarique, I and Caligiri, P (1995) Training and
Human Resource Management, 23 (6), pp development of international staff, in (eds) A W
1197–215 Herzorg and J V Ruyssevelde, International
Mol, S T, Born, M P, Willemsen, M E, Henk, T V and Human Resource Management, London, Sage
Derous, E (2009) When selection ratios are high: Publications
predicting the expatriation willingness of Wu, P D and Ang, S H (2011) The impact of
prospective entry-level job applicants, Human expatriate supporting practices and cultural
Performance, 22, pp 111–29 intelligence on cross-cultural adjustment and
Pinto, L H, Cabral-Cardoso, C and Werther, W B performance of expatriates in Singapore,
(2012) Compelled to go abroad: motives and International Journal of Human Resource
outcomes of international assignments, Management, 22 (13), pp 2683–702
568

569
PART XVI
People management
skills and
competencies
PART XVI CONTENTS 78 Handling people problems

79 Handling challenging conversations
64 Strategic people management skills
80 Managing conflict
65 Business skills
81 Political skills
66 Dealing with business issues from
an HR perspective 82 Project management
67 Problem-solving and decision-
making skills
68 Analytical and critical skills Introduction
69 Research skills It can be argued that fully fledged HR professionals
70 Statistical skills have to be able to deploy a range of skills supported
by knowledge that is wider than that required by
71 Selection interviewing skills any other professional working in organizations.
Even if this claim cannot be substantiated, it is in-
72 Job, role and skills analysis and controvertible that a very wide variety of skills have
competency modelling to be used by HR specialists on a day-to-day basis.
As business partners they need strategic and
73 Learning and development skills business skills. As professionals constantly faced
with the need to gain insight into the organizational
74 Negotiating skills and business issues they have to address, they need
75 Change management problem-solving, analytical and critical skills. HR
professionals need to know about research method-
76 Influencing skills ology to understand the contribution of HR re-
search and, increasingly, to initiate research and
77 Leadership take part in research projects themselves. They must
be able to analyse and present information on what
570 Part 16 | People Management Skills and Competencies
is happening in their organizations by using statisti- skills in persuading managers to agree to innova-
cal skills. tions or adopt different courses of action in people
Another major group of skills that HR profes- management. They will be constantly involved in
sionals need to have are those concerned with HRM handling people problems and, from time to time, in
practices, especially selection interviewing, job and managing conflict. Politics is a feature of life in or-
competency analysis, learning and development ganizations and HR people must know how to cope
techniques and negotiating. Then there are the skills with political situations. As business partners, they
they need because they have a complex role to play can be involved in advising on dealing with business
within their organizations. They are involved in situations which have HR implications. Finally, they
leading change and exercising leadership in their are often involved in implementing new systems and
own functions and, indirectly, in their dealings with to do this they need project management skills.
line managers – providing guidance and advice. They The purpose of this part is to provide guidance
have to exert influence, not just by using the author- on the application of all the skills mentioned
ity of their position but by the effective exercise of together with any supporting knowledge required.
571
64
Strategic people
management skills
Introduction The strategic business
HR management professionals have a strategic role partner model
when they take part in conjunction with their line
manager colleagues in the development and imple- HR practitioners share responsibility with their line
mentation of innovative people strategies that are management colleagues for the success of the or-
aligned with business or corporate strategies and ganization. HR practitioners can be described as
thus help to achieve them. This is an essential aspect strategic business partners when they have the ca-
of the role of a business partner. This chapter exam- pacity to identify business opportunities, to see the
ines what this means and describes the knowledge broad picture and to understand how their role can
and skills required. help to achieve the company’s business objectives.
They integrate their activities closely with top man-
agement and ensure that they serve a long-term
The strategic role of the HR strategic purpose. They anticipate needs, act flexibly
and are proactive.
professional
HR strategic activities support the achievement of The strategic skills required
the organization’s goals and values by aligning HR
strategies with business or corporate strategies. HR professionals who act strategically will think
Senior people management professionals are in- about what the organization wants to be and be-
volved in the development and implementation of come and what they can do to ensure this happens.
forward-looking HR strategies that are integrated They will have insight into the real needs of the
with one another. Importantly, they work with their business and its people and will take a broad view
line management colleagues in the continuous for- of where the business is going. They will be capable
mulation and execution of the business strategy. of seeing ‘the big picture’, looking beyond the con-
People management professionals, especially at fines of the immediate problems they and the busi-
the highest level, make a strategic contribution that ness face to what lies ahead, how these problems
ensures that the organization has the quality of skilled can be solved and what they can do to support the
and engaged people it needs. Sparrow et al (2010: 88) efforts of other people. This means that they need
observed that ‘HR must be fully responsive to the business, problem-solving and analytical skills, as
strategy and business model of the business. HR is described in the next three chapters of this book.
not a rule to itself. It is not “HR for HR”, but HR (as They also need to be able to advise on the HR im-
broadly defined across the competing stakeholders plications of business plans and issues, as consid-
whom HR has to satisfy) for the business.’ The strate- ered in Chapter 66.
gic nature of HR has been expressed in the strategic
business partner model, as described below.
Key learning points
The strategic role of the HR professional business opportunities, to see the broad picture and to
understand how their role can help to achieve the
HR strategic activities support the achievement of the company’s business objectives.
organization’s goals and values by aligning HR
strategies with business or corporate strategies. HR
The strategic skills required
professionals are involved in the development and
implementation of forward-looking HR strategies that HR professionals who act strategically will think about
are integrated with one another. what the organization wants to be and become and
what they can do to ensure this happens.
The strategic business partner model
HR practitioners can be described as strategic
business partners who have the capacity to identify
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
573
65
Business skills
and operations.’ Research by the CIPD (2010: 5) led
Introduction to the following conclusion:
HR professionals who work in a business need to It is also evident that some HR functions see
see themselves – and be seen – as business people HR as an applied business discipline first and a
with particular expertise and interest in people, people discipline second. The ability to understand
rather than HR people who happen to work for a the business agenda in a deep way means that
business. To make an effective contribution, they they are then able to help the business see how
must possess business and financial skills. They critical objectives can only truly be delivered if
need to understand what their business model is – the people and cultural issues are fully factored
in – insight into what it would take to truly
how their organization delivers value to its custom-
deliver. In these places HR has a real share of voice
ers and how the business achieves competitive ad-
and credibility… Where HR is grounded in the
vantage and makes money. They need to understand
business and delivering the fundamentals well,
and be able to use the language of the business and, then it is able to engage in higher value-adding
because this will generally be expressed in mone- ‘OD’ and talent-related activities that speak to the
tary terms, they need to appreciate how the finan- critical challenges faced in that organization.
cial systems of the business work. This means that
they have to understand the budgeting processes of
the organization and to be able to manage their
own financial budgets They also need to know
Business skills
about the concepts of the business model and busi- Business skills are required to adopt a business-like
ness model innovation in order to understand how approach to management – one that focuses on al-
the business makes money now and intends to do locating resources to opportunities and demands
so in the future so that they can do something and making the best use of them to achieve the re-
about it. Even if they do not work in a profit-mak- quired results. HR managers who are business-like
ing business, they still need to know about the busi- understand and act upon:
ness implications and requirements of what the
organization does. As the chief executive of a large ●● the business imperatives of the
charity told the writer: ‘We are not a business but organization – its mission and its strategic
we have to be business-like.’ goals;
Equipped with this knowledge, HR professionals ●● the organization’s business model – the basis
can develop the skills needed to interpret the organ- upon which its business is done (how its
ization’s business or corporate strategies, to contrib- mission and strategic goals will be achieved);
ute to the formulation of those strategies, to develop
●● the organization’s business drivers – the
integrated HR strategies and to run their own func-
characteristics of the business that move it
tion in a business-like way. This requirement was
forward;
spelt out by Ulrich (1997: 7) when he wrote that
‘HR professionals must know the business which ●● the organization’s core competencies – what
includes a mastery of finance, strategy, marketing, the business is good at doing;
●● how performance in the organization is
measured in financial and non-financial terms;
●● the factors that will ensure the effectiveness money comes from, and assets indicate where the
of its activities including specific issues money is now.
concerning profitability, productivity,
financial budgeting and control, costs and Make-up of the balance sheet
benefits, customer service and operational
performance; The balance sheet contains four major sections:
●● the key performance indicators (KPIs) of the ●● Assets or capital in use, which is divided into
business (the results or outcomes identified long-term or fixed assets (eg land, buildings
as being crucial to the achievement of high and plant) and current or short-term assets,
performance) that can be used to measure which include bank balances and cash,
progress towards attaining goals; debtors, stocks of goods and materials and
●● the factors that will ensure that the firm’s work-in-progress.
resources, especially its human resources, ●● Current liabilities, which are the amounts
create sustained competitive advantage that will have to be paid within 12 months
because they are valuable, imperfectly of the balance sheet date.
imitable and non-substitutable (the resource- ●● Net current assets or working capital, which
based view). are current assets less current liabilities.
Careful control of working capital lies at the
heart of efficient business performance.
Financial skills ●● Sources of capital, which comprise share
capital, reserves including retained profits,
A business-like approach means using financial and long-term loans.
skills to know how to analyse and interpret balance
sheets, cash flow and trading statements and profit
and loss accounts, and to understand and make use Liquidity analysis
of the financial techniques of budgeting and budget- Liquidity analysis is concerned with the extent to
ary control, cash budgeting and costing. which the organization has an acceptable quantity
of cash and easily realizable assets to meet its needs.
The analysis may be based on the ratio of current
Interpreting balance sheets assets (cash, working capital, etc) to current liabili-
ties (the working capital ratio). Too low a ratio may
A balance sheet is a statement on the last day of the
mean that the liquid resources are insufficient to
accounting period of the company’s assets and lia-
cover short-term payments. Too high a ratio might
bilities and the share capital or the shareholders’
indicate that there is too much cash or working
investment in the company. Balance sheet analysis
capital and that they are therefore being badly man-
assesses the financial strengths and weaknesses of
aged. The working capital ratio is susceptible to
the company, primarily from the point of view of
‘window dressing’, which is the manipulation of the
the shareholders and potential investors, but also as
working capital position by accelerating or delaying
part of management’s task to exercise proper stew-
transactions near the year end.
ardship over the funds invested in the company and
Liquidity analysis also uses the ‘quick ratio’ of
the assets in its care. With the help of balance sheet
current assets minus stocks to current liabilities.
ratios, the analysis focuses on the balance sheet
This concentrates on the more realizable of the cur-
equation, considers the make-up of the balance
rent assets and therefore provides a stricter test of
sheet in terms of assets and liabilities, and examines
liquidity than the working capital ratio. It is there-
the liquidity position (how much cash or easily real-
fore called ‘the acid test’.
izable assets are available) and capital structure.
The balance sheet equation Capital structure analysis

Capital structure analysis examines the overall
The balance sheet equation is: Capital + Liabilities =
means by which a company finances its operations,
Assets. Capital plus liabilities shows where the
Chapter 65 | Business Skills 575
which is partly by the funds of their ordinary share- 7 Taxation.

holders (equity) and partly by loans from banks and 8 Net profit (6 minus 7).
other lenders (debt). The ratio of long-term debt to
ordinary shareholders’ funds indicates ‘gearing’. A
company is said to be highly geared when it has a
high level of loan capital as distinct from equity Profitability analysis ratios
capital. Profitability is expressed by the following ratios:
●● Return on equity – profit after interest and
Classification of profits preference dividends before tax in relation to
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
1 Gross profit – the difference between sales the best profitability ratio.
revenue and the cost of goods sold. This is ●● Return on capital employed – trading or
also referred to as gross margin, especially in operating profit to capital employed. This
the retail industry. measures the efficiency with which capital is
2 Operating or trading profit – the gross profit employed.
less sales, marketing and distribution costs, ●● Earnings per share – profit after interest,
administrative costs and research and taxation and preference dividends in relation
development expenditure. to the number of issued ordinary shares. This
3 Profit before taxation – operating profit plus is an alternative to return on equity as a
invested income minus interest payable. measure of the generation of ‘shareholder
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
Trading statements of shares issued, although it is often referred
Trading statements or accounts show the cost of to within companies as the means by which
goods manufactured, the cost of sales, sales revenue their obligations to shareholders should be
and the gross profit, which is transferred to the profit assessed.
and loss account. ●● Price-earnings (P/E) ratio – market price of
ordinary shares in relation to earnings per
share. This ratio is often used by investment
Profit and loss accounts analysts.
Profit and loss accounts provide the information re- ●● Economic value added (EVA) – post-tax
quired to assess a company’s profitability – the return operating profit minus the cost of capital
in the shape of profits that shareholders obtain for invested in the business. This measures how
their investment in the company. This is the primary effectively the company uses its funds.
aim and best measure of efficiency in competitive
business. Profit and loss accounts show:
1 The gross profit from the trading account.
Financial budgeting
2 Selling and administration expenses. Budgets translate policy into financial terms. They
are statements of the planned allocation and use of
3 The operating profit (1 minus 2).
the company’s financial resources. They are needed to
4 Investment income. (1) show the financial implications of plans, (2) de-
5 Profit before interest and taxation (3 plus 4). fine the resources required to achieve the plans, and
6 Profit before taxation (5 minus loan interest). (3) provide the means of measuring, monitoring and
controlling results against the plans. Heads of HR from the company). It is an important and system-
functions need to know how budgets should be pre- atic process of ensuring that problems of liquidity
pared and controlled. are minimized and that funds are managed effec-
The procedure for preparing financial budgets tively. The aim is to ensure that the company is not
consists of the following steps: over-trading, ie that the cost of its operations does
not significantly exceed the amount of cash availa-
1 Budget guidelines are prepared that have
ble to finance them. The old adage is that whatever
been derived from the corporate plan and
else is done, ensure that ‘cash in exceeds cash out’.
forecasts. They will include the activity levels
Cash flow statements report the amounts of cash
for which budgets have to be created and the
generated and cash used for a period. They are used
ratios to be achieved. The assumptions to be
to provide information on liquidity (the availability
used in budgeting are also given. These could
of cash), solvency and financial adaptability.
include rates of inflation and increases in
costs and prices.
2 Initial budgets for a budget or cost centre are Cash budgeting
prepared by departmental managers with the
help of budget accountants. An operating cash budget deals with budgeted re-
ceipts (forecast cash inflows) and budgeted payments
3 Departmental budgets are collated and
(forecast cash outflows). It includes all the revenue
analysed to produce the master budget,
expenditure incurred in financing current opera-
which is reviewed by top management, who
tions, ie the costs of running the business in order to
may require changes at departmental level to
generate sales.
bring it into line with corporate financial
objectives and plans.
4 The master budget is finally approved by top Costing
management and issued to each
departmental (budget centre) manager for Costing techniques provide information for deci-
planning and control purposes. sion making and control. They are used to establish
the total cost of a product for stock valuation, pric-
ing and estimating purposes and to enable the com-
Budgetary control pany to establish that the proposed selling price will
enable a profit to be made.
Budgetary control ensures that financial budgets Costing involves measuring the direct costs of
are met and that any variances are identified and material and labour plus the indirect costs (over-
dealt with. Control starts with the budget for the heads) originating in the factory (factory overheads)
cost centre, which sets out the budgeted expendi- and elsewhere in the company (sales, distribution,
ture under cost headings against activity levels. A marketing, research and development and adminis-
system of measurement or recording is used to al- tration). Overheads are charged to cost units – this
locate expenditures to cost headings and record ac- process is called ‘overhead recovery’. It provides in-
tivity levels achieved. The actual expenditures and formation on total costs. Costing has to take account
activity levels are compared and positive and nega- of fixed costs that do not vary with activity levels
tive variances noted. Cost centre managers then act and variable costs which do. There are four main
to deal with the variances and report their results to costing methods:
higher management. Heads of HR functions need
to understand how they should monitor and con- ●● Absorption costing – this involves allocating
trol expenditure. all fixed and variable costs to cost units and
is the most widely used method, although it
can be arbitrary.
Cash management ●● Activity-based costing – costs are assigned to
activities on the basis of an individual
Cash management involves forecasting and control-
product’s demand for each activity.
ling cash flows (inflows or outflows of cash to or
●● Marginal costing – this segregates fixed costs assets and how well resources should be
and apportions the variable or marginal utilized. Inventory or stock refers to the
costs to products. goods and materials that a business holds,
●● Standard costing – is the preparation of inventory or stock turnover measures the
predetermined or standard costs, which are number of times inventory is sold or used in
compared with actual costs to identify a time period. It is calculated to see if a
variances. It is used to measure performance. business has an excessive inventory in
comparison to its sales level.
Business models Business model innovation

HR professionals also need to know about the con-
cept of business models and how this influences their Business model innovation is the process of devel-
activities. A business model provides a picture of an oping new business models or changing existing
organization, explaining how it achieves competitive ones in order to deliver better value to customers,
advantage and makes money. As defined by Magretta achieve competitive advantage and increase profit-
(2002: 87), business models ‘are at heart stories – ability. Johnson (2010: 20) defined the concept in
stories that explain how enterprises work… They more detail as follows:
answer the fundamental questions every manager Business model innovation (BMI) refers to the
needs to ask: How do we make money in this busi- creation or reinvention of a business. Though
ness? What is the underlying economic logic that innovation is more often seen in the form of a
explains how we can deliver value to customers at new product or service offering, a business model
an appropriate cost?’ She explained that a business innovation results in an entirely different type
model ‘focuses attention on how all the elements in of company that competes not only on the value
a system fit into a working whole’ (page 90). proposition of its offerings, but aligns its profit
formula, resources, and processes to enhance that
value proposition, capture new market segments,
Elements of a business model and alienate competitors.
Johnson et al (2008: 52) stated that: ‘A business Johnson also observed that ‘Business model innova-
model, from our point of view, consists of four in- tion thrives in cultures of inquiry, environments in
terlocking elements that, taken together, create and which new value propositions and ideas for new
deliver value.’ These are: business models are met with interest and encour-
agement’ (page 177).
●● The customer value proposition: how the
business will create value for its customers;
this is the most important element. Business model analysis and
The profit formula: the blueprint that defines
●●
how the company creates value for itself
design
while providing value to the customer. It Business model analysis is a necessary part of busi-
consists of the revenue model, cost structure, ness model innovation. It is concerned with two key
margin model (the contribution needed from issues: (1) how the organization creates value and
each transaction to achieve desired profits) (2) how the organization establishes unique re-
and resource velocity (the ratio of the value sources, assets or positions that will achieve com-
of the goods the company produces and sells petitive advantage. It may involve an analysis of
or the services it provides to the value of the how value is generated at each stage of the value
investment in producing or delivering those chain (a value chain identifies the sequence of ac-
goods or services over the same period of tivities in a firm that are strategically relevant and
time). It is also concerned with how fast the underlie its key capabilities).
business needs to turn over inventory and
The role of HR in business model ●● mastermind change management

programmes that provide for the acceptance
innovation 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 Sparrow et al (2010: people required with specified skills and
14–15) as follows: knowledge;
A central task for HR directors is to identify how ●● formulate and implement talent management
they as leaders, and how their function’s own strategies that provide for the development,
delivery model, structure, and the people processes deployment, recruitment and retention of
it manages, add value during periods of business talented people – those individuals who can
model change. In order for organizations to make make a difference to organizational
their models work, they have to understand the performance through their immediate
potentially deep implications they have for people contribution and in the longer term;
management. People management experts have to ●● develop performance management and
make sure that those engineering the new business contingent reward systems – what Sparrow
models are working on assumptions that can et al (2010: 16) call ‘performance-driven
reasonably be executed. processes’;
To play their part in business model innovation, ●● plan and manage learning programmes to
heads of HR need to: ensure that people have the skills required to
implement the new or changed business
●● understand the implications of the existing
model;
and potential business model in terms of the
organization structure and the new or ●● establish knowledge management procedures
enhanced capabilities the people involved for storing and sharing the wisdom,
will require; understanding and expertise accumulated in
the organization about its processes,
●● contribute to the redesign of the organization
techniques and operations.
to meet the requirements of the business
model change programme; In addition, as Schuler and Jackson (2007: 31)
●● plan organization development activities that pointed out, ‘because an innovation strategy requires
systematically improve organizational risk taking and tolerance of inevitable failures, HRM
capability in terms of process – how things in firms pursuing this strategy should be used to give
get done; employees a sense of security and e ncourage a long-
term commitment’.
Key learning points
The need for business and financial skills Business skills

To make an effective contribution, HR professionals Business skills are required to adopt a business-like
must have business and financial skills. They need to approach to management – one that focuses on
understand what the business model is – how the allocating resources to business opportunities and
organization delivers value to its customers and, in making the best use of them to achieve the required
commercial organizations, how the business achieves results.
competitive advantage and makes money.
Financial skills price-earnings (P/E) ratio and economic value

added (EVA).
A business-like approach means using financial skills
to analyse and interpret balance sheets, cash flow and
Financial budgeting
trading statements and profit and loss accounts, and
to understand and make use of the financial Budgets translate policy into financial terms. They are
techniques of budgeting and budgetary control, cash statements of the planned allocation and use of the
budgeting and costing. company’s resources.
Interpreting balance sheets Budgetary control

A balance sheet is a statement on the last day of the Budgetary control ensures that financial budgets are
accounting period of the company’s assets and met and that any variances are identified and dealt
liabilities and the share capital or reserves or with.
shareholders’ investment in the company. Balance
sheet analysis assesses the financial strengths and Cash management
weaknesses of the company primarily from the point of
view of the shareholders and potential investors, but Cash management involves forecasting and controlling
also as part of management’s task to exercise proper cash flows (inflows or outflows of cash). An operating
stewardship over the funds invested in the company cash budget deals with budgeted receipts (forecast
and the assets in its care. cash inflows) and budgeted payment (forecast cash
outflows).
Classification of profits
Costing
It is necessary to understand the different ways in
which profits can be classified as recorded in trading Costing techniques provide information for decision
statements and profit and loss accounts. There are making and control. They are used to establish the
four headings: gross profit, operating or trading profit, total cost of a product for stock valuation, pricing and
profit before tax and net profit. estimating purposes, and to enable the company to
establish that the proposed selling price will enable a
profit to be made.
Trading statements Overheads are charged to cost units to provide
Trading statements or accounts show the cost of information on total costs – this is called ‘overhead
goods manufactured, the cost of sales, sales revenue recovery’. There are four methods of doing this:
and the gross profit, which is transferred to the profit absorption costing, activity-based costing, marginal
and loss account. costing and standard costing.
Profit and loss accounts Business model

Profit and loss accounts provide the information required A business model provides a picture of an organization
to assess a company’s profitability – the primary aim and that explains how it achieves competitive advantage
best measure of efficiency in competitive business. and makes money. Business model innovation is the
Profitability is a measure of the return in the shape of process of developing new business models or
profits that shareholders obtain for their investment in the changing existing ones to deliver better value to
company. It is expressed in the following ratios: return on customers, achieve competitive advantage and
equity, return on capital employed, earnings per share, increase profitability.
References
Chartered Institute of Personnel and Development organizations and their environments, in (eds) R S
(2010) Next Generation, London, CIPD Schuler and S E Jackson, Strategic Human
Johnson, M (2010) Seizing the White Space, Boston, Resource Management, Oxford, Blackwell,
MA, Harvard Business Press pp 23–48
Johnson, M, Christensen, C and Kagermann, H Sparrow, P, Hesketh, A, Hird, M and Cooper, C
(2008) Reinventing your business model, Harvard (2010) Introduction: performance-led HR, in (eds)
Business Review, December, pp 52–59 P Sparrow, A Hesketh, M Hird, and C Cooper,
Magretta, J (2002) Why business models matter, Leading HR, Palgrave Macmillan,
Harvard Business Review, May, pp 86–93 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
581
66
Dealing with business
issues from an HR
perspective
organization successful – or stop it from being
Introduction so – in the market within which it operates at
this stage in its evolution, together with a deep
HR professionals not only have to understand the appreciation of what goes on around here and
business they are working in but must also be able what really make things happen here (given
to identify the business issues that influence how the people, politics and culture). The former derives
organization operates and how the people in the from understanding the key drivers of the business,
business are treated. In this chapter the processes the wider market and the context in which it sits.
involved in doing this are examined under the fol- The latter comes from the ‘intelligence’ generated
lowing headings: both systematically through data- gathering and
analysis, as well as from the discrete activities
●● identify business issues; and interactions HR engages in across the
●● establish people factors; organization.
●● critically analyse relevant HR policy and At corporate level it is necessary to understand
practice; what the organization exists to do and how it does
●● conduct or participate in research; it. In a commercial business this means understand-
●● analyse quantitative and qualitative ing how it makes money with particular reference
information; to its development, marketing and operational ac-
tivities. In a national or local government establish-
●● draw conclusions from research and analysis;
ment or a not-for-profit organization it means un-
●● prepare and make a business case. derstanding its key functions such as service
delivery, administration, research and development.
This means finding out:
Identify business issues ●● the business imperatives of the organization –
its mission and its strategic goals;
A business issue will be anything occurring in the
●● the organization’s business model – the basis
organization or affecting it that will influence its
upon which its business is done (how its
performance in terms of the achievement of its
mission and strategic goals will be achieved);
goals. To identify issues it is necessary to develop
qualities of organizational insight defined by the ●● the organization’s business drivers – the
CIPD (2010: 13) as: characteristics of the business that move it
forward;
Organizational insight is the juxtaposition of a
●● the organization’s core competencies – what
deep understanding of what will help make your
the organization is good at doing;
the factors that will affect performance and

●●
ensure the effectiveness of its activities,
Establish people factors
including specific issues concerning
profitability, productivity, operational An HR executive reported by the CIPD (2010:13)
performance, quality, financial budgeting and commented that ‘We need deep employee insights –
control, costs and benefits and customer not just employee engagement surveys which just
service; scratch the surface. As an HR function we need a
deep and segmented understanding of employees’
●● the key performance indicators (KPIs) of the aspirations, motivations and needs in some ways
business (the results or outcomes identified akin to how a customer-facing company thinks
as being crucial to the achievement of high about its customers.’
performance, eg financial, productivity and Inevitably, many of the identified business issues
quality measures) that can be used to will involve people, especially issues concerned gen-
measure progress towards attaining goals; erally with performance and particularly with pro-
●● the factors and issues that can affect the ductivity, quality, sales and customer service. People
organization’s performance, especially those factors can include skills (talent) shortages, levels of
concerned with people. motivation and engagement, inadequate leadership,
poor teamwork, lack of trust, management succes-
Understanding these characteristics of their organi-
sion problems, employee turnover, absenteeism and
zation will enable HR professionals to make the
long-term illness. Sometimes, however, people fac-
strategic contribution required from them.
tors are not so evident. For example, to what extent
Getting this information cannot be left to chance.
is a fall in productivity due to people not working
To obtain it the first thing to do is to get hold of as
hard enough or because the system of work is fail-
much written or published information as you can:
ing to deliver? It may be necessary to drill down to
annual reports (see Chapter 65 for guidance on
find out what lies behind the people factor, for ex-
how to read a balance sheet), company websites,
ample, the causes of employee turnover.
sales brochures, articles in the financial pages of
newspapers, reports from management consultants.
The next thing to do is to talk to people: members
of the senior management team (if you can get to Critically analyse relevant
them), line managers, team leaders and supervisors
and, when the occasion presents itself, people in of-
HR policy and practice
fices, sales teams, research laboratories, delivery To address any issues the first step is to critically
teams and on the shop floor. It is necessary to make analyse any evidence that illustrates good HR policy
a deliberate effort to walk about, ask questions and, and practice. There are a number of sources. One of
importantly, listen. Business partners should spend them is the literature. People Management contains
far more time doing this than sitting in their office. the most practical and relevant information.
So should more senior HR professionals and L&D Academic journals, particularly the Human Resource
specialists. Even those who are likely to be office- Management Journal, International Journal of
based for much of the time (eg recruiters and re- Human Resource Management and Employee
ward specialists) should get out as much as they Relations should also be consulted. Although many
can. In the experience of the writer (25 years as an of the articles in these publications are somewhat
HR professional, 12 of them as an HR director), esoteric – academics writing for academics – some
understanding takes time and sometimes occurs by contributions are relevant for practitioners.
a process of osmosis. But it is worth it. HR people Articles in academic journals are usually based
earn respect by the quality of their service delivery on research but a considerable amount of practical
efforts but, importantly, also by demonstrating that research data is provided by the CIPD, which pro-
they know what is going on and understand the is- duces a large number of research reports and sur-
sues that concern managers and staff generally and veys every year that are full of relevant information
base their strategy proposals on them. and illustrated by illuminating case studies. The
Chapter 66 | Dealing with Business Issues from an HR Perspective 583
Institute for Employment Studies (IES) also does a side the organization with fellow HR professionals
lot of relevant research. or academics, especially where these seem likely to
Other sources of information include confer- produce results of interest to their organization. In
ences, networking, eg at CIPD branch meetings, and either case they need to know what research meth-
contacts with organizations that are known to be ods are available and their relevance in different
successfully using a relevant HR practice. Research situations.
methods are considered in the next section of this A full discussion of research methodology and a
chapter. summary of data collection techniques are con-
An evidence-based management approach is nec- tained in Chapter 69.
essary, as described in Chapter 12. Any information
obtained should be subject to critical evaluation. As
mentioned in Chapter 68, this is the process of mak- Analyse quantitative and
ing informed judgements about the validity, rele-
vance and usefulness of ideas and arguments. qualitative information
Critical evaluation means not taking anything for
granted and, where necessary, challenging proposi- Quantitative business information will be available
tions. It involves making informed judgements in the form of financial and operational reports.
about the value of ideas and arguments. It uses crit- Quantitative HR data will be generated through
ical thinking by analysing and evaluating the qual- HR analytics (see Chapter 13) and by research.
ity of theories and concepts to establish the degree Qualitative HR information may be obtained by re-
to which they are valid and supported by the evi- search but it will also emerge from day-to-day con-
dence (evidence-based) and the extent to which they tacts between HR specialists and managers and
are biased. The arguments for and against are employees
weighed and the strength of the evidence on both
sides is assessed. On the basis of this assessment, a
conclusion is reached on which proposition or ar- Quantitative information
gument is to be preferred. Critical evaluation is re- Company annual financial reports (see Chapter 65)
quired when testing propositions and evaluating the containing the balance sheet, profit and loss ac-
outcomes of research. count and other financial data provide an overall
source of information on how well the business
doing. Internal periodical reports will show perfor-
Conduct or participate in mance against financial budgets and targets and
research there are likely to be other reports, depending on
the nature of the business, on such matters as sales,
output, service levels and quality. They can be ana-
Research is concerned with establishing what is,
lysed to reveal business performance (profitability
and from this predicting what will be. It does not
and productivity) issues expressed in terms of trends
decide what ought to be; that is for people inter-
and ratios. HR professionals can pursue this analy-
preting the lessons from research in their own con-
sis in discussions with management to establish the
text. Research is about the conception and testing
extent and nature of any people problems and con-
of ideas and hypotheses. This is a creative and im-
sider remedies.
aginative process, although new information is nor-
Statistical techniques such as frequency analysis,
mally obtained within the framework of existing
measures of central tendency, correlation and re-
theory and knowledge. Logic and rational argu-
gression analysis, as described in Chapter 70, can be
ment are methods of testing ideas after they have
used when establishing the significance of the data.
been created.
It may be useful for HR professionals to conduct
formal research within their organization in order
to assemble evidence upon which they can base pro-
Qualitative information
posals on how to deal with business or HR issues. Qualitative, subjective information can be obtained
They may also be involved in research projects out- by opinion surveys, individual discussions or focus
groups. But the technique of content analysis can be the financial returns in such areas as increased
used to provide a form of measurement. This in- productivity).
volves selecting a number of key phrases or words, It can be more difficult to make out a business
counting the number of times they are mentioned in case for an HRM innovation in financial terms. The
interviews or focus groups and then analysing these costs can and should be calculated but the benefits
frequencies. may have to be expressed qualitatively. A business
case will be enhanced if:
Data is available on the impact the proposal
Draw conclusions ●●
is likely to make on key areas of the
organization’s operations, eg shareholder
Drawing conclusions from the analysis of the data
value, profitability, income generation,
involves:
customer service levels, quality, productivity,
●● assessing the nature of the issue and its innovation, skills development, talent
causes; management.
●● considering the HR strategic and operational ●● It can be shown that the proposal will help
implications; to achieve competitive advantage through
●● examining and evaluating alternative courses the strategic development for the
of action; organization of rare, hard to imitate and
hard to substitute human resources (the
●● deciding on the preferred course of action; resource-based view).
●● establishing the costs and benefits of the ●● The way(s) in which the proposed policy or
action. practice will generate added value and
stimulate improved performance are spelt
out.
Prepare and make the ●● There is proof that the innovation has
already worked well within the organization
business case (perhaps as a pilot scheme) or represents
‘good practice’ that is likely to be
A business case should set out the costs and benefits transferable to the organization.
of the proposal. It can be made either in added-
●● It can be implemented without too much
value terms (ie the income generated by the pro-
trouble.
posal will exceed the cost of implementing it) or on
the basis of the return on investment or RoI (ie the ●● The proposal is brief, to the point, laid out
cost of the investment, say in training, is justified by clearly and well argued.
Key learning points

When investigating a business issue from an HR ●● critically analyse and discuss relevant HR policy
perspective it is necessary to: and practice by reference to the literature,
published research and any other sources of
●● identify business issues that are of strategic
information;
importance to the organization;
●● conduct or participate in research within and
●● establish the extent and nature of any people
outside the organization to find out what factors
factors that affect these issues;
Chapter 66 | Dealing with Business Issues from an HR Perspective 585
cause and affect the issues and what remedies ●● draw realistic and appropriate conclusions from
have proved to be successful; analyses and research;
●● systematically analyse quantitative and qualitative ●● make recommendations based on costed options
information using HR analytics and statistical and develop and present a persuasive business
methods and present the results in clear and case for proposals.
consistent formats;
Reference
(2010) Next Generation HR, London, CIPD
586
67
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 con- ●● An objective-setting exercise based on a
flicting evidence, lack of data and political and emo- diagnosis of what specific objectives are
tional issues affecting those involved. But even if it is appropriate to the organizational context
not possible to apply neat, logical and sequential involved.
methods, the principles of getting and analysing what
●● An analytical classification of the alternatives
information is available, considering alternatives and
that are the subject of the exercise.
making the best choice based on the evidence, an
analysis of the context and an assessment of the pos- ●● An analysis of the context in which such an
sible consequences, remain the same. Decision mak- alternative is to apply.
ing as considered at the end of this chapter is an out- ●● The selection of one of the alternatives on
come of problem solving. Analytical and critical skills the basis that it ‘fits’ the context in which it
are required for both problem solving and decision is to operate in such a way as to facilitate the
making and they are dealt with in Chapter 68. achievement of the specified objectives.
●● A recognition of the need to evaluate
systematically not only the basis for selecting
Problem solving a specific alternative in the first 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 op-
a proactive approach is desirable, involving antici- portunities’. This is not universally true, of course,
pating potential problems and dealing with them in but it does emphasize the point that a problem
advance by taking preventative action using the should lead to positive thinking about what is to be
normal approaches to problem solving set out done now, rather than to recriminations. If a mis-
below. Proactive problem solving may require crea- take has been made, the reasons for it should be
tive thinking. The approach to problem solving is analysed to ensure that it does not happen again.
affected by decision theory as described later in this
chapter.
Chapter 67 | Problem-solving and Decision-making Skills 587
Improving your skills freely agreed to be the one best suited to the situa-
tion (the law of the situation again).
How can you improve your ability to solve prob- Further consideration of the processes of evalu-
lems? There are a few basic approaches you should ating evidence and options and to the consulting
use as discussed below. skills used in problem solving is given in the next
chapter.
Improve your analytical ability
A complicated situation can often be resolved by sep- Twelve problem-solving steps
arating the whole into its component parts. Such an
analysis should relate to facts, although, as Peter The 12 steps of problem solving are:
Drucker (1955) pointed out, when trying to under-
1 Define the situation – establish what has
stand the root causes of a problem you may have to
gone wrong or is about to go wrong.
start with an opinion. Even if you ask people to search
for the facts first, they will probably look for those 2 Specify objectives – define what is to be
facts that fit the conclusion they have already reached. achieved now or in the future to deal with an
Opinions are a perfectly good starting point as actual or potential problem or a change in
long as they are brought out into the open at once circumstances.
and then tested against reality. Analyse each hy- 3 Develop hypotheses – develop hypotheses
pothesis and pick out the parts that need to be stud- about what has caused the problem.
ied and tested. (Analytical skills are covered in 4 Get the facts – find out what has actually
Chapter 68.) Mary Parker Follett’s (1924) ‘law of happened and contrast this with an
the situation’ – the logic of facts and events – should assessment of what ought to have happened.
rule in the end. This is easier said than done. Insidious
political factors may have contributed to the
Be creative problem and could be difficult to identify
and deal with. The facts may not be clear
A strictly logical answer to the problem may not be
cut. They could be obscured by a mass of
the best one. Creative thinking is often necessary to
conflicting material. There may be lots of
develop an entirely new approach.
opinions but few verifiable facts. Remember
that people will see what has happened in
Keep it simple terms of their own position and feelings
One of the basic principles of problem solving is (their framework of reference). Try to
known as Occam’s razor. It states that ‘entities are understand the political climate and the
not to be multiplied without necessity’. That is, al- attitudes and motivation of those concerned.
ways believe the simplest of several explanations. Bear in mind that, as Pfeffer (1996: 36)
commented, ‘smart organizations
occasionally do dumb things.’ Obtain
Focus on implementation information about internal or external
A problem has not been solved until the decision has constraints that affect the situation.
been implemented. Think carefully not only about
5 Analyse the facts – determine what is
how a thing is to be done (by whom, with what
relevant and what is irrelevant. Diagnose the
resources and by when) but also about what will hap-
likely cause or causes of the problem. Do not
pen when it is put into effect – its impact on the or-
be tempted to focus on symptoms rather
ganization and the people concerned and the extent to
than root causes. Test any assumptions.
which they will cooperate. Unforeseen consequences
Distinguish between opinions and facts. Dig
can upset the most carefully prepared plans.
into what lies behind the problem.
6 Identify possible courses of action – spell out
Involve people what each involves.
You will get less cooperation if you impose your 7 Evaluate alternative courses of action –
answer to a problem. The best method is to arrange assess the extent to which they are likely to
things so that everyone arrives jointly at a solution, achieve the objectives, the cost of
implementation, any practical difficulties that with Simon’s concept of ‘bounded rationality’
might emerge and the possible reactions of (Simon, 1979), people do not always have complete
stakeholders. Consider possible information and the ability to make an optimal
consequences. Critical evaluation techniques, choice is therefore limited. Furthermore, what is
as described in Chapter 68, can be used for done in organizations with the evidence depends
this purpose. largely on the context in which it is done. Cultural,
8 Weigh and decide – determine which social and political factors influence perceptions
alternative is likely to result in the most and judgements, and the extent to which people be-
practical and acceptable solution to the have rationally is limited by their capacity to under-
problem. This is often a balanced judgement. stand the complexities of the situation they are in
Decision making is considered in more detail and by their emotional reactions to it.
below. Decision-making theory is concerned with the
rational model that assumes that a rational person
9 Decide on the objective – set out goals for
follows a logical sequence of steps such as those
implementation of the decision.
given by Simon (1977):
10 Adopt a ‘means-end’ approach where
appropriate – in complicated situations with ●● intelligence: finding occasions for making a
long-term implications it may be useful to decision;
identify the steps required and select an ●● design: inventing, developing and analysing
action at each step that will move the process possible courses of action;
closer to the goal. ●● choice: selecting a particular course of action
11 Plan implementation – prepare a timetable from those available; and
and identify and assemble the resources ●● review: assessing past choices.
required.
12 Implement – monitor progress and evaluate
success. Remember that a problem has not Characteristics of the decision-
been solved until the decision has been
implemented. Always work out the solution
making process
to a problem with implementation in mind. The doyen of management thinkers, Peter Drucker
(1955: 310), noted that ‘A good deal of decision-
making tends to centre on problem-solving, that is,
Decision making on giving answers. And that is the wrong focus.
Indeed, the most common source of mistakes in
Decision making is essentially about making choices, management decisions is the emphasis on finding
often in conditions of uncertainty. This involves ana- the right answer rather than the right question.’ In
lysing a situation or problem, identifying possible 1967 (page 120) he described the decision-making
courses of action, weighing them up, defining the process thus:
preferred action implementing it and evaluating its A decision is a judgement. It is a choice between
effectiveness. Decision-making theory provides a alternatives. It is rarely a choice between right
background to the process of decision making and and wrong. It is at best a choice between almost
the skills required. right and probably wrong – but much more often
a choice between two courses of action neither of
which is probably more nearly right than the other.
Decision-making theory
He also argued that the best decisions emerge from
Decision-making theory as developed by Simon conflicting viewpoints and that you should not ex-
(1979) explains that a rational approach to making pect or even welcome a bland consensus view. He
a decision requires a logical sequence of steps: (1) observed (page 124) that ‘The first rule in decision-
analysing the situation, (2) developing possible making is that one does not make a decision unless
courses of action, (3) exercising choice and (4) as- there is disagreement. You can benefit from a clash
sessing the outcome of the choice. But in accordance
Chapter 67 | Problem-solving and Decision-making Skills 589
of opinion to prevent falling into the trap of starting assumptions that support our case and
with the conclusion and then looking for the facts ignore the facts that might contradict it.
that support it.’ 6 Learn from the past – build on your
experience in decision making; what
approaches work best. But don’t rely too
Ten approaches to decision making much on precedents. Situations change. The
right decision last time could well be the
1 Define the problem – as Drucker (1955: 312) wrong one now.
emphasized: ‘The first job in decision-making
7 Be systematic – adopt a rigorous problem-
is to find the real problem and to define it.’
solving approach as described earlier in this
2 Avoid procrastination – it is easy to put an chapter.
email demanding a decision into the ‘too
8 Talk it through – before you make a
difficult’ section of your actual or mental
significant decision talk it through with
in-tray. Avoid the temptation to fill your time
someone who is likely to disagree so that any
with trivial tasks so that the evil moment
challenge they make can be taken into
when you have to address the issue is
account (but you have to canvass opinion
postponed. Make a start. Once you have got
swiftly).
going you can deal with the unpleasant task
of making a decision in stages. A challenge 9 Leave time to think it over – swift decision
often becomes easier once we have started making is highly desirable but you must
dealing with it. Having spent five minutes on avoid knee-jerk reactions. Pause, if only for a
it we don’t want to feel it was time wasted, few minutes, to allow yourself time to think
so we carry on and complete the job. through the decision you propose to make.
And confirm that it is logical and fully
3 Expect the unexpected – you are then in the
justified.
frame of mind needed to respond decisively
to a new situation. 10 Consider the potential consequences – This is
called ‘consequence management’. Every
4 Think before you act – this could be a recipe
decision has a consequence, and you should
for delay, but decisive people use their
consider very carefully what that might be
analytical ability to come to swift
and how you will manage it. When making a
conclusions about the nature of the situation
decision it is a good idea to start from where
and what should be done about it.
you mean to end – define the end result and
5 Be careful about assumptions – we have a then work out the steps needed to achieve it.
tendency to leap to conclusions and seize on
Key learning points
Problem solving 2 Specify objectives.
Problem solving is a constant feature of life in 3 Develop hypotheses.

organizations and elsewhere. It is the process of 4 Get the facts.
analysing and understanding a problem, diagnosing its
cause and deciding on a solution that solves the 5 Analyse the facts.
problem and prevents it being repeated. 6 Identify possible courses of action.
To improve problem-solving skills, it is necessary to
improve your analytical ability, be creative, keep it 7 Evaluate alternative courses of action.
simple and focus on implementation. 8 Weigh and decide.
The 12 steps of problem solving are:
9 Decide on the objective.
1 Define the situation.
10 Plan implementation. 2 Avoid procrastination.
11 Implement. 3 Expect the unexpected.
12 Review and evaluate. 4 Think before you act.
5 Be careful about assumptions.

Decision making 6 Learn from the past.
Decision making is essentially about making choices, 7 Be systematic.
often in conditions of uncertainty. This involves
analysing a situation or problem, identifying possible 8 Talk it through.
courses of action, weighing them up, defining the 9 Leave time to think it over.
preferred action implementing it and evaluating its
effectiveness. 10 Consider the potential consequences.
Ten approaches to decision making

1 Define the problem.
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
591
68
Analytical and critical
skills
Introduction Analytical skills
The effectiveness of HR initiatives and the processes Analysis is the process of breaking down a condition
of problem solving and decision making in which or state of affairs into its constituent parts and es-
HR practitioners are constantly involved depend tablishing the relationships between them. In the
largely on thorough analysis, logical reasoning and Aristotelian sense, analysis involves discerning the
critical thinking as described in this chapter. These particular features of a situation. Note should
processes are the basis for evidence-based manage- be taken of attribution theory which deals with
ment and analytic consulting. how individuals explain the causes of behaviour
Analytical and critical skills are needed to pro- and events, and states that the validity of such ex-
vide for clear and logical thinking – a necessary skill planations depends on:
for HR professionals who are constantly faced with
●● the degree of distinctiveness – the event and
problems to be solved and decisions to be made.
its effect are highly observable;
The following are words of wisdom from the phi-
losopher L Susan Stebbing (1939: 24), largely for- ●● consistency – the event and its effect presents
gotten now but influential in her day. She certainly itself as being the same across time; and
influenced the writer in his student days at the ●● consensus – there is agreement among
London School of Economics and that influence has individuals’ views of the relationship
continued ever since: between the event and its effect.
One of the greatest difficulties at the outset Analytical skills are used to gain a better understand-
of the attempt to think effectively consists in ing of a complex situation or problem. They involve
the difficulty of recognizing what we know the ability to visualize, articulate and solve complex
as distinguished from what we do not know problems and concepts and make decisions based on
but merely take for granted. Further, it is not available information. They include the capacity to
always easy to distinguish between what we evaluate that information to assess its significance,
may reasonably believe and what we ought to and the ability to apply logical and critical thinking
hold as doubtful and in need of confirmation. It to the situation. Analytical skills involve considering
is reasonable to accept a statement as true, ie to
a complex situation and breaking it down to its con-
hold a belief, provided that there is some evidence
stituent but interrelated parts in order to understand
in support of it and that this does not contradict
the situation. They provide the basis for a diagnosis
what we already know to be the case. Perhaps few
people would deny that we all hold beliefs which of the cause or causes of a problem and therefore for
are not in this sense reasonable. its solution. Importantly, they are a means of gaining
insight into issues that affect the success of the busi-
ness and which influence business and HR strategy.
that need to be discerned in other people’s argu-

Diagnostic skills ments or avoided in one’s own are summarized
below:
Diagnostic skills are used to identify and define
problems in order to solve them. A diagnosis is based ●● Affirming the consequent – leaping to the
on the analysis of evidence assembled to illuminate conclusion that a hypothesis is true because a
the features of the situation (in medical terms, the single cause of the consequence has been
symptoms). Specially developed diagnostics can be observed.
used for this purpose. These are tools that consist of ●● Begging the question – taking for granted
various tests when used to diagnose a medical prob- what has yet to be proved.
lem. In management they take the form of checklists
●● Chop logic – ‘Contrarywise’, said Tweedledee,
or questionnaires which are constructed on the basis
‘if it was so, it might be, and if it were so, it
of research and provide information on the nature of
would be; but as it isn’t it ain’t. That’s logic.’
a situation or process, for example, the Organizational
Chop logic may not always be as bad as that,
Culture Inventory devised by Cooke and Lafferty
but it is about drawing false conclusions and
(1989). Diagnostic skills comprise the abilities re-
using dubious methods of argument. For
quired to identify the significant features of a situa-
example, selecting instances favourable to a
tion, to select the most appropriate ways to under-
contention while ignoring those that are
stand the nature of that situation, eg the choice of
counter to it, twisting an argument used by an
diagnostics, and to draw conclusions on the basis of
opponent to mean something quite different
that evidence. This could lead to a prognosis – a pre-
from what was intended, diverting opponents
diction of what will happen if nothing is done about
by throwing on them the burden of proof for
the problem – and in the light of that prognosis and
something they have not maintained, ignoring
the supporting evidence, a decision on the action that
the point in dispute, changing the question to
needs to be taken.
one that is less awkward to answer, and
reiterating what has been denied and ignoring
what has been asserted. Politicians know all
Logical reasoning about chop logic.
If you say people are logical, you mean that they ●● Confusing correlation with causation –
draw reasonable inferences – their conclusions can assuming that because A is associated with B
be proved by reference to the facts used to support it has caused B. It may or may not.
them – and they avoid ill-founded and tendentious ●● False antithesis – the error of thinking two
arguments, generalizations and irrelevancies. things are in opposition to one another when
Logical reasoning is the basis of critical thinking really they are not.
and evaluation. It takes place when there is a clear ●● False choice – a situation in which only two
relationship (a line of reasoning) between the prem- alternatives are considered, when in fact
ise (the original proposition) and the conclusion, there are additional options.
which is supported by valid and reliable evidence ●● Potted thinking – using slogans and
and does not rely on fallacious or misleading argu- catchphrases to extend an assertion in an
ment. Logical reasoning is what Stebbing (1939) unwarrantable fashion.
called ‘Thinking to some purpose’. Clear thinking is
required to establish the validity of a proposition, ●● Reaching false conclusions – forming the
concept or idea. view that because some are, then all are. An
It is necessary to question assumptions especially assertion about several cases is twisted into
when a belief is expressed as a fact. You need to ask an assertion about all cases. The conclusion
yourself – and others – ‘What’s the evidence for does not follow the premise. This is what
that?’ You have to spot fallacious and misleading logicians call the ‘undistributed middle’.
arguments. A fallacy is an unsound form of argu- ●● Selective reasoning – selecting instances
ment leading to an error in reasoning or a mislead- favourable to a contention while ignoring
ing impression. The most common form of fallacies those that conflict with it.
Chapter 68 | Analytical and Critical Skills 593
●● Sweeping statements – over-simplifying the evaluation means not taking anything for granted
facts. and, where necessary, challenging propositions. It
●● Special pleading – focusing too much on uses critical thinking by analysing and evaluating
one’s own case and failing to see that there the quality of theories and concepts to establish the
may be other points of view. degree to which they are valid and supported by the
evidence (evidence-based) and the extent to which
they are biased. The arguments for and against are
Critical thinking weighed and the strength of the evidence on both
sides is assessed. On the basis of this assessment, a
Critical thinking is the process of analysing and conclusion is reached on which proposition or ar-
evaluating the quality of ideas, theories and con- gument is to be preferred. Critical evaluation is re-
cepts to establish the degree to which they are valid quired when testing propositions and evaluating the
and supported by the evidence and the extent to outcomes of research.
which they are biased. It involves reflecting on and
interpreting data, drawing warranted conclusions
and recognizing ill-defined assumptions. Testing propositions
‘Critical’ in this context does not mean disap- Propositions based on research investigations and evi-
proval or being negative. There are many positive dence can be tested by using the following checklist:
uses of critical thinking, for example testing a hy-
pothesis, proving a proposition or evaluating a con- ●● Was the scope of the investigation sufficiently
cept, theory or argument. Critical thinking can occur comprehensive?
whenever people weigh up evidence and make a ●● Are the instances representative or are they
judgement, solve a problem or reach a decision. The selected simply to support a point of view?
aim is to come to well-reasoned conclusions and so- ●● Are there contradictory instances that have
lutions and to test them against relevant criteria and not been looked for?
standards. Critical thinking calls for the ability to:
●● Does the proposition conflict with other
●● recognize problems and establish ways of propositions for which there are equally
dealing with them; good grounds?
●● gather and marshal pertinent (relevant) ●● If there are any conflicting beliefs or
information; contradictory items of evidence, have they
●● identify unstated assumptions and values; been put to the test against the original
proposition?
●● interpret data, to appraise evidence and to
evaluate arguments; ●● Could the evidence lead to other equally
valid conclusions?
●● recognize the existence (or non-existence) of
logical relationships between propositions; ●● Are there any other factors that have not
been taken into account that may have
●● draw warranted conclusions and make valid influenced the evidence and, therefore, the
generalizations; conclusion?
●● test assertions, conclusions and
generalizations;
●● reconstruct ideas or beliefs by examining and Critically evaluating research
analysing relevant evidence. Putting the outcomes of research, for example ma-
terial published in academic journals, to the test re-
quires critical evaluation and the following check-
Critical evaluation list can be used:
Critical evaluation is the process of making in- 1 Is the research methodology sufficiently
formed judgements about the validity, relevance rigorous and appropriate?
and usefulness of ideas and arguments. Critical
2 Are the results and conclusions consistent ●● a conclusion that sums up the argument and
with the methodology used and its its significance.
outcomes?
3 Is the perspective adopted by the researchers
stated clearly? Developing an argument
4 Have hypotheses been stated clearly and
An argument is based (predicated) on a premise (the
tested thoroughly?
proposition) that sets out the underpinning assump-
5 Do there appear to be any misleading errors tion. There may be more than one proposition or
of omission or bias? assumption. It could be phrased something like this:
6 Are any of the arguments tendentious? ‘The argument is that A is the case. It is predicated
7 Are inferences, findings and conclusions on the assumption that B and C apply.’ In a sense
derived from reliable and convincing this suggests what conclusion the argument is in-
evidence? tended to reach but it also indicates that this con-
clusion depends on the validity of the assumptions,
8 Has a balanced approach been adopted?
which will have to be proved (there are such things
9 Have any underlying assumptions been as false premises).
identified and justified?
10 Have the component parts been covered in
terms of their interrelationships and their Justifying an argument
relationship with the whole? The argument continues by supplying reasons to ac-
11 Have these component parts been cept the proposition or point of view. These reasons
disaggregated for close examination? have to be supported by evidence, which should be
12 Have they been reconstructed into a coherent based on valid research, rigorous observation, or
whole based on underlying principles? relevant and verifiable experience, not on hearsay. It
involves logical reasoning, which avoids the falla-
Critical evaluation does not necessarily mean nega- cies referred to earlier and requires critical thinking,
tive criticism; it means reaching a judgement based which means coming to well-reasoned conclusions
on analysis and evidence, and the judgement can be and solutions and testing them against relevant cri-
positive as well as negative. teria and standards. It also demands critical evalua-
tion, which means reflecting on and interpreting
data, drawing warranted conclusions and identify-
Developing and justifying ing faulty reasoning, assumptions and biases.
arguments Assumptions have to be tested rigorously and re-
search evidence has to be evaluated. The checklists
set out above can be used for this purpose.
An argument as an aspect of critical thinking con-
sists of a presentation of reasons that support a con-
tention. It consists of:
A final word
●● a proposition or statement that expresses a
point of view or belief; Recalling such incidents as the Brexit referendum it
●● the reasoning that makes a case for the is interesting to note what L Susan Stebbing wrote
proposition or point of view; (1939: 6):
●● a discussion, the aim of which is to get the I am convinced of the urgent need for a democratic
reader or listener to agree with the case that people to think clearly without the distortions due
has been made; to unconscious bias and unrecognised ignorance.
Chapter 68 | Analytical and Critical Skills 595
Key learning points
Basis of the processes of problem solving on the analysis of evidence assembled to illuminate
the features of the situation
and decision making
The processes of problem solving and decision making Logical reasoning
depend largely on effective analysis, diagnosis, critical
thinking and evaluation. Logical reasoning involves clear thinking to establish
the validity of a proposition, concept or idea.
Evidence-based management
Critical thinking
Evidence-based management is a method of informing
decision making by making use of appropriate Critical thinking clarifies goals, examines assumptions,
information derived from the analysis of HR policy and discerns hidden values, evaluates evidence,
practices and surveys of employee opinion within the accomplishes actions and assesses conclusions.
organization, systematic benchmarking and the
messages delivered by relevant research. Critical evaluation
Critical evaluation involves making informed
Analytical skills judgements about the value of ideas and arguments.
Analysis is the process of gaining a better
understanding of a complex situation or problem by Developing and justifying arguments
breaking it down into its constituent parts and
An argument as an aspect of critical thinking consists
establishing the relationships between them.
of a presentation of reasons that support a
contention.
Diagnostic skills
Diagnostic skills are used to identify and define
problems in order to solve them. A diagnosis is based
References
Cooke, R and Lafferty, J (1989) Organizational Stebbing, L Susan (1939) Thinking to Some Purpose,
Culture Inventory, Plymouth, MI, Human Harmondsworth, Penguin Books
Synergistic
596
69
Research skills
What emerges from research is a theory – a well-
Introduction established explanatory principle that has been
tested and can be used to make predictions of fu-
HRM specialists and those studying for HR profes- ture developments. Kurt Lewin (1945: 129) wrote
sional qualifications may be involved in conducting or that ‘Nothing is as practical as a good theory’. A
taking part in research projects. Postgraduate students ‘good’ theory is produced by clear, logical and lin-
frequently do so. Qualified HR specialists should keep ear development of argument with a close relation-
up to date as part of their continuous professional de- ship between information, hypothesis and conclu-
velopment by studying publications that present re- sion. Quality of information is a criterion for
search findings, such as those produced by the CIPD, good research, as is the use of critical evaluation
the IES or by reading articles in academic journals. techniques.
Students must extend their understanding of HRM The production of narratives that depict events
through reading about research findings. (case studies) or the collection of data through sur-
The purpose of this chapter is to describe the veys are elements in research programmes, but they
skills and techniques used in research and explain can stand alone as useful pieces of information that
what is involved in planning and conducting illustrate practice. Research can be based on a phi-
research projects. This will be done against the
losophy of positivism or phenomenology.
background of a brief review of the nature and phi-
losophy of 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 follows: fundamental laws, reduce phenomena to their sim-
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] review
observations that lend themselves to statistical anal-
and critique the results of their peers. (Committee on
ysis. It tends to be deductive, ie it uses logical rea-
Science, Engineering and Public Policy, 1995)
soning to reach a conclusion based on established
Research is concerned with establishing what is and evidence or premises.
from this predicting what will be. It does not decide
what ought to be; that is for people interpreting the
lessons from research in their own context. Research Phenomenology
is about the conception and testing of ideas and hy-
Phenomenology focuses on the meaning of phenom-
potheses. This is a creative and imaginative process,
ena rather than the facts associated with them.
although new information is normally obtained
Researchers adopting this philosophy try to under-
within the framework of existing theory and knowl-
stand what is happening. Their approach is holistic,
edge. Logic and rational argument are methods of
covering the complete picture, rather than reductionist.
testing ideas after they have been created.
Researchers collect and analyse evidence, but their
Chapter 69 | Research Skills 597
purpose is to use this data to develop ideas that ex- 4 Develop theoretical framework. It is
plain the meaning of things. They believe that reality necessary to conduct the research within a
is socially constructed rather than objectively deter- clear theoretical framework. This will set out
mined. Using a phenomenological approach means the models, concepts and theories that can be
that the research unfolds as it proceeds – early evi- drawn on and developed to provide an
dence is used to indicate how to move on to the next answer to the research question. If an
stage of evidence collection and analysis, and so on. It appropriate framework does not exist, a
tends to be inductive, ie general laws are inferred from grounded theory approach may be required
particular instances. in which the researcher uses empirical
evidence directly to establish the concepts
and relationships that will be contained in
Planning and conducting the theory adopted as the research
framework. It is important to be clear about
research programmes the assumptions, conditions and limitations
that impinge on the investigation.
Against this background, the steps required to plan
5 Finalize the research question. The initial
and conduct a research programme are:
research question needs to be finalized in the
1 Define research area. This should be one that light of the outcome of the earlier steps. The
interests the researcher and has a clear link final research question will identify the issues
to an accepted theory or an important issue to be explored and the problems to be
worth exploring. The research should investigated. It will include a statement of
generate fresh insights into the topic. It is intent, which will set out what the research is
necessary to undertake background reading to achieve. This statement leads to the
at this stage by means of a preliminary formulation of the hypotheses or
review of the literature (particularly propositions that will be tested by survey or
academic journals but also books, especially experiment during the research programme.
those based on research) to identify what has 6 Formulate hypotheses or propositions. A
already been achieved in this area and any hypothesis provisionally states a relationship
gaps (academic articles often include between two concepts in such a way that the
proposals on further research). The context consequences of the statement being true can
within which the research is to be carried out be tested. Hypotheses (there may be more
needs to be explained and justified. than one) indicate the form the research
2 Formulate initial research question. This project will take in the shape of obtaining
provides a rationale for the research. It is in and analysing the evidence required to test
effect a statement that answers the questions: them. Hypotheses may be attached to the
‘What is this research project intended to statement of the research question. A
address and what is its potential contribution proposition is a proposal put forward as an
to increasing knowledge?’ At this stage it is explanation of an event, a possible situation
based on the outcome of the initial work or a form of behaviour that will be tested by
carried out in step 1, but it will be refined and the research.
reformulated at a later stage when more 7 Design the research. This means considering
information about the research has been initially what research philosophy will be
made available. adopted. Is it to be positivist,
3 Review literature. A literature review will phenomenological, or both? It is then
focus mainly on academic journals. The aim necessary to establish the methodology. A
is to establish what is already known about decision will need to be made as to the
the topic, identify existing theoretical extent to which the research will be
frameworks and find out what other relevant quantitative, qualitative or, again, a
research has been carried out. combination of the two and on the methods
to be used as described below.
8 Draw up research programme. This will and field work. The methodology can include the
cover how the research will be conducted, use of triangulation, integrative synthesis, cross-
the timetable and the resources (funding, lagged analysis, establishing validity and quantita-
people, software, etc) required. Careful tive or qualitative research.
project planning is essential.
9 Prepare and submit proposal. This will
justify the research by setting out the Triangulation
research question, the proposed methodology Triangulation takes place when information is ob-
and how the research is intended to increase tained from more than two sources, for example,
knowledge and understanding. It will also surveys, case studies and literature reviews. Greater
describe the programme and the resources confidence can be attached to a result if different
required. methods lead to the same answer. If a researcher
10 Conduct the research project. This includes uses only one source this may be misleading or ran-
obtaining and analysing the evidence from dom. If two sources are used the results may clash.
the various sources needed to answer the If three sources are used, the hope is that two of the
research question and prove or disprove three will produce similar answers, or if three clash-
hypotheses. The significance of the findings ing answers are produced, the researcher knows
in relation to the research question and the that the question needs to be reframed, methods
hypotheses will be discussed and reference reconsidered, or both.
will be made to relevant information
provided in the literature. This involves an
extended literature review, data collection, Integrative synthesis
the use of logical, analytical and critical
Integrative synthesis involves the collection and
thinking processes and the use of statistical
comparison of evidence involving two or more data
analysis where relevant.
collection methods. It investigates patterns across
11 Develop conclusions. These draw together all published research studies, compensating for single-
the evidence. They provide the answer to the study weaknesses in research design to improve the
research question and explain why internal and external validity of the various research
hypotheses have been accepted or rejected. findings. It relies on the judgment of researchers,
The significance of the findings will also be but around a structured framework and set of
assessed in terms of how they contribute to questions.
the development of existing knowledge and
understanding. Any limitations to the study
should also be mentioned. Cross-lagged models
12 Make recommendations. These set out any Cross-lagged models are longitudinal statistical
guidelines emerging from the research. They panel studies in which two or more variables are
may also indicate any follow-up actions measured for a large number of subjects at each of
required if the research has been conducted several waves or points in time. The variables divide
within an organization. naturally into two sets and the primary purpose of
the analysis is to estimate and test the cross-effects
between these two sets.
Research methodology
Research methodology involves the collection and Establishing validity
analysis of evidence and testing hypotheses or prop-
ositions. The sources of evidence and how they will Validity is the main extent to which a concept, conclu-
be accessed will be identified. This will include the sion or measurement is well-founded and likely cor-
analysis of primary and secondary source docu- responds accurately to the real world. It is clearly im-
ments, further literature reviews, interviews, surveys portant that research produces valid results – the
ultimate aim of all the research methods described in Interviews

this chapter. There are three ways of assessing validity:
Interviews are an important research method. They
1 Criterion validity (or criterion-related obtain factual data and insights into attitudes and
validity) measures how well one measure feelings and can take three forms:
predicts an outcome for another measure. A
test has this type of validity if it is useful for 1 Structured, which means that they obtain
predicting performance or behaviour in answers to a pre-prepared set of questions.
another situation (past, present, or future). This ensures that every topic is covered and
2 Convergent validity reflects the extent to minimizes variations between respondents.
which a construct is related to other But they may be too rigid and inhibit
measures of the same construct (a construct spontaneous and revealing reactions.
is an idea or theory containing various 2 Unstructured, which means that no questions
conceptual elements that can be subjective have been prepared in advance and the person
and not based on empirical evidence). being interviewed is left free to talk about the
3 Discriminant validity is shown by subject without interruption or intervention.
demonstrating that a construct has low or Such ‘non-directive’ interviews are intended to
null relationships with other measures. provide greater insight into the interviewee’s
perspective, avoid fitting respondents into pre-
determined categories and enable interviewers
Quantitative research to explore issues as they arise. But they can be
inconsequential and lead to poor data that is
Quantitative research is empirical – based on the difficult to analyse.
collection of factual data, which is measured and
3 Semi-structured, which means that the areas
quantified. It answers research questions from the
of interest have been pre-determined and the
viewpoint of the researcher. It may involve a consid-
key questions to be asked or information to
erable amount of statistical analysis, using methods
be obtained have been identified. The
for collecting the data through questionnaires, sur-
interviewer may have a checklist but does not
veys, observation and experiment. The collection of
follow this rigidly. This approach enables the
data is distinct from its analysis.
interviewer to phrase questions and vary their
order to suit the special characteristics of
each interviewee. It may avoid the problems
Qualitative research of the completely structured or unstructured
Qualitative research aims to generate insights into interview but it does require a considerable
situations and behaviour so that the meaning of degree of skill on the part of the interviewer.
what is happening can be understood. It emphasizes
Interviews are basically qualitative but they can be-
the interpretation of behaviour from the viewpoint
come more quantitative by the use of content analy-
of the participants. It is based on evidence that may
sis. This records the number of times references are
not be easily reduced to numbers. It makes use of
made in an interview to the key issues or areas of
interviews, case studies and observation but it may
interest it was intended to cover.
also draw on the information obtained from sur-
The advantages of interviews are that they ob-
veys. It may produce narratives or ‘stories’ describ-
tain information directly from people involved in
ing situations, events or processes.
the area being researched and can provide insights
into attitudes and perspectives that questionnaires
and surveys will not reveal, thus promoting in-
Methods of collecting data depth understanding. They enable the interviewer
to probe answers and check that questions had been
The main methods of collecting data are interviews, understood. But the disadvantages are that:
questionnaires, surveys, case studies, observation,
diaries and experimental designs. ●● the construction of the interview questions may
result in leading questions or bland answers;
●● interviewers may influence the interviewees’ 7 Start with simple factual questions, moving
reactions by imposing their own reference on later to items of opinion or values.
frame; 8 Add variety and the opportunity to check
●● respondents may tell interviewers what they consistency by interspersing positive
want to hear; statements, such as ‘I like working for my
●● they are time-consuming – to set up, to boss’ with occasional associated negative
conduct and to analyse; ones such as ‘I do not get adequate support
from my boss.’
●● they require considerable skill, including the
abilities to recognize what is important and 9 Pilot test the questionnaire.
relevant, to probe when necessary, to listen 10 Code results and analyse. Where rating scales
and to control the interview so that it covers have been used the analysis can be quantified
the ground it was intended to cover. for comparison purposes. Content analysis
can be used to analyse narrative answers to
open-ended questions.
Questionnaires Questionnaires can effectively gather factual evi-
Questionnaires collect data systematically by ob- dence but are not so useful for researchers who are
taining answers on the key issues and opinions that investigating how or why things are happening. It is
need to be explored in a research project. They are also impossible to assess the degree of subjectivity
frequently used as a means of gathering information that has crept in when expressing opinions. For ex-
on matters of fact or opinion. They use a variety of ample, HR managers may give an opinion of the
methods, namely, closed questions that require a yes extent to which a performance-related pay scheme
or no answer, ranking in order of importance or has in fact improved performance but the evidence
value, or Likert scales. The latter, named after Rensis to support that opinion will be lacking. This is
Likert, the American sociologist who invented them, where interviews can be more informative.
ask respondents to indicate the extent to which they
agree or disagree with a statement. For example, in
response to a statement such as, ‘I like my job’ the Surveys
choice may be 1 Strongly agree, 2 Agree, 3 Disagree,
Surveys obtain information from a defined popula-
4 Strongly disagree. Alternatively, an extended scale
tion of people. Typically, they are based on ques-
may be used and respondents asked to ring round
tionnaires but they can provide more powerful data
the number that reflects their view about the state-
than other methods by using a combination of
ment (the higher the number the greater the agree-
questionnaires and interviews and, possibly, focus
ment), for example: My contribution is fully recog-
groups (groups of people gathered together to
nized 1 2 3 4 5 6 7. Extended scales facilitate the
answer and discuss specific questions). When devel-
quantitative analysis of responses to questionnaires.
oping and administering surveys the issues are:
To construct and use a questionnaire effectively
it is necessary to: ●● The definition of the purpose of the survey
and the outcomes hoped for – these must be
1 Identify the key issues and potential
as precise as possible.
questions.
●● The population to be covered – this may
2 Ensure questions are clear.
involve a census of the whole population.
3 Avoid asking two questions in one item. Alternatively, if the population is large,
4 Avoid leading questions that supply their sampling will be necessary (see below).
own answers. ●● The choice of methods – relying entirely on
5 Decide on the structure of the questionnaire questionnaires may limit the validity of the
including its length (not too many items) and findings. It is better, if time and the
the type of scale to be used. availability of finance permit, to complement
6 Code questions for ease of analysis. them with interviews and, possibly, focus
groups. Consideration has to be given to the
extent to which triangulation (comparing the Case studies are used extensively in HRM r esearch
information obtained from more than two as a means of collecting empirical evidence in a real-
sources) is appropriate. life context. Information is obtained about a situa-
●● The questions to which answers are required, tion, an event or a set of events that establishes what
whichever method is used. has happened, how it happened and why. Case stud-
ies provide information that contributes to the crea-
●● The design of questionnaires and the ways in
tion of a theory as part of a grounded theory ap-
which interview or focus groups, if used,
proach or the validation of an established theory. In
should be structured.
addition, they can take the form of stories or narra-
●● How the outcome of the survey will be tives that illuminate a decision or a set of decisions,
analysed and presented, including the use of why they were taken, how they were implemented
case studies. and with what result. They can illustrate a total situ-
ation and describe the processes involved and how
Sampling individuals and groups behave in a social setting.
Case study protocol sets out the objectives of the
In using surveys it may not be feasible to cover the
research, how the case study will support the
whole population (the sampling frame) and sam-
achievement of those objectives, including the evi-
pling will therefore be necessary. Sampling means
dence required, and how the work of producing the
that a proportion of the total population is selected
case study will be conducted. The methodology
for study and the aim is to see that this proportion
covers:
represents the characteristics of the whole popula-
tion. The sample must not be biased and that is why ●● sources of evidence – interviews, observation,
in large-scale surveys use is made of random sam- documents and records;
pling, ie the individuals covered by a survey are not ●● the need to use multiple sources of evidence
selected in accordance with any criteria except that (triangulation) so far as possible;
they exist in the population and can be reached by
the survey. It is the equivalent of drawing numbers ●● the questions to which answers need to be
out of a hat. However, if the sample frame is consid- obtained;
ered to be already arranged randomly as in the elec- ●● how the case study should be set up,
toral roll, then structured sampling, that is, sam- including informing those involved of what
pling at regular intervals, can be employed. is taking place and enlisting their support;
Sampling can produce varying degrees of error ●● the schedule of interviews and other evidence
depending on the size of the sample. Statistical tech- collection activities;
niques can be used to establish sample errors and ●● how the case study database recording the
confidence limits. For example, they might establish evidence will be set up and maintained;
that a sampling error is 3 per cent and the confidence
limit is 95 per cent. This could be reasonably satisfac- ●● how the case study will be presented –
tory, depending on the nature of the research (medi- including the chain of evidence so that the
cal research aims to achieve 100 per cent confidence). reader can follow the argument and trace the
development of events, the headings and
report guidelines (these may be finalized
Case studies during the course of the exercise) and whether
or not the name of the organization will be
A research case study is a description of a situation revealed on publication (named cases studies
or a history of an event or sequence of events in a are more convincing than anonymous ones);
real-life setting that illustrates a particular area of
●● how approval will be sought for the
interest, for example, how a performance manage-
publication of the case study, especially if it
ment system has been developed and works. In
reveals the name of the organization.
learning and development, case studies are analysed
by those involved to learn something by diagnosing Case studies are useful ways of collecting informa-
the causes of a problem and working out how to tion on the reality of organizational life and pro-
solve it. cesses. But there is a danger of them being no more
than a story or an anecdote that does not contribute Experimental designs

to greater knowledge or understanding. Much skill
and persistence are required from the researcher in Experimental designs involve setting up an experi-
gaining support, ensuring that relevant and reveal- mental group and a control group and then placing
ing information is obtained and presenting the case subjects at random in one or other group. The
study as a convincing narrative from which valid conditions under which the experimental group

and interesting conclusions can be derived. All this functions are then manipulated and the outcomes
must be done without taking a biased view, which compared with the control group, whose conditions
can be difficult. remain unchanged. The classic case of an experi-
mental design was the Hawthorne study, the results
of which had a major impact on thinking about
Observation how groups function and on the human relations
movement. But this was exceptional. It is much eas-
Observation of individuals or groups at work is a
ier to use experiments in a laboratory setting which
method of getting a direct and realistic impression
has been done many times with students. But there
of what is happening. It can be done by a de-
is always the feeling that such experiments do not
tached or an involved observer, or by participant
reflect real-life conditions.
observation.
Detached observers who simply study what is
going on without getting involved with the people
concerned may only get a superficial impression of
Processes involved in
what is happening and may be resented by the peo- research
ple under observation as ‘eavesdropping’. Involved
observers work closely with employees and can This section describes the logical, analytical and
move around, observe and participate as appropri- critical thinking processes that are used in research:
ate. This means that they can get closer to events deduction, induction, hypothesis testing, grounded
and are more likely to be accepted, especially if theory, paradigms and critical evaluation.
the objectives and methods have been agreed in
advance.
Participant observation in the fullest sense means Deduction
that the researcher becomes an employee and expe-
riences the work and the social processes that take Research can involve deduction, which is the pro-
place at first hand. This can provide powerful in- cess of using logical reasoning to reach a conclusion
sights but is time-consuming and requires consider- that necessarily follows from general or universal
able skill and persistence. premises. If the premises are correct, so is the deduc-
The issues with any form of observation are get- tion. The conclusion is therefore contained within
ting close enough to events to understand their the evidence. It is not a creative or imaginative
significance and then analysing the mass of infor- argument that produces new ideas.
mation that might be produced in order to come up
with findings that contribute to answering the re-
search question. Induction
Research can also be based on induction, which is
the process of reaching generalized conclusions
Diaries from the observation of particular instances. In con-
Getting people to complete diaries of what they do trast to deduction, inductive conclusions may be
is a method of building a realistic picture of how tentative but they contain new ideas. In research,
people, especially managers, spend their time. both deductive and inductive reasoning can be used
in hypothesis testing.
Hypothesis testing the account in empirical observations or evidence.

The researcher uses empirical evidence directly to
Formulating a hypothesis is an important element establish the concepts and relationships that will be
in a research project in that it provides a basis for contained in the theory. Evidence is collected from
the development of theory and the collection and both primary sources (ie obtained directly by the
analysis of data. A hypothesis is a supposition – a researcher from the originator of the evidence) and
tentative explanation of something. It is a provi- secondary sources (ie information that is already
sional statement that is taken to be true for the pur- available in the literature or on the internet). Use is
pose of argument or a study and usually relates to made of triangulation.
an existing wider body of knowledge. A hypothesis
has to be tested and should be distinguished from a
theory, which is an explanation of something that Paradigm
has been tested. A working hypothesis is a general
The term ‘paradigm’ has become popularized as
hypothesis that has been operationalized so that it
meaning a way of looking at things. It is often used
can be tested.
loosely, but properly it means the philosophical and
Hypothesis formulation and testing uses the
conceptual framework of a scientific school or dis-
strengths of both deductive and inductive processes;
cipline within which theories, laws and generaliza-
the former entirely conclusive but unimaginative,
tions and the experiments performed in support of
the latter tentative but creative. Induction produces
them are formulated. In other words, it is a c ommon
ideas and deduction tests them.
perspective that underpins the work of theorists so
To test a hypothesis, data has to be obtained that
that they use the same approach to conducting
will demonstrate that its predicted consequences
research.
are true or false. Simply leaping to the conclusion
that a hypothesis is true because a single cause of
the consequence has been observed falls into the
trap of what logicians call the ‘fallacy of affirming
Critical evaluation
the consequent’. There may be alternative and more Critical evaluation involves making informed judge-
valid causes. The preferred method of testing is that ments about the value of ideas and arguments. It
of denying the consequent. This is ‘falsification’ as uses critical thinking, which is the process of analys-
advocated by Popper (1959). His view was that ing and evaluating the quality of ideas, theories and
however much data may be assembled to support a concepts to establish the degree to which they are
hypothesis, it is not possible to reach a conclusive valid and supported by the evidence (evidence-
proof of the truth of that hypothesis. Popper there- based) and the extent to which they are biased. It
fore proposed that it was insufficient simply to means reflecting on and interpreting data, drawing
assemble confirmatory evidence: what must also be warranted conclusions and identifying faulty rea-
obtained is evidence that refutes the hypothesis. soning, assumptions and biases. A creative leap may
Only one instance of refutation is needed to falsify be required to reach a judgement.
a theory, whereas however many confirmations of A summary of the most used techniques for col-
the theory exist it will still not be proved conclusively. lecting data, their advantages and disadvantages
and their relevance in different situations is set out
in Table 69.1. These techniques are often c ombined.
Grounded theory
Grounded theory is an inductive method of devel-
oping the general features of a theory by grounding
604
TA B L E 69.1 Analysis of basic data collection methods
Data Relevance in
collection different
technique Methodology Advantages Disadvantages situations
Interviews Interviews are an important Interviews obtain information ●● The construction of the interview Can be used to
research method. They directly from people involved questions may result in leading obtain a range of
obtain factual data and in the area being researched questions or bland answers. views about a topic
insights into attitudes and and can provide insights into ●● Interviewers may influence the as long as when
feelings. Direct quotations attitudes and perspectives that interviewees’ reactions by imposing this is required a
from individuals can be used questionnaires will not reveal, their own reference frame. balanced sample of
to give life and reality to the thus promoting in-depth ●● Respondents may tell interviewers people are
research. understanding. They enable what they want to hear. interviewed.
the interviewer to probe ●● They are time-consuming – to set up,
answers and check that to conduct and to analyse.
questions have been ●● They require considerable
understood. 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
systematically by obtaining assembling data. happening. collecting basic
answers, which provide ●● It is impossible to assess the degree factual data.
factual information or of subjectivity that has crept in when
indicate opinions. expressing opinions.
Surveys Surveys obtain information Can provide more powerful ●● If not coupled with interviews, They can be used
from a defined population of data than other methods by surveys may give only a superficial to provide evidence
people. They are usually using a combination of picture. covering facts and/
based on questionnaires but questionnaires and interviews ●● It is impossible to assess the degree or opinions. In the
these are best reinforced by and, possibly, focus groups. of subjectivity that has crept in when latter case
interviews and focus expressing opinions. triangulation is
groups, a process known as desirable.
triangulation.
Data Relevance in
collection different
technique Methodology Advantages Disadvantages situations
Case studies A research case study is a Case studies are useful ways There is a danger of them being no more When it is useful to
description of a situation or of collecting information on than a story or an anecdote that does obtain an
a history of an event or the reality of organizational life not contribute to greater knowledge or illustration of what
sequence of events in a and processes. understanding. Much skill and is actually
real-life setting, which persistence are required from the happening from
illustrates a particular area researcher in gaining support, ensuring which conclusions
of interest. that relevant and revealing information is can be drawn on
obtained and presenting the case study what sort of action
as a convincing narrative from which can take place.
valid and interesting conclusions can be They can reinforce
derived. All this must be done without other methods as
taking a biased view, which can be part of a
difficult. triangulation
process.
605
Key learning points
The nature of research ●● It can use inductive or deductive methods.
Research is concerned with establishing what is and ●● It involves the testing of hypotheses and may adopt
from this predicting what will be. It is about the a grounded theory approach, ie an inductive
conception and testing of ideas. method of developing the general features of a
theory by grounding the account in empirical
observations or evidence.
Research philosophy
●● Use may be made of paradigms – common
Research design can be based on a philosophy of
perspectives that underpin the work of theorists so
positivism or phenomenology. Positivism is the belief
that they use the same approach to conducting
that researchers should focus on facts (observable
research.
reality), look for causality and fundamental laws.
Phenomenology is concerned more with the meaning ●● Informed judgements about the value of ideas
of phenomena than the facts associated with them. and arguments are made through critical
evaluation.
Planning and conducting research ●● It makes use of critical thinking, which is the
programmes process of analysing and evaluating the quality of
ideas, theories and concepts to establish the
1 Define research area.
degree to which they are valid and supported by
2 Formulate initial research question. the evidence.
3 Review literature.
Methods of collecting data
4 Assess existing theoretical frameworks.
●● Interviews obtain factual data and insights into
5 Formalize the research question. attitudes and feelings and can be structured,
6 Formulate hypotheses. unstructured or semi-structured.
7 Establish the methodology. ●● Questionnaires collect data systematically by

obtaining answers on the key issues and opinions
8 Draw up research programme. that need to be explored in a research project.
9 Prepare and submit proposal. ●● Surveys obtain information from a defined
10 Collect and analyse evidence. population of people.
11 Develop conclusions. ●● Case studies collect empirical evidence in a

real-life context.
Approaches to research
●● Research can be quantitative or qualitative.
References
Committee on Science, Engineering and Public Policy Lewin, K (1945) The research centre for group
(1995) On Being a Scientist: Responsible conduct dynamics at Massachusetts Institute of Technology,
in research, Washington DC, National Academy of Sociometry, 8, pp 126–36
Sciences, National Academy of Engineering, Popper, K (1959) The Logic of Scientific Discovery,
Institute of Medicine London, Hutchinson
608
70
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. The messages conveyed by the
sions as a support to evidence-based management analysis of frequency can be conveyed most effec-
and to monitor outcomes. They are an essential ele- tively by using data visualization techniques such as
ment in human capital management and are also the graphs illustrated in Figure 70.1.
important in such fields as performance manage-
ment (the analysis of appraisal results and levels of
performance) and reward management (the analysis Measures of central
of market rates, pay reviews, the distribution of pay
and equal pay). Statistics play a major part in the tendency
analysis of surveys and research evidence.
Statistics describe and summarize data relating Measures of central tendency identify the middle or
to a ‘population’, ie a homogeneous set of items centre of a set of data. There are three types:
with variable individual values. This involves meas- ●● Arithmetic average or mean – the total of
uring frequencies, central tendencies and dispersion. items or scores in a set divided by the
Statistics can also measure the relationships be- number of individual items in the set. It may
tween variables (correlation and regression), estab- give a distorted picture because of large
lish the relation between cause and effect (causal- items at either end of the scale.
ity), assess the degree of confidence that can be
attached to conclusions (tests of significance) and ●● Median – the middle item in a range of items
test hypotheses (the chi-squared test and null-hy- (often used in pay surveys when the
pothesis testing). They can form the basis for a pro- arithmetic mean is likely to be distorted).
jection – an estimate or forecast of a future situation ●● Mode – the most commonly occurring item
based on a study of present trends. in a set of data.
Statistics can be expressed in tabular form or
graphically using data visualization techniques. A
wide variety of software is available to conduct the Measures of dispersion
more sophisticated analyses. HR professionals do
not need advanced statistical skills unless they are It is often useful to measure the extent to which the
conducting or taking part in detailed research pro- items in a set are dispersed or spread over a range of
jects. This chapter describes the statistics or statisti- data. This can be done in five ways:
cal concepts that they are most likely to use or
1 By identifying the upper quartile or lower
should be familiar with, namely, those concerned
quartile of a range of data. The strict
with frequency, measures of central tendency, dis-
definition of an upper quartile is that it is the
persion, correlation, regression, causality, tests of
value which is exceeded by 25 per cent of the
significance and testing hypotheses.
values in the distribution, and the lower
Chapter 70 | Statistical Skills 609
F I G U R E 70.1 Examples of charts
Number Number Number *

of cases of cases of cases *
*
Number Number of Number of

of items items items
Histogram Frequency polygon Scattergram Pie chart
quartile is the value below which 25 per cent called the ‘outcome variable’) is one that may be af-
of the values in a distribution occur. More fected by changes in an ‘independent variable’
loosely, especially when looking at pay (sometimes called the ‘predictor variable’). If they
distributions, the upper and lower quartiles are highly correlated, they are strongly connected to
are treated as ranges rather than points in a one another, and vice versa. In statistics, correlation
scale and represent the top and the bottom is measured by the coefficient of correlation, which
25 per cent of the distribution respectively. varies between -1 and +1 to indicate totally negative
2 By presenting the total range of values from and totally positive correlations respectively. A cor-
top to bottom; this may be misleading if relation of zero means that there is no relationship
there are exceptional items at either end. between the variables. Establishing the extent to
which variables are correlated is an important fea-
3 By calculating the inter-quartile range, which
ture of HRM research in, for example, assessing the
is the range between the value of the upper
degree to which a performance management system
quartile and that of the lower quartile. This
improves organizational performance. But correla-
can present more revealing information of
tions do not indicate causal relationships. Multiple
the distribution than the total range.
correlation looks at the relationship between more
4 By calculating the standard deviation, which than two variables.
is used to indicate the extent to which the
items or values in a distribution are grouped
together or dispersed in a normal Regression
distribution, ie one that is reasonably
symmetrical around its average. As a rule of Regression is another way of looking at the rela-
thumb, two-thirds of the distribution will be tionship between independent and dependent vari-
less than one standard deviation from the ables. It expresses how changes in levels of one item
mean, 95 per cent of the distribution will be relate to changes in levels of another. The levels may
less than two standard deviations from the be expressed in the form of correlations. A regres-
mean and less than 1 per cent of the sion line (a trend line or line of best fit) can be traced
distribution will be more than three standard on a scattergram expressing values of one variable
deviations from the mean. on one axis and values of the other variable on an-
5 By calculating variance, which is the square other axis, as shown in Figure 70.2.
of a standard deviation. A trend line like this can be drawn by hand as a
line of best fit, but it can be calculated mathemati-
cally with greater accuracy. The distances of points
Correlation from the trend line (the residuals) can be calculated
as a check on the reliability of the line.
Correlation represents the relationship between Where there are two or more independent varia-
two variables. A ‘dependent variable’ (sometimes bles that might affect the dependent variable, multi-
F I G U R E 70.2 A scattergram with regression (trend) line

..
…
….
Number of cases
…..
….
…
Trend line
..
Number of items
regression analysis can be used. If there are two or of reasons why an organization has done well in
more dependent variables as well as two or more in- addition to adopting ‘best practice’ HRM, whatever
dependent variables multivariate analysis is used. that is. Statistical techniques can be used to ‘control’
Confusingly, the term multivariate analysis is some- some variables, ie eliminate them from the analysis,
times used instead of multi-regression analysis, for but it is difficult if not impossible to ensure that
example by the CIPD (2018). However, Edwards and HRM practices have been completely isolated and
Edwards (2016) only use the term multi-regression that their direct impact on the organization’s per-
analysis. formance has been measured. Multivariate analysis
Multiple regression analysis involves complex is used where there is more than one dependent
calculations and is best conducted with the aid of variable and where the dependent variables cannot
software such as SPSS as recommended by Edwards be combined.
and Edwards. Secondly, there is the phenomenon of reverse
causation, when a cause may be pre-dated by an ef-
fect – A might have caused B but, alternatively, B
Causality might have come first and be responsible for A. For
example, it is possible to demonstrate that organi-
Causality is the representation of cause and effect, zations with effective performance management
ie the link between independent and dependent var- schemes do better than those without. But it might
iables. To establish causality is to explain how one equally be the case that it is high-performing or-
thing leads to another. Causality is a major issue in ganizations that introduce effective performance
research, especially in the HRM field. It may be management. It can be hard to be certain.
relatively easy to establish correlations in the shape
of a demonstration that X is associated with Y; it is
much more difficult and sometimes impossible to Tests of significance
prove that X causes Y. There are a number of rea-
sons for this, of which the two set out below are the Significance as a statistical concept refers to the de-
most important. gree to which an event could have occurred by
First, complications arise because of the phe- chance. At the heart of statistical science lies a sim-
nomenon of multiple causation. There may be a ple idea, which is that the chance or probability of
number of factors contributing to a result. various patterns of events can be predicted. When a
Researchers pursuing the holy grail of trying to es- particular pattern is observed it is possible to work
tablish what HRM contributes to an organization’s out what the chances of its occurrence may be, given
performance are usually confronted with a number our existing state of knowledge or by making cer-
Chapter 70 | Statistical Skills 611
tain assumptions. If something has been observed

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

Statistics are used to describe and summarize data Correlation represents the relationship between two
relating to a ‘population’, ie a homogeneous set of variables. If they are highly correlated they are
items with variable individual values. This involves strongly connected to one another, and vice versa.
measuring frequencies, central tendencies and
dispersion. Regression
They are also used to measure the relationships
between variables (correlation and regression) to Regression is another way of looking at the
establish the relation between cause and effect relationship between variables. It expresses how
(causality) and to assess the degree of confidence that changes in levels of one item relate to changes in
can be attached to conclusions (tests of significance) levels of another.
and to test hypotheses (the chi-squared test and
null-hypothesis testing). Causality
Statistics are used extensively in HRM to analyse
Determining the link between independent and
and present quantitative information that can be used
dependent variables (cause and effect) is a major
to guide decisions and monitor outcomes.
issue in research, especially in the HRM field. It may
be relatively easy to establish correlations in the
Measures of central tendency shape of a demonstration that X is associated with Y; it
Measures of central tendency identify the middle or is much more difficult and sometimes impossible to
centre of a set of data. There are three types: prove that X causes Y.
arithmetic average or mean, median and mode.
Tests of significance
Measures of dispersion Significance as a statistical concept refers to the
It is useful to measure the extent to which the items in degree to which an event could have occurred by
a set are dispersed or spread over a range of data. chance.
References
Chartered Institute of Personnel and Development Edwards, M R and Edwards, K (2016) Predictive HR
(2018) New Profession Map. https:// Analytics: Mastering the HR metric, London,
peopleprofession.cipd.org/profession-map Kogan Page
(archived at https://perma.cc/BJ3X-ER7B)
613
71
Selection
interviewing skills
Introduction Step 2. Review information about
candidates
The purpose of a selection interview is to establish
the extent to which candidates have the types and You should then consider the information candi-
levels of skill, knowledge and abilities required to dates provide for themselves in, for example, their
carry out a job. In this chapter the process of pre- CVs, application forms, letters or during a prelimi-
paring for an interview is examined initially and the nary telephone or videoed conversation. This will
skills required to conduct an interview are then re- identify any special questions you should ask about
viewed. Next, what is generally regarded as the best their career or to fill in any gaps, for example, ‘You
method of selection interviewing – the structured left your job in C and started in D. Would you mind
interview – and the approaches that can be adopted telling me what you were doing during this time?’.
to structuring are examined. The chapter continues
with descriptions of the different types of interviews
and examples of the questions that can be put in Step 3. Plan the interview
them. It ends with suggestions on how a conclusion A selection interview consists of three parts: (1) the
following an interview should be reached. opening where the candidate is welcomed and put
at ease, (2) the middle in which a pre-planned se-
quence of questions is put to the candidate and (3)
Preparing for the interview the end in which the candidate can ask questions
and is informed about the next steps, eg that if a
It is necessary to prepare for the interview by carry- provisional offer is accepted, references will be
ing out the following steps. taken up with the candidate’s existing employer.
You should decide at this stage how long you
want to spend on each interview. As a rule of thumb,
Step 1. Know what you are looking 45 to 60 minutes are usually required for senior
for professional or technical appointments. Middle-
ranking jobs need about 30 to 45 minutes. The
In the first place, you need to understand exactly more routine jobs can be covered in 20 to 30 min-
what you are looking for in terms of qualifications, utes. But the time allowed depends on the job and
experience and personality. This can be recorded in you do not want to insult a candidate by conduct-
a person specification and will provide the basis ing a superficial interview.
upon which the questions to be put to candidates You need to give some thought to how you are
can be prepared. These questions might be extended going to sequence the middle, information-seeking,
by what are called work sample tests that give an part of an interview. The most popular approach is
indication of how well the candidate would per- the chronological biographical interview which
form important parts of the job. starts with the first job or even before that at school
and, if appropriate, college or university. The suc- a pproach to interviewing can be summed up as the
ceeding jobs, if any, are then dealt with in turn end- three Cs:
ing with the present job on which most time is
●● Content – the information you want and the
spent. If you are not careful, however, using the
questions you ask to get it.
chronological method for someone who has had a
number of jobs can mean spending too much time ●● Contact – your ability to make and maintain
on the earlier jobs, leaving insufficient time for the good contact with candidates; to establish
most important recent experiences. To overcome the sort of rapport that will encourage them
this problem, an alternative biographical approach to talk freely, thus revealing their strengths
is to start with the present job, which is discussed in and their weaknesses.
some depth. The interviewer then works backwards, ●● Control – your ability to control the interview
job by job, but only concentrating on particularly so that you get the information you want.
interesting or relevant experience in earlier jobs.
This involves using the following interviewing
The problem with the biographical approach is
skills: establishing rapport, questioning, listening,
that you can miss an important piece of informa-
keeping control and note taking.
tion about the candidate. This is because there is a
risk of concentrating on a succession of jobs and
what, broadly, they entail rather than focusing on
those aspects of a candidate’s experience that illus-
Establishing rapport
trate their ability to carry out the role for which Establishing rapport means establishing a good re-
they are being considered. lationship with candidates – getting on their wave-
This risk can be avoided by conducting a tar- length, putting them at ease, encouraging them to
geted interview which is based on an analysis of the respond and generally being friendly. This is not just
person specification in order to identify the criteria a question of being ‘nice’ to them. If you achieve
you will use to judge the suitability of the candidate. rapport you are more likely to get them to talk
You ‘target’ these key criteria during the interview freely about both their strengths and weaknesses.
by asking appropriate questions about the experi- Good rapport is created by the way in which you
ence, knowledge, skills, capabilities, values and per- greet candidates, how you start the interview and
sonal qualities of candidates, the answers to which how you put your questions and respond to replies.
can then be compared with the criteria to assess the Questions should not be posed aggressively or
extent to which candidates meet the specification. imply that you are criticizing some aspect of the
These questions will be concerned with capabilities candidate’s career. Some people like the idea of
and behavioural events, or be situation-, strength- ‘stress’ interviews but they are counter-productive.
or value-based. They can provide the basis for a Candidates clam up and gain a negative impression
structured interview. Examples are given later in of you and the organization.
this chapter. When responding to answers you should be ap-
preciative, not critical: ‘Thank you, that was very
helpful; now can we go on to?’ not, ‘Well, it seems
Conducting a selection to me that things did not go according to plan.’
Body language can also be important. If you main-
interview tain natural eye contact, avoid slumping in your seat,
nod and make encouraging comments when appro-
There are different kinds of selection interviews as priate, you will establish better rapport and get more
described below. But they all have one characteristic out of the interview.
in common – they are conversations with a purpose.
They are conversations because candidates should
be given the opportunity to talk freely about their Questioning
careers and experience. But the conversation has to
be planned, directed and controlled to achieve your Questioning is the key skill interviewers need to pos-
aims in the time available. Overall, an effective sess. Their purpose is to draw candidates out and
elicit the information the interviewer has d ecided
Chapter 71 | Selection Interviewing Skills 615
must be obtained to reach a conclusion. To this end the form of a general discussion during which the
it is desirable to ask open-ended questions – ques- interviewer asks a few questions that are relevant to
tions that cannot be answered by ‘yes’ or ‘no’ and what they are looking for but without any specific
which promote a full response. Biased questions re- aim in mind other than getting an overall picture of
ferring to gender, race, sexual orientation, disability the candidate as an individual. Research has shown
or age must be avoided that unstructured interviews are not very effective.
Structured interviews are better.
Listening
If an interview is a conversation with a purpose, lis-
tening skills are important. You need not only to Structured interviews are based on predetermined
hear but also to understand what candidates are questions put to all the candidates so that they can
saying. When interviewing you must concentrate on be compared against the same criteria. They are
what candidates are saying to you. You should play sometimes called competency-based interviews be-
back to candidates from time to time your under- cause they focus on the competencies (knowledge,
standing of what they have told you and ask them skills and abilities) required to do the job. A scoring
to confirm or amend them. system can be developed for comparative purposes.
Structured interviews can be competency-based,
strength-based or values-based. Research by
Keeping control Schmidt and Hunter (1998) showed that such inter-
views are much more likely to provide an accurate
You want candidates to talk, but not too much.
prediction of how someone will perform in a role
When preparing for the interview you should have
than an unstructured interview. Structured inter-
drawn up an agenda and you must try to stick to it.
views are based on a set of predetermined questions.
Don’t cut candidates short too brutally but say
something like: ‘Thank you, I’ve got a good picture
of that, now what about?’
Focus on specifics as much as you can. If candi-
Competency-based interviews
dates ramble on a bit or their replies to your ques- A competency-based interview is a structured inter-
tions lack substance, ask a pointed question (a view in which the questions put to all candidates
‘probe’ question) that asks for an example illustrat- aim to establish the extent to which they have the
ing the particular aspect of their work that you are competencies required to perform the job as set out
considering. in the person specification. The interview will cover
both behavioural and technical competencies.
Behavioural competencies describe the types of be-
Note taking haviour required for successful performance of a
role, for example, communication, leadership and
You won’t remember everything that candidates tell
teamwork. Technical competencies describe what
you. It is useful to take notes of the key points they
people have to know and be able to do to carry out
make, discreetly, but not surreptitiously. However,
their role effectively.
don’t put candidates off by frowning or tut-tutting
when you are making a negative note. It may be
helpful to ask candidates if they would mind if you
take notes. They can’t really object, but they will
Strength-based interviews
appreciate the fact that they have been asked. A strengths-based interview is a structured inter-
view in which the focus is on finding out the
strengths of candidates – what they are good at
Types of interviews doing. It involves asking questions such as ‘What are
you good at?’ ‘What comes easily to you?’ and
Interviews can be conducted face to face or by tele- ‘What have you done recently that you are proud
phone or video. They can be unstructured, taking of?’ It is often used with graduates and school
leavers who have little work experience. Strengths- last longer than 20 or 30 minutes. Make and keep
based questions can be incorporated alongside ex- notes in case a decision not to proceed is challenged.
perience-based and situation-based questions as One way of doing this is to use a form such as the
long as the same questions are put to each candi- one illustrated in Figure 71.1.
date. The strengths that are important in a job can Telephone interviews should be used simply to
be established by identifying the strengths of existing confirm or amplify basic information about candi-
high performers in a similar job. dates – whether they have the required skills and
experience, can they communicate in a clear way,
can they explain anything you’re unsure about on
Value-based interviews their CV and, afterwards, whether or not more
should be found out about them by seeing them in
A values-based interview is a form of structured in-
person.
terview that aims to establish the extent to which
Planning for a telephone interview means read-
the values of the candidate are in line with those of
ing the candidate’s CV carefully to assess the extent
the organization.
to which it meets the person specification for the
job. A set of questions should be prepared which
would be put to each candidate. Here are some pos-
Telephone interviews sible questions:
Telephone interviews speed up the recruitment pro-
●● Tell me about yourself.
cess. They are used to screen applicants and enable
interviewers to decide which ones they would like to ●● What does your current role involve?
take further. But they have to be planned and con- ●● What do you think you are best at doing in
ducted carefully because of the limitations imposed your current role?
by the lack of face-to-face contact. As interviewers ●● What interests you most about your present
are unable to judge things like personal appearance, role?
body language and, to some extent, personality, on
the telephone, they shouldn’t try to. The interview ●● What motivates you?
should be kept succinct; no rambling on the part of ●● What sort of behaviour do you value most in
either the candidate or the interviewer. It should not the workplace?
F I G U R E 71.1 Telephone interview assessment form
Name of candidate: Date of interview:

Question Quality of response Comments
Good Acceptable Poor
Assessment of Highly Relevant Not

qualifications and relevant sufficiently
experience relevant
Decision Next stage Hold Reject

●● What are your strengths? 10 Is there anything else relating to your career
●● How would you describe your management that hasn’t come out yet in this interview,
style? but you think I ought to hear about?
●● Why do you want to work here? But the advice given by Moore (2017: 18) should be
●● Why did you leave your last job? noted:
If the phone interview goes well, schedule a face-to- Each interview question should have a point. It
face interview with the candidate at the end of the ought to be able to assess some work-relevant
ability or behaviour. As such, it should be easy
call. If the interview did not go well, tell the person
for interviewers to specify beforehand what a
at that time that their qualifications did not appear
good answer might look like. Actual responses
to meet what the company is currently looking for
should be scored against these criteria. These
but thank them for their interest.
scores should then be averaged to establish some
numerical assessment of interview performance.
If you are concerned that the scored questions
Video interviews seem to omit an intuitive holistic assessment of the
Like telephone interviews, video interviews can re- candidate, then you can consider adding a final
duce the length of an interview programme. They holistic assessment, and this can be averaged in
have the obvious advantage over telephone inter- with the scores for the specific interview questions.
views that there is visual as well as oral contact be- Examples of different categories of such questions
tween the two parties. However, care has to be are given below.
taken in making judgements in the somewhat artifi-
cial context of a videoed conversation. And, as in
the case of telephone interviews, careful prepara- Capability questions
tion is necessary.
Capability questions establish what candidates are
capable of doing, what they know and the skills
Selection interview they possess. Their purpose is to obtain evidence
from candidates that shows the extent to which
questions they meet the specification in each of its key areas.
Because time is always limited it is best to concen-
The following are 10 useful questions from which trate on the most important aspects of the work,
you can select any that are particularly relevant: and it is always best to prepare the questions in ad-
vance. Here are some examples:
1 What are the most important aspects of your
present job? ●● Tell me about the most important things you
2 What do you think have been your most are doing in your present job.
notable achievements in your career to date? ●● What do you think has been your greatest
3 What sort of problems have you successfully achievement in your career to date?
solved recently in your job? ●● What experience have you had in… ?
4 What have you learned from your present ●● You’ve informed me that you have had
job? experience in… . Could you tell me more
5 What has been your experience in… ? about what you did?
6 What do you know about… ? ●● What sort of targets have you been expected
to achieve?
7 What is your approach to handling… ?
●● How successful have you been in achieving
8 What particularly interests you in this job those targets or standards? Please give
and why? examples.
9 Which aspects of your experience do you ●● In what ways do you think your experience
think are most relevant for this job? fits you to do this job?
●● What have been the most challenging aspects ●● Could you give an instance of when you
of your job? took the lead in a difficult situation in getting
●● Could you give an example of any project something worthwhile done?
you have undertaken? ●● Could you give an example of when you
●● What was your role in this project? successfully introduced an innovation at
work?
●● What was the contribution you made to its
success? ●● Could you describe a situation in which you
had to convince others to do something they
●● What knowledge and skills were you able to
weren’t particularly keen on?
apply to the project?
●● Could you tell me about a difficult situation
●● Were you responsible for monitoring
with a member of your staff which you have
progress?
handled particularly well?
●● Did you prepare the final recommendations
in full or in part?
●● Could you describe in more detail the Situation-based questions
equipment you used?
Situation-based questions are hypothetical ques-
●● How would you improve the quality of team tions that describe a situation to candidates who are
work in a group? asked how they would deal with it. Questions can
●● What do you think is the best way to test how candidates would approach a typical prob-
motivate people? lem or issue they might meet in the job for which
●● What is your approach to reviewing the they are being considered and are critical to success-
performance of members of your team? ful job performance. The assumption upon which
such questions are based is that the ways in which
●● What part have you played in coaching people describe how they would behave in dealing
members of your team? with or reacting to events is a good predictor of fu-
ture behaviour. Situational questions typically take
the form ‘What would you do if… ?’ Examples of
Behavioural event questions situational questions are:
Behavioural event questions ask candidates to de-
●● What would you do if you were asked to
scribe how they behaved in a situation or an experi-
perform a task you’ve never done before?
ence they have had in their present or a previous
job. Questions present a situation, inquire about ●● What would you do if you were told by your
what action the candidate has taken to deal with boss to do something which you thought was
something similar and ask what the result was. For unethical?
example: ●● What would you do if you made a mistake
that no one else noticed?
●● Could you tell me about a recent achievement
of which you are particularly proud? ●● What would you do if an angry and
dissatisfied customer or colleague confronted
●● Could you give me an example of when you
you? How would you resolve their concern?
had to deal with a difficult situation with a
colleague? ●● What would you do if someone rudely
disagreed with you during a meeting?
●● Could you give an instance of when you
persuaded others to take an unusual course ●● What approach would you adopt to
of action? persuading someone to take a course of
action which they are not very keen to do?
●● Could you describe an occasion when you
completed a project or task in the face of ●● What do you do at a meeting when you are
great difficulties? asked a question that you are unable to
answer?
●● Could you describe any contribution you
have made as a member of a team in ●● What do you think the qualities of a good
achieving a highly successful result? leader are?
●● What would you do if a member of your ●● Have you ever faced an ethical dilemma at
team refused to carry out what you work? If so, what was the issue and what did
considered to be a reasonable request? you do?
●● How would you deal with a subordinate ●● What company policies would you suggest
whose performance is good but is creating to make their operations more
persistently late coming to work? environmentally friendly? How would you
●● What would you do about your team if its ensure employees understand and apply
members were not working well together? these guidelines?
●● How would you motivate someone who ●● Why is good team work important and how
wasn’t pulling their weight? can it be achieved?
●● Are there any situations in which you think
Situation-based questions can be illuminating. But
the needs of the individual are more
what candidates say they would do and what they
important than the needs of the organization?
actually do could be quite different. Hypothetical
questions can produce hypothetical answers. The ●● What do you think a line manager should do
best data upon which judgements about candidates if a member of their team is suspected of
can be made are what they have actually done or bullying a fellow worker?
achieved. You need to find out if they have success- ●● Do you think organizations should be
fully dealt with the sort of issues and problems they concerned with the financial wellbeing of
may be faced with if they join your organization. their employees, and if so, why?
This is the function of capability and behavioural
event questions.
Common interviewing
Strength-based interview questions mistakes
Strength-based questions focus on what people are You should be aware of the following common mis-
good at. They are particularly suitable when inter- takes that interviewers make.
viewing graduates, school leavers or students who
have had little relevant work experience. ●● jumping to conclusions on a single piece of
favourable evidence – the ‘halo effect’;
●● What are you good at doing?
●● jumping to conclusions on a single piece of
●● What comes easily to you? unfavourable evidence – the ‘horns effect’;
●● What do you learn quickly? ●● not weighing up the balance between the
●● What did you find easiest to learn at school favourable and unfavourable evidence
or university? logically and objectively;
●● What subjects did you most enjoy studying? ●● failing to ensure that candidates support
●● What things give you energy? what they say about what they have done or
can do with examples from their personal
●● Describe a successful day you have had.
experience;
●● When did you achieve something you were
●● coming to firm conclusions on inadequate
really proud of?
evidence;
●● making snap or hurried judgements;
Value-based interview questions ●● making biased judgements on the grounds of
The aim of value-based questions such as the fol- sex, race, age, disability, religion, appearance,
lowing is to establish the values of candidates about accent, class or any aspect of the candidate’s
different aspects of work and to assess how com- life history, circumstances or career which do
patible they are with those of the organization. not fit your preconceptions of what you are
looking for.
In the end, the decision between qualified candi-

Coming to a conclusion dates could well be judgemental. There may be one
suitable candidate but there could be two or three
Individual candidates can be assessed on the basis (although sometimes there may be none at all).
of the answers they have given to the structured Where there is a choice, a balanced view has to be
questions. The answers could be scored on a scale reached by reference to interview notes and ratings.
of, say, 1 to 10. These assessments can inform an Don’t, however, settle for second best in desperation.
overall assessment of knowledge and skills and abil- It is better to try again.
ities. Any clearly unsuitable candidate could be re- A record of the reasons for the choice and why
jected at this stage. candidates have been rejected should be kept for at
Next, compare the assessment of each of the re- least six months in case the decision is challenged as
maining potentially successful candidates against being discriminatory. An example of an interview
one another to reach a conclusion on the preferred rating form is given in Figure 71.2.
candidate. You can then reach a conclusion on those
preferred by reference to their assessments under
each heading.
TA BLE 71.1 Dos and don’ts of selection interviewing

Do Don’t
●● Plan the interview. ●● Start the interview unprepared.
●● Give yourself sufficient time. ●● Plunge too quickly into demanding questions.
●● Use a structured interview approach. ●● Ask multiple or leading questions.
●● Create the right atmosphere. ●● Pay too much attention to isolated strengths or
●● Establish an easy and informal relationship – start weaknesses.
with an undemanding question. ●● Allow candidates to gloss over important facts.
●● Encourage the candidate to talk. ●● Talk too much or allow candidates to ramble
●● Cover the ground as planned, ensuring that you on.
complete a prepared agenda and maintain ●● Allow your prejudices to get the better of your
continuity. capacity to make objective judgements.
●● Analyse the candidate’s career to reveal strengths, ●● Fall into the halo effect trap, ie drawing
weaknesses and patterns of interest. conclusions about a person on the basis of
●● Make use of open questions which invite people to one or two good points, leading to the neglect
talk. of negative indicators. Or into the horns trap –
●● Ensure that questions are clear and unambiguous. focusing too much on one or two weak points.
●● Get examples and instances of the successful ●● Ask questions or make remarks that could be
application of knowledge, skills and the effective use construed as in any way discriminatory.
of capabilities. ●● Attempt too many interviews in a row.
●● Make judgements on the basis of the factual
information you have obtained about candidates’
experience and attributes in relation to the person
specification.
●● Keep control over the content and timing of the
interview.
F I G U R E 71.2 Example of an interview rating form
Questions Assessment of answers Comments
Unacceptable Marginally Acceptable Very

1–2 acceptable 5–8 acceptable
3–4 9–10
Overall
suitability
Key learning points
Purpose of an interview Nature of an interview

The purpose of a selection interview is to establish the An interview is a conversation with a purpose. It is a
extent to which a candidate will be able to do the job. conversation because candidates should be given the
This means finding out how well a candidate’s levels of opportunity to talk freely about themselves and their
skill, knowledge, abilities and competency fit a person careers. But the conversation has to be planned,
specification for the job that sets out these directed and controlled to achieve your aims in the
requirements. time available.
Preparing for the interview Interviewing skills

The steps required to prepare for an interview are: ●● Establishing rapport – creating a good relationship
with candidates – getting on their wavelength,
1 Read the job description and person.
putting them at ease, encouraging them to respond
2 Ensure that candidates have information about the and generally being friendly.
job in advance.
●● Questioning is the key skill interviewers need to
3 Read the candidates’ CVs and any other possess. Their purpose is to draw candidates out
information about them. and elicit the information the interviewer has
decided must be obtained to reach a conclusion.
4 Decide on the type of interview you will use. The
best approach is a structured interview ●● If an interview is a conversation with a purpose,
listening skills are important. You need not only to
5 Decide on the questions to be asked in a structured
hear but also to understand what candidates are
interview.
saying. When interviewing you must concentrate
6 Decide how candidates will be assessed. on what candidates are telling you.
7 Plan the interview.
●● So far as possible link your questions to a through a rating system. The types of questions asked
candidate’s last reply so that the interview in a structured interview are:
progresses logically and a cumulative set of data is
●● capability;
built up.
●● behavioural event;
●● You want candidates to talk, but not too much.
●● situation-based;
●● It is useful to take notes of the key points they
make, discreetly, but not surreptitiously. ●● strength-based;
●● values-based.
Structuring the interview
A structured interview is one based on a defined Coming to a conclusion
framework within which there is a set of
Candidates can be assessed on the basis of the
predetermined questions. All candidates are asked the
answers they have given to the structured questions.
same questions and the answers may be scored
References
Moore, D A (2017) How to improve the accuracy psychology: practical and theoretical implications
and reduce the cost of personnel selection, of 85 years of research findings, Psychological
California Management Review, 60 (1), pp 8–17 Bulletin, 124 (2), pp 262–74
Schmidt, F L and Hunter, J E (1998) The validity and
utility of selection methods in personnel
623
72
Job, role and skills
analysis and
competency modelling
Introduction Job description
A job description defines what job holders are re-
The analysis of jobs, roles and skills and competency quired to do in terms of activities, duties or tasks. It
modelling are some of the key techniques in human is prescriptive and inflexible, giving people the op-
resource management. They provide the informa- portunity to say ‘It’s not in my job description’,
tion required to produce job descriptions, role pro- meaning that they only need to do the tasks listed
files, and person and learning specifications. They there. A job description is more concerned with
are of fundamental importance in organization and tasks than outcomes, and with the duties to be per-
job design, recruitment and selection, performance formed than the competencies required to perform
management, learning and development, manage- them (technical competencies covering knowledge
ment development, career management, job evalua- and skills, and behavioural competencies).
tion and the design of grade and pay structures.
These constitute most of the key HRM activities.
This chapter starts with definitions of the terms Job analysis
used in job and role analysis and then deals with the
skills required to analyse jobs, roles and skills in Job analysis is the process of collecting, analysing
order to produce job descriptions and role profiles and setting out information about jobs in order to
and to model competencies to produce competency provide the basis for a job description and data for
frameworks. recruitment, training, job evaluation and perfor-
mance management. Job analysis concentrates on
what job holders do and achieve. It identifies the
Definitions tasks job holders undertake and the outcomes and
outputs they are expected to produce. Outcomes are
the results of performance expressed as something
Jobs and roles that has been attained, such as a task or a project.
The terms ‘job’ and ‘role’ are often used inter- Outputs are the results of performance expressed in
changeably, but they are different. A job is an or- quantified terms such as sales volume, income gen-
ganizational unit consisting of a group of defined erated or units of production.
tasks or activities to be carried out or duties to be
performed. A role is the part people play in their
work – the emphasis is on the expected patterns of Role profile
behaviour to achieve agreed outcomes. Roles are A role profile defines key result areas, accountabilities
about people. Jobs are about tasks and duties. and competencies for an individual role. It concentrates
on outcomes rather than duties and therefore provides Competency modelling

better guidance than a job description on expecta-
tions. It does not constrain people by prescribing their Competency modelling is concerned with behav-
tasks. Outcomes may be expressed as ‘key result ioural analysis to establish the behavioural dimen-
areas’ – elements of the role for which clear outputs sions that affect job performance, and functional
and standards can be defined, each of which makes a analysis to determine technical or work-based com-
significant contribution to achieving its overall petencies. Behavioural or personal competencies are
purpose. Alternatively, they may be termed ‘accounta- the personal characteristics of individuals they bring
bilities’ – areas of the role for which role holders are to their work roles. Technical or work-based com-
responsible in the form of being held to account for petencies refer to expectations of workplace perfor-
what they do and what they achieve. mance and the standards and outputs that people
A role profile does not prescribe in detail what carrying out specified roles are expected to attain.
has to be done to achieve the required outcomes. It They are also described as competences. The model-
therefore allows for greater flexibility than a job de- ling process can produce competency profiles of in-
scription and is more easily updated to reflect dividual roles as well as a competency framework.
changing demands.
Role profiles are person-oriented. A role can be
described in behavioural terms – given certain ex- Job analysis
pectations, this is how the person needs to behave
to meet them. Because it identifies knowledge, skill Job analysis produces the following information
and competency requirements it also provides a about a job:
better basis for recruitment and selection, perfor-
●● Overall purpose – why the job exists and, in
mance management and learning and development
essence, what the job holder is expected to
purposes.
contribute.
●● Organization – to whom the job holder
Generic role reports and who reports to the job holder.
●● Content – the nature and scope of the job in
A generic role is a role in which essentially similar
terms of the tasks and operations to be
activities are carried out by a number of people, for
performed and duties to be carried out.
example a team leader or a call centre agent. In ef-
fect, it covers an occupation rather than a single If the outcome of the job analysis is to be used for
role. job evaluation purposes, the job will also be ana-
lysed in terms of the factors or criteria used in the
job evaluation scheme.
Role analysis
Role analysis finds out what people are expected to
achieve when carrying out their work and the com-
Job analysis methodology
petencies and skills required to meet those expecta- The essence of job analysis is the application of sys-
tions. Role analysis uses similar techniques to job tematic methods to the collection of information
analysis, although the objective of the analysis will about job content. It is essentially about data collec-
be different. tion and the basic steps are to:
1 Obtain documents such as existing
Skills analysis organization, procedure or training manuals
that give information about the job.
Skills analysis determines the skills required to 2 Obtain from managers fundamental
achieve an acceptable level of performance. information concerning the job.
3 Obtain from job holders similar information
about their jobs.
Chapter 72 | Job, Role and Skills Analysis and Competency Modelling 625
There are a number of job analysis techniques used easy: if asked what decisions they are
for data collection as described below. authorized to make, most people look blank
because they think about their job in terms
Interviews of duties and tasks rather than abstract
decisions.
The full flavour of a job is best obtained by inter-
viewing job holders and checking findings with 6 Avoid asking leading questions that make the
their managers or team leaders. The aim of the in- expected answer obvious.
terview should be to obtain the relevant facts about 7 Allow the job holder ample opportunity to
the job, namely the job title, organizational details talk by creating an atmosphere of trust.
(reporting relationships as described in an organiza- It is helpful to use a checklist when conducting the
tion chart) and a list of the tasks or duties per- interview. Elaborate checklists are not necessary;
formed by the job holder. The interview should also they only confuse people. The basic questions to be
establish outcomes and outputs. answered are as follows:
For recruitment, training or job evaluation pur-
poses these basic details can be supplemented by ●● What is the title of your job?
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 re-
ceived, the degree of discretion allowed in making ●● What is the main purpose of your job in
decisions, the typical problems to be solved, the overall terms, ie what are you expected to
amount of guidance available when solving the do?
problems, the relative difficulty of the tasks to be ●● What are the key activities you have to carry
performed and the qualifications and skills required out in your role? Try to group them under no
to carry out the work. The following are the steps more than 10 headings.
required to conduct a job analysis interview: ●● What are the results you are expected to
1 Work to a logical sequence of questions that achieve in each of those key activities?
help interviewees to order their thoughts ●● What are you expected to know to be able to
about the job. carry out your job?
2 Probe as necessary to establish what people ●● What skills should you have to carry out
really do in terms of outputs and outcomes – your job?
answers to questions are often vague and
The answers to these questions may need to be
information may be given by means of
sorted out – they can often result in a mass of jum-
untypical instances.
bled information that has to be analysed so that the
3 Ensure that job holders are not allowed to various activities can be distinguished and refined
get away with vague or inflated descriptions to seven or eight key areas.
of their work – if, for example, the interview The advantages of the interviewing method are
is part of a job evaluation exercise, they that it is flexible, can provide in-depth information
would not be human if they did not present and is easy to organize and prepare. It is therefore
the job in the best possible light. the most common approach. But interviewing can
4 Sort out the wheat from the chaff; answers be time-consuming, which is why in large job analy-
to questions may produce a lot of irrelevant sis exercises, questionnaires may be used to provide
data that must be sifted before preparing the advance information about the job. This speeds up
job description. the interviewing process or even replaces the inter-
5 Obtain a clear statement from job holders view altogether, although this means that much of
about their authority to make decisions and the ‘flavour’ of the job – ie what it is really like – may
the amount of guidance they receive from be lost.
their manager or team leader. This is not
Questionnaires Reporting to
Questionnaires about their roles can be completed The job title of the manager or team leader to whom
by role holders and approved by the role holder’s the job holder is directly responsible should be
manager or team leader. They are helpful when a given under this heading. No attempt should be
large number of roles have to be covered. They can made to indicate here any functional relationships
also save interviewing time by recording purely fac- the job holder might have to other people.
tual information and by enabling the analyst to
structure questions in advance to cover areas that
need to be explored in greater depth. The simpler Reporting to job holder
the questionnaire the better: it need only cover the
eight questions listed above. The job titles of all the posts directly reporting to
The advantage of questionnaires is that they can the job holder should be given under this heading.
produce information quickly and cheaply for a Again, no attempt should be made here to indicate
large number of jobs. But a substantial sample is any functional relationships that might exist be-
needed and the construction of a questionnaire is a tween the job holder and other employees.
skilled job, which should only be carried out on the
basis of some preliminary fieldwork. It is highly ad-
visable to pilot test questionnaires before launching Overall purpose
into a full-scale exercise. The accuracy of the results This section should describe as concisely as possible
also depends on the willingness and ability of job the overall purpose of the job. The aim should be to
holders to complete questionnaires. Many people convey in one sentence a broad picture of the job
find it difficult to express themselves in writing that will clearly distinguish it from other jobs and
about their work. establish the role of job holders and the contribu-
tion they should make towards achieving the objec-
Observation tives of the company and their own function or
Observation means studying role holders at work, unit. No attempt should be made to describe the
noting what they do, how they do it and how much activities carried out under this heading, but the
time it takes. This method is most appropriate for overall summary should lead naturally to the analy-
routine administrative or manual roles but it is sel- sis of activities in the next section. When preparing
dom used because of the time it takes. the job description, it is often best to defer writing
down the definition of overall responsibilities until
the activities have been analysed and described.
Job descriptions
Job descriptions should be based on the job analysis
Main activities, tasks or duties
and should be as brief and factual as possible. The The following method of describing activities, tasks
headings under which the job description should be or duties should be adopted:
written and notes for guidance on completing each
1 Group the various activities identified by the
section are set out below.
job analysis together so that no more than
seven or eight areas remain. If the number is
Job title extended much beyond that, the job
description will become over-complex and it
The existing or proposed job title should indicate as will be difficult to be specific about tasks or
clearly as possible the function in which the job is duties.
carried out and the level of the job within that func- 2 Define each activity in one sentence, starting
tion. The use of terms such as ‘manager’, ‘assistant with a verb in the active voice, to provide a
manager’ or ‘senior’ to describe job levels should be positive indication of what has to be done
reasonably consistent between functions with re- and eliminate unnecessary wording. For
gard to how the jobs are graded.
example, plan, prepare, produce, implement, to the warehouse planned output so that all
process, provide, schedule, complete, items are removed by carriers on the same
dispatch, maintain, liaise with, collaborate day they are packed; schedule production to
with. meet laid-down output and delivery targets;
3 Describe what is done as succinctly as ensure that management accounts are
possible, for example, test new systems, post produced that provide the required level of
cash to the nominal and sales ledgers, information to management and individual
dispatch packed output to the warehouse, managers on financial performance against
schedule production, ensure that budget and on any variances; prepare
management accounts are produced, prepare marketing plans that support the
marketing plans. achievement of the marketing strategies of
the enterprise, are realistic, and provide clear
4 State briefly the purpose of the activity in
guidance on the actions to be taken by the
terms of outcomes, outputs or standards to
development, production, marketing and
be achieved. For example, test new systems
sales departments; plan and implement sales
to ensure they meet agreed systems
campaigns to meet sales targets.
specifications; post cash to the nominal and
sales ledgers in order to provide up-to-date An example of a job description is given in
and accurate financial information; dispatch Figure 72.1.
F I G U R E 72.1 Example of a job description
Job title: HR Adviser; Recruitment
Reports to: HR Service Centre Manager

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

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

profiles Behavioural competencies describe how the role
holder is expected to behave when carrying out the
role. They may be linked to the organization’s com-
Role analysis uses the same techniques as job analy-
petency framework and cover such areas as team-
sis but the focus is on identifying inputs – KSAs
working, communication, people management and
(knowledge, skill and abilities) and competency re-
customer relations. An example of an individual
quirements – and outcomes (key result areas or ac-
role profile is given in Figure 72.2.
countabilities) rather than simply listing the tasks to
be carried out. A role profile is initially set out under
the same headings as a job description, ie role title,
responsible to, responsible to role holder and the
Generic role profiles
purpose of the role, but it then focuses on the fol- Generic role profiles cover occupations rather than
lowing aspects of the role. individual roles. They tend to be more generalized
and may be somewhat simpler than individual role
profiles, for example by restricting the profile to
Key result areas lists of key result areas and competency dimensions.
An example of a generic role profile is given in
A key result area is an element of a role for which
Figure 72.3.
clear outputs and outcomes can be defined, each of
which makes a significant contribution to achieving
the overall purpose of the role. It may be described
as an ‘accountability’ – an aspect of the role for Skills analysis
which the role holder is responsible (held to ac-
count for). Skills analysis determines the skills required to
The number of key result areas is unlikely to be achieve an acceptable standard of performance. It is
more than seven or eight, certainly not more than mainly used for technical, craft, manual and office
10. The basic structure of a key result area defini- jobs to provide the basis for devising learning and
tion should resemble that of a job description task training programmes. Skills analysis starts from a
definition, ie it should be expressed in one sentence broad job analysis but goes into details of not only
starting with an active verb. However, the content what job holders have to do but also the particular
of the definition should focus more on the specific abilities and skills they need to do it. Skills analysis
purpose of the activity in terms of outputs or stand- techniques are described below.
ards to be achieved than on describing in detail the
duties involved.
Job breakdown
The job breakdown technique analyses a job into
Knowledge, skills and abilities separate operations, processes or tasks that can be
required used as the elements of an instruction sequence. A
job breakdown analysis is recorded in a standard
Knowledge, skills and abilities should be expressed format of three columns:
in terms of ‘need to know’ – the required knowledge
of techniques, processes, procedures, systems and 1 The stage column, in which the different
the business generally (its products or services and steps in the job are described – most
its competitors and customers), and ‘need to be able semiskilled jobs can easily be broken down
to do’ – the skills required in each area of activity. into their constituent parts.
These are the technical competencies required by 2 The instruction column, in which a note is
the job. made against each step of how the task
F I G U R E 72.2 Example of a role profile
Role title: Database administrator
Department: Information systems
Purpose of role: Responsible for the development and support of databases

and their underlying environment.
Key results areas

• Identify database requirements for all projects that require data
management in order to meet the needs of internal customers.
• Develop project plans collaboratively with colleagues to deliver against
their database needs.
• Support underlying database infrastructure.
• Liaise with system and software providers to obtain product information
and support.
• Manage project resources (people and equipment) within predefined
budget and criteria, as agreed with line manager and originating
department.
• Allocate work to and supervise contractors on day-to-day basis.
• Ensure security of the underlying database infrastructure through
adherence to established protocols and to develop additional security
protocols where needed.
Need to know
• Oracle database administration.
• Operation of Designer 2000 and Oracle forms SQL/PLSQL, Unix
administration, shell programming.
Able to
• Analyse and choose between options where the solution is not always
obvious.
• Develop project plans and organize own workload on a timescale of 1–2
months.
• Adapt to rapidly changing needs and priorities without losing sight of
overall plans and priorities.
• Interpret budgets in order to manage resources effectively within them.
• Negotiate with suppliers.
• Keep abreast of technical developments and trends, bring these into
day-to-day work when feasible and build them into new project
developments.
Behavioural competencies
• Aim to get things done well and set and meet challenging goals, create
own measures of excellence and constantly seek ways of improving
performance.
• Analyse information from range of sources and develop effective
solutions/recommendations.
• Communicate clearly and persuasively, orally or in writing, dealing with
technical issues in a non-technical manner.
• Work participatively on projects with technical and non-technical
colleagues.
• Develop positive relationships with colleagues as the supplier of an
internal service.
F I G U R E 72.3 Example of a generic role profile
Generic role title: Team leader
Overall purpose of role: To lead teams in order to attain team goals and further
the achievement of the organization's objectives.
Key result areas

1. Agree targets and standards with team members which support
the attainment of the organization’s objectives.
2. Plan with team members work schedules and resource
requirements which will ensure that team targets will be reached,
indeed exceeded.
3. Agree performance measures and quality assurance processes
with team members which will clarify output and quality
expectations.
4. Agree with team members the allocation of tasks, rotating
responsibilities as appropriate to achieve flexibility and the best
use of the skills and capabilities of team members.
5. Coordinate the work of the team to ensure that team goals are
achieved.
6. Ensure that the team members collectively monitor the team's
performance in terms of achieving output, speed of response and
quality targets and standards and agree with team members any
corrective action required to ensure that team goals are achieved.
7. Conduct team reviews of performance to agree areas for
improvement and actions required.
Competencies
• Build effective team relationships, ensuring that team members are
committed to the common purpose.
• Encourage self-direction amongst team members but provide
guidance and clear direction as required.
• Share information with team members.
• Trust team members to get on with things – not continually
checking.
• Treat team members fairly and consistently.
• Support and guide team members to make the best use of their
capabilities.
• Encourage self-development by example.
• Actively offer constructive feedback to team members and
positively seek and be open to constructive feedback from them.
• Contribute to the development of team members, encouraging the
acquisition of additional skills and providing opportunities for them
to be used effectively.
should be done. This, in effect, describes 4 Training method – the instructional

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

repetition to get right;
Task analysis is a systematic analysis of the behav-
●● complex procedures or sequences of activity
iour required to carry out a task with a view to
that are memorized or followed with the aid
identifying areas of difficulty and the appropriate
of written material such as manuals;
training techniques and learning aids necessary for
successful instruction. It can be used for all types of ●● non-verbal information such as sight, sound,
jobs but is specifically relevant to administrative smell, taste and touch, used to check, assess
tasks. or discriminate, and which usually takes
The analytical approach used in task analysis is practice to get right;
similar to those adopted in the job breakdown and ●● memorizing facts or information;
manual skills analysis techniques. The results of the ●● ordering, prioritizing and planning, which
analysis are usually recorded in a standard format refer to the degree to which a role holder has
of four columns, as follows: any responsibility for and flexibility in,
1 Task – a brief description of each element. determining the way a particular activity is
performed;
2 Level of importance – the relative
significance of each task to the successful ●● looking ahead and anticipating;
performance of the role. ●● diagnosing, analysing and problem solving,
3 Degree of difficulty – the level of skill or with or without help;
knowledge required to perform each task.
●● interpreting or using written manuals and analysis – in ascending order of complexity these
other sources of information such as are:
diagrams or charts;
1 Expert opinion
●● adapting to new ideas and systems.
2 Structured interview
In conducting a job learning analysis interview, the 3 Workshops
interviewer obtains information on the main aims
4 Critical-incident technique
and principal activities of the job and then, using
question cards for each of the nine learning skills, 5 Repertory grid analysis.
analyses each activity in more depth, recording re-
sponses and obtaining as many examples as possi- Expert opinion
ble under each heading.
The basic, crudest and least satisfactory method is
for an ‘expert’ member of the HR department, pos-
sibly in discussion with other ‘experts’ from the
Competency modelling same department to draw up a list from their own
understanding of ‘what counts’, coupled with an
As defined by Shippmann et al (2000: 727): analysis of other published lists. This is unsatisfac-
Competency modelling approaches typically tory because the likelihood of the competencies
provide descriptions of the individual-level being appropriate, realistic and measurable in the
competencies that are core, or common, for an absence of detailed analysis is fairly remote. The list
occupational group, entire level of jobs (e.g., tends to be bland and, because line managers and
executive, management, supervisory, hourly), job holders have not been involved, unacceptable.
or for the organization as a whole. The focus is
on broad applicability and leveraging what is in
common or universal. Even when the modelling
Structured interview
effort targets a narrowly defined job group (e.g., This method begins with a list of competencies
sales managers), the resulting descriptions are drawn up by ‘experts’ and proceeds by subjecting a
typically at a fairly high level and general in number of role holders to a structured interview.
nature. The interviewer starts by identifying the key result
areas of the role and goes on to analyse the behav-
Competency modelling is the basis for defining
ioural characteristics that distinguish performers at
behavioural and technical competencies (see

different levels of competence. The basic question is
Chapter 16).
‘What are the positive or negative indicators of be-
haviour conducive or non-conducive to achieving
high levels of performance?’ These may be analysed
Behavioural competency modelling under headings such as those set out below. Under
Behavioural competency modelling is the method each heading instances will be sought that illustrate
used to identify, analyse and describe behavioural effective or less effective behaviour:
competencies. These define the behaviours that or-
●● personal drive (achievement motivation);
ganizations expect their employees to practise in
their work in order to reach an acceptable level of ●● impact on results;
performance. They have an important part to play ●● analytical power;
in providing information that contributes to a num- ●● strategic thinking;
ber of HRM activities, for example, recruitment,
●● creative thinking (ability to innovate);
learning and development, and performance man-
agement. Table 72.1 shows guidance on the criteria ●● decisiveness;
for a fully rigorous competency definition produced ●● commercial judgement;
by Shippmann et al (2000). ●● team management and leadership;.
These are exacting criteria. The emphasis is on
the systematic collection and analysis of data. There ●● interpersonal relationships;
are five approaches to behavioural competency ●● ability to communicate;
TA B L E 72.1 Criteria for a fully rigorous competency definition (Shippman et al, 2000)
Variable Conditions required to meet high rigorous criteria
Method of A logically selected mix of multiple methods is used to obtain information,

investigation eg interviews, focus groups, questionnaires.
Type of descriptor Variable combinations of multiple types of information are collected, eg

content collected work activities, KSAs (knowledge, skills and abilities statements) and
performance standards.
Procedures for Information collected from content experts using a structured protocol and
developing descriptors a representative sample.
Detail of descriptor Use of a number of labels representing discrete categories of content

content which operationally define each category and leave no room for
misinterpretation.
Link to business goals Steps taken to ensure that results are aligned with the broader goals and
and strategies longer-term strategies of the organization.
Content review Formal review takes place to ensure that:

●● item-level descriptions are clear;
●● content categories do not overlap, content categories are internally
consistent;
●● items represent measurable content appropriate for the intended
application.
Ranking descriptor The set of descriptors are prioritized and ranked.

content
Assessment of Content category labels are matched with item-level descriptors and rated
reliability according to their relative importance for successful job performance.
Item retention criteria Multiple, clear, logical criteria are consistently applied to items to
determine whether content is retained or deleted.
Documentation Clear definitions are made of the procedures to be employed in applying

the competency framework.
●● ability to adapt and cope with change and of behaviour and then groups them under compe-
pressure; tency headings. This can be done in a workshop by
●● ability to plan and control projects. analysing positive and negative indicators to gain
an understanding of the competence dimensions of
One of the problems with this approach is that it an occupation or job, as described below.
relies too much on the ability of the expert to draw
out information from interviewees. It is also unde-
sirable to use a deductive approach that pre-empts
Workshops
the analysis with a prepared list of competency Workshops bring a group of people together who
headings. It is better to do this by means of an in- have ‘expert’ knowledge or experience of the role –
ductive approach, which starts from specific types managers and role holders as appropriate – with a
facilitator, usually but not necessarily a member of ●● strategic capability;

the HR department or an outside consultant. ●● business understanding;
The members of the workshop begin by getting
●● achievement motivation;
agreement to the overall purpose of the role and its
key result areas. They then develop examples of ef- ●● interpersonal skills;
fective and less effective behaviour for each area, ●● communication skills;
which are recorded on flipcharts. For example, one ●● consultancy skills.
of the key result areas for a divisional HR director
might be workforce planning, defined as: These dimensions might also be reflected in the
analysis of other areas of competency so that, pro-
Prepares forecasts of human resource requirements gressively, a picture of the competencies is built up,
and plans for the acquisition, retention and which is linked to actual behaviour in the work-
effective utilization of employees, which ensure
place.
that the company’s needs for people are met.
The facilitator’s job is to prompt, help the group
The positive indicators for this competency area to analyse its findings and assist generally in the
could include: production of a set of competence dimensions that
can be illustrated by behaviour-based examples.
●● seeks involvement in business strategy
The facilitator may have some ideas about the sort
formulation;
of headings that may emerge from this process but
●● contributes to business planning by taking a should not try to influence the group to come to a
strategic view of longer-term human resource conclusion it has not worked out for itself, albeit
issues that are likely to affect business with some assistance from the facilitator.
strategy; Workshops can use the critical-incident or reper-
●● networks with senior management colleagues tory grid techniques, as described below.
to understand and respond to the human
resource planning issues they raise; Critical-incident technique
●● suggests practical ways to improve the use of The critical-incident technique is a means of elicit-
human resources, for example, the ing data about effective or less effective behaviour
introduction of annual hours. related to examples of actual events – critical inci-
Negative indicators could include: dents. The technique is used with groups of job
holders and/or their managers or other ‘experts’
●● takes a narrow view of HR planning – does (sometimes, less effectively, with individuals) as
not seem to be interested in or understand follows:
the wider business context;
1 Explain what the technique is and what it is
●● lacks the determination to overcome
used for, ie ‘to assess what constitutes good
problems and deliver forecasts;
or poor performance by analysing events
●● fails to anticipate skills shortages; for that have been observed to have a noticeably
example, unable to meet the multi-skilling successful or unsuccessful outcome, thus
requirements implicit in the new computer- providing more factual and “real”
integrated manufacturing system; information than by simply listing tasks and
●● does not seem to talk the same language as guessing performance requirements’.
line management colleagues – fails to 2 Agree and list the key results in the role to be
understand their requirements; analysed. To save time, the analyst can
●● slow in responding to requests for help. establish these prior to the meeting but it is
necessary to ensure that they are agreed
When the positive and negative indicators have
provisionally by the group, which can be
been agreed, the next step is to distil the compe-
told that the list may well be amended in the
tency dimensions that can be inferred from the lists.
light of the forthcoming analysis.
In this example they could be:
3 Take each area of the role in turn and ask To elicit judgements, a group of people are asked
the group for examples of critical incidents. to concentrate on certain elements, which are the
If, for instance, one of the job tasks carried out by role holders, and develop con-
responsibilities is dealing with customers, structs about these elements. This enables them to
the following request could be made: ‘I want define the qualities that indicate the essential re-
you to tell me about a particular occasion at quirements for successful performance.
work which involved you – or that you The procedure followed by the analyst is known
observed – in dealing with a customer. as the ‘triadic method of elicitation’ (a sort of three-
Think about what the circumstances were, card trick) and involves the following steps:
eg who took part, what the customer asked
1 Identify the tasks or elements of the role to
for, what you or the other member of the
be subjected to repertory grid analysis. This
staff did and what the outcome was.’
is done by one of the other forms of job
4 Collect information about the critical analysis, eg interviewing.
incident under the following headings:
2 List the tasks on cards.
|| what the circumstances were;
|| what the individual did; 3 Draw three cards at random from the pack
|| the outcome of what the individual did. and ask the members of the group to
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 of expected behaviour. If, for example, a
recorded behaviour on a scale such as 1 for characteristic has been described as the
least effective to 5 for most effective. ‘ability to plan and organize’, ask questions
8 Discuss these ratings to get initial definitions such as ‘What sort of behaviour or actions
of effective and ineffective performance for indicate that someone is planning
each of the key result areas. effectively?’ or ‘How can we tell if someone
9 Refine these definitions as necessary after is not organizing their work particularly
the meeting – it can be difficult to get a well?’
group to produce finished definitions. 5 Draw three more cards from the pack and
10 Produce the final analysis, which can list the repeat steps 3 and 4.
competencies required and include 6 Repeat this process until all the cards have
performance indicators or standards of been analysed and there are no more
performance for each key result area. constructs to be identified.
This is at thorough, indeed exhaustive approach, but 7 List the constructs and ask the group
it is time-consuming and requires skill to manage members to rate each task on every quality,
using a six- or seven-point scale.
Repertory grid 8 Collect and analyse the scores to assess their

relative importance.
Like the critical-incident technique, the repertory
grid can be used to identify the dimensions that dis- Repertory grid analysis helps people to articulate
tinguish good from poor standards of performance. their views by reference to specific examples. An ad-
The technique is based on Kelly’s (1955) personal ditional advantage is that the repertory grid makes
construct theory. Personal constructs are the ways it easier for them to identify the behavioural charac-
in which we view the world. They are personal be- teristics or competencies required in a job by limit-
cause they are highly individual and they influence ing the area of comparison through the triadic tech-
the way we behave or view other people’s behaviour. nique. Although a full statistical analysis of the
The aspects of the role to which these ‘constructs’ or outcome of a repertory grid exercise is helpful, the
judgements apply are called ‘elements’. most important results that can be obtained are the
descriptions of what constitute good or poor per- tences contained in NVQ (National Vocational
formance in each element of the job. Qualification) frameworks. Functional analysis fo-
Like the critical-incident technique, the repertory cuses on the outcomes of work performance. Note
grid requires a skilled analyst who can probe and that the analysis is not simply concerned with out-
draw out the descriptions of job characteristics. It is puts in the form of quantifiable results but deals
quite detailed and time-consuming, but even if the with the broader results that have to be achieved by
full process is not followed much of the methodol- role holders. An outcome could be a satisfied cus-
ogy is of use in a less elaborate approach to compe- tomer, a more highly motivated subordinate or a
tency modelling. better-functioning team.
Functional analysis deals with processes such as
Choice of approach developing staff, providing feedback and monitor-
ing performance as well as tasks. It starts with an
Workshops are probably the best approach. They analysis of the roles fulfilled by an individual in
get people involved and do not rely on ‘expert’ order to arrive at a description of the separate com-
opinion. Critical-incident or repertory grid tech- ponents or ‘units’ of performance that make up
niques are more sophisticated and can be associated that role. The resulting units consist of performance
with workshops but they are time-consuming and criteria, described in terms of outcomes, and a de-
considerable expertise is required to run them. scription of the knowledge and skill requirements
that underpin successful performance. The tech-
niques used in functional analysis are similar to
Technical competency modelling those used in job analysis, described earlier in this
Technical competencies or competences can be chapter.
modelled through the process of functional analysis,
which is used to produce definitions of the compe-
Key learning points
Job analysis methodology and techniques Role analysis methodology

The essence of job analysis is the application of Role analysis uses the same techniques as job
systematic methods to the collection of information analysis but the focus is on identifying inputs
about job content. It is essentially about data (knowledge, skill and competency requirements) and
collection and the basic steps are: required outcomes (key result areas) rather than
simply listing the tasks to be carried out.
●● obtain documents such as existing organization,
procedure or training manuals that give information
about the job; Behavioural competency modelling
●● obtain from managers fundamental information Behavioural competency modelling is used for
concerning the job; identifying, analysing and describing behavioural
competencies that define the behaviours that
●● obtain from job holders similar information about organizations expect their staff to practise in their
their jobs. work in order to reach an acceptable level of
performance. The emphasis is on the systematic
Job descriptions collection and analysis of data. There are five
approaches to behavioural competency analysis. In
Job descriptions should be based on the job analysis and
ascending order of complexity these are: expert
should be as brief and factual as possible. The headings
opinion, structured interview, workshops, critical-
should be job title, reporting to, reporting to job holder,
incident technique and repertory grid analysis.
main purpose of job, main activities, tasks or duties.
Analysing technical competencies Skills analysis

Functional analysis starts with an analysis of the Skills analysis determines the skills required to achieve
roles fulfilled by an individual in order to arrive at a an acceptable standard of performance. It is mainly used
description of the separate components or ‘units’ of for technical, craft, manual and office jobs to provide the
performance that make up that role. The resulting basis for devising learning and training programmes.
units consist of performance criteria, described in Skills analysis starts from a broad job analysis but goes
terms of outcomes, and a description of the knowledge into details of what job holders have to do and the
and skill requirements that underpin successful particular abilities and skills they need to do it. Skills
performance. analysis techniques include job breakdown, manual
skills analysis, faults analysis and job learning analysis.
References
Kelly, G (1955) The Psychology of Personal Shippmann, J S, Ash, R A and Battista, M (2000) The
Constructs, New York, Norton practice of competency modelling, Personnel
Pearn, K and Kandola, R (1993) Job Analysis: A Psychology, 53 (3), pp 703–40
manager’s guide, London, IPM
638
73
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 are often responsible for enhanc- or skill or modifying their behaviour. Individuals
ing the knowledge and skills of employees and for should be given guidance on what they should be
providing guidance to line managers on conducting learning and feedback on how they are doing and,
their learning and development activities. They because learning is an active not a passive process,
therefore need to know about coaching, mentoring, they should be actively involved with their coach.
facilitation and job instruction skills as described in Coaching is sometimes informal but it has to be
this chapter. 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
Chapter 73 | Learning and Development Skills and Competencies 639
to do it with guidance and comments from competence. Mentors may be line managers. They
the coach as required. are often appointed and trained by learning and de-
3 Tutor – this involves encouraging learners to velopment specialists who therefore need to be
find out how to do things for themselves. It is aware of the skills required. HR and L&D profes-
still relatively directive as it is the coach who sionals may act as mentors themselves, although
suggests what learners should look for. experienced managers are best if they have the skills
and enthusiasm required.
4 Stimulator – this helps learners to teach
Mentors provide people with:
themselves by guiding their thinking through
the use of insight-provoking questions. ●● advice in drawing up self-development
programmes or learning contracts;
●● general help with learning programmes;
Criteria for effectiveness ●● guidance on how to acquire the necessary
The following criteria for evaluating the perfor- knowledge and skills to do a new job;
mance of a coach were listed by Gray (2010: 379): ●● advice on dealing with any administrative,
●● establishes rapport; technical or people problems individuals
meet, especially in the early stages of their
●● creates trust and respect;
careers;
●● demonstrates effective communication skills;
●● information on ‘the way things are done
●● promotes self-awareness and self-knowledge; around here’ – the corporate culture in terms
●● uses active listening and questioning of expected behaviour;
techniques; ●● coaching in specific skills;
●● assists goal development and setting; ●● help in tackling projects – not by doing it for
●● motivates; them but by pointing them in the right
●● encourages alternative perspectives; direction, helping people to help themselves;
●● assists in making sense of a situation; ●● a parental figure with whom individuals can
discuss their aspirations and concerns and
●● identifies significant patterns of thinking and
who will lend a sympathetic ear to their
behaving;
problems.
●● provides an appropriate mix of challenge
and support; Mentors need to adopt a non-directive but support-
ive approach to helping the person or persons they
●● facilitates depth of understanding;
are dealing with.
●● shows compassion;
●● acts ethically;
●● inspires curiosity; Facilitating
●● acts as a role model;
The facilitation of learning is the process of help-
●● values diversity and difference; ing people to learn mainly for themselves rather
●● promotes action and reflection. than force-feeding them. The aim of the facilitator
is to guide thinking rather than simply imparting
new knowledge. The facilitator of a learning group
Mentoring has unobtrusively to stimulate group members to
talk, move the discussion along predetermined
Mentors offer guidance, pragmatic advice and con- lines (there must be a plan and an ultimate objec-
tinuing support to help those allocated to them to tive) and provide interim summaries and a final
learn and develop. It is a method of helping people summary.
to learn as distinct from coaching, which can be a Help in reaching conclusions is provided by ask-
relatively directive means of increasing people’s ing questions that encourage people to think for
themselves. These can be challenging and probing Demonstration

questions but the facilitator does not provide the
answers – that is the role of the people involved. Demonstration is an essential stage in instruction,
Neither do facilitators allow their own opinions to especially when the skill to be learnt is mainly a
intrude – they are there to help people to learn, not ‘doing’ skill. Demonstration can take place in three
to enforce their own ideas. stages:
1 The complete operation is shown at normal
speed to show the trainee how the task
Job instruction should be carried out eventually.
When people learn specific tasks, especially those 2 The operation is demonstrated slowly and in
involving basic administrative or manual skills, the correct sequence, element by element, to
learning will be more effective if job instruction indicate clearly what is done and the order in
techniques are used. HR professionals may possibly which each task is carried out.
be involved in providing direct instruction but their 3 The operation is demonstrated again slowly,
most typical role is that of promoting effective in- at least two or three times, to stress the how,
struction techniques for use by line managers and when and why of successive movements.
others involved in workplace learning or face-to- The learner then practises by imitating the instruc-
face learning events. They should therefore be aware tor and constantly repeating the operation under
of the sequence of instruction, as described below. guidance. The aim is to reach the target level of per-
formance for each element of the total task, but the
instructor must constantly strive to develop coordi-
Preparation nated and integrated performance – that is, the
Preparation for each instruction period means that smooth combination of the separate elements of the
the trainer must have a plan for presenting the sub- task into a whole job pattern.
ject matter and using appropriate teaching meth-
ods, visual aids and demonstration aids. It also
means preparing trainees for the instruction that is Follow up
to follow. They should want to learn. They must Follow up continues during the training period for
perceive that the learning will be relevant and useful all the time required by the learner to reach a level
to them personally. They should be encouraged to of performance equal to that of the normal experi-
take pride in their job and to appreciate the satisfac- enced worker in terms of quality, speed and atten-
tion that comes from skilled performance. tion to safety. During the follow-up stage, the
learner will continue to need help with particularly
difficult tasks or to overcome temporary set-backs
Presentation that result in a deterioration of performance. The
Presentation should consist of a combination of instructor may have to repeat the presentation for
telling and showing – explanation and demonstra- the elements and supervise practice more closely
tion. Explanation should be as simple and direct as until the trainee regains confidence or masters the
possible: the trainer explains briefly the ground to task.
be covered and what to look for. He or she makes
the maximum use of charts, diagrams and other
visual aids. The aim should be to teach first things Instructional design
first and then proceed from the known to the un- The following are the nine conditions for effective
known, the simple to the complex, the concrete to instructional design set out by Gagne (1977):
the abstract, the general to the particular, the obser-
vation to reasoning, and the whole to the parts and 1 Gain attention of learners.
back to the whole again. 2 Inform learners of learning objectives.
3 Stimulate recall of prior learning.
Chapter 73 | Learning and Development Skills and Competencies 641
4 Present the content and break it down into 7 Provide feedback to learners.
components so as to avoid information 8 Assess the performance of learners.
overload.
9 Enhance knowledge retention and transfer to
5 Provide learning guidance. real life in the workplace.
6 Elicit performance.
Key learning points
The requirement ●● general help with learning programmes;
HR professionals need skills in coaching and

●● guidance on how to acquire the necessary
mentoring to fulfil their important responsibilities for knowledge and skills to do a new job;
enhancing the knowledge and skills of employees and ●● advice on dealing with any administrative,
for providing guidance to line managers on conducting technical or people problems individuals meet,
their learning and development activities. especially in the early stages of their careers;
●● information on ‘the way things are done around
Coaching here’ – the corporate culture in terms of expected
Coaching is a personal (usually one-to-one) approach behaviour;
that enables people to develop their skills and ●● coaching in specific skills;
knowledge and improve their performance.
●● help in tackling projects – not by doing it for them
The approach to coaching but by pointing them in the right direction, helping
people to help themselves;
To succeed in coaching you need to understand that
your role is to help people to learn and to see that they
●● a parental figure with whom individuals can
are motivated to learn. discuss their aspirations and concerns and who
Coaching is sometimes informal but it has to be will lend a sympathetic ear to their problems.
planned. It is not simply checking from time to time on
what people are doing and then advising them on how Facilitating
to do it better, or occasionally telling people where
The facilitation of learning is the process of helping
they have gone wrong and throwing in a lecture.
people to learn mainly for themselves rather than
Coaching should provide motivation, structure and
force-feeding them.
effective feedback. As a coach, you should believe
that people can succeed and that they can contribute
to their own success. Job instruction
When people learn specific tasks, especially those
Mentoring involving basic administrative or manual skills, the
learning will be more effective if job instruction
Mentors offer guidance, pragmatic advice and
techniques are used. The sequence of instruction is:
continuing support to help those allocated to them to
learn and develop. It is a method of helping people to ●● Preparation for each instruction period means that
learn as distinct from coaching, which can be a the trainer must have a plan for presenting the
relatively directive means of increasing people’s subject matter and using appropriate teaching
competence. Mentors provide people with: methods, visual aids and demonstration aids. It also
means preparing trainees for the instruction that is
●● advice in drawing up self-development
to follow.
programmes or learning contracts;
●● 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
643
74
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 requires considerable skill. It is a pro- Negotiation can be convergent when both parties
cess in which two parties – management and the are equally keen to reach a win-win agreement (in
trade union – get together with the aim of getting commercial terms, a willing buyer/willing seller ar-
the best deal possible for their business or their rangement). It can be divergent when one or both of
members. It involves bargaining, which is reaching the parties aim to win as much as they can from the
the most advantageous position in discussion with other while giving away as little as possible.
another party by means of offer sand counter-offers. Negotiations in an industrial relations setting differ
Negotiations usually involve a conflict of interest. from commercial negotiations in the respects shown
In pay negotiations, unions want the highest settle- in Table 74.1.
ment they can get; management wants the lowest. In In negotiations on pay or other terms and condi-
negotiations about other terms and conditions, un- tions of service, management represents the
ions will want the best result for their members while employer’s interests and employee representatives
management will want to avoid agreeing to anything represent the interests of employees. Both sides are
other than what they think is reasonable from their of equal status. Negotiations take place in an at-
viewpoint. It can be a zero-sum game – what one mosphere of uncertainty. Neither side knows how
side gains the other loses. No one likes to lose, so strong the other side’s bargaining position is or
there is scope for conflict, which has to be managed what it really wants and will be prepared to accept.
if an amicable agreement is to be achieved. And ne-
gotiators do, or should, try to end up on friendly
terms, whatever differences of opinion have occurred Stages of negotiation
on the way. After all, they may well meet again.
A ‘mutual gains’ approach is desirable but not Negotiations are conducted in four stages: initial
always achievable. This involves recognizing that steps, opening, bargaining and closing.
while the interests of the two parties will probably
differ in some if not many respects, it may be pos-
sible to find common ground. A problem-solving Initial steps
approach is best. Both sides exchange information
In a pay negotiation, unions making the claim will
to advance interests that they think will benefit both
define for themselves three things: (a) the target
of them. This results in the generation of options
they would like to achieve, (b) the minimum they
and a choice of those that are considered to provide
will accept and (c) the opening claim they believe
mutual gains (Cullinane et al, 2014: 819).
TA BLE 74.1 Commercial and industrial relations negotiations compared

Industrial relations negotiations Commercial negotiations
●● Assume an ongoing relationship – negotiators ●● Negotiators can walk away.

cannot walk away. ●● The contract is legally binding.
●● The agreement is not legally binding. ●● May be conducted at a distance.
●● Conducted on a face-to-face basis. ●● Carried out directly with the parties being
●● Carried out by representatives responsible to responsible to a line manager.
constituents. ●● Usually conducted on a continuing basis.
●● Make frequent use of adjournments. ●● Usually conducted on a ‘willing buyer/willing
●● May be conducted in an atmosphere of seller’ basis.
distrust, even hostility.
will be most likely to achieve the target. Employers ●● obtaining supporting data;
define three related things: (1) the target settlement ●● selecting the negotiating team, briefing them
they would like to achieve, (2) the maximum they on the strategy and tactics and rehearsing
would be prepared to concede and (3) the opening them in their roles.
offer that will provide them with sufficient room to
manoeuvre in reaching their target. The difference
between a union’s claim and an employer’s offer is Opening
the negotiating range. If the maximum the employer
will offer exceeds the minimum the union will ac- Tactics in the opening phase of a negotiation are as
cept the difference will be the settlement range, in follows:
which case a settlement will be easily reached. If, ●● open realistically and move moderately;
however, the maximum the employer will offer is
●● challenge the other side’s position as it
less than the minimum the union will accept, nego-
stands; do not destroy their ability to move;
tiations will be more difficult and a settlement will
only be reached if the expectations of either side are ●● observe behaviour, ask questions and listen
adjusted during the bargaining stage. The extent to attentively in order to assess the other side’s
which this will happen depends on the relative strengths and weaknesses, their tactics and
power of the two parties. The strength of the argu- the extent to which they may be bluffing;
ments put forward by either party will also be a ●● make no concessions at this stage;
factor, but the major consideration is usually power. ●● be non-committal about proposals and
Similarly, in a negation on an employment issue explanations – do not talk too much.
such as working arrangements, the union sets out a
request (or demand) but usually has a fall-back po-
sition, while the employer decides on an initial re- Bargaining
sponse but again has a fall-back position.
Preparation for negotiation by either party After the opening moves, the main bargaining phase
involves: takes place in which the gap is narrowed between the
initial positions. The attempt is made to persuade
●● deciding on the strategy and tactics to be each other that their case is strong enough to force
used; the other side to close at a less advantageous point
●● listing the arguments to be used in than they had planned, although it is still a good idea
supporting their case; to try to identify the basis for a possible agreement;
●● listing the arguments or counter-arguments that is, the common ground. Bargaining is often as
the other party is likely to use; much about concealing as revealing – keeping
Chapter 74 | Negotiating Skills 645
a rguments in reserve to deploy when they will make ●● It is normal, although not inevitable, for the
the greatest impact. negotiation to proceed by alternate offers
The following tactics are used: and counter-offers from each side, leading
steadily towards a settlement.
●● Always make conditional proposals: ‘If you
will do this, then I will consider doing ●● Third parties should not be brought in until
that’ – the words to remember are: ‘if… both sides agree that no further progress can
then…’. be made without them.
●● Never make one-sided concessions: always ●● Concessions, once made, cannot be
trade off against a concession from the other withdrawn.
party: ‘If I concede x, then I expect you to ●● If negotiators want to avoid committing
concede y.’ themselves to ‘a final offer’ with the risk of
●● Negotiate on the whole package: devaluing the term if they are forced to make
negotiations should not allow the other side concessions, they should state as positively as
to pick off item by item (salami negotiation). they can that this is as far as they can go.
Bargaining conventions allow further moves
●● Keep the issues open to extract the maximum
from this position on a quid pro quo basis.
benefit from potential trade-offs.
●● Firm offers must not be withdrawn.
There are certain bargaining conventions that expe-
●● The final agreement should mean exactly
rienced negotiators follow because they appreciate
what it says. There should be no trickery and
that by so doing, they create the atmosphere of trust
the agreed terms should be implemented
and understanding that is essential to the sort of
without amendment.
stable bargaining relationship which benefits both
sides. Some of the more generally accepted conven- ●● So far as possible the final settlement should
tions are as follows: be framed and communicated in such a way
as to reduce the extent to which the other
●● Whatever happens during the bargaining, party loses face or credibility.
both parties are hoping to reach a settlement.
The features of typical negotiations are illustrated in
●● Negotiators should show that they respect
Figures 74.1 and 74.2. The difference between the
the views of the other side and take them
union’s claim and the employer’s offer is the negoti-
seriously even if they disagree with them.
ating range. If the employer’s maximum exceeds the
●● While it is preferable to conduct negotiations union’s minimum this will indicate the settlement
in a civilized and friendly manner, attacks, zone. In the example shown in Figure 74.1 the chance
hard words, threats and controlled losses of of settlement without too much trouble is fairly high.
temper may be used by negotiators to It is when the employer’s maximum is less than the
underline determination to get their way and union’s minimum, as shown in Figure 74.2, that the
to shake their opponent’s confidence and trouble starts.
self-possession. But these should be treated
by both sides as legitimate tactics and should
not be allowed to shake the basic belief in Closing
each other’s integrity or desire to settle
without taking drastic action. There are various closing techniques:
●● Off-the-record discussions (‘corridor ●● Make a concession from the package,
negotiations’) can be mutually beneficial as a preferably a minor one, which is traded off
means of probing attitudes and intentions against an agreement to settle. The
and smoothing the way to a settlement, but concession can be offered more positively
they should not be referred to specifically in than in the bargaining stage: ‘If you will
formal bargaining sessions unless both sides agree to settle at x then I will concede y.’
agree in advance. ●● Do a deal, split the difference or bring in
●● Each side should be prepared to move from something new, such as extending the settlement
its original position.
F I G U R E 74.1 Negotiating range with a settlement zone

Union Management
% %
Claim 5
Negotiating
Target 3 3 Maximum
range
Settlement
zone
2 2 Target
Minimum
1.5 Offer
F I G U R E 74.2 Negotiating range without a settlement zone
Claim 5
Negotiating
Target 4
range
Minimum 3
Negotiating
gap
2 Maximum
1.5 Target
1 Offer
timescale, agreeing to back-payments, phasing Employers should not make a final offer unless they
increases, or making a joint declaration of intent mean it. If it is not really their final offer and the
to do something in the future. union calls their bluff, they may have to make fur-
●● Summarize what has happened so far, ther concessions and their credibility will be under-
emphasize the concessions that have been mined. Each party will attempt to force the other
made and the extent of movement from the side into revealing the extent to which they have
original position, and indicate that the limit reached their final position. But negotiators should
has been reached. not allow themselves to be pressurized. They have
to use their judgement on when to say ‘this is a far
●● Apply pressure through a threat of the dire
as we can go’. That judgement will be based on their
consequences that will follow if a ‘final’
understanding that the stage when a settlement is
claim is not agreed or a ‘final offer’ is not
possible has been reached.
accepted.
Chapter 74 | Negotiating Skills 647
Keeping cards close to the chest – not giving

Negotiating and bargaining ●●
away what you really want or are prepared
skills to concede until you are ready to do so (in
the market place it is always easier for sellers
The skills and qualities required to be effective in to drive a hard bargain with buyers who
negotiations and bargaining are: have revealed somehow that they covet the
article).
●● Analytical ability – the capacity to assess the ●● Flexible realism – the capacity to make
factors that affect the negotiating stance and realistic moves during the bargaining process
tactics of both parties. to reduce the claim or increase the offer,
●● Empathy – the ability to put oneself in the which will demonstrate that the bargainer is
other party’s shoes. seeking a reasonable settlement and is
●● Interactive skills – the ability to relate well prepared to respond appropriately to
with other people. movements from the other side.
●● Communicating skills – the ability to convey ●● Resilience – the ability to withstand pressure.
information and arguments clearly, positively
and logically.
Key learning points
The process of negotiation Negotiating and bargaining skills

Negotiation is the process of coming to terms and, ●● Analytical ability – the capacity to assess the
in so doing, getting the best deal possible. factors that affect the negotiating stance and
Negotiation involves bargaining, which is reaching tactics of both parties.
the most advantageous position in discussion with
●● Empathy – the ability to put oneself in the other
another party through a process of offer and
party’s shoes.
counter-offer.
Negotiating takes place when two parties meet to ●● Interactive skills – the ability to relate well with
reach an agreement on a proposition, such as a pay other people.
claim, one party has put to the other. Negotiation can
●● Communicating skills – the ability to convey
be convergent when both parties are equally keen to
information and arguments clearly, positively and
reach a win-win agreement (in commercial terms, a
logically.
willing buyer/willing seller arrangement). It can be
divergent when one or both of the parties aim to win ●● Keeping cards close to the chest – not giving away
as much as they can from the other while giving away what you really want or are prepared to concede
as little as possible. until you are ready to do so.
●● Flexible realism – the capacity to make realistic
Stages of negotiation moves during the bargaining process to reduce the
Negotiations are conducted in four stages: initial claim or increase the offer, which will demonstrate
steps, opening, bargaining and closing. that the bargainer is seeking a reasonable
settlement and is prepared to respond
appropriately to movements from the other side.
Reference
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and Dobbins, T (2014) Regulating for mutual International Journal of Human Resource
gains? Non-union employee representation and the Management, 25 (6), pp 81–28
649
75
Change management
tics of the situation and an indication of the direc-
Introduction tion in which action needs to be taken. Possible
courses of action can then be identified and evalu-
Change management is a systematic process for ated and a choice made of the preferred action.
leading and facilitating change – initiating and It is then necessary to decide how to get from
achieving continuous improvement and the smooth here to there. This transitional state is a critical
implementation of new developments and initia- phase in the change process. It is here that the prob-
tives, and taking account of the possibility of their lems of introducing change emerge and have to be
being resisted or at least misunderstood. Change managed. These problems can include resistance to
management processes can play a key part in an or- change, low stability, high levels of stress, misdi-
ganization development programme, especially rected energy, internal political pressures, conflict,
where this involves culture change. and loss of momentum. Hence the need to do every-
To understand how to manage change it is neces- thing possible to anticipate reactions and likely im-
sary to understand the process of change and why it pediments to the introduction of change.
can be resisted. This is covered in the first section of Change can be gradual, proceeding by incremen-
the chapter. The next two sections cover the process tal steps until it reaches the ‘tipping point’, the time
of change management and who is responsible for it. when a trend catches fire, spreading throughout the
organization. It can operate by means of diffusion.
This was defined by Rogers (2003: 5) as ‘the process
Change by which an innovation is communicated through
certain channels over time among the members of a
Change is a constant in all organizations. Heraclitus social system.’ He described it as ‘an information-
observed in 513 BC that ‘Nothing endures but seeking and information-processing activity, where
change.’ Change is about doing things differently. It an individual is motivated to reduce uncertainty
can be the outcome of innovations or plans gener- about the advantages and disadvantages of an in-
ated within the organization in order to increase the novation’ (page 172). He advised that to reduce the
efficiency and effectiveness of its operations. Or it uncertainty of adopting the innovation, individuals
can be imposed on an organization by a ‘VUCA’ en- should be informed about its advantages and disad-
vironment, ie one characterized by volatility, uncer- vantages and thus made aware of its consequences.
tainty, complexity and ambiguity, and by external He classified consequences as desirable versus unde-
events such as the Covid-19 pandemic. sirable (functional or dysfunctional), direct versus
indirect (immediate result or result of the immedi-
ate result) and anticipated versus unanticipated
The process of change (recognized and intended or not).
The process of change involves moving from a pre-
sent state, through a transitional state, to a future
desired state. It starts with an awareness of the need Resistance to change
for change or that change is happening. An analysis People do not necessarily take kindly to change. It is
of the present state and the factors that have created resisted when it is seen as a threat to familiar pat-
it leads to a diagnosis of the distinctive characteris-
terns of behaviour as well as to status and financial Resistance to change for any of these reasons can be
rewards. Resistance to change can be active when a natural reaction. Joan Woodward (1968: 80)
people take action to convey their hostility and stop commented that
or disrupt it. But when they are worried by change,
When we talk about resistance to change we tend
they can respond passively by being unenthusiastic
to imply that management is always rational in
about its implementation and by subtly undermining changing its direction, and that employees are
change initiatives. The CIPD (2021) cited neurosci- stupid, emotional or irrational in not responding
ence research which showed that resistance may be a in the way they should. But if an individual is
deep-rooted threat response, designed to keep us going to be worse off, explicitly or implicitly,
safe. when the proposed changes have been made, any
Specifically, the reasons for resisting change are: resistance is entirely rational in terms of their own
best interest. The interests of the organization
●● The shock of the new – people are suspicious
and the individual do not always coincide.
of anything they perceive will upset their
established routines, methods of working or Resistance to change can be difficult to overcome,
conditions of employment. They do not want even when the change is not detrimental to those con-
to lose the security of what is familiar to cerned. But the attempt must be made. The starting
them. They may not believe statements by point is an analysis of the potential impact of change
management that the change is for their by considering how it will affect people in their jobs.
benefit as well as that of the organization, Involvement in the change process gives people
sometimes with good reason. They may feel the chance to raise and resolve their concerns and
that management has ulterior motives and, make suggestions about the form of the change and
sometimes, the louder the protestations of how it should be introduced. The aim is to get ‘own-
management, the less they will be believed. ership’ – a feeling amongst people that the change is
●● Economic fears – loss of money, threats to something that they are happy to live with because
job security. they have been involved in its planning and intro-
duction – it has become their change.
●● Status fears – the change may result in loss of
A communication strategy to explain the pro-
status, for example, following a
posed change should be prepared and implemented
reorganization.
so that unnecessary fears are allayed. All the avail-
●● Inconvenience – the change will make life able channels should be used, but face-to-face com-
more difficult. munications direct from managers to individuals or
●● Uncertainty – change can be worrying through a team briefing system are best.
because of uncertainty about its likely impact.
●● Symbolic fears – a small change that may
affect some treasured symbol, such as a The process of change
separate office or a reserved parking space,
may symbolize big ones, especially when
management
employees are uncertain about how extensive
the programme of change will be. Change management is about ensuring that change
happens in a considered way with the maximum de-
●● Threat to interpersonal relationships – gree of acceptance and the minimum amount of dis-
anything that disrupts the customary social ruption. The process of change management has
relationships and standards of the group will been explained in a number of change models as
be resented. summarized in the first part of this section. Taking
●● Threat to status or skill – the change is these into account and allowing for some limita-
perceived as reducing the status of tions, these influence the approaches to change
individuals or as de-skilling them. management set out in the next part of the section.
●● Competence fears – concern about the ability As described in the subsequent parts of the section,
to cope with new demands or to acquire new the approach to change may make use of the tools
skills. available for continuous improvement programmes
Chapter 75 | Change Management 651
or ‘nudge’ techniques. Change may be facilitated by ●● Set goals and define the future state or
people known as change agents who are dedicated organizational conditions desired after the
to making it happen. The HR function has an im- change.
portant part to play. ●● Diagnose the present condition in relation to
these goals.
Define the transition state activities and
Change management models ●●
commitments required to meet the future
The aim of change models is to explain the mecha- state.
nisms for change and the factors that affect its suc- ●● Develop strategies and action plans for
cess. The best known change model is that devel- managing this transition in the light of an
oped by Lewin (1951) but a number of other models analysis of the factors likely to affect the
exist, including those produced by Beckhard (1969), introduction of change.
Beer et al (1990), Kotter (1996) and Rogers (2003).
Lewin Beer, Eisenstat and Spector

Lewin (1951) stated that the basic mechanisms for Beer et al (1990) prescribed six steps to change that
managing change are: concentrate on what they call ‘task alignment’ – re-
organizing employees’ roles, responsibilities and re-
●● Unfreezing – altering the present stable lationships to solve specific business problems in
equilibrium that supports existing behaviours small units where goals and tasks can be clearly de-
and attitudes. This process must take account fined. The aim of following the overlapping steps is
of the inherent threats change presents to to build a self-reinforcing cycle of commitment, co-
people and the need to motivate those ordination and competence:
affected to attain the natural state of
equilibrium by accepting change. 1 Mobilize commitment to change through the
joint analysis of problems.
●● Changing – developing new responses based
on new information. 2 Develop a shared vision of how to organize
and manage to achieve goals such as
●● Refreezing – stabilizing, supporting and
competitiveness.
reinforcing the new changed conditions.
3 Foster consensus for the new vision,
Lewin also suggested the following methodology competence to enact it, and cohesion to
for analysing change, which he called ‘field force move it along.
analysis’:
4 Spread revitalization to all departments
●● Analyse the restraining or driving forces that without pushing it from the top – don’t force
will affect the transition to the future the issue: let each department find its own
state – these restraining forces will include way to the new organization.
the reactions of those who see change as 5 Institutionalize revitalization through formal
unnecessary or as constituting a threat. policies, systems and structures.
●● Assess which of the driving or restraining 6 Monitor and adjust strategies in response to
forces are critical. problems in the revitalization process.
●● Take steps both to increase the critical
driving forces and to decrease the critical
restraining forces. Kotter’s 8-Step Change Model
The eight steps in the model produced by John
Kotter (1996) are:
Beckhard
1 Establish a sense of urgency – examine
Beckhard (1969) proposed that a change pro-
market and competitive realities. Identify
gramme should incorporate the following processes:
crises and opportunities.
2 Form a powerful guiding coalition – and highly political process. It is political because
assemble a group with enough power to lead there are usually winners and losers. People gain or
the change effort and encourage it to work win power, get promoted or side-lined, see their
together as a team. budgets rise or fall, gain or lose influence. This is
3 Create a vision – people must have a reason, particularly true of structural change, but also arises
and a really good one at that, for doing from cultural change programmes which fit some
something different. interests more than others. Situations of this kind
create conflict and often stress.
4 Communicate the vision – use every vehicle
When planning change people think that it will
possible to communicate the new vision and
be a logical and linear progression from A to B. It is
strategies and teach new behaviours by the
not like that at all. As described by Pettigrew and
example of the guiding coalition.
Whipp (1991: 27), the implementation of change is
5 Empower employees – leaders must clear the an ‘iterative, cumulative and reformulation-in-use
way for employees to develop new ideas and process’. And Caldwell (2003: 132) contended that
approaches without being stymied by the old ‘It is assumed within most OD models that change
ways. can be planned in a “rational” or linear manner, and
6 Create short-term wins – plan and implement that the change agent can facilitate this group pro-
visible performance improvements. cess, although there is little evidence to support this
7 Consolidate improvements – use increased illusion of “manageability”.’
credibility to change systems, structures and Hamel and Zarina (2014) criticized the popular
policies that don’t fit the vision. Lewin notion of unfreezing and refreezing. They
pointed out that in a world that is relentlessly evolv-
8 Institutionalize new approaches – anchor the
ing, anything which is frozen soon becomes irrele-
changes in corporate culture.
vant. They proposed that, instead, what is needed is
constant experimentation with new operating, busi-
ness and management models, ie continuous im-
Rogers’ model of the innovation/ provement. There should be less emphasis on project
decision process of change management and more on building ‘platforms for
Rogers (2003) suggested that the innovation-deci- change’ with self-organizing communities that iden-
sion process involves five steps: tify the scope for new initiatives and through experi-
ment and testing see that they work.
1 Knowledge – person becomes aware of an However, these models do provide a number of
innovation and has some idea of how it valuable insights into the process of managing
functions. change.
2 Persuasion – person forms a favourable or
unfavourable attitude toward the innovation.
3 Decision – person engages in activities that The approach to managing change
lead to a choice to adopt or reject the Change management involves such activities as
innovation. identifying the need to change, consulting people on
4 Implementation – person puts an innovation what should be done about it, involving them in
into use. planning and implementing the change, communi-
5 Confirmation – person evaluates the results cating the details of the change, spelling out how it
of an innovation-decision already made. will work, why it is necessary and how they will be
affected by it, and ensuring that the people, mecha-
nisms and infrastructure needed to implement the
Critical evaluation of change change possible are available. This is the hard bit
and therefore it is considered in detail in the last
models part of this section.
It can be argued that the models of change manage- The choice of approach will be affected by the
ment are flawed because they assume a rational ap- nature and complexity of the change. This could be
proach, whereas in practice change is an emotional
a specific innovation or structural change, a continu- ●● Directive – the imposition of change in crisis
ous improvement programme, a culture change pro- situations or when other methods have
gramme dealing with a particular aspect of culture failed. This is done by the exercise of
such as team working or a more radical ‘transforma- managerial power without consultation.
tional change’ programme aiming to introduce a ●● Bargained – this approach recognizes that
fundamentally different approach to the manage- power is shared between the employer and
ment of the organization. Other factors are how the the employed and change requires
change will impact on employees and how they are negotiation, compromise and agreement
likely to react to it, and the context in which the before being implemented.
change will take place in the shape of external pres-
●● ‘Hearts and minds’ – an all-embracing thrust
sures and internal challenges.
to change the attitudes, values and beliefs of
the whole workforce. This ‘normative’
A suggested approach approach (ie one that starts from a definition
The following suggestions on the approach to man- of what management thinks is right or
aging change were made by Nadler and Tushman ‘normal’) seeks ‘commitment’ and ‘shared
(1980): vision’ but does not necessarily include
involvement or participation.
●● Motivate in order to achieve changes in
behaviour by individuals. ●● Analytical – a theoretical approach to the
change process using models of change such
●● Manage the transition by making as those described above. It proceeds
organizational arrangements designed to sequentially from the analysis and diagnosis
ensure that control is maintained during and of the situation, through the setting of
after the transition and by developing and objectives, the design of the change process,
communicating a clear image of the future. the evaluation of the results and, finally, the
●● Shape the political dynamics of change so determination of the objectives for the next
that power centres develop that support the stage in the change process. This is the
change rather than block it. rational and logical approach much favoured
●● Build in stability of structures and processes by consultants – external and internal. But
to serve as anchors for people to hold on change seldom proceeds as smoothly as this
to – organizations and individuals can only model would suggest. Emotions, power
stand so much uncertainty and turbulence, politics and external pressures mean that the
hence the need for an incremental approach. rational approach, although it might be the
‘Small wins’ are important. They help to right way to start, is difficult to sustain.
build support and make it easier for people ●● Action-based – this recognizes that the way
to accept the change. Nudge theory as managers behave in practice bears little
described later in this chapter provides resemblance to the analytical, theoretical
support for this approach. model. The distinction between managerial
thought and managerial action blurs in
practice to the point of invisibility. What
Ways of managing change managers think is what they do. Real life
Thurley (1979) produced the following analysis of therefore often results in a ‘ready, aim, fire’
ways in which change is managed in practice. His approach to change management. This
aim was to describe rather than prescribe. He was typical approach to change starts with a
not trying to model a universal way of managing broad belief that some sort of problem exists,
change, perhaps because he doubted the existence although it may not be well defined. The
of such a model. But his description of the different identification of possible solutions, often on
approaches to change usefully sets out the alterna- a trial or error basis, leads to a clarification
tive approaches that are available. of the nature of the problem and a shared
understanding of a possible optimal solution,
or at least a framework within which
solutions can be discovered.
Change platforms iteration, and the outcome of each iteration

is then the starting point of the next
Thurley’s perceptive analysis supports the belief
iteration. It is an innovation technique that
that while the change models may be persuasive,
provides for progressive improvement
they do not represent the reality of organizational
taking into account previous experience. In
life. The notion of ‘change platforms’ offered by
change management, the use of iteration
Hamel and Zarina (2014) is more convincing.
ensures that cumulative use is made of the
Change platforms replace change programmes or-
evidence generated in the development
dained and implemented from the top. They allow
process.
anyone to initiate change, recruit confederates, sug-
gest solutions and launch experiments. This recog-
nizes that change is a constant in which everyone is
involved. It is in line with the philosophy of con- Nudge techniques
tinuous improvement.
Nudge techniques can be used to persuade people
to welcome or at least accept change. They are
based on nudge theory, as described in Chapter
Continuous improvement 17, which proposes that it is easier for people to
Continuous improvement is the ongoing improve- take a series of small steps than one large one.
ment of products, services or processes through in- ‘Nudging’ means that they are not forced to ac-
cremental and breakthrough developments. It cept huge changes or make big decisions all at
therefore involves change and various tools as de- once. They can more easily absorb what is hap-
scribed below are available to help in the initiation pening. It is about steering people in particular
and management of this change: directions but also allowing them scope to go
their own way.
●● ‘Test and learn’ is a method of innovation
This is what Thaler and Sunstein (2009: 6), who
that involves setting up experiments,
originated the notion, had to say about it:
observing the results of those experiments
and making decisions based on that data. It A nudge, as we will use the term, is any aspect
avoids basing decisions entirely on past of the choice architecture that alters people’s
experience and gut feelings. behaviour in a predictable way without forbidding
any options or changing their economic
●● Customer journey mapping (also called user
perspective. To count as a mere nudge, the
journey mapping or user research) is used in
intervention must be cheap and easy to avoid.
marketing to create a visual story of the
Nudges are not mandatory. Putting fruit out at
interactions of customers with a company’s eye level (hoping that people will choose fruit over
brand in order to see the business from the unhealthy alternatives) counts as a nudge. Banning
customer’s point of view. It is used in junk food does not.
continuous improvement to investigate likely
reactions to an innovation. Incidentally, it is
a technique that can be used when
researching the ‘employee experience’ (see Implementing change
Chapter 29). It is generally not too difficult to plan change. The
●● Prototyping is an experimental process real problem is to implement it. Lawler and
which innovators use to help in the Mohrman (2003: 24) noted that ‘Implementation
conversion of ideas into tangible forms. failures usually involve the failure to acknowledge
Prototypes of varying degrees of fidelity are and build the needed skills and organizational capa-
produced to test on users, in order to bilities, to gain support of the workforce, and to
validate and refine the concept. support the organizational changes and learning
●● Iteration is the repetition of a process in required to behave in new ways.’
order to generate a sequence of outcomes.
Each repetition of the process is a single
Research by Carnall (1991) in 93 organizations individual or team responsible for initiating, sponsor-
identified the following explanations for failures to ing, managing and implementing a specific change
implement change effectively: initiative or complete change programme’. As de-
scribed by Balugon and Hope-Hailey (2004), the role
●● major problems that had not been identified
of the change agent is to lead change. Alfes et al
beforehand emerged during implementation;
(2010) noted that change agents establish what is re-
●● coordination of implementation activities quired, involve people in planning and managing
was not effective enough; change, advise on how change should be imple-
●● competing activities and other crises mented and communicate to people the implications
distracted management from implementing of change.
the change decision; It is sometimes assumed that only people from
●● the capabilities of the employees involved outside the organization can take on the change
were not sufficient; agent role because they are independent and do not
‘carry any baggage’. They can be useful, but people
●● training and instruction to develop new skills
from within the firm who are respected and credible
was inadequate.
are better. This is often the role of HR specialists,
Implementation is likely to be more effective if the but the use of line managers adds extra value.
proposed change is practical, uncomplicated, can be
put into effect without too much trouble and, im-
portantly, there has been proper consultation with The role of HR
both managers and employees generally during the If HR is concerned – as it should be – in playing a
course of its development. Implementation may major strategic role in the achievement of continu-
well be difficult if the change is detrimental to the ous improvement and in the HR processes that sup-
interests of those affected by it, which means that port that improvement, then it has to get involved
every attempt should be made to justify it and miti- in leading and facilitating change. Caldwell (2001)
gate its impact. The aims should be to (1) keep it stated that the change agent roles that can be car-
simple; (2) spell out how and why the change is to ried out by HR professionals are those of change
be implemented as well as what is to be imple- champions, change adapters, change consultants
mented; (3) ensure that support is given to line and change synergists.
managers in the shape of advice, guidance and Ulrich (1997: 7) observed that HR professionals
training; and (4) ‘hold the gains’ provide for the should be ‘as explicit about culture change as they
benefits of the change to be maintained. are today about the requirements for a successful
training program or hiring strategy.’ He later em-
phasized that, ‘HR should become an agent of con-
The responsibility for tinuous transformation, shaping processes and a
change culture that together improve an organization’s ca-
pacity for change’ (1998: 125).
In its profession map, the CIPD (2022) stated
Change is often initiated by senior management but
that
the responsibility for implementing it mainly rests
with line managers. Change can be facilitated by People professionals are involved in all stages of
change agents and HR professionals. change. We need business knowledge: how to build
a case for change, develop costings and measures,
and plan and deliver projects. But we also need an
The role of change agents understanding of how to engage people for that
change to be effective. How to choose the right
The change process will take place more smoothly approach that supports a change culture; how to
with the help of credible internal or external change involve the right people and listen to their views;
agents – people who help to manage change by pro- how to continuously innovate and deliver change
viding advice and support on its introduction and at pace, and knowing what else needs to be in
management. A change agent was defined by place to enable that change for the long-term.
Caldwell (2003: 139–40) as ‘an internal or external
Ulrich (1997) emphasized that one of the key roles 3 Understanding is necessary of the culture of
of HR professionals is to act as change agents, but the organization and the levers for change
it is a difficult role to play. As Alfes et al (2010: 111) that are most likely to be effective in that
observed on the basis of their research: ‘The role [of culture. Account must be taken of the
HR] is generally constrained and reactive.’ They political pressures that may affect the
also noted that ‘HR professionals may find their achievement of change.
roles circumscribed by expectations of their role, 4 Evidence should be provided of the value of
the nature of the change process, capability and ca- change – how the organization and
pacity’ (page 125). individuals will benefit from it.
5 It is important to build a platform for change –
a working environment that supports it.
Guidelines for change 6 Resistance to change is inevitable if the
management individuals concerned feel that they are going
to be worse off – implicitly or explicitly. The
inept management of change will produce
1 In an age of global competition,
that reaction.
technological innovation, pandemics,
turbulence, discontinuity, even chaos, change 7 People support what they help to create.
is inevitable and necessary. The organization Commitment to change is improved if those
must do all it can to explain why change is affected by change are allowed to participate
essential and how it will affect everyone. as fully as possible in planning and
Moreover, every effort must be made to implementing it. The aim should be to get
protect the interests of those affected by people to ‘own’ the change as something they
change. want and will be glad to live with.
2 Hard evidence and data on the need for 8 Change may involve new skills and may be
change are the most powerful tools for its resisted because people are nervous about
achievement, but establishing the need for acquiring and using them. It is essential
change is easier than satisfying it. therefore to include training in new skills as
part of a change programme.
Key learning points
Change management defined Resistance to change

Change management is a systematic process for People do not necessarily take kindly to change. It is
leading and facilitating change – initiating and resisted when it is seen as a threat to familiar patterns
achieving continuous improvement and the smooth of behaviour as well as to status and financial
implementation of new developments and initiatives, rewards.
and taking account of the possibility of their being
resisted or at least misunderstood. Reasons for resistance to change
The shock of the new, economic fears, inconvenience,
The process of change uncertainty, symbolic fears, threat to interpersonal
The process of change involves moving from a present relationships, threat to status or skills, competence
state, through a transitional state, to a future desired fears.
state.
The approach to managing change recognizes that change is a constant in which

everyone is involved.
Change management involves such activities as
identifying the need to change, consulting people on
Nudge techniques
what should be done about it, involving them in
planning and implementing the change, Nudge techniques can be used to persuade people to
communicating the details of the change, spelling out welcome or at least accept change. They are based on
how it will work, why it is necessary and how they will the proposition that it is easier for them to take a
be affected by it, and ensuring that the people, series of small steps than one large one.
mechanisms and infrastructure needed to implement
the change possible are available. Continuous improvement
Continuous improvement is the ongoing improvement
Change models of products, services or processes through
The main change models are those produced by incremental and breakthrough developments. It
Lewin, Beckhard, Beer et al, Kotter and Rogers. therefore involves change.
Change platforms The responsibility for change

Change platforms replace change programmes Change is often initiated by senior management but
ordained and implemented from the top. They allow the responsibility for implementing it mainly rests with
anyone to initiate change, recruit confederates, line managers. Change can be facilitated by change
suggest solutions and launch experiments. This agents and HR professionals.
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76
Influencing skills
correct. More often, it is a battle to decide
Introduction who is more stubborn.
HR professionals are in the business of influencing 3 Find out what the other party wants. The key
people. They have to persuade senior management, to all persuasion is to see your proposition
line managers and employees generally to accept from the other person’s point of view. Find
their advice or proposals. Influencing involves case out how they look at things. Establish what
presentation and submitting a business case. HR they need and want.
professionals can often be concerned with more 4 Accentuate the benefits. Present your case in
subtle forms of influencing people by acting as fa- a way that highlights the benefits to the other
cilitators and leading discussions in focus groups or party or at least reduces any objections or
meetings. fears.
5 Predict the other person’s response.
Everything we say should be focused on that
Persuading people likely response. Anticipate objections by
asking yourself how the other party might
Persuasion is akin to selling. You may feel that good react negatively to your proposition and
ideas should sell themselves, but life is not like that. thinking up ways of responding to them.
People resist change and anything new is usually 6 Create the other person’s next move. It is not
treated with suspicion. Here are 10 rules for effec- a question of deciding what we want to do
tive persuasion: but what we want the other person to do.
1 Define your objective and get the facts. If you 7 Convince people by reference to their own
are persuading someone to agree to a perceptions. People decide what to do on the
proposal, first decide what you want to basis of their own perceptions, not yours.
achieve and why. Assemble all the facts you 8 Prepare a simple and attractive proposition.
need to support your case. Eliminate Make it as straightforward as possible.
emotional arguments so that you and others Present the case ‘sunny side up’, emphasizing
can judge the proposition on the facts alone. its benefits. Break the problem into
2 Define the problem. If there is a problem to manageable pieces and deal with them one
resolve and you are trying to persuade step at a time.
someone to accept your views on what 9 Make the other person a party to your ideas.
should be done about it, first decide whether Get them to contribute. Find some common
the problem is a misunderstanding (a failure ground so that you can start with agreement.
to understand each other accurately) or a Don’t try to defeat them in an argument –
true disagreement (a failure to agree even you will only antagonize them.
when both parties understand one another).
It is not necessarily possible to resolve a true 10 Clinch and take action. Choose the right
disagreement by understanding each other moment to clinch the proposal – don’t
better. People generally believe that an prolong the discussion and risk losing it. But
argument is a battle to understand who is follow up promptly.
Case presentation Making a business case

Persuasion frequently means making a case for You may be asked specifically to produce a business
what you think should be done. You have to con- case. This will set out the reasons why a proposed
vince people to believe in your views and accept course of action will benefit the business, how it will
your recommendations. To do this, you must have a provide that benefit and how much it will cost. A
clear idea of what you want, and you have to show business case is a particular form of persuasion and
that you believe in it yourself. Above all, the effec- all the points made above apply to its preparation
tiveness of your presentation will depend upon the and presentation. But there are some special fea-
care with which you have prepared it. tures about business cases, as described below.
Thorough preparation is vital. You must think A business case is typically made either in added-
through not only what should be done and why, but value terms (ie the income generated by the proposal
also how people will react. Only then can you de- will significantly exceed the cost of implementing it),
cide how to make your case: stressing the benefits or on the basis of the return on investment or ROI
without underestimating the costs, and anticipating (ie the cost of the investment, say in training, is justi-
objections. The four steps you should take are: fied by the financial returns in such areas as in-
creased productivity). Clearly, a business case is
1 Show that your proposal is based on a
more convincing when it is accompanied by realistic
thorough analysis of the facts and that the
projections of added value or return on investment.
alternatives were properly evaluated before
When people make out a case for capital expendi-
the conclusion was reached. If you have
ture they analyse the cash flows associated with the
made assumptions, you must demonstrate
investment and calculate the benefits – in financial
that these are reasonable on the basis of
terms as far as possible – that are likely to arise from
relevant experience and justifiable
them. The objective is to demonstrate that in return
projections, which allow for the unexpected.
for paying out a given amount of cash today, a larger
Bear in mind that a proposal is only as
amount will be received over a period of time.
strong as its weakest assumption.
It can be more difficult to make out a business
2 Spell out the benefits – to the company and/ case for an HRM innovation in financial terms. The
or the individuals to whom the case is being costs can and should be calculated but the benefits
made. Wherever possible, express benefits in may have to be expressed in qualitative terms. A
financial terms. Abstract benefits, such as business case will be enhanced if:
customer satisfaction or workers’ morale, are
difficult to sell. But don’t produce ‘funny ●● data is available on the impact the proposal
numbers’ – financial justification that will is likely to make on key areas of the
not stand up to examination. organization’s operations, eg customer
service levels, quality, shareholder value,
3 Reveal costs. Don’t try to disguise them in
productivity, income generation, innovation,
any way. And be realistic. Your proposition
skills development, talent management;
will be destroyed if anyone can show that
you have underestimated the costs. ●● it can be shown that the proposal will
increase the business’s competitive edge,
4 Remember, senior management decision
for example enlarging the skill base or
makers want to know in precise terms what
multi-skilling to ensure that it can achieve
they will get for their money. Most are likely
competitive advantage through innovation
to be cautious, being unwilling and often
and/or reducing time-to-market;
unable to take much risk. For this reason, it
can be difficult to make a case for ●● there is proof that the innovation has already
experiments or pilot schemes unless the worked well within the organization
decision maker can see what the benefits and (perhaps as a pilot scheme) or represents
the ultimate bill will be. ‘good practice’ that is likely to be
transferable to the organization;
Chapter 76 | Influencing Skills 661
●● it can be implemented without too much satisfaction, to gain higher rewards and to
trouble, for example not taking up a lot of progress within the organization;
managers’ time, or not meeting with strong ●● operational flexibility would be improved by
opposition from line managers, employees extending the range of skills possessed by
or trade unions (it is as well to check the employees (multi-skilling).
likely reaction before launching a
proposal);
●● it will add to the reputation of the company; Facilitating
●● it will enhance the ‘employer brand’ of the
company by making it a ‘best place to work’; Facilitating is the process of helping a group reach
conclusions in the shape of ideas and solutions.
●● the proposal is brief, to the point and well
Facilitators do not ‘chair’ a meeting in the sense of
argued – it should take no more than five
controlling the discussion and pressurizing the
minutes to present orally and should be
group to agree to a course of action. The group is
summarized in writing on the proverbial one
there to make up its own mind and the facilitator
side of one sheet of paper.
helps it to do so. The facilitator is exerting influ-
Making a business case is obviously easier where ence, but indirectly.
management is preconditioned to agree to the prop- Facilitators ensure that everyone has their say
osition. For example, it is not hard to convince top and that they are listened to. They step in quickly to
managers that performance-related pay is a good defuse unproductive arguments. They see that the
thing – they may well be receiving bonus payments group defines and understands its objectives and
themselves and believe, rightly or wrongly, that be- any methodology they might use. They summarize
cause it motivates them it will motivate everyone from time to time the progress made in achieving
else. Talent management is another process where the objectives, without bringing their own views to
top management needs little persuasion that things bear. Facilitators are there to ensure that the group
need to be done to enhance and preserve the talent makes progress and does not get stuck in fruitless or
flow, although they will have to be convinced that, disruptive argument. They encourage the group
in practice, innovations will achieve that aim. rather than drive it forward.
Performance management may be slightly more dif-
ficult because it is hard to demonstrate that it can
produce measurable improvements in performance, Coordinating discussions
but senior managers are predisposed towards an
approach that at least promises to improve the level Coordinating discussions is a matter of getting active
of performance. participation and then ensuring that the discussion
The toughest area for justification in added-value informs people of the issues related to the subject
terms can be expenditure on learning and develop- and leads to a conclusion that satisfies the partici-
ment. The business case for L&D should demonstrate pants. HR practitioners lead discussions when they
how learning, training and development programmes are taking part in L&D activities. Importantly, dis-
will meet business needs. An L&D initiative can be cussion is also a means of persuading people to do or
supported by pointing out that one or more of the accept something by getting them to participate in
following benefits would accrue: analysing the issues and reaching a joint and accept-
●● individual, team and corporate performance able conclusion.
would improve in terms of output, quality, The following techniques can be used to get ac-
speed and overall productivity; tive participation and to coordinate the process:
●● high-quality employees would be attracted ●● Ask for contributions by direct questions.

by offering them learning and development ●● Use open-ended questions that will stimulate
opportunities, increasing their levels of thought.
competence and enhancing their skills, thus ●● Check understanding; make sure that
enabling them to obtain more job everyone is following the argument.
●● Encourage participation by providing time. If necessary, ‘reflect’ opinions expressed

support rather than criticism. by individuals back to the group to make
●● Prevent domination by individual members sure they find the answer for themselves.
of the group by bringing in other people and The leader is there to help the group reach a
asking cross-reference questions. conclusion, not to do it for them.
●● Avoid dominating the group yourself. The ●● Maintain control – ensure that the discussion
leader’s job is to guide the discussion, is progressing along the right lines towards a
maintain control and summarize from time to firm conclusion.
Key learning points
Influencing people idea of what you want, and you have to show that you
believe in it yourself.
HR professionals are often involved in influencing
other’s 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
Persuasion frequently means making a case for what active participation and then ensuring that the
you think should be done. You have to convince discussion informs people of the issues related to the
people to believe in your views and accept your subject and leads to a conclusion that satisfies the
recommendations. To do this, you must have a clear participants.
663
77
Leadership
Trait theory, which explains leadership by refer-
Introduction ence to the qualities leaders have, is the basic and to
many people the most familiar theory. But it has its
HR professionals need to know about leadership limitations, and pragmatic research was carried out
for four reasons: (1) they have to exercise leadership to identify what types of behaviour characterized
in persuading others to do things; (2) they are con- leadership rather than focusing on the personalities
cerned with the development of leaders in the or- of leaders. The key leadership behaviour studies
ganization; (3) at a more senior level they have to conducted by the Universities of Michigan and Ohio
lead teams; and (4) they are involved in leading State led to the identification of two dimensions of
change. The purpose of this chapter is to meet this leadership behaviour, respectively: employee as dis-
need by analysing the process of leadership and the tinct from job-centred behaviour and the processes
skills involved. of consideration and initiating structure.
The next step in the development of leadership
theory was the recognition by researchers that what
The meaning of leadership leaders did and how they did it was dependent or
contingent on the situation they were in (Fiedler,
To lead people is to influence, guide and inspire. 1967). Different traits became important; different
Leadership can be described as the ability to per- behaviours or styles of leadership had to be used to
suade others willingly to behave differently. It is the achieve effectiveness in different situations. These
process of getting people to do their best to achieve studies resulted in the theories of contingent and
a desired result. It involves developing and commu- situational leadership.
nicating a vision for the future, motivating people Next, traits theory was in effect revived by
and securing their engagement. As Stogdill (1950: 3) Goleman (2001) in the notion of emotional intelli-
explained, leadership is an ‘influencing process gence as a necessary attribute of leaders.
aimed at goal achievement.’
The problem with leadership

Leadership theories theories
Leadership is a complicated notion and a number Despite of all the research and theorizing, the con-
of theories have been produced to explain it. These cept of leadership is still problematic. As Meindl
theories, as summarized below, have developed et al (1985: 78) commented: ‘It has become appar-
over the years and explore a number of different ent that, after years of trying, we have been unable
facets of leadership and leadership behaviour. In to generate an understanding of leadership that is
many ways they complement one another and to- both intellectually compelling and emotionally sat-
gether they help to gain a comprehensive under- isfying. The concept of leadership remains elusive
standing of what the process of leadership is about. and enigmatic.’
These problems may arise because, as a notion, team spirit. As can be seen in Figure 77.1, he mod-
leadership is difficult to pin down. There are many elled these demands as three interlocking circles.
different types of situations in which leaders oper- This model indicates that the task, individual
ate, many different types of leaders and many dif- and group needs are interdependent. Satisfying task
ferent leadership styles. Producing one theory that needs will also satisfy group and individual needs.
covers all these variables is difficult if not impossi- Task needs, however, cannot be met unless attention
ble. All that can be done is to draw on the various is paid to individual and group needs, and looking
theories that exist to explain different facets of lead- after individual needs will also contribute to satisfy-
ership without necessarily relying on any one of ing group needs, and vice versa. There is a risk of
them for a comprehensive explanation of what is becoming so task-oriented that leaders ignore indi-
involved. vidual and group or team needs. It is just as danger-
Perhaps leadership is best defined by considering ous to be too people-oriented, focusing on meeting
what leaders do and how they do it (the different individual or group needs at the expense of the task.
styles they adopt), examining what sort of leaders The best leaders are those who keep these three
carry out these activities and practise these styles needs satisfied and in balance, according to the de-
and looking at any empirical evidence available on mands of the situation.
what makes them good leaders. These are all cov-
ered in the next four sections of this chapter.
Leadership styles
What leaders do Leadership style is the approach managers use in
exercising leadership when they are relating to their
The most convincing analysis of what leaders do team members. It is sometimes called ‘management
was produced some time ago by John Adair (1973). style’. There are many styles of leadership and no
He explained that the three essential roles of leaders one style is necessarily better than the other in any
are to: situation. To greater or lesser degrees, leaders can be
autocratic or democratic, controlling or enabling,
●● Define the task – they make it quite clear
task-oriented or people-centred. Goleman (2000)
what the group is expected to do.
identified the following six styles and indicated
●● Achieve the task – that is why the group when they might be used:
exists. Leaders ensure that the group’s
purpose is fulfilled. If it is not, the result is
frustration, disharmony, criticism and,
eventually perhaps, disintegration of the
F I G U R E 7 7. 1 J
ohn Adair’s model of
group. leadership
●● Maintain effective relationships – between
themselves and the members of the group,
and between the people within the group.
These relationships are effective if they Task
contribute to achieving the task. They can be needs
divided into those concerned with the team
and its morale and sense of common
purpose, and those concerned with
individuals and how they are motivated.
Adair suggested that demands on leaders are best ex-
pressed as three areas of need which they must sat- Individual Group
isfy. These are: (1) task needs: to get the job done; (2) needs maintenance
needs
individual needs: to harmonize the needs of the indi-
vidual with the needs of the task and the group; and
(3) group maintenance needs: to build and maintain
Chapter 77 | Leadership 665
1 Coercive – demands compliance (use in a described below, leaders can be charismatic, vision-
crisis or with problem people). ary, transformational, transactional or ‘authentic’.
2 Authoritative – mobilizes people (use when However, typical leaders may exhibit any or even all
new vision and direction is needed). of these characteristics either consistently or in re-
sponse to the situation in which they find themselves.
3 Affiliative – creates harmony (use to heal
Many studies focus on the importance of top
wounds and to motivate people under stress).
managers as ‘charismatic’ or ‘visionary’ leaders. But
4 Democratic – forges consensus (use to build leadership needs to be spread throughout the or-
agreement and get contributions). ganization (distributed leadership) amongst people
5 Pacesetting – sets high standards (use to get working together by processes of influence and in-
fast results from a motivated team). terdependencie. Huczynski and Buchanan (2007:
6 Coaching – develops people (to improve 720) commented that ‘Leadership is a widely dis-
performance and develop strengths). tributed phenomenon. Leadership functions are
best carried out by those who have the interest,
In line with contingency and situational theories it knowledge, skills and motivation to perform them
should not be assumed that any one style is right in effectively.’ The possibility that people who become
any circumstances. There is no such thing as an managers may not have these qualities to a desira-
ideal leadership style. The factors affecting the de- ble extent creates a need for systematic leadership
gree to which a style is appropriate will be the type development programmes.
of organization, the nature of the task, the charac-
teristics of the individuals in the leader’s team (the
followers) and of the group as a whole and, impor- Charismatic leaders
tantly, the personality of the leader.
Effective leaders are capable of flexing their style Charismatic leaders rely on their personality, their
to meet the demands of the situation. Normally inspirational qualities and their ‘aura’ to get people
democratic leaders may have to shift into more of a to follow them. Burns (1978), who coined the term,
directive mode when faced with a crisis, but they suggested that charismatic leaders were set apart
make clear what they are doing and why. Poor lead- from ordinary people and treated as being endowed
ers change their style arbitrarily so that their team with exceptional powers or qualities that inspire
members are confused and do not know what to followers.
expect next. Conger and Kanungo (1998) described charis-
Good leaders may also flex their style when deal- matic leadership as a process of formulating an in-
ing with individual team members according to their spiring vision of the future and then demonstrating
characteristics. Some people need more positive di- the importance of the articulated vision. This may
rections than others. Others respond best if they are involve unconventional behaviour that conveys im-
involved in decision making with their boss. But portant goals that are part of the vision and demon-
there is a limit to the degree of flexibility that should strates means to achieve these goals. Charismatic
be used. It is unwise to differentiate too much be- leaders also take risks and motivate followers by
tween the ways in which individuals are treated or setting a personal example. In this sense, charis-
to be inconsistent in one’s approach. matic leaders operate as visionary and transforma-
tional leaders, as described below.
But Carey (1992: 232) emphasized that, ‘when
Types of leaders the gifts of charisma, inspiration, consideration and
intellectual strength are abused for the self-interest
of the leader, the effect on followers ceases to be lib-
To understand the process of leadership (and, inci-
erating 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
that ‘the ability to inspire trust, not charisma, is
styles that leaders can adopt but also to classify the
what enables leaders to recruit others to a cause.’
different types of leaders that apply those styles. As
Visionary leaders recognizing the need for revitalization, creating a

new vision and institutionalizing change.
Visionary leaders are inspired by a clear vision of an Yukl (1999) advised that transformational leaders
exciting future and inspire their followers by suc- should:
cessfully conveying that vision to them. Bennis and
Nanus (1985: 89) defined a vision as ‘a target that ●● develop a challenging and attractive vision
beckons’. Their notion of visionary leadership was together with employees;
explained as follows: ●● tie the vision to a strategy for its
achievement;
To choose a direction, a leader must first have
developed a mental image of a possible and ●● develop the vision, specify and translate it to
desirable future state of the organization. This actions;
image, which we call a vision, may be as vague ●● express confidence, decisiveness and
as a dream or as precise as a goal or mission optimism about the vision and its
statement. The critical point is that a vision implementation;
articulates a view of a realistic, credible and
●● realize the vision through small planned
attractive future for the organization, a condition
steps and small successes on the path to its
that is different in some important ways from one
full implementation.
that now exists
Kouzes and Posner (2003: 112) claimed that ‘One
of the most important practices of leadership is giv- Transactional leaders
ing life and work a sense of meaning and purpose
Transactional leaders trade money, jobs and secu-
by offering an exciting vision.’
rity for compliance. As Burns (1978: 19) noted,
‘Such leadership occurs when a person takes the
initiative in making contact with others for the pur-
Transformational leaders pose of an exchange of valued things.’ Tavanti
Transformational leaders are able, by their force of (2008: 169) stated that ‘Transactional leaders ex-
personality, to make significant changes in the be- hibit specific leadership skills usually associated
haviour of their followers in order to achieve the with the ability to obtain results, to control through
leader’s vision or goals. As described by Burns structures and processes, to solve problems, to plan
(1978), what he called ‘transforming leadership’ in- and organize, and work within the structures and
volves motivating people to strive for higher goals. boundaries of the organization.’ Put like this, a
He believed that good leadership implies a moral transactional leader conforms to the stereotype of
responsibility to respond to the values and needs of the manager rather than the leader. Bass (1985) ar-
people in a way that is conducive to the highest gued that leaders can display both transformational
form of human relations. As he put it: ‘The ultimate and transactional characteristics. Tavanti also ob-
test of moral leadership is its capacity to transcend served that transactional leadership behaviour is
the claims of the multiplicity of everyday needs, used to one degree or another by most leaders, but
wants and expectations’ (page 46). that ‘Particular instances of transactional leadership
Another researcher, Bass (1985), extended the are motivated simply by people’s wants and prefer-
work of Burns by explaining the psychological ences. This form of leadership uncritically responds
mechanisms that underlie transforming leadership. to our preferences, that is, even when they are
He pointed out that the extent to which leaders are grounded in base motivations or an undeveloped
transformational is measured by their influence on moral sense’ (page 171).
their followers in terms of the degree to which they
feel trust, admiration, loyalty and respect for the
leader and are willing to work harder than origi- Authentic leaders
nally expected. According to Bass, this occurs be-
The concept of the authentic leader was originally
cause the leader transforms and motivates through
defined by George (2003: 12) as follows:
an inspiring mission and vision and gives them an
identity. Tichy and Devanna (1986) concluded that Authentic leaders genuinely desire to serve
the transformational leader has three main roles: others through their leadership. They are more
interested in empowering the people they lead be charismatic, visionary or transformational lead-
to make a difference than they are in power, ers because even if they have the latent qualities re-
money or prestige for themselves. They lead with quired, their situation does not seem to require or
purpose, meaning and values. They build enduring encourage any of these approaches.
relationships with them. Others follow them However, the better ones will rely on their know-
because they know where they stand. They are how (authority goes to the person who knows),
consistent and self-disciplined. their quiet confidence and their cool, analytical ap-
Authenticity was described by Harter (2002: 382) proach to dealing with problems. Any newly ap-
as ‘owning one’s personal experiences, be they pointed leader or individual who is progressing to a
thoughts, emotions, needs, preferences, or beliefs, higher level of leadership will benefit from a leader-
processes captured by the injunction to know one- ship development programme (see Chapter 40),
self and behaving in accordance with the true self’. which will help them to understand and apply the
Authentic leadership is based on a positive moral skills they need.
perspective characterized by high ethical standards
that guide decision making and behaviour (May et
al, 2003). As Avolio et al (2004) explained, authen- The qualities of a good
tic leaders act in accordance with deep personal val-
ues and convictions to build credibility and win the
leader
respect and trust of followers. By encouraging di-
verse viewpoints and building networks of collabo- Research into the qualities associated with effective
rative relationships with followers, they lead in a leadership in organizations has focused on three
manner that followers perceive and describe as distinct sets of requirements:
authentic. ●● cognitive requirements – the ability to make
George et al (2007: 129) set out the basis of au- sound decisions and exercise judgement;
thentic leadership as follows: ●● social requirements – the capacity to inspire,
We all have the capacity to inspire and empower persuade and engage others;
others. But we must first be willing to devote ●● self-motivational requirements – the desire to
ourselves to our personal growth and development take on leadership responsibilities.
as leaders… No one can be authentic by trying
to imitate someone else. You can learn from As mentioned earlier, the trait theory of leadership
others’ experiences, but there is no way you has its limitations but there is still some value in stud-
can be successful when you are trying to be like ying the qualities required by good leaders. It is gener-
them. People trust you when you are genuine and ally accepted that one of the key skills a leader or
authentic, not a replica of someone else. manager needs is an ability to analyse and read situa-
tions and to establish order and clarity in situations of
Authentic leadership is, in essence, ethical leader-
ambiguity. Gold et al (2010: 6) stated that ‘Leadership
ship. Walumbwa et al (2008) claimed that it can lead
demands a sense of purpose, and an ability to influ-
to enhanced trust, job satisfaction and performance.
ence others, interpret situations, negotiate and ex-
press their views, often in the face of opposition.’
Research conducted by Tamkin et al (2010) in-
The reality of leadership volving 260 in-depth interviews conducted with 77
The reality of leadership is that many first-line man- business leaders from six high-profile organizations,
agers and team leaders are appointed or promoted found that outstanding leaders:
to their posts with some idea, possibly, of what their
●● viewed things as a whole rather than
managerial or supervisory duties are, but with no
compartmentalizing them;
appreciation of the leadership skills they need. They
see their role as being to tell people what to do and ●● connect the parts through a guiding sense of
then see that they do it. They may tend to adopt a purpose;
transactional approach, focusing on getting the job ●● are highly motivated to achieve excellence
done and neglecting everything else. They may not and are focused on organizational outcomes,
vision and purpose;
●● understand they cannot create performance ●● What tasks are they best at doing?
themselves but are conduits for performance ●● Is there scope to increase flexibility by
through their influence on others; developing new skills?
●● watch themselves carefully and act ●● How well do they perform in achieving
consistently to achieve excellence through targets and performance standards?
their interactions and their embodiment of
●● To what extent can they manage their own
the leadership role.
performance and development?
●● Are there any areas where there is a need to
develop skill or competence?
Effective leadership ●● How can I provide them with the sort of
support and guidance that will improve their
Effective leaders are confident and know where
performance?
they want to go and what they want to do. They
have the ability to take charge, convey their vision ●● What can be done to improve the
to their team, get their team members into action performance of any individuals in the group
and ensure that they achieve their agreed goals. by coaching or mentoring?
They know how to build well-functioning teams.
They are trustworthy, good at influencing people
and earn the respect of their team. They are aware The team
of their own strengths and weaknesses and are The questions leaders need to answer about their
skilled at understanding what will motivate their team are:
team members. They appreciate the advantages of
consulting and involving people in decision making. ●● How well is the team organized?
They can switch flexibly from one leadership style ●● Is the team clear about what is expected of it?
to another to meet the demands of different situa- ●● Do the members of the team work well
tions and people. Brindle (2016) reported research together?
commissioned by Firstline, the social work training
●● If there is any conflict between team
organization. The finding of the study, which ob-
members, how can I resolve it?
tained evidence from 169 key figures in the social
work sector, was that outstanding leaders create a ●● How can the commitment and motivation of
climate that energizes teams to improve the impact the team be achieved?
they make, giving them stability, clear direction and ●● Are team members flexible – capable of
definition of role, plus the space and time to reflect carrying out different tasks?
on practice and develop their own leadership skills. ●● To what extent can the team manage its own
Effective leaders endeavour to answer the fol- performance?
lowing questions about the individuals in the group
●● Is there scope to empower the team so that it
and the team.
can take on greater responsibility for setting
standards, monitoring performance and
taking corrective action?
Individuals
●● Can the team be encouraged to work
The questions leaders need to answer about their together to produce ideas for improving
individual team members are: performance?
●● What are their strengths and weaknesses? ●● What is the team good and not so good at
●● What are their needs, attitudes, perspectives doing?
and preferences? ●● What can I do to improve the performance
●● What are likely to be the best ways of of the team through coaching and
motivating them? mentoring?
Key learning points
Leadership defined The qualities of a good leader

Leadership is the process of influencing the behaviour Leaders need the ability to analyse and read situations
of others to achieve results. and to establish order and clarity in situations of
ambiguity. Leadership demands a sense of purpose
Leadership theories and an ability to influence others, interpret situations,
negotiate and express their views, often in the face
The main leadership theories are trait theory, of opposition (Gold et al, 2010: 6).
leadership behaviour theory, contingent and The reality of leadership is that many first-line
situational theories, emotional intelligence theory and managers and supervisors are appointed or promoted
the leadership brand. to their posts with some idea, possibly, of what their
managerial or supervisory duties are, but with no
What leaders do appreciation of the leadership skills they need to get
the results they want with the help of their team.
Adair (1973) explained that the three essential roles of
leaders are to define the task, achieve the task and
maintain effective relationships. Leaders have to Team building
satisfy interdependent task, individual and group Team building involves clarifying the team’s purpose
needs. and goals, ensuring that its members work well
together, strengthening the team’s collective skills,
Types of leaders enhancing commitment and confidence, removing
externally imposed obstacles and creating
Leaders can be charismatic, visionary,
opportunities for team members to develop their skills
transformational, transactional or ‘authentic’.
and competencies.
References
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Challenge, San Francisco, CA, Jossey-Bass Walumbwa, F O, Avolio, B J, Gardner, W L, Wernsing,
May, D R, Chan, A, Hodges, T and Avolio, B J (2003) T S and Peterson, S J (2008) Authentic leadership:
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leadership, Organizational Dynamics, 32 (3), measure, Journal of Management, 34 (1),
pp 247–60 pp 89–126
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671
78
Handling people
problems
Introduction Disciplinary issues
An important part of the transactional role of HR Employees can be dismissed because they are not
professionals is handling people problems directly capable of doing the work or for misconduct. It is
or by providing advice and guidance to line manag- normal to go through a formal disciplinary proce-
ers. Problem-solving skills, described in Chapter 67, dure containing staged warnings, but instant
are required but it is also necessary to advise overall dismissal can be justified for gross misconduct (eg
on how to handle disciplinary problems and how to serious theft), which should be defined in the com-
deal with absenteeism, poor timekeeping, negative pany’s disciplinary procedure or employee hand-
behaviour and under-performance. Dealing with book. Anyone who has completed more than two
people problems may involve handling challenging years’ service can claim unfair dismissal if their em-
conversations, which is covered in Chapter 79. ployer cannot show that one of these reasons
applied, if the dismissal was not reasonable in the
circumstances, if a constructive dismissal has taken
Approach place or if there has been a breach of a customary or
agreed redundancy procedure and there are no valid
The basic approach to tackling people problems reasons for departing from that procedure.
is to: Even if the employer can show to an employ-
ment tribunal that there was good reason to dismiss
1 Get the facts. Make sure that you have all the employee, the tribunal will still have to decide
the information or evidence you need to whether or not the employer acted in a reasonable
understand exactly what the problem is. way at the time of dismissal. The principles defining
2 Weigh and decide. Analyse the facts to ‘reasonable’ behaviour are in line with the princi-
identify the causes of the problem. Consider ples of natural justice and are as follows:
any alternative solutions to the problem and ●● the employee should be informed of the
decide which is likely to be the most nature of the complaint;
successful. ●● the employee should be given the chance to
3 Take action. Following the decision, plan explain;
what you are going to do, establish goals and ●● the employee should be given the
success criteria and put the plan into effect. opportunity to improve, except in cases of
4 Check results. Monitor the implementation particularly gross incapability or misconduct;
of the plan and check that the expected ●● the employee should be warned of the
results have been obtained consequences in the shape of dismissal if
specified improvements do not take place;
●● the employer’s decision to dismiss should be recorded warning followed, if the problem
based on sufficient evidence; continues, by a first written warning, then a
●● the employer should take any mitigating final written warning and lastly, if the earlier
circumstances into account; stages have been exhausted, disciplinary
action, which would be dismissal in serious
●● dismissal should only take place if the
cases.
offence or misbehaviour deserves it rather
than some lesser penalty. ●● Deliver the decision, explaining why it has
been taken and confirm it in writing.
The organization should have a statutory discipli-
●● If possible, meet when everything is quiet,
nary procedure (see Chapter 59). Managers need to
preferably on a Friday.
know what that procedure is and the part they are
expected to play in implementing it. Whether or not ●● Keep the meeting formal and organized.
there is a formal procedure, if it is believed that dis- ●● Write down what is going to be said in
ciplinary action is necessary the following steps advance, giving the reason and getting your
should be taken by the manager, as guided by HR, facts, dates and figures right.
in planning and conducting a disciplinary interview. ●● Be polite but firm – read out what has been
If all the stages in the disciplinary procedure written down and make it clear that it is not
have been completed and the employee has to be open for discussion.
dismissed, or where immediate dismissal can be jus-
●● Ensure that the employee clears their desk
tified on the grounds of gross misconduct, a man-
and has no opportunity to take away
ager may have to carry out the unpleasant duty of
confidential material or use their computer.
dismissing the employee. This should be as guided
by HR and it is advisable that an HR specialist is ●● See the employee off the premises – some
involved in the dismissal meeting. This is best con- companies use security guards as escorts; this
ducted as follows: might be rather heavy-handed, although it
could be useful to have someone on call
●● Plan a disciplinary meeting. in case of difficulties.
●● Get all the facts in advance, including
statements from the people involved.
●● Invite the employee to the meeting in writing, Absenteeism
explaining why it is being held and that he or
she has the right to have someone present at A frequent people problem managers and HR pro-
the meeting on his or her behalf. fessionals have to face is absenteeism. It may be
necessary to deal with recurrent short-term (one or
●● Ensure that the employee has reasonable
two days) absence or longer-term sickness absence.
notice (ideally at least two days).
●● Plan how to conduct the meeting.
●● Line up another member of management to Recurrent short-term absence
attend the meeting to take notes (they can be
Dealing with people who are repeatedly absent for
important if there is an appeal), generally
short periods can be difficult. This is because it may
provide support and witness the proceedings.
be hard to determine when occasional absence be-
●● Start the interview by stating the complaint comes a problem or whether it is justifiable, perhaps
to the employee and referring to the on medical grounds.
evidence. So what can be done about it? Many organiza-
●● Give the employee plenty of time to respond tions provide guidelines to managers on the ‘trigger
and state his or her case. points’ for action (the amount of absence that
●● Take a break as required to consider the needs to be investigated), perhaps based on analy-
points raised and to relieve any pressure in ses of the incidence of short-term absence and the
the meeting. level at which it is regarded as acceptable (there
may be software to generate analyses and data that
●● Consider what action is appropriate, if any.
Actions should be staged, starting with a
Chapter 78 | Handling People Problems 673
can be made available direct to managers through recognizing that in extreme cases the person may
a self-service system). If guidelines do not exist, HR not be able to come back. In that case they can
specialists should be available to provide advice. fairly be dismissed for lack of capability as long as:
It is necessary to decide when something needs to
●● the employee has been consulted at all
be done and then what to do about it. A day off
stages;
every other month may not be too serious, although
if it happens regularly on a Monday (after week- ●● contact has been maintained with the
ends in Prague, Barcelona, etc?) or a Friday (before employee – this is something you can usefully
such weekends?) you may feel like having a word do as long as you do not appear to be
with the individual, not as a warning but just to let pressing them to return to work before they
them know that you are aware of what is going on. are ready;
There may be a medical or other acceptable expla- ●● appropriate medical advice has been sought
nation. Return-to-work interviews can provide val- from the employee’s own doctor, but the
uable information and an opportunity to discuss employee’s consent is needed and employees
any problems. The individual is seen and given the have the right to see the report – it may be
chance to explain the absence. desirable to obtain a second opinion;
In persistent cases of absenteeism an absence re- ●● all reasonable options for alternative
view meeting can be held. Although this would be employment have been reviewed as well any
more comprehensive than a return-to-work inter- other means of facilitating a return to work.
view it should not at this stage be presented as part
of a disciplinary process. The meeting should be The decision to dismiss should only be taken if these
positive and constructive. If absence results from a conditions are satisfied. It is a tricky one and it may
health problem it can be established what is being be advisable to seek advice from an employment
done about it, and if necessary suggest that their law expert.
doctor should be consulted. Or absences may be
caused by problems facing a parent or a carer. In
such cases it is right to be sympathetic but it would Handling poor timekeeping
be reasonable to discuss with the individual what
steps can be taken to reduce the problem or whether A poor timekeeping record may initially be dealt
flexible working could be arranged. The aim is to with by an informal warning. But if in spite of the
get the employee to discuss as openly as possible warning lateness persists it may be necessary to in-
any factors affecting their attendance and to agree voke the disciplinary procedure. This would go
any constructive steps. through the successive stages of a recorded oral
If after holding an attendance review meeting and, warning, a written warning and a final written
it is to be hoped, agreeing the steps necessary to re- warning which would indicate that timekeeping
duce absenteeism, short-term absence persists with- must improve by a certain date (the improvement
out a satisfactory explanation, then another meeting period) otherwise disciplinary action would take
can be held that emphasizes the employee’s responsi- place. If the final warning does not work, such ac-
bility for attending work. Depending on the circum- tion would be taken; in serious cases this would
stances (each case should be dealt with on its merits), mean dismissal.
at this meeting it can be indicated that absence levels Note that this raises the difficult question of time
should improve over a defined timescale (an improve- limits which may be given when a final warning is
ment period). If this does not happen, the individual given. If timekeeping does improve by that date,
can expect more formal disciplinary action. and the slate is wiped clean, it might be assumed
that the disciplinary procedure starts again from
scratch if timekeeping deteriorates again. But it is in
Dealing with long-term absence the nature of things that some people cannot sus-
tain efforts to get to work on time for long, and
Dealing with long-term absence can also be diffi-
deterioration often occurs. In these circumstances,
cult. The aim should be to facilitate the employee’s
is it necessary to keep on going through the warning
return to work at the earliest reasonable point while
cycles time after time? The answer is no, and the
best way to deal with this is to avoid stating a finite expressing their anger. To deal with the problem it is
end date to a final warning period that implies a necessary to find out what has made them angry.
‘wipe the slate clean’ approach. Instead, the warn-
ing should simply say that timekeeping performance
will be reviewed on a stated date. If it has not im- Causes of negative behaviour
proved, disciplinary action can be taken. If it has,
There are many possible causes of negative behaviour,
no action will be taken, but the employee is warned
which could include one or more of the following:
that further deterioration will make them liable to
disciplinary action, which may well speed up the
●● a real or imagined slight from their manager
normal procedure, perhaps by only using the final
or a colleague;
warning stage and by reducing the elapsed time be-
tween the warning and the review date. There will ●● a feeling of being put upon;
come a time, if poor timekeeping persists, when you ●● a belief that the contribution they make is
can say ‘enough is enough’ and initiate disciplinary neither appreciated nor rewarded properly in
action. terms of pay or promotion;
●● resentment at what was perceived to be
unfair criticism;
Handling negative ●● anger directed at the company or their
behaviour manager because what was considered to be
a reasonable request (such as for leave or a
Negative behaviour may take the form of lack of transfer) was turned down, or because of an
interest in the work, unwillingness to cooperate unfair accusation.
with team leaders or other members of the team,
making unjustified complaints about the work or
working conditions, grumbling at being asked to Dealing with the problem
carry out a perfectly reasonable task, objecting It is because there can be such a variety of real or
strongly to being asked to do something extra (or imagined causes of negative behaviour that dealing
even refusing to do it) – ‘It’s not in my job descrip- with it becomes one of the most difficult tasks line
tion’, or, in extreme cases, insolence. People exhibit- managers and HR people have to undertake. If the
ing negative behaviour may be quietly resentful action taken is crude or insensitive the negative be-
rather than openly disruptive. They mutter away in haviour will only be intensified. This might mean
the background at meetings and lack enthusiasm. having to invoke the disciplinary procedure, which
Managers have to tolerate a certain amount of should be a last resort.
negative behaviour as long as the individual works In one sense, it is easier to deal with an actual
reasonably well and does not upset other team example of negative behaviour. This can be handled
members. They have simply to say to themselves ‘It on the spot. If the problem is one of general attitude
takes all sorts…’ and put up with it, although they rather than specific actions it is more difficult to
might calmly say during a review meeting, ‘You’re cope with. Hard evidence may not be available.
doing a good job but…’. If, however, they take this When individuals are accused of being, for exam-
line they have to be specific. They must cite actual ple, generally unenthusiastic or uncooperative, they
instances. It is no good making generalized accusa- can simply go into denial and accuse you of being
tions that will either be openly refuted or internal- prejudiced. Their negative behaviour may be rein-
ized by the receiver, making them even more re- forced.
sentful. It is best to deal with this sort of problem infor-
If the negative behaviour means that the indi- mally, either when it arises or at any point during
vidual’s contribution is not acceptable and is dis- the year when it is felt that something has to be
ruptive, action has to be taken. Negative people can done about it. An annual formal performance re-
be quiet but they are usually angry about some- view or appraisal meeting is not the right time, espe-
thing; their negative behaviour is an easy way of cially if it produces ratings that are linked to a pay
increase. Raising the issue then will only put indi- not been particularly helpful in the following
viduals on the defensive and a productive discus- ways… ?’
sion will be impossible. Of course, even if this careful approach is
The discussion may be informal but it should adopted, individuals may still refuse to admit that
have three clear objectives: there is anything wrong with their behaviour. If this
impasse is reached, then there is no alternative but
1 To review the situation with individuals, the
to spell out where it is believed they have gone
aim being if possible to get them to recognize
wrong. But this should be done in a positive way:
for themselves that they are behaving
‘Then I think that it is only fair for me to point out
negatively. If this cannot be achieved, then
to you that your contribution (to the meeting)
the objective is to bring to the attention of
would have been more helpful if you had…’.
individuals your belief that their behaviour is
unacceptable in certain ways.
2 To establish the reasons for the individuals’ Establishing causes
negative behaviour so far as this is feasible.
If the negative behaviour is because of a real or
3 To agree any actions individuals could take
imagined grievance about what the manager, col-
to behave more positively, or what you or
leagues or the organization have done, then the
the organization could do to remove the
individual has to be persuaded to spell this out as
causes of the behaviour.
precisely as possible. At this point, the job of the
manager or HR practitioner is to listen, not to
judge. People can be just as angry about imaginary
Discussing the problem as real slights. You have to find out how they per-
The starting point should be general questions ceive the problem before you can deal with it.
about how individuals feel about their work. Do It may emerge during the discussion that the
they have any problems in carrying it out? Are they problem has nothing to do with the manager or the
happy with the support they get from you or their company. It may be family troubles or worries
colleagues? Are they satisfied that they are pulling about health or finance. If this is the case a sympa-
their weight to the best of their ability? thetic approach is appropriate, which may involve
This generalized start provides the basis for the suggesting remedies in the form of counselling or
next two stages – identifying causes and any reme- practical advice from within or outside the organi-
dies. It is best if individuals are encouraged to de- zation. If the perceived problem is the manager, col-
cide for themselves that there is a problem, but in leagues or the organization, try to get chapter and
many, if not the majority, of cases, this is unlikely to verse on what it is so that remedial action can be
happen. Individuals may not recognize that they are taken.
behaving negatively or will not be prepared to
admit it.
It is then necessary to discuss the problem. They Taking remedial action
should be given time to say their piece. The response
If the problem rests with the individual, the objec-
should spell out how justifiable grievances will be
tive is, of course, to get them to recognize for them-
dealt with or why no action is necessary. In the lat-
selves that corrective action is necessary and what
ter case, an explanation should be given as to why
they need to do about it – with help as necessary. In
the individual’s behaviour gives the impression of
some situations you might suggest counselling or a
being negative. This should be specific, bringing up
source of advice might be recommended. But care
actual instances. For example, a discussion could be
needs to be taken: there should be no implication
based on the following questions: ‘Do you recall
that there is something wrong with them. It is best
yesterday’s team meeting?’, ‘How did you think it
to go no further than suggesting that individuals
went?’, ‘How helpful do you think you were in deal-
may find this helpful – they don’t need it but they
ing with the problem?’, ‘Do you remember saying…
could benefit from it. Managers or HR specialists
?’, ‘How helpful do you think that remark was?’,
should not offer counselling themselves. This is bet-
‘Would it surprise you to learn that I felt you had
ter done by professional counsellors.
If there is anything specific that the parties in- 10 If the negative behaviour persists and
volved in the situation can do, then the line to take continues seriously to affect performance,
is that the problem can be tackled together: ‘This is take the disciplinary action.
what I will do’, ‘This is what the company will do’,
‘What do you think you should do?’ If there is no
response to the last question, this is the point where Dealing with under-
it is necessary to spell out the necessary action. This
should be as specific as possible and expressed as performance
suggestions, not commands. A joint problem-solving
approach is always best. Poor performance can be the fault of the individual
but it could arise because of poor leadership or
problems in the system of work. In the case of an
Ten approaches to handling individual, the reason may be that they:
negative behaviour ●● could not do it – ability;
●● did not know how to do it – skill;
1 Define the type of negative behaviour that is ●● would not do it – attitude; or
being exhibited. Make notes of examples.
●● did not fully understand what was expected
2 Discuss the behaviour with the individual as of them.
soon as possible, aiming to get agreement
about what it is and the impact it makes. Inadequate leadership from managers can be the
3 If agreement is not obtained, give actual cause of poor performance from individuals. It is
examples of behaviour and explain why you the manager’s responsibility to specify the results
believe them to be negative. expected and the levels of skill and competence
required. As likely as not, when people do not un-
4 Discuss and, so far as possible, agree reasons derstand what they have to do it is their manager
for the negative behaviour including those who is to blame.
attributed to the individual, yourself and the Performance can also be affected by the system
organization. of work. If this is badly planned and organized or
5 Discuss and agree possible remedies – actions does not function well individuals cannot be blamed
on the part of the individual, yourself or the for the poor performance that results. This is the
organization. fault of management and they must put it right.
6 Monitor the actions taken and the results If inadequate individual performance cannot be
obtained. attributed to poor leadership or the system of work,
7 If improvement is not achieved and the there are seven steps that can be taken to deal with it:
negative behaviour is significantly affecting
the performance of the individual and the 1 Identify the areas of under-performance – be
team, then invoke the disciplinary procedure. specific.
8 Start with a verbal warning, indicting the 2 Establish the causes of poor performance.
ways in which behaviour must improve and 3 Agree on the action required.
give a time scale and offers of further 4 Ensure that the necessary support (coaching,
support and help as required. training, extra resources etc) is provided to
9 If there is no improvement, issue a formal ensure the action is successful.
warning, setting out as specifically as 5 Monitor progress and provide feedback.
possible what must be achieved over a
6 Provide additional guidance as required.
defined period of time, indicating the
disciplinary action that could be taken. 7 As a last resort, invoke the capability or
disciplinary procedure (see Chapter 41),
starting with an informal warning.
Key learning points
The HR role in handling people problems Handling negative behaviour

An important part of the transactional role of HR Negative behaviour may take the form of lack of
professionals is handling people problems by providing interest in the work, unwillingness to cooperate with
advice and guidance to line managers or directly. team leaders or other members of the team, making
unjustified complaints about the work or working
Disciplinary issues conditions, grumbling at being asked to carry out a
perfectly reasonable task, objecting strongly to being
Employees can be dismissed because they are not asked to do something extra (or even refusing to do it)
capable of doing the work or for misconduct. It is or, in extreme cases, insolence.
normal to go through a formal disciplinary procedure It is because there can be such a variety of real or
containing staged warnings, but instant dismissal can imagined causes of negative behaviour that dealing
be justified for gross misconduct (eg serious theft), with it becomes one of the most difficult tasks line
which should be defined in the company’s disciplinary managers and HR people have to undertake. If the
procedure or employee handbook. action taken is crude or insensitive the negative
The organization should have a statutory behaviour will only be intensified. This might mean
disciplinary procedure. Managers need to know what having to invoke the disciplinary procedure, which
that procedure is and the part they are expected to should be a last resort.
play in implementing it. In one sense, it is easier to deal with an actual
example of negative behaviour. This can be handled on
Absenteeism the spot. If the problem is one of general attitude
rather than specific actions it is more difficult to cope
A frequent people problem managers and HR
with. It is best to deal with this sort of problem
professionals have to face is that of dealing with
informally, either when it arises or at any point during
absenteeism. It may be necessary to deal with
the year when it is felt that something has to be done
recurrent short-term (one or two days) absence or
about it.
longer-term sickness absence.
Many organizations provide guidelines to
managers on the ‘trigger points’ for action (the amount Dealing with under-performance
of absence which needs to be investigated), perhaps Poor performance can be the fault of the individual,
based on analyses of the incidence of short-term but it could arise because of poor leadership or
absence and the level at which it is regarded as problems in the system of work. To deal with it:
acceptable. If guidelines do not exist, HR specialists
should be available to provide advice. 1 Identify the areas of under-performance – be
specific.
Handling poor timekeeping 2 Establish the causes of poor performance.
Faced with persistent lateness and when informal 3 Agree on the action required.
warnings to the individual concerned seem to have
4 Ensure that the necessary support (coaching,
little effect, it may be necessary to invoke the
training, extra resources, etc) is provided to ensure
disciplinary procedure. If timekeeping does not
the action is successful.
improve this could go through the successive stages
of a recorded oral warning, a written warning and a 5 Monitor progress and provide feedback.
final written warning. If the final warning does not
6 Provide additional guidance as required.
work, disciplinary action would have to be taken; in
serious cases this would mean dismissal. 7 As a last resort, invoke the capability or disciplinary
procedure (see Chapter 59), starting with an
informal warning.
678
79
Handling challenging
conversations
Many line managers and indeed HR specialists 5 Begin the conversation by explaining the
find it difficult to have conversations or hold purpose of the meeting, indicating to the
meetings with individuals about performance or individual what the issue is and giving
discipline issues. In advance these can look diffi- specific examples.
cult and in practice they can be challenging if the 6 Focus on the issue and not the person.
manager wants to achieve desired changes or im-
7 Ask for an explanation. Ask unloaded
provements in performance. They can be even
questions to clarify the issues and explore
more challenging in prospect if it is feared that
them together.
unpleasantness can occur in the shape of lack of
cooperation or outright hostility, or in practice 8 Allow people to have their say and listen to
when this happens in spite of efforts to prevent it. them.
The following is a 12-point guide to handling 9 Keep an open mind and don’t jump to
challenging conversations: conclusions.
1 Don’t wait too long or until a formal 10 Acknowledge the individual’s position and
meeting. Have a quiet word at the first sign any mitigating circumstances.
that something is going wrong. 11 Ask the employee for proposals to resolve
2 Get the facts in advance – what happened, the situation, discuss the options and if
when and why? possible agree on action by the individual,
the manager or jointly.
3 Plan the meeting on the basis of the facts and
what is known about the individual. Define 12 If agreement cannot be reached, the way
what is to be achieved. forward will have to be defined, with reasons
and explanations of any actions proposed.
4 Set the right tone from the start of the
meeting – adopt a calm, measured, deliberate
but friendly approach.
679
80
Managing conflict
Introduction Peaceful coexistence
The aim here is to smooth out differences and em-
Conflict is inevitable in organizations because they phasize the common ground. People are encouraged
function by means of adjustments and compromises to learn to live together, there is a good deal of in-
among competitive elements in their structure and formation, contact and exchange of views, and indi-
membership. Conflict also arises when there is change, viduals move freely between groups (for example,
because it may be seen as a threat to be challenged or 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. The
than as a problem to be worked through. Conflict hallmark of this approach is that there is no ‘right’
resolution deals with ways of settling differences be- or ‘best’ answer. Agreements only accommodate dif-
tween groups, individuals and team members. ferences. Real issues are not likely to be solved.
Handling inter-group Problem solving

An attempt is made to find a genuine solution to the
conflict problem rather than just accommodating different
points of view. This is where the apparent paradox
There are three principal ways of resolving inter-
of ‘creative conflict’ comes in. Conflict situations
group conflict: peaceful coexistence, compromise
can be used to advantage to create better solutions.
and problem solving.
If solutions are to be developed by problem solv- Reaching a compromise

ing, they have to be generated by those who share
the responsibility for seeing that the solutions work. Yet another approach is bargaining to reach a com-
The sequence of actions is: first, those concerned promise. This means that both sides are prepared
work to define the problem and agree on the objec- to lose as well as win some points and the aim is to
tives to be attained in reaching a solution; second, reach a solution acceptable to both sides.
the group develops alternative solutions and de- Bargaining, however, involves all sorts of tactical
bates their merits; and third, agreement is reached and often counterproductive games, and the parties
on the preferred course of action and how it should are often more anxious to seek acceptable compro-
be implemented. mises than to achieve sound solutions.
Handling interpersonal Counselling

conflict Personal counselling is an approach that does not
address the conflict itself but focuses on how the
two people are reacting. It gives people a chance to
Handling conflict between individuals can be even
release pent-up tensions and may encourage them
more difficult than resolving conflicts between
to think about new ways of resolving the conflict.
groups. Whether the conflict is openly hostile or sub-
But it does not address the essential nature of the
tly covert, strong personal feelings may be involved.
conflict, which is the relationship between two peo-
However, interpersonal conflict, like inter-group con-
ple. That is why constructive confrontation offers
flict, is an organizational reality that is not necessar-
the best hope of a long-term solution.
ily good or bad. It can be destructive, but it can also
play a productive role. The approaches to dealing
with it are withdrawal, smoothing over differences,
reaching a compromise, counselling and constructive
Constructive confrontation
confrontation. Constructive confrontation is a method of bringing
the individuals in conflict together with a third party
whose function is to help build an exploratory and
Withdrawal cooperative climate. Constructive confrontation
aims to get the contending parties to understand and
The reaction to interpersonal conflict may be the
explore the other’s perceptions and feelings. It is a
withdrawal of either party, leaving the other one to
process of developing mutual understanding to pro-
hold the field. This is the classic win-lose situation.
duce a win-win situation. The issues will be con-
The problem has been resolved by force, but this
fronted but on the basis of a joint analysis, with the
may not be the best solution if it represents one per-
help of the third party, of facts relating to the situa-
son’s point of view that has ignored counter-argu-
tion and the actual behaviour of those involved.
ments, and has, in fact, steamrollered over them.
Feelings will be expressed but they will be analysed
The winner may be triumphant but the loser will be
by reference to specific events and behaviours rather
aggrieved and either demotivated or resolved to
than inferences or speculations about motives. Third
fight again another day. There will have been a lull
parties have a key role in this process, and it is not an
in, but not an end to, the conflict.
easy one. They have to get agreement to the ground
rules for discussions aimed at bringing out the facts
Smoothing over differences and minimizing hostile behaviour. They must moni-
tor the ways in which negative feelings are expressed
Another approach is to smooth over differences and and encourage the parties to produce new defini-
pretend that the conflict does not exist, although no tions of the problem and its cause or causes and new
attempt has been made to tackle the root causes. motives to reach a common solution. Third parties
Again, this is an unsatisfactory solution. The issue is must avoid the temptation to support or appear to
likely to re-emerge and the battle will recommence.
Chapter 80 | Managing Conflict 681
support either of those in contention. They should 4 Talk to other members of the group to get
adopt a counselling approach, as follows: their views, being careful to be dispassionate
and strictly neutral.
●● listen actively;
5 Evaluate what you hear from both parties
●● observe as well as listen;
and other people against your knowledge of
●● help people to understand and define the what has been happening, any history of
problem by asking pertinent, open-ended conflict and the dispositions and previous
questions; behaviour of the people involved.
●● recognize feelings and allow them to be 6 Reach preliminary conclusions on the facts, the
expressed; reasons for the dispute and the extent to which
●● help people to define problems for either of the parties or both of them are to
themselves; blame (but keep these to yourself at this stage).
●● encourage people to explore alternative 7 Bring the parties together to discuss the
solutions; situation. The initial aim of this meeting
●● get people to develop their own would be to bring the problem out into the
implementation plans but provide advice and open, get the facts and defuse any emotions
help if asked. that may prejudice a solution to the problem.
Both parties should be allowed to have their
To conclude, conflict, as has been said, is in itself say but, as the facilitator of this meeting, you
not to be deplored: it is an inevitable concomitant should do your best to ensure that they stick
of progress and change. What is regrettable is the to the facts and explain their point of view
failure to use conflict constructively. Effective prob- dispassionately. You should not even
lem solving and constructive confrontation both remotely give the impression that you are
resolve conflicts and open up channels of discussion taking sides.
and cooperative action.
8 Try to defuse the situation so that a solution
Many years ago, one of the pioneering and most
can be reached that on the whole will be
influential writers on management, Mary Parker
acceptable to all concerned. Ideally, this should
Follett (1924), wrote that differences can be made
be an integrated solution reached by agreement
to contribute to the common cause if they are re-
on the basis of collaboration along the lines of
solved by integration rather than domination or
‘Let’s get together to find the best solution on
compromise.
the basis of the facts.’ It may be necessary to
reach a compromise or accommodation –
something everyone can live with.
Resolving conflict between 9 Only if all else fails or the parties are so
team members recalcitrant in holding an untenable position
that no integrated, compromise or
To resolve conflict between team members the fol- accommodating solution can be reached,
lowing actions can be taken: should you resort to direct action –
instructing one or both of the parties to bury
1 Obtain an overview of the situation from their differences and get on with their work.
your own observations. If the worst comes to the worst this may
2 Find out who is involved. involve disciplinary action, beginning with a
3 Talk to each of the parties to the conflict to formal warning.
obtain their side of the story.
Key learning points
The manifestation of conflict reaching a compromise, counselling and constructive

confrontation.
Conflict is inevitable in organizations because they
function by means of adjustments and compromises
Resolving conflict between team
among competitive elements in their structure and
membership. Conflict also arises when there is members
change, because it may be seen as a threat to be ●● Obtain an overview of the situation.
challenged or resisted, or when there is frustration –
this may produce an aggressive reaction: fight
●● Find out who is involved.
rather than flight. ●● Talk to each of the parties to the conflict to obtain
their side of the story.
Handling inter-group conflict ●● Talk to other members of the group.
There are three principal ways of resolving inter-group ●● Evaluate what you hear.
conflict: peaceful coexistence, compromise and
problem solving. ●● Reach preliminary conclusions on the facts and the
reasons for the dispute.
Handling interpersonal conflict ●● Bring the parties together to discuss the situation.
The approaches to dealing with interpersonal conflict ●● Only resort to direct action if all else fails.
are withdrawal, smoothing over differences,
Reference
Follett, M P (1924) Creative Experience, New York, Longmans Green
683
81
Political skills
It was suggested by Kakabadse (1983) that poli-
Introduction tics in an organization is a process of influencing
individuals and groups of people to your point of
To be politic, according to the Oxford English view, where you cannot rely on authority. In this
Dictionary, you can be sagacious, prudent, judi- sense, a political approach can be legitimate as long
cious, expedient, scheming or crafty. So political be- as the ends are justifiable from the viewpoint of the
haviour in an organization could be desirable or organization. Whether or not that is the case, politi-
undesirable. cal skills and political sensitivity, as described in this
Organizations consist of individuals many of chapter, are required to thrive and sometimes even
whom, while they are ostensibly there to achieve a survive in organizations. This applies particularly to
common purpose, will, at the same time, be driven HR specialists who may lack the power-base others
by their own needs to achieve their own goals. possess and may feel they have to pursue the
Effective management is the process of harmonizing achievement of their ends and exert influence
individual endeavour and ambition to the common through political as well as more open means. But it
good. Some individuals will genuinely believe that is also essential for them to gain insight into the
using political means to achieve their aims will ben- political situation in their organization in order to
efit the organization as well as themselves. Others understand what is happening, why it is happening
will rationalize this belief. Yet others will unasham- and what they need to do about it.
edly pursue their own ends. They may use all their
powers of persuasion to legitimize these ends to their
colleagues, but self-interest remains the primary
drive. These are the corporate politicians the Oxford
Typical political approaches
English Dictionary describes as ‘shrewd schemers,
Kakabadse (1983) identified seven approaches that
crafty plotters or intriguers’. Politicians within or-
organizational politicians adopt, some of which are
ganizations can be like this. They manoeuvre behind
more legitimate than others:
people’s backs, blocking proposals they do not like.
They advance their own reputation and career at the 1 Identify the stakeholders, those who have
expense of other people’s. They can be envious and commitment to act in a particular way.
jealous and act accordingly. They are bad news. 2 Keep the stakeholders comfortable,
But it can also be argued that a political ap- concentrating on behaviour, values, attitudes,
proach to management is inevitable in any organi- fears and drives that the individuals will
zation where the clarity of goals is not absolute, accept, tolerate and manage (comfort zones).
where the decision-making process is not clear-cut
3 Fit the image – work on the comfort zones
and where the authority to make decisions is not
and align their image to that of the people
evenly or appropriately distributed. And there can
with power.
be few organizations where one or more of these
conditions do not apply. 4 Use the network – identify the interest
groups and people of influence.
5 Enter the network – identify the gatekeepers, skill that HR specialists need to have and it means
adhere to the norms. that it is necessary to:
6 Make deals – agree to support other people ●● know how ‘things are done around here’;
where this is of mutual benefit.
●● know how key decisions are made and who
7 Withhold and withdraw – withhold makes them;
information as appropriate and withdraw
●● understand the factors that are likely to
judiciously when the going gets rough.
affect decisions;
●● know where the power base is in the
organization (sometimes called the ‘dominant
Using political means to get coalition’) – who makes the running, who
are the people who count when decisions are
things done taken;
People acting politically get things done by lobby- ●● be aware of what is going on behind the
ing decision makers and doing deals. This may not scenes;
always be desirable, but it does happen, and some ●● know who is a rising star and whose
people rationalize it on the basis that the end justi- reputation is fading;
fies the means (always a dubious stance). Other ●● identify any ‘hidden agendas’ – try to
ploys include withholding information, which is understand what people are really getting at
not legitimate but which recognizes the fact that beneath the surface by getting answers to the
knowledge is power. Organizational politicians question ‘Where are they coming from?’;
can go behind people’s backs, hatch up plots in
●● find out what other people are thinking and
dark corners, ‘sew things up’ before meetings (lob-
seeking;
bying) and exert undue influence on weaker breth-
ren. You may not deign to practise these political ●● network – identify the interest groups and
black arts but it is useful to be aware of the possi- keep in contact with them.
bility that others will so that you are prepared for
that eventuality.
The reality of politics in organizational life Dangers of politics
means that HR specialists who are proposing new
initiatives to managers need to identify the key de- Much of this behaviour is legitimate, but there are
cision makers before coming to a final conclusion dangers. Politicking can be carried out to excess,
and launching a fully fledged proposal at a meeting and it can then seriously harm the effectiveness of
or in a memorandum. It makes good sense to test an organization. The signs of excessive indulgence
opinion and find out how other people may react, in political behaviour include:
especially when it is possible that there will be ●● back-biting;
some opposition or indifference. This testing pro-
cess enables the anticipation of counter-arguments ●● buck-passing;
and the modification of proposals, either to meet ●● secret meetings and hidden decisions;
legitimate objections or, when there is no alterna- ●● feuds between people and departments;
tive, to accommodate other people’s requirements. ●● email wars between armed camps – arguing
by email rather than meeting people face to
face is a sign of distrust;
Political sensitivity ●● a multiplicity of snide comments and
criticisms;
Organizational politicians exert hidden influence to
get their way, and ‘politicking’ in some form takes ●● excessive and counterproductive lobbying;
place in most organizations. A degree of political ●● the formation of cabals – cliques that spend
sensitivity is desirable – knowing what is going on their time intriguing.
so that influence can be exerted properly. This is a
Chapter 81 | Political Skills 685
A more positive approach to keeping politics

Dealing with organizational operating at an acceptable level is for the organi-
politics zation to manage its operations as transparently
as possible. The aim should be to ensure that is-
One way to deal with this sort of behaviour is to sues are debated fully, that differences of opinion
find out who is going in for it and openly confront are dealt with frankly and that disagreements are
them with the damage they are doing. They will, of de-personalized, so far as this is possible. Political
course, deny that they are behaving politically (they processes can then be seen as a way of helping to
wouldn’t be politicians if they didn’t), but the fact maintain the momentum of the organization as a
that they have been identified might lead them to complex decision-making and problem-solving
modify their approach. It could, of course, only entity. In their organization development role, HR
serve to drive them further underground, in which professionals can exert influence in achieving
case their behaviour would have to be observed these aims.
even more closely and action taken to restrain it.
Key learning points
Organizational politics Using political means to get things done

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

To keep politics operating at an acceptable level the
organization should manage its operations as
Reference
Kakabadse, A (1983) The Politics of Management,
Aldershot, Gower
687
82
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 vestment are satisfied. Cost–benefit analysis may be
time, in accordance with specified performance or used to assess the degree to which the benefits jus-
quality standards and 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 how change should take place, what work Performance specification
is to be done, why the work needs to be done, who
will do the work, how much it will cost, when it has This sets out what the project is expected to do –
to be completed (totally or stage by stage) and how it should perform – and describes the details of
where it will be carried out. the project’s configuration or method of operation.
HR professionals are often called upon to man-
age or take part in such projects as developing a
new performance management system or job evalu- Project plan
ation scheme, or revising a pay structure. They The project plan sets out:
therefore need project 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;
an assessment of the resources required –
Initiation ●●
money, people, equipment and time;
Project planning starts with a definition of the ob- ●● how many people will be allocated to the
jectives of the project. A business case has to be project with different skills at each stage, and
made. This means answering two basic questions: who is to be responsible for controlling the
1 Why is this project needed? project as a whole and at each of the major
stages or operations.
2 What benefits are expected from the project?
Setting up the project Controlling the project

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

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

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

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

Setting up the project
Setting up the project involves:
●● selecting and briefing the project management team;
689
PART XVII
Conclusion
690

691
83
Trends in HRM
Introduction The nature, philosophy and
practice of HRM
A lot is happening in the world of HRM. A partici-
pant in the research conducted by the CIPD in 2020 There has been much criticism, mainly from aca-
on the future of the people profession observed that demics, about the nature, philosophy and practice
of HRM. Marchington (2015: 176) commented
We can (for example) drive transparency that ‘in its quest for legitimacy, HRM has tended
and fairness in pay and reward, we can build primarily to look up the hierarchy and focus on
inclusive cultures with diversity considerations
narrow performance goals, so neglecting other
mainstreamed through our policies and processes,
long-standing values and stakeholders.’ Beer et al
we can demonstrate the return on investment in
(2015: 432) suggested that HRM should be treated
skills development in our local communities, we
as a social system, in contrast to the dominant indi-
can develop leadership selection criteria which
values compassion as core leadership competence. vidual perspective. Dundon and Rafferty (2018:
People professionals will need to have a broad 377) argued that ‘human resource management
understanding of business drivers, be powerful (HRM), both as an academic field of study and as a
influencers, and partner closely with other leaders form of professional practice, is at risk of impover-
across their organisations. ishment. The main reasoning for this is because of
ideological individualism and marketisation with
As examined in this chapter, trends in people man- an attendant neglect on wider organisational, em-
agement are grouped under two headings: overall ployee, and societal concerns.’
trends affecting how people are managed and trends For a long time academics like these were crying
in specific aspects of people management. in the wilderness. But now opinion formers such as
the CIPD (2021) are calling for a change. Two inter-
related principles underpin this trend. The first is
Overall trends the use of a multi-stakeholder approach which em-
phasizes that employees have a stake in their or-
Overall trends consist of: ganization that is just as important as the stake held
●● revisions to views on the nature, philosophy by its owners and senior management. The second
and of HRM; is that employees should be regarded as people
rather than as exploitable resources. People are val-
●● the response to change; uable in themselves as well as sources of value. This
●● the strategic role of the people management indicates that organizations and the HR function
function; within them should be value-driven.
●● the pressure for sustainability and Another trend is to refer to people management
responsible business; and people professionals rather than to HRM and
●● focus on the management of diversity and HR professional. This is largely a revolt against the
inclusion; implication of the term human resources which is
that people in organizations exist to be exploited
●● digital transformation; like any other resource. However, this may be no
●● the management of the employee experience. more than a name change. An attempt to define a
692 Part 17 | Conclusion
difference between traditional HRM and people The pressure for sustainability and
management was made in Chapter 1 of this book
but it is difficult to find any other clear explanations socially responsible business
elsewhere. Steadily increasing attention is being paid to the
need for sustainability and the role of HR in pro-
moting it. The term ‘sustainability’ was first used by
Response to change the World Commission on Environment and
The nature of work is changing rapidly as a result Development which in its 1987 report defined it as
of the impact of emerging technologies, digitaliza- ‘development that meets the needs of the present
tion, work intensification, the emergence of new without compromising the ability of future genera-
forms of the employment relationship, eg pressure tions to meet their own needs.’ The three dimen-
by employers for increased flexibility, relationships sions of sustainability are the environmental, the
between employers and their employees and, im- social and the economic. Social responsibility is ex-
portantly, environmental changes – economic, so- ercised by organizations when they conduct their
cial and events such as the Covid-19 pandemic and, business in an ethical way, taking account of the
in the UK, Brexit. social, environmental and economic impact of how
Organizations are changing too. They are becom- they operate, and going beyond compliance.
ing less hierarchical. In today’s conditions of turbu- The CIPD (2020: 8) commented that
lence and change, this means a tendency towards A rise in demand for sustainable, ethical and
more decentralized and flexible structures, with responsible business practices is coming from
greater responsibility given to individuals and an ex- regulators and investors, as well as employees.
tension of the use of task forces and project teams to People professionals should be at the forefront of
deal with opportunities or threats. This implies an driving responsible business that creates value for
informal, non-bureaucratic, organic approach to or- all stakeholders, including employees.
ganization – the form of the organization will follow
its function, not the other way around.
People professionals have to be more agile to
thrive in this changing world. The people manage- Managing diversity and inclusion
ment function is learning that it has to influence or- The trend is towards developing and implementing
ganizational change strategy rather than reacting to it. more specific and comprehensive strategies for
managing diversity and inclusion. Such strategies
make it plain that the focus will be on fairness, en-
The strategic role of the people suring that merit, competence and potential are the
management function basis for all recruitment, employment, development
and reward decisions. They emphasize that respon-
The pressure is for HRM to be more strategic. This sibility is shared amongst all members of the organ-
has existed at least since Dave Ulrich was advocat- ization.
ing it in 1997. However, it has recently intensified,
often without a clear definition of what being stra-
tegic means, although Ulrich made it quite clear Digital transformation
when he stated that the role of what he called a
strategic HR partner was to align HR systems to The achievement of digital transformation is a
help accomplish the organization’s vision and mis- major trend in organizations and the people man-
sion. As described in Chapter 64 of this book, peo- agement function has an important role in facilitat-
ple management professionals act strategically ing it. Digital transformation is what happens when
when they take part in conjunction with their line organizations successfully take advantage of the
manager colleagues in the development and imple- opportunities offered by digital technology. The
mentation of innovative people strategies that are aim is to achieve digital maturity – the integration
aligned with business or corporate strategies and of digital technology into all areas of the business
thus help to achieve them. and its acceptance as a way of life. It is not just
Chapter 83 | Trends in HRM 693
about the process of digitalization. It is also con- Employment

cerned with the ability of people to adapt to the
new circumstances. Trends in employment practices are taking place be-
The reasons for and the implications of proposed cause of the impact of emerging technologies, digi-
new digital technology need to be communicated to talization, the pressure for work intensification, the
and discussed with those affected by it and steps emergence of new forms of the employment relation-
have to be taken to ensure that they have the under- ship, eg the gig economy, and, importantly, environ-
standing and skills required. The people manage- mental changes – economic, social and events such as
ment function has a crucial role in ensuring that the Covid-19 pandemic and, in the UK, Brexit. The
people issues are considered, that the change is obvious trend is the move to home working and hy-
managed effectively and that learning programmes brid working during and following the Covid-19
are planned and delivered. pandemic. But pressures to improve productivity, in-
crease profit and reduce costs are encouraging trends
towards more flexible working, and associated with
Managing the employee experience that the use of zero-based contracts and the growth
of the gig economy.
The ‘employee experience’ is what happens to peo-
Managements are also having to react to changes
ple at work and how they feel about it. Rather than
in the labour market including skills shortages, dif-
making assumptions about what employees want,
ficulties in recruiting people for some forms of more
the tendency is to explore more systematically the
routine work and problems in retaining key staff.
employee experience of those policies: what’s good
and what’s not so good about that experience. And
this understanding is gained not just by an annual Recruitment
engagement survey but by pulse surveys using feed-
back apps supported by discussions with individual The tendency is to rely more on company websites
employees and focus groups. This is a ‘bottom-up and social media as sources of candidates.
process’ – developing management practices that Interviews, especially when sifting applications, are
address the issues raised by the factors that affect being held online or by telephone rather than face
the experience and dealing with these as a whole in to face. Artifcial intelligence is being applied to a
an employee experience framework, ensuring that a limited extent to match candidates located in a da-
coherent approach is adopted and that the practices tabase to job/person specifications and to use natu-
are mutually supportive. ral language processing to predict which words in
job advertisements will make the most impact on
applicants.
Specific trends
Specific trends are described below in the following Talent management
areas of people management: Increasingly, talent management is becoming ac-
●● employment; cepted as a key area of people management, one
with which senior management is becoming actively
●● recruitment;
engaged, unlike some other areas of people manage-
●● talent management; ment. This is because top management have, at last,
●● learning and development; come to recognize that the success of their organiza-
●● performance management; tions depends on the development of a flow of tal-
ented people.
●● reward.
694 Part 17 | Conclusion
Learning and development Reward management

Learning and development is shifting towards a more Reward management processes are becoming more
learner-centric perspective. It is less concerned with flexible to cope with change and external pressures.
how to plan, run and evaluate training courses and im- Moves are taking place from general approaches to
pose them on employees. Instead, the major preoccu- reward to selective approaches as a better alterna-
pation is understanding how people learn and know- tive to copying a set of supposedly generic and uni-
ing what the best environment is in which they will versal ‘best practice’ reward techniques. Reward
learn. The focus is primarily on workplace learning – in- strategies are being developed that combine and
cluding the concept of ‘learning in the flow of work’ – tailor approaches that involve evolutionary rather
and on self-directed learning in which learners manage than revolutionary changes and adaptations. No
their own learning with the support of their line man- one universal reward practice, pay approach or ‘so-
agers and the help of L&D professionals. Increased at- lution’ such as total rewards, broad-banding, per-
tention is also being paid to remote learning, especially formance-related pay or flexible benefits will make
following the Covid-19 pandemic. a major impact. Rather, improving levels of engage-
ment and productivity is about providing for the
interaction of financial and non-financial factors
Performance management and tailoring the approach to suit each organization
and its workforce.
The major trend is away from the traditional bu-
Two other trends in reward management can be
reaucratic performance management ‘system’. The
identified. First, as Dundon and Rafferty (2018: 381)
move is towards a recognition of the importance of
argued, ‘Reward strategies in many organisations le-
ensuring that line managers have the skills required
gitimize the size of gaps in pay across the corporate
to manage performance and are ready to use them.
ladder and reinforce a “winners versus losers” men-
They are there as performance leaders and as such
tality.’ This problem is now appreciated widely and
they set the direction, make available the resources
there are calls for more effective action to be taken in
needed to get results, motivate their team members,
organizations to tackle inequalities in pay. The sec-
help people to develop their skills (coaching), moni-
ond trend is wider recognition that organizations
tor their progress, provide feedback by means of
need to pay more attention to the financial wellbeing
constructive performance conversations (not for-
of their employees, especially in periods of high infla-
mal annual reviews) and ensure that corrective ac-
tion such as during 2022.
tion is taken when necessary. The onus is on the
organization to identify, select and train managers
who are able and willing to do all this.
Key learning points
Trends in HRM consist of: ●● focus on the management of diversity and

inclusion;
●● revisions to views on the nature, philosophy and
of HRM; ●● digital transformation;
●● the response to change; ●● the management of the employee experience;
●● the strategic role of the people management ●● developments in specific aspects of HRM –
function; employment, recruitment, talent management,
learning and development, performance
●● the pressure for sustainability and responsible management and reward.
business;
Chapter 83 | Trends in HRM 695
References
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Chartered Institute of Personnel and Development Ulrich, D (1997) Judge me by my future not my past,
(2020) People Profession 2030, London, CIPD Human Resource Management, 36 (1), pp 5–8
Chartered Institute of Personnel and Development World Commission on Environment and
(2021) Responsible Business Through Crisis, Development (1987) Our Common Future,
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Dundon, T and Rafferty, A (2018) The (potential)
demise of HRM? Human Resource Management
Journal, 28, (3), pp 377–91
696
CIPD Profession Map: Cross-references

to text
Core and specialist knowledge Page(s)

People practice Development of integrated people practices 14
What good people practice looks like 12
How to test new people practices 14
Employment law 528–536
Workforce planning and how it is used 235>
Performance management 383>
Employee wellbeing 493>
Diversity and inclusion management 298>
Creating effective teams 149, 188
Stakeholder management and analysis 180
Facilitation, coaching and mentoring 638, 639, 661
Employer brand 247–248
Culture and behaviour Culture 144>
Different models of organization behaviour 140
Different theories about human behaviour (eg 140, 141
decision-making theory, nudge theory, self-
determination theory)
Impact of people practices on behaviour, culture, 36, 38
systems and structures
Ethics 47>
Ways of learning and emerging learning trends 335–337, 694
Employee engagement and motivation 193>, 218>
Business acumen Link between HR and business strategy 65–66, 75
Establish the cause of organizational/business issues 581–582
Financial and non-financial measures of performance 36–37
Make calculations (eg percentages, averages) and 574–575
interpret financial information
External and internal factors that shape short- and 35
long-term business performance
(continued )
Appendix 697

Drivers of competitive advantage and the people 17, 66
opportunities they present
Representing the value of people in different ways 20
(eg skills, profit, capability, cost)
HR strategy development 79–80
The role and purpose of governance 141, 187, 437
Select and manage suppliers and partnership 92
organizations
How organizations can create opportunities to 58–59
improve society
Analytics and creating value Evidence-based management 109–111
Data management 120,124
Critical thinking 593
People analytics 113>
How people practices create value 39–40
Digital working The use of digital technologies 119
Using digital technology to improve collaboration 120
Use of social media 120, 249, 359, 481
The benefits of digital technology 119
Change Making a business case 584
Evidencing the value of change 656
Impact of change on culture 145, 656
Applying principles of psychology of change 651
Assessing capability for change 651
Assessing choice of levers for change 652–653
Project planning for change 687
Employee experience Approaches to enhance engagement 222
Employee voice 479>
Management practices and the employee experience 277>
Onboarding programmes 281–283
Wellbeing practice 495–498
Trust 461
Employer brand 247–248
People policies 515>
Communication channels 487–488
(continued )
698 Appendix

Employee relations Employment law 528–536
Dispute resolution 476–477
Development of people policies 520
Diversity and inclusion Difference between diversity and inclusion 298
Managing diversity and inclusion 299
Diversity and inclusion legislation 530–531
Creating an inclusive environment 300
Learning and development Learning cultures 326
Defining capability needs 344
Adult learning theories 334
Face-to-face learning techniques 640–641
Digital learning 357–360
Learning content creation 358, 362
Learning facilitation 639
Learning engagement 224
Learning transfer 362
Organization development Consulting cycle and 184
and design processes
Organization development theory 180–181, 187
Organization diagnostic tools 183–186
Organization development interventions 187
Macro trends that impact on organization design 158
Organization design theory 158–159
Organization structures 159
Work design 164>
People analytics Analytic consulting 591
People data modelling 124
Research techniques 598–599
Multivariate analysis 610
Data visualization techniques 608–609
Resourcing Workforce planning 235>
Sourcing 248–252
Assessment approaches 620–621
Tailoring advertising to different candidates 250
Use of social media 249
Different types of workers 240
(continued )
Appendix 699

Reward Reward strategy 415>
Salary surveys 420–421
Executive remuneration 435–437
International reward 555
Employee benefits 429–430
Link between reward and performance 205
Reward legislation 531–532, 534–535
Reward reports 532
Remuneration committees 437–438
Talent management Retaining talent 283–284
Identifying and reviewing talent 269–270
Creating diverse talent pools 268
Global approaches to talent management 554
Self-managed talent approaches 341
Career development pathways 271
700
AUTHOR INDEX
Abell, D F 74 Behling, O 200 Caldwell, R 652, 655

Adair, J 664 Bell, B S 339 Caligiuri, P 563
Adam, D 482 Bennis, W G 180, 367, 467, Cameron, J 38, 202
Adams, J S 49, 196, 200, 204 665, 666 Campion, M A 390
Alderfer, C 197–98 Bersin, J 277, 336 Canibano, A 266, 465
Alfes, K 218–19, 222, 226, 467, Bertalanffy, L V 143, 158 Cappelli, P 69, 236, 266, 26,
497, 655, 656 Bevan, S 284, 506 284, 285
Allport, G 196 Birdi, K 37, 334 Carnall, C 655
Altman, Y 559 Birkinshaw, J 367 Carter, C 128
Alvesson, M 39 Blanchard, K H 367 Cascio, W F 65, 70
Anderson, V 348 Bontis, N 18, 349 Cervone, D 200
Ando, N 552 Bos-Nehles, A 38, 102 Chamberlain, N W 475
Anthony, P D 182 Boselie, P 11, 39 Chamorro-Premuzic, T 224,
Applebaum, E 42, 43, 210, 212 Boudreau, J W 113, 114 246, 265
Araujo, J 332 Bowen, D 147, 486 Charney, D 507
Argyle, M 152 Bowie, N E 47 Cheese, P 32, 74–75, 78, 87, 88,
Argyris, C 142, 180, 329, 330 Boxall, P 11, 35, 40, 41, 47, 65, 283
Armstrong, M 9, 10, 28, 70, 75, 66, 69, 74, 88, 460, 479, 482 Child, J 160
182, 219, 415 Boyatzis, R 131 Christen M 205
Arnold, J 140, 196 Braverman, H 27, 465 Clardy, A 337
Ashton, D 42, 43 Brayfield, A H 205 Clark, A E 172
Atkinson, J 304 Brewster, C 11, 545, 546, 548 Clarke, N 153, 221, 227
Bridwell, L G 197 Clegg, C 174
Baeten, X 555 Briner, R B 109, 227 Clegg, S 47, 52
Bakker, A 228, 494, 497 Brinjolfsson, E 98 Clutterbuck, D 638
Baird, L 67 Briscoe, D 547, 554, 555, 556 Coens, T 380
Balain, S 219, 227 Brockbank, W 95 Coffman, C 223
Balkin, D B 28 Brown, D 70, 78, 93, 95, 218, 224, Collins, S 319, 336
Balugon, J 655 388, 389, 412, 415, 451, 494 Collings, D G 266, 554
Bandura, A 200, 356 Brynson A 494 Combs, J 42
Barends, E G 109 Buchanan, D 139, 151, 152, Conger, J A 665
Barnard, C 142 160, 181, 212 Conway, N 38, 470, 471
Barney, J 66, 323 Buckingham, M 398 Cooke, R 182, 185
Baron, A 57, 75 Budd, J 479 Cooper, C 494, 495, 507
Bartlett, C A 143, 159, 545, 546 Burgoyne, J 331, 367 Coopey, J 213
Baruch, Y 559 Burke, L A 350 Costa, P 151
Bass, B M 666 Burke, P J 141 Coster, C 11
Baumann, Z 52 Burke, W W 182 Cotton, C 38, 202, 205
Beauchamp, T L 48 Burke-Smalley, L A 362 Crawford, E R 28, 175, 221
Becker, B E 3, 4, 42, 43, 88 Burns, J M 143, 160, 665, 667 Crocker-Hefter, A 69
Beckhard, R 180 Burt, C 150 Crockett, W H 205
Beer, M 9, 10, 11, 70, 210, 651 Burt, E 257 Crombie, A 144
Author Index 701
Cropanzano, R 379 Fang, M 537 Groysberg, B

Crossan, M M 329, 330, 331 Farh, C I 563 Guest, D E 9, 10, 35, 36, 37, 38,
Cullinane, N 460 Felstead, A 494 39, 68, 210, 211, 213, 222,
Cyert, R M 163, 213 Fernadez-Areoz, C 268 225, 461, 469, 471, 475,
Cummings, T G 160, 183 Ferreira, A I 339 494, 497
Festing, M 548, 556 Gunter, B 144, 470
Davis, A 54 Fiedler, F E 368, 663 Guthrie, J P 36
Davis-Blake, A 67 Findlay, P 28, 172 Guzzo, R A 40
Deal, T 144 Fisher, S L 119
Deci, E L 174, 195, 196, 200, Fitzpatrick, M J 291 Haas, H 556
202, 204 Flanders, A 474 Hackenen, J J 221
DeCotiis, T 186 Flanagan, J 319 Hackman, J R 149, 164, 175,
Delery, J E 17, 66, 67, 68 Fletcher, C 388 200, 204
De Menezes, L 43 Folger, R 379 Hamel, G 652
Deming, W E 380, 387 Follett, M P 161, 681 Hamlin, B 47
Demerouti, E 28, 175, 497 Fombrun, C J 9 Handy, C 146, 158
Den Hartog, D N 40 Foots, P A 60 Hansen, M T 127, 128, 129
DeNisi, A S 41, 377, 378, 379 Ford, M T 494 Harackiewicz, J M 200
Denison, D R 147 Forth J 494 Hardman, P 93
Derkes, D 494 Foucault, M 48 Harley, B 11, 465–66
De Stefano, F 60 Fowler, A 9, 10 Harris, C M 19
Dewey, J 335 Francis, H 88, 94 Harris, H 548
Dickens, C 81 Freeman, R E 4, 48, 59, 475 Harrison, R 146, 185
Dickman, M 559, 564 French, W L 148 Harrison, Rosemary 319
Dickson, W 142, 180, 204 Frenkel, S 36, 548 Hart, J 356
Digman, J M 151 Friedman, A 27, 59 Harter, J K 218
Dixon, N F 367 Froes, J 564 Harter, S 667
Doherty, N T 559 Furnham, A 144 Hartley, J 213
Donahue, R 559 Hase, S 334
Donald, I 494 Gagne, R M 640–41 Hebb, D 336
Doty, H D 67, 68 Galbraith, K 28 Hemp, P 293
Dowling, P J 553 Galpin, M 222 Hendel-Giller, R 336
Dowling, W E 171 Garrow, V 293 Hendry, C 9, 437
Drucker, P 114, 366, Garvin, D A 331 Hensvick, L 446
372, 589 Gennard, J 28 Heron, P 43
Dulewicz, V 153 George, B 666–67 Herriott, P 461
Dundon, T 24, 455, Gephart, M A 43 Hersey, P 367
474, 479 Gerhart, S 3, 202, 547 Herzberg, F 38, 142, 164, 171,
Dunnette, M D 198 Ghoshal, S 59, 129, 143, 159, 175, 180, 195, 198, 203, 205
Dutton, J E 176 545, 546 Hesketh, A 35
Dwivedula, R 202 Giiancola, F L 412 Hesketh, I 495, 507
Dyer, L 7, 68, 69, 74, 212 Gibson, S K 180 Higgs, M 153
Gifford, J 149 Hillman, A 59, 60
Easterby-Smith, M 332 Godard, J 43 Hiltrop, J M 547
Edwards, M R 455 Gold, J 667 Hirsh,W 90, 396
Eichinger, R W 337 Goleman, D 149, 152, 153, 663 Hitt, M A 17
Eidems, J 556 Gomez-Mejia, L R 28 Hofstede, G 547
Eisenhardt, K M 651 Gonzalis-Molina, G 223 Holbeche, L 284
Eldridge, J 144 Goodall, A 398 Holder, G W 69
Elias, J 18 Grant, R M 128 Holley, N 89
Emery, F F 143 Gratton, L 65, 81, 278 Honey, P 340
Eraut, M J 353 Gray, D A 660 Hope-Hailey, V 88, 655
Ericksen, J 42 Grint, K 388 Houghton, E 109
702 Author Index
Hoyle, R 320 Kohn, A 38 Marchington, M 10, 691

Hsiu S-W 331 Kolb, D A 335 Markwick, C 222
Hucyznski, A 139, 151, 152, 160, Kotter, J P 367 Marler, J H 113, 119
181, 291 Kouzes, J 667 Marsden, D 464, 465
Hunt, S 66 Koys, D 186 Marsh, C 163, 182, 183, 213
Hunter, J E 150, 195, 254, 615 Kramer, M R 59, 563 Martin, A O 493
Hunter, L 304 Krekel, C 494 Marx, K 27
Huselid, M A 36, 42, 88 Kuhn, J 474, 475 Maslach, C 225
Hutchins, H M 350, 352 Maslow, A 180, 195, 197, 203
Hutchinson, S 103 Lai, L 206 Mayer, J D 152, 153
Hyman, R 10 Lake, D 183 Mayo, E 180, 204
Hymowitz, C 265 Lafferty, J 182, 185 McDonald, D 379
Lancaster, A 331 McGregor, D 142, 180, 373
Ivancevich, J M 139, 147 Latham, G 196, 200, 204, 390 McKersie, R B 474
Lau, P Y 332 McLean, A 180
Jackson, S E 65, 225 Lawler, E E 87, 199, 203, McClelland, D C 198
Jaques, E 205 225, 654 McMahan, G C 18, 19, 65, 68
Jenkins, M 380 Lawrence, P R 159 McRae, R R 151
Jesuthasan, R 114 Leblanc, B 560 McWilliams, A 57, 58
Jiang, K 40 Lee, C D 389 Medoff, J 475
Johnson, M 577 Lee, L 559 Meindl, J R 663
Jones, P 380 Lee, W G 54 Mellahi, K 554
Jones, T M 47 Legge, K 9, 10, 11, 24, 48, 53, Meshoulam, I 67
Judge, G 28 182, 213 Michie, J 68
Jung, C 152 Leon, L S 331 Miles, R E 67
Lepak, D 4 Miller, T 158, 348
Kahn, W A 149, 194, 218, 219 Leuven, V 555 Mintzberg, H 163, 213, 367
Kakabadse, A 683 Leventhal, G S 48 Mischel, W 150
Kanungo, R N 665 Levitt, T 59, 545 Mohrman, S A 87, 654
Kanter, R M 66 Lewin, K 149, 180, 651 Moliterno, T P 19
Katz, D 149, 200 Lewis, R 223 Molloy, E 163
Katzenbach, J 148 Likert, R 142, 180 Mookerjee, D 93
Kaufman, B E 65 Linna, A 389 Moore, D A 257, 617
Kaye, L 70 Little, P 220 Mor Barak, M E 300
Kearns, P 348 Littler, C 27 Morgan, J 277
Keegan, A 88, 94 Locke, E A 153, 196, 200, 204, Mowday, R 210
Keenoy, T 9, 227 220, 390 Murlis, H 389, 415
Keim, G 59, 60 Lombardo, M M 337 Murphy, K R 390, 395, 398
Kelley, H H 150 Long, P 75
Kennedy, A 144 Lorsch, J 159 Nadler, D A 139, 653
Kenyon, C 334 Lourenco, D 339 Nahpiet, J 129
Kessler, S 464 Lupton, T 1617 Newton, T 28
Keynes, J M 57 Nanus, B 666
Khatri, N 36 Mabey, C 16 Nishii, L H 4, 40, 299
Khilji, E 41 MacDuffie, J P 68 Nonaka, I 128
Kim, D M 329, 561, 564 Macey, W H 218, 220, 221, Noonan, K A 40
King, Z 96 223, 227 Northouse, P G 149
Kirkpatrick, D L 350–51 MacInnes J 304 Nuesch, S 556
Kirton, H 446 MacLeod, D 221, 227
Kleim, G 59 Magretta, J 577 Oldham, G R 164, 175, 201, 204
Knight, R 312 Mangham, L L 213 O’Leary, R S 398
Kochan, T A 53, 211, 212, 460 Manzini, A O 184, 185 Olsen, W 446
Author Index 703
Opsahl, R C 198 Revans, R W 371 Soane, E 230

O’Reilly, C A 446 Reynolds, J 353, 361 Snow, C C 67
Organ, D W 220 Rice, A 158 Snyder, W M 128
Orlitzky, P M 36 Rikhard, C 447 Southwick, S 507
Osterby, B 11 Richer, J 36, 481 Sparrow, P 93, 227, 545, 546,
Osterman, P 211, 460 Robinson, D 219, 227, 246, 559, 571, 578
Ostroff, C 147, 486 380, 393 Spector, P E 205, 651
O’Toole, J 467 Roethlisberger, F 142, 180, 204 Spindler, G S 470
Rogers, E M 649, 652 Stairs, M 222
Paauwe, J 38, 40, 67, 69 Rollinson, D 479 Stalker, G 143, 160
Paik, Y 552 Rothwell, S 236 Standing, G 494
Parker, S K 160 Roumpi, D 17, 66 Starke, F A 200
Parkes, C 54 Rousseau, D M 40, 109, 147, Stavrou, E T 69–70
Pascale, R 143 198, 466, 469 Stebbing, S 594
Patterson, M G 37 Rubery, J 25, 305, 464 Steers, R M 205
Peccei, R 9, 36, 211, 461, 475, Ruona, W F 180, 350 Stets, J E 141
493, 494 Russo, M V 60 Stiles, P 547
Pedler, M 331 Ryan, R M 174, 195, 196, 200, Stogdill, R M 394, 663
Peetz, D 548 202, 204 Stoskopf, G A 388
Penrose, E 66 Ryle, G 127–28 Storey, J 3, 9, 27–28, 38,
Perkins, S 437 Rynes, S L 202 219, 222
Peters, K 370 Sung, J 42, 43
Petrick, J A 47 Sako, M 467 Sunstein, C 141, 654
Pettigrew, A 9, 652 Saks, A M 218, 219, 227 Sutton, R 109, 366
Pfeffer, J 67, 69, 109, 366 Salaman, G 27 Suutari, V 548
Phillips, J D 286 Salancik, G R 210 Swailes, S 211
Phillips, J J 348 Salovey, P 152
Pink, D H 38, 19, 201, 202 Sandel, M J 202 Takeuchi, H 128
Pinto, H I 559, 561, 564 Scarborough, H 18, 128, 331 Tamkin, P 367, 667
Plaskoff, J 277 Schein E H 142, 144, 145, 271 Tan, J 127
Popper, K 603 Schmidt, F L 150, 254, 615 Tansley, C 266
Porter, L W 59, 199, 203 Schneider, B 12, 212, 221 Tavanti, M 666
Porter, M E 67 Schuler, R S 65 Tayeb, M 152
Posner, B 667 Schulz, T W 18 Taylor, A 151
Posthuma, R A 390 Senge, P 331 Taylor, F W 27, 142, 164, 195
Pritchard, K 94, 377 Sheehan, M 68 Taylor, M 171
Pulakos, E D 380–81, 388, Shih, H-A 42 Thaler, R 141, 654
393, 398 Shields, J 196, 198–99, 200, Thompson, M 37, 43
Purcell, J 37, 39, 40, 66, 69, 74, 202, 378 Thompson, P 11, 465–66, 467
75, 100, 103, 212, 225, 227, Shippmann, J S 632 Thorndike, E L 195, 196, 203, 335
456, 479, 482 Shirom, A 146 Tietze, S 266
Simon, H 141 Toplis, J 152
Quinn, J F 47 Singh, P 202 Trevor, J 415, 418
Quinn Mills, D 233, 235 Sisson, K 213 Trist, E L 143
Quisenberry, W L 311 Skaggs, B C 17 Truss, C 9, 65, 218, 219, 227
Skinner, B F 196, 203, 335 Tsang, E W 329
Rafferty, A 10, 24 Sloan, A J 141 Tuckman, B 148–49
Rawls, J 12, 48 Smith, Adam 18, 52 Tuomi, K 36
Reay, T 109 Smith, C E 41, 378, 379 Tushman, M L 139, 653
Rees, C 225 Smith, D 148
Reeves, T 68, 74 Smith, R S 379 Ulrich, D 38, 67, 87, 113, 119,
Reilly, P 89, 218, 224, 241, 548 Snell, S A 4 127, 183, 545, 655
704 Author Index
Undy, R 464 Warr, P B 350, 493, 497 Wood, D J 57

Urwick, L F 142 Wayne, S J 563 Woodfield, R 479
Weber, M 142 Woodall, J 48
Vance, R J 230 Weidner, C K 182 Woodrow, C 36
Vanhala, S 36 Wellins, R 128 Woodruff, C 131
Vanrooy, B 483 Wenger, E 128 Woodward, J 143, 650
Vernon, P E 150 Wernerfelt, B 437 Worley, C 160, 183, 184
Viswesveran, C 389 West, M A 37 Wrzesniewski, A 176
Vroom, V 196, 199, 203, 205 Whipp, R 652 Wright, D S 152
Whittington, R 163 Wright, P M 4, 17, 18, 36,
Wade-Benzoni, K A 466, 469 Wick, C W 331 40, 65
Wagner, D N 121 Wietrack, E 149
Wahba, M A 197 Wilkinson, A 474 Yalabik, Z Y 219, 220
Wall, T D 176 Williams, T 548 Youndt, M A 17
Walton, R E 174, 193, 210, 211, Wilson, N A B 171 Yukl, G 368, 666
213, 455, 461, 474, 497 Winstanley, D 48
Wang, X 41 Wong, W 17–18 Zarina, M 652
705
SUBJECT INDEX
abilities 132 appraisal 377, 385, see also and best practice 3, 69–70
ability performance management and contingency theory 69
classification of 150 appreciative enquiry 181 limitations to concept 69
cognitive 150 apprenticeships 364 strategic fit 67
defined 150 aptitude tests 259 best practice
ability tests 258–59 arbitration 494–95 assumption of 69
absence management architecture, human resource, see and best fit 69–70
the Bradford factor 291 human resource criticism of concept 69
causes of absence 291 architecture defined 69
defined 290 arguments, development and list of best practices 69
incidence of absence 290 justification of 594 bias and diversity 300
long-term absence 292 artefacts 145 big idea, the 75
recording and measuring artificial intelligence (AI) bite-sized training 363
absence 291–92 and automation 168 black box phenomenon 38
short-term absence 292 components of 122 blended learning 347,
absenteeism, handling of 672–73 concerns 123 357, 362
achievement motivation 1198 defined 122 blind job applications (name
action learning 187 extent used in HR 123 blind) 253
action research 181 risks 123 blockchain 120
added value 38 use of in learning and blogs 360
ADDIE model for training development 361 bonuses 428
events 362 use of in recruiting 250 bounded rationality 52, 588
adult learning 336 uses of 122–23 the Bradford factor 291
advertising (recruitment) 250 assessment centres 260 Brexit 25, 35
affective commitment 212 associative learning 335 British Standards Institute 6
affective engagement 219 attendance management, see broad-banded grade and pay
age and employment absence management structures 424
policy 516 attitude surveys, see employee broad-graded grade and pay
agency 337 surveys structures 424
agency theory 28 attitudes 153 budgetary control 576
agility 164, 303 attribution theory 150–51 bullying 516
AMO model automation 29, 30, 168 bundling
defined 40 aim of 67
and HRM 40 balance sheets 574–75 defined 67
and performance 40, 41 bargaining 644–45 and an HPWS 43
analysis of data 583 base pay management 410, process of 68
analytic consulting 591 422–26, 430 strategy for 76
analytical job evaluation 421–22 behavioural competencies 131 burnout 225–26
analytical job matching 422 behaviourist learning business case, making of 584,
analytical skills 591 theory 335, 338 660–61
analytics, see HR analytics benchmarking business issues, dealing with from
andragogy 334 best fit an HR perspective
application form 252 approach 69 identification of
706 Subject Index
adopt an evidence-based models 651–52 distributive bargaining 475

approach 583 nudge theory, use of 654 integrative bargaining 475–76
analyse quantitative and process of 650–52 forms of 474–75
qualitative information psychology of commercial job boards 250
conduct a critical responsibility for 655–56 commitment
evaluation 583 resistance to change 649–50 affective commitment 212
conduct research 583 role of HR 655–56 critical evaluation 213–14
critically analyse HR policy change models defined 193, 210
and practice 582–83 Beckhard 651 developing a commitment
establish people factors 582 Beer et al 651 strategy 214
identify issues 581 Kotter 651–52 and engagement 212
make business case 584 Lewin 651 factors affecting 212
business models 577 Rogers 652 and flexibility 213
business model innovation 577 Chartered Institute of high commitment
business partners (HR) 89 Personnel and Development management 76, 214
business planning and workforce (CIPD) 3, 4, 11, 12, 19, 20, and mutual gains
planning 236 25, 29, 30, 44, 53, 58, 61, perspective 211
business skills 573–78 89, 92, 103, 132, 165, 166, and mutuality 210–11
business strategy and HR 75 167, 168, 171, 186, 218, and performance 211
226, 236, 248, 253, 279, communications 120, see also
candidate relationship 466, 285, 286, 290, 303, employee communications
management systems 248 309, 310, 322, 323, 325, communities of practice
capability procedure 522–23 331, 341, 347, 357, 371, 128, 331
capability requirements, 425, 435, 437, 470, 479, compa-ratio analysis 430
definition of 344 480, 481, 483, 493, 494, competence 131
career development 271 495, 582, 650, 692 competence analysis, see
case presentation 660 chatbot 120 competency modelling
causal ambiguity 38–39 check-ins 390 competencies
centres of expertise 89 Civil Aviation Authority 20 behavioural 131
challenging conversations, cloud computing 121–22 defined 131
handling of 678 coaching 354–55, 638–39 and emotional
change cognitive ability 150 intelligence 1153
defined 649 cognitive dissonance 152 graded 134
evidencing the value of cognitive learning theory 335, NVQ/SNVQ 131
change 656 338 role-specific 134
and flexibility 305 collaborative learning 356, technical 131–32
implementation of 654–55 see also types of competencies
platforms 654 social learning 131–32
process of 649 collaboration, use of using competencies 133–34
resistance to 649–50 technology 120 competency
response by HR to collective agreements defined 131
change 692 defined 475 distinguished from
change agents 655–56 new style agreements 475 competence 131
change and culture 145 partnership agreements competency-based HRM
change management 475–76 applications 134
approach to 652–53 procedural agreements 475 defined 131
change agents 655–56 single-union deals 475 keys to success 134
change models 651–52 substantive competency-based interview and
the change process 649 agreements 475 competency
evidencing the value of collective bargaining frameworks 132
change 656 conjunctive competency frameworks
defined 649 bargaining 475 defined 131, 132–33
guidelines for 656 cooperative bargaining 475 development of 133
implementing change 654–55 defined 474 headings 132
Subject Index 707
competency modelling 632–36 benefits 60 deduction 602

competitive advantage competency framework 60 Delloite 29
defined 6 CSR activities 57, 58 demand forecasting 237
drivers of 67 defined 6, 57–58 deontological theory 48
and the HR function developing a CSR strategy 60 dependent variable 609
competitive strategies best fit investment criteria 60 descriptive analytics 114–15
model 67 opposing views 59–60 diagnostic cycle 185
conciliation 476 pressure for sustainability and diagnostic reviews 79
conflict 150 socially responsible diagnostic skills 592
conflict management 679–81 business 692 diagnostics 185–86
configurational perspective on rationale for 59 different types of workers 240
achieving strategic fit 68 role of HR 61 digital 119
conjunctive bargaining 475 strategic CSR 58 digital HRM
connected learning 356 corporate websites 249 defined 7, 119
constructs 193 correlation 609 managing 123–24
consultative committees 482 costing 576–77 uses of 120–21
consulting cycle, the 184 Covid-19 25, 32, 35, 309 digital learning
content (needs) theory of criterion measure of test categories of 357
motivation 196–99 validity 259 defined 357
context of HRM critical evaluation skills 593–94 digital recruitment 248
environmental factors 24–25 critical evaluations in text digital technology 119
the external environment of change models 652 digital transformation 121, 692–93
24–25 of commitment 212–13 directors, reward of, see
the internal environment 24 of contingent pay 429 rewarding directors
the labour market 25 of engagement 227–28 and senior
what’s happening to work 30–31 of strategic HRM 70 executives
contingency perspective on of the resource-based view 67 discipline policy 516
achieving strategic fit 68 of the reward strategy disciplinary issues, 671–72
contingency model of HRM 69 concept 418 disciplinary procedure 523–24
contingency theory of the three-legged stool discourse ethics 48
defined 3 model 89 discovery learning 337
emphasis of 69 of the total reward discretionary behaviour
and the organization 24 concept 411 193, 219
contingent pay critical incident technique 635–36 discretionary learning 337
defined 410, 426 critical thinking 593 dismissal 290
individual 426 cross-lagged research models 598 dispersion measures 608–09
critical evaluation of 429 crowding out 138 dispute resolution
schemes 427–28 CSR Academy 60 aim 476
continuing professional culture arbitration 476
development 341 components of 146 conciliation 476
continuous improvement 654 defined 144 mediation 477
contracts of employment impact of change 145 pendulum arbitration 476
464, 520 learning 326 distributive justice 49
contracts, employment management 182 divergence 548
relationship 466 see also organizational culture diversity and inclusion
convergence 548 diversity defined 298
cooperative bargaining 475 data 114 inclusion defined 298
coordinating discussions 661–62 database management 124 management of 299–300
core/periphery firm 304 data mining 113 meaning of 296
corporate culture, see data modelling 124 policy 300, 516–17
organizational culture decision-making skills 589 rationale for management
corporate social responsibility decision-making theory 141, 589 of 299
(CSR) data visualization 608 strategy 299
708 Subject Index
trends in management of meaning of 218–19 defined 8, 493

values 300 measurement of 226–28 factors and actions 495–95
diversity networks 301 and motivation 220 and performance
double-loop learning 330 and organizational citizenship strategy 495, 497
due process 379 behaviour 220 employer brand
organizational defined 247
education 320 engagement 219 development of 248
efficiency wage theory 407 outcomes 221–22 features of 248
e-HRM, see digital HRM strategy 222 employer of choice 247
e-learning 347, 358–59 surveys 226 employment defined 7
emails and internet policy 517 theory of engagement 219 employment law
emotional intelligence employee experience, the compliance 7
and competencies 153 defined 8, 27, 277 contracts of
critical assessment of enhancing the employee employment 530
concept 153 experience 279 data protection 535–36
components of 152 and engagement 220–21 dealing with 528
defined 152 factors affecting 277 discrimination law 530–31
models of 153 improvement of 278–79 dismissal law 532–33
emotions 152 management of 693 employment tribunal
employee assistance programmes employee life cycle 12, 222, cases, dealing with
(EAPs) 496 277 539–40
employee benefits 430–31 employee resourcing 231 enforcement 536–37
employee communications employee relations, see equal pay law 531–32
approach to 487 employment relations family-friendly employment
consultative committees 488 employee retention 283–85 law 535
defined 489 employee surveys 480–81 fire and rehire 533
importance of 489–90 employee turnover General Data Protection
intranet 487 cost of 285–86 Regulation
enterprise social network 487 choice of measurement 289 (GDPR) 535
methods 487–88 defined 285 health and safety law
strategy 488 employee turnover index 286 533–34
team briefing 488 half-life index 287 and HRM 537–39
two-way communication 4897 length of service analysis 289 hours and wages law 534–35
what should be stability index 286 provisions 528–36
communicated 486–87 survival rate 286–87 purpose 528–30
employee development employee value proposition 248 redundancy 533
policy 517, see also employee voice TUPE 533
learning and development defined 479 employment practices, ethical
employee engagement degrees of 479–80 guidelines 51
affective engagement 219 direct voice 480–82 employment relations
and burnout 225–26 employee surveys 480–81 approaches to 456
and commitment 219 and engagement 225 climate 460
components of 219 indirect voice 482 defined 8, 453
critical evaluation of 227–28 involvement 482 ethical approach 475
defined 193, 194 joint consultation 482 ethical guidelines 51
drivers of 221 need for 479 and industrial relations 453
and the employee participation 482 management style 456
experience 220–21 policy 517 managing with trade
enhancing job strategy 461 unions 456
engagement 222–25 team briefing 481 managing without trade
enhancing organizational employee wellbeing unions 456
engagement 225 actions 495–96 meaning of 455–56
job engagement 219 basis of 493–94 objectives 408
and job satisfaction 220 the case for 494–95 policies 457
Subject Index 709
strategy 459–461 the Kirkpatrick model 350–51 family-friendly law 535

employment relationship learning impact model 349 feedback
basis of 464–66 outcomes 347–48 guidelines on providing 397
contracts 466 problem of 351 and performance
defined 464 return on expectations 348–49 management 385
and labour process theory 465 return on investment 348 felt-fair principle 205
managing the employment evidence-based HRM financial budgeting 575–76
relationship 466–67 approach to 110–11 financial incentives and
nature of 464 defined 109 motivation 205
and the psychological evidence-based management 110 financial rewards
contract 464, 469 evidencing the value of incentive effect 410
engagement see employee change 656 job-based pay 410
engagement exchange theory 9, 28 person-based pay 410
enterprise resource planning executive remuneration sorting effect 410
(ERP) systems 124 bonus schemes 436 fire and rehire 289–90, 533
enterprise social network 360 487 elements of 435–37 fit (strategic) 68
environmental scanning 79 executive pay 435 flexibility
Equality Act (2010) 447 remuneration committees and commitment 213–14
equal opportunity policy 517 437–38 compressed hours 303
equal pay expatriates, management of flexible (core-periphery)
equal pay claims 531 assimilation and support firms 304
the Equal Pay Act 532 562–63 flexible hours 305
and the gender pay gap 445 career management 563 flexitime 305
material factor defence 531 expatriate defined 559 forms of 303–05
equity 49 home-based pay 564 functional 303–04
equity theory of motivation 200 host-based pay 565 hot desking 305
ERG theory of motivation pay and allowance incidence of 303
(Alderfer) 198 policies 564–65 job sharing 305
ethical performance management 563 multi-skilling 304
approach to employee preparation 562 numerical 304
relations 126 process of 559–60 role of HR 307
decisions 47 recruitment and selection structural 304
dilemmas 52–53 policies 561 support for 303
ethical role of HR 53–54 resourcing policies 560 work flexibility 305
judgements 47 why use expatriates? 559 zero-hours contracts 306–07
ethical dilemmas, resolution expectancy theory of flexible firm, the 304
of 52–53 motivation 38, 199–200 flexible labour markets 305
ethical guidelines 50–52 experiential learning 335, 353 flexible working 168, 305–06
ethics experiential learning theory 338 flexitime 305
defined 47 experienced worker’s standard formal learning 347
deontological theory 48 (ESW) 336
discourse ethics 48 extreme market pricing 420 game-based learning 360
and morality 47 extrinsic motivation 201 gamification 360
concerns of 47 gender pay gap, the
eudaimonic wellbeing 493 facilitating 639, 661 actions to reduce a gender pay
Eurofound 171 factor plan 422 gap 446–48
evaluation of learning factors, job evaluation 421 defined 445
of overall contribution of face-to-face (F2F) learning 320 and equal pay 445, 447
learning 348–49 factors shaping business impact of lack of
defined 347 performance 35 flexibility 303
external benchmarking 349 fairness narrowing the gap at
individual learning events defined 48 organizational level 448–49
349–50 and equity 49 reasons for 445–46
internal surveys 349 and justice 49 size of 445
710 Subject Index
General Data Protection occupational health multi-dimensional

Regulation (GDPR) 253 programmes 506 analytics 115, 117
general intelligence 151 organizing 509 predictive analytics 117
general mental ability (GMA) 150 policies 501–02 purpose of 113–14
generic roles 624, programmes 501 types of 114–17
generic role profile 628, 630 risk assessments 502–04 HR architecture 3–4
gig economy 30 safety programmes 501 HR business partner role 89, 94
Glassdoor 247, 283 training 508 HR data 115–17
globalization 545 Herzberg’s two-factor model of HR delivery model 89
goal theory of motivation 200 motivation 198 HR function
governance 3, 94, 141, 187, 437 hierarchy of needs and automation 30
grade structures (Maslow) 197 business partners 89, 94
defined 423 high-commitment centres of expertise 89
described 423 management 76, 214 concerns of 88
grade and pay structures high-involvement contribution of 87
broad-banded structure 424 management 76, 225 ethical role of 53–54
broad-graded structure 424 high-performance culture 42 evaluation of 90
defined 423 high-performance HR operating model 88–89
guiding principles 423 management 42, 76 organization of 88–89
individual job grades 425 high-performance work role of 87
job family 424 design 168 shared service centres 89
managing pay in 426 high-performance work strategic business partners 89
narrow graded 424 systems 42–43 three-legged stool model 89
pay progression 423 high-performance transactional activities 88
pay spine 424 working 42, 168 transformational activities 87
purpose 422 home-based pay 564 HR guiding principles 6
spot rates 425 home-working HR information system (HRIS)
types of 423–24 defined 31 cloud-based 121
grievance procedure 524–25 and employees 312 defined 121
grievance policy 518 incidence of 309 enterprise resource planning
grounded theory 603 and line managers (ERS) systems 121
group dynamics 149 311–12 intranet 121
group behaviour 148–49 management of 312–14 purpose 121
guiding principles of HRM 6 and productivity 310 self-service 124
themes 310 HR operating model 88–89
halo effect 619 use of surveillance HR model 85
handling people problems 671–76 software 311 HR operating model 88–89
harassment, see sexual horizontal fit 63, 67–68 HR and performance
harassment horizontal integration, contribution of HR 35
‘hard’ model of HRM 10 see horizontal fit how HR can improve
hard skills 131 host-based pay 565 performance 41
harmonization 457 hot desks 312 impact of HR on
Harvard framework of HRM 9 HR (human resources) performance 36–37
Hawthorne studies 204 ethical role of 53–54 HR philosophy
health and safety HR operating model 88 and corporate social
accident prevention 505 and HRM 1 responsibility 6
aim 501 impact of 36–37 HR plans 239
audits 504–05 and performance 35 HR policies (general
communicating on 508 HR administration 120 considerations)
hazards 503 HR analytics defined 31, 81
inspections 505 content of 114 formulating 86–87
management of 501, 507–08 defined 7, 113 and HR procedures, 81
measuring performance descriptive analytics 114–15 implementing 87
507–08 HR data 115–17 reason for 81–82
Subject Index 711
HR policies (overall) 4, 82 core behaviours required employee communications 488

HR policies (specific) 95–96 employment relations 459–62
absence management 298 as employee advocates 93 high commitment
age and employment 516 financial skills required 573 management 76
bullying 516 handling people problems high involvement
discipline 516 skills required 671 management 76
diversity and inclusion 516 influencing skills required 659 high performance
e-mails and use of the insight-focus 96 management 76
internet 517 job analysis skills 623 individual learning 326
employee development 517 leading and facilitating change international HRM 546
employment relations 457 role 655 learning culture 326
employee voice 517 learning and development learning and development 325
the employment skills required 638 motivation 205–06
relationship 517 negotiating skills required 643 organization development
equal opportunity 517 political skills required 683 184–85
grievances 84 problem-solving skills organizational learning 326
health and safety 85, 518–19 required 586 overarching purpose 63
industrial relations 518 professional behaviours resourcing 233–34
new technology 518 required 95 reward 415–18
promotion 518 professionalism in HRM 96 specific HR strategies 76–78
redundancy 518 research skills required 596 talent management 267
reward 518 role of 92 wellbeing 495, 497
sexual harassment 518–19 role requirements 95 HR system 4
and stakeholders 516 selection interviewing and the HR architecture, 4
substance-abuse 519 skills 613–21 components of 4, 5
talent management 271–73 service delivery role 88 defined 4
talent on demand policy 271 statistical skills required features of 4
whistle-blowing 519 608 a strong system 4
work-life balance 519 strategic knowledge and skills HR value chain 40
HR practices 4 required 571 HR values 6
HR practitioners, see HR as strategic partner 93 HRM and performance 35
professionals strategic role 93 human capital
HR processes 7 the Ulrich model 93 absolute measures of 19
HR procedures (general work system design role 168 concept of 17–18
considerations) HR senior professionals, strategic constituents of 18–19
defined 7, 522 role of 93–94 defined 18
and HR policies 522 HR shared service centres 89 and HRM 20
HR procedures (specific) HR specialists, see HR intellectual capital 18
capability 522–23 professionals as an intangible asset 18
disciplinary 523–24 HR strategic business partner 89 measurement of 19–20
grievance 524–25 HR strategy organizational
redundancy 525–27 approaches to 75 capital 19
HR profession 4, 92 for complementary practices representing the value of
HR Profession Map (CIPD) 92 (bundling) 76 people 20
HR professionals defined 4, 74 and the resource-based
ambiguities in the role 96 development of 78–81 view 18
analytical and critical skills examples of 75, 76 social capital 18
required 591 and HR policy 74 specific measures 19–20
business model innovation implementation of 81–82 human capital advantage 66
role 578 linking to business strategy 79 human capital management
business partner role 89 nature of 74 (HCM)
business skills required 573 and strategic HRM 74 defined 7, 17
carrying out the role 96 HR strategy (specific) and investment decisions 20
change agent role 93 commitment 214 human capital theory 20
competencies required 95 diversity and inclusion 299 human process advantage 66
712 Subject Index
human resources 11, see also HR impact of HRM on performance persuading people 659
human resource advantage 66 as explained by the AMO informal learning 319–22
human resource development model 40–41 information 114
(HRD), see learning and how the impact is made 39–40 Institute for Employment Studies
development what the impact is 36–37 (IES) 78, 93, 95
human resource function, see HR impact of rewards on performance Instruction 640
function as a distinctive feature of instructional design 640–41
human resource management HRM 35 integrated strategic change 184
(HRM) how HRM makes an integrative bargaining 474
context, see context of HRM impact 38 intellectual capital 18
criticisms of 9–10 incentive effect 410 intelligence
defined 1, 3 inclusion emotional 151
future of HRM 691 defined 298 general 151
guiding principles 6 management of 298–99 intelligence quotient (IQ) 151
hard HRM 9 and diversity 298 intelligence tests 151, 258
Harvard framework 9 individual bonuses 428 internal relativities 420
impact of HRM on individual characteristics 154 international HRM
performance 36–37 individual job grades 425 contextual factors 546–47
matching model of individual learning convergence 545, 548
HRM 9 characteristics of 334 defined 540, 545
origins 8–9 defined 334 differences between
and performance 59–68 how people learn 335–37 international and domestic
perspectives on Kolb learning cycle 335 HRM 552
as a philosophy 8, 9 strategy 326 divergence 545, 548
as a social system 11 individual contingent pay drivers for convergence 548
soft HRM 9 schemes 426–27 expatriates, management
strategic approach to 63 induction (employment) of 559
strong system 4 aims 281 globalization 545
system 4 reception 281 home country nationals, use
themes 9 induction training 282, 354 of 553
see also HR information for new staff 282 HR in international
human resource management introduction to the subsidiaries 551
architecture workplace 282 the international scene 545–46
defined 3–4 formal induction courses 283 multi-cultural working 556
and managing people 3 induction (research) 602 parent company nationals, use
significance of 4 industrial relations of 553
human resource planning, see collective agreements 475 performance management
workforce planning collective bargaining 474–75 554–55
human resource practitioners/ defined 453, 473 reward management 555
professionals/specialists, see informal processes 477 role of the international HRM
HR practitioners managing with trade function 556
human resource system, see HR unions 456 strategies 546
system managing without trade talent management 554
human resources 1, 4 unions 456 workforce planning 552
humanistic values 178 policy 518 interventions
hybrid working union recognition 473 defined 181
defined 31 see also employee relations organization development 181,
guidelines 311 influencing skills 187–89
incidence of 309 case presentation 660 training 347
management of 312–14 coordinating discussions interviews, selection, see selection
hypothesis testing 603 661–62 interviews
facilitating 661 intellectual capital 18
identifying learning needs, see making a business case intranet 125, 487
learning needs, identification of 660–61 intrinsic motivation
Subject Index 713
defined 174 job rotation 171 qualities of a good leader

and extrinsic motivation job satisfaction 667–68
201–02 defined 194 reality of leadership 667–68
and job design 174 factors affecting 204 styles 664–65
involvement 225 and engagement 194, 220 theories 663–64
and motivation 202 types of leaders 665–67
job and performance 204–05 what leaders do 664
characteristics of 173–74 Johnson and Johnson 44 leadership development 368–70
defined 173, 623 jobs and roles 173 leadership and management
and roles 173 joint consultation 482 development programmes
job analysis 623, 624–26 justice criteria for 373
job-based pay 410 defined 49 leadership development 368
job boards 250 distributive justice 49 defined 366
job characteristics model 175 justice as fairness 49 management development
job crafting 177 natural justice 49 370–73
job demands-resources model procedural justice 49 nature of leadership and
28, 175 social justice 49 management 366–68
job descriptions 623, 626–27 just-in-time training 367 leadership styles 664–65
job design lean manufacturing (‘lean’) 167
approaches to 176 key performance indicators learner-centred perspective 353,
characteristics of jobs 173–74 (KPIs) 201, 574 694
defined 173 key result areas 628 learner engagement 224
and engagement 223 knowledge learning
‘good’ jobs, characteristics as competitive advantage 67 blended learning 357, 362
of 172–73 defined 114, 127–28, 132 cognitive learning 335
job characteristics explicit knowledge 128 communities 340, 347,
model 175 tacit knowledge 128 356–57
jobs and roles 173 knowledge management connected learning 322
practice of 173–74 approaches to 128–29 culture 326
principles of 175 defined 7, 127 cycle 335
responsibility for 177 implementing 129 defined 319
task structure 174 issues 129 digital learning 357–61
job engagement 2222 knowledge sharing double loop 330
job enlargement 175 technologies 360 e-learning 358–59
job enrichment 175 knowledge, skills and abilities evaluation of learning 347–51
job evaluation (KSAs) 132, 628 experiential learning 335, 353
analytical job matching 422 Kolb’s learning cycle 325 formal learning 319–22
analytical schemes 421–22 game-based learning 360
defined 421 labour market 25 how people learn 335–37
explicit weighting 422 labour process theory identification of learning
factor plan 422 27, 465 needs 344–47
factors 422 labour turnover see employee implications of learning
implicit weighting 422 turnover theory 337, 338
internal benchmarking 422 labour wastage, see employee informal learning 319–22
market pricing 420 turnover Kolb’s learning cycle 335
non-analytical schemes 422 law of effect 335 the learning curve 336
point-factor rating 421–22 law of the situation 587 learning in the flow of
job family grade and pay leadership work 319
structures 424 defined 367, 394 learning to learn 340
job instruction 640–41 described 149 learning needs analysis 345
job quality effective leadership 668–69 learning organization 331–32
defined 171 leadership and management learning theory 335–37
dimensions of 171–72 compared 394 and neuroscience 336
enhancement of 172 meaning of 663 organizational 329–30
714 Subject Index
process of 334 defined 344 macro trends affecting

reinforcement 335 gap analysis 344 organization design 158
self-directed learning 337 performance management management 367
self-managed learning 339 346–47 management development
self-regulated learning 339 role analysis 346 aim 370
70:20:10 model 337 skills analysis 346 criteria for 373
single-loop learning 330 surveys 345 defined 370
social learning 336 workforce plans 345 formal approaches to 370–71
specification 346 learning organization informal approaches to
workplace learning 353–55 comparison with concept of 371–72
learning communities 340, 347, organizational learning 332 leadership and management
356–57 defined 331 development compared
learning culture 326 and knowledge 367–68
learning curve 336, 338 management 331 role of HR and learning and
learning and development new learning organization development specialists 373
components of 321 331–32 role of the individual 372–73
defined 8, 319 learning theory role of the organization 372
elements of 319–20 behaviourist 335 management and leadership
and engagement 224 cognitive learning 335 compared 394
ethical dimension 322 experiential learning 335–36 management style 145
ethical guidelines 50–51 Kolb 335 management training events 371
evaluating 347–51 learning-in-the-flow of managing change 352–53
implementing 347 work 336 managing expatriates, see
learner-centred neuroscience 336 expatriates, management of
perspective 353 practical implications of 337, managing reward systems 430–32
planning 347 338 manpower planning, see
process of 344 reinforcement 335 workforce planning
relationship with other HR 70:20:10 learning model 337 manual workers pay 440–43
activities 322–23 social learning 336 market groups 421
the 70:20:10 model 337 life cycle strategic fit model 67 market pay 409
state of 322–23 line managers market pricing
strategic learning and devolution of HR defined 420
development 325 responsibilities to 101–02 extreme 421
strategies 325–26 and employee engagement 223 use of 420
use of competencies 134 and employment market rate 420
workplace learning 353–56 relations 477 market rate analysis 421
learning and development factors affecting HR market stance 421
strategies effectiveness of line market supplements 409, 421
individual learning 326 managers 102 Maslow’s hierarchy of needs 197
learning culture 326 and home working 311–12 matching model of HRM 69
organizational learning 326 how managers can manage matching technology 250
learning and development performance 380–81 matrix organization 144
trends 694 HR role of 3 measures of central tendency 625
learning events, see training events and implementation of HR mechanistic organization 160
learning evaluation, see evaluation policy 100 mediation 477
of learning people management roles 100 mentoring 355
learning experience platform 358 and performance merit pay 426
learning in the flow of work management 390 metrics 114
319, 353 line and staff organization 142 motivation
learning to learn 340 LinkedIn 249 achievement motivation 198
learning management system Lloyds Banking Group 58, 378 carrot and stick approach
(LMS) 358 logical reasoning 592–93 to 196
learning needs, identification of Loughborough University 29 components of 196
Subject Index 715
content (needs) theory 196–99 non-financial rewards 411 programmes 184

defined 193, 195 nudge techniques 654 purpose of 179
and engagement 220 nudge theory 141, 654 story of 180–83
equity theory 201 NVQ/SNVQ competences 131 strategy 183–84
ERG theory (Alderfer) organization structures
197–98 objective-setting 390 defined 141
expectancy theory 199–200 Occam’s razor 587 formal structures 141
extrinsic motivation 201 occupational health organizational behaviour
goal theory 200 programmes 506–07 defined 139–40
hierarchy of needs occupational pension schemes, see implications for HR
(Maslow) 197 pensions specialists 153–54
and financial incentives 205 OD, see organization development sources and applications
intrinsic motivation 201 OECD 29 of theory
and job satisfaction 202–03 Office for National Statistics 309 140–41
meaning of 195 onboarding, see induction organizational capital 19
needs (content theory) 196–99 operant conditioning 335 organizational citizenship
process (cognitive) theory operating model, HR 88–89 behaviour 220
199–201 opinion surveys, see employee organizational climate 147–49
reinforcement theory 196 surveys organizational culture
self-determination theory 201 organization appropriate cultures
social learning theory 336, defined 141 147, 153
338, 356 practice of 7 artefacts 146
theory 140 organization culture, see and change 145
two-factor model organizational culture classification of 146–47
(Herzberg) 198 organization climate, see components of 145–46
multiple regression 609–10 organizational climate defined 144
multi-skilling 304 organization design development of 144–45
multiple-stakeholder aim 158 diagnostics 186
approach 11 defined 158 diversity of 145
multivariate analysis 610 described 158 implications 153
mutual gains guidelines 159–61 management style 146
defined 211 macro trends affecting norms 145–46
and mutuality 461 organization design 158 organizational climate
strategy 460–61 mechanistic 161 147–48
mutuality 210, 461 minimum critical values 145
specification 161 Organizational Culture
‘name blind’ application organic 161 Inventory 179
forms 253 organizational choice 161–62 organizational development,
narrow graded pay structure 424 reviews 161–62 see organization
needs theory of success in 162 development
motivation 196 theories 159–60 organizational diagnosis
negative behaviour, handling organization structures 143–44 184–86
of 674–76 organization design theories organizational insight 581
negotiating 159–60 organizational learning
bargaining 644–45 organization theory, schools defined 329
process of 643 of 142–43 development of 331
skills 647 organization development process of 330–31 330
stages 643–44 (OD) single and double loop
network organization 144 activities 187 learning 330
networking recruitment defined 179 strategy 326
sites 249 diagnostics 186 organizational performance
neuroscience 336 ethical guidelines 50 factors affecting 35
non-analytical job evaluation interventions 181, 187–89 impact of HR on
schemes 422 nature of 179–80 performance 36–37
716 Subject Index
measurement of 35–36 compared with human nature of 378

organizational processes resource management 13 objective setting 390
communications 148 defined 12 performance reviews 385, 388
conflict 150 see also human resource and performance
group behaviour (team management appraisal 377
work) 148–49 people management practices the reality of performance
interaction 148 development of 14 management 387–88
leadership 149 impact of 12 SMART objectives 390
networking 148 testing of 14 360-degree feedback 386–87
politics 150 people problems, handling of use of competencies 134
power 149 absenteeism 672–73 performance management cycle
organizations approach 671 defined 383
defined 140 disciplinary issues 671–72 described 384
how organizations negative behaviour 674–76 monitoring 385
function 140–41 timekeeping 673–74 performance and development
schools of organization underperformance 676 planning 383–84
theory 142–43 people, representing the value problems with 387–88
types of 143 of 20 reviewing 385
organizing 141 performance performance management system
outsourcing HR work 92 and the AMO model 40 defined 383
climate 41 features of 383
paradigm 603 factors affecting 35 performance management form
participation 482 high performance working 42 performance pay 426
partnership agreements 461 impact of HR on performance ratings 389–90
pay determination 410 performance 36–37, 41 performance-related pay
pay levels, determination of measuring organizational advantages and
407–08 performance 35–36 disadvantages 427
pay for organizational organizational 35–36 defined 426
performance 429 performance agreement 383 performance reviews 385, 388
pay progression 423 performance appraisal 377, 385 person-based pay 410
pay range 423 see also performance person specification 246–47
pay span 423 management personal development
pay spine 424 performance climate 41–42 planning 341
pay structures 423, 425 performance conversations 390, personality
pay-work bargain 455 396–98 defined 151
payment-by-results schemes 440 performance leadership judgements on 154
pendulum arbitration 476 competency profile 396 traits 151
pensions 430 concept of 394 types 51
people skills 395 personality tests 258
activities 4 performance management personnel function, see HR
handling people problems 671 aims 378 function
good people practice 12 approach to 379–80 persuading people 659
impact of people practices 12 cycle 383 PESTLE analysis 79
people management 11 defined 8, 375, 377 philosophy of HRM 8
practices defined 12 and engagement 224 piecework 441
resourcing 231 ethical dimension of 379–80 planned experience 354
people analytics, see HR analytics ethical guidelines 51 pluralist view 28, 455
people data modelling 124 how managers can manage point-factor rating job
people factors, establishment performance 380–81 evaluation 421–22
of 582 impact on performance 379 policies, see HR policies
people management in international firms 554 political skills 683–85
as an alternative term for issues 388–90 politics in organizations 150
HRM 11 monitoring performance 385 power 149
Subject Index 717
predictive analytics 117–18 recruitment and selection reinforcement theory of

predictive validity 252 advertising 250 motivation 196
presenteeism 293 aim of 245 reinforcement theory of
PricewaterhouseCoopers 31 AI, use of in recruiting 250 learning 335
principal agency theory 28 analysis of recruitment remuneration committees
problem-solving skills 586–88 strengths and 437–38
process-centred organizations 165 weaknesses 247 representing the value of
process planning 165 analysis of requirements 247 people 20
process (cognitive) theories of application form 252 research skills
motivation 199–201 applications, dealing with 263 case studies 601
productivity assessment centres 260 collecting data 509–602
and a business case 660 attracting candidates 247–48 convergent validity 599
defined 36 checking applications 253 criterion validity 599
and HR practices 37, 40 dealing with applications 253 cross-lagged models 598
professionalism in HR 96 competency-based data collection 599–600
Profession Map, HR (CIPD) 4, 92 interviews 256 deduction 602
profit and loss accounts 575 corporate websites 249 diaries 602
profits dealing with recruitment discriminant validity 599
classification of 575 problems 262 experimental designs 602
defined 36 defined 7, 245 grounded theory 603
profitability analysis 575 defining requirements 246–47 hypothesis testing 603
profit-sharing 429 digital recruitment and induction 602
project management 687–88 selection 248 integrative synthesis 598
promotion policy 518 interviewing 255–57 interviews 599–600
psychological contract name-blind applications 253 methodology 598–602
defined 469 making the decision 260–61 nature of research 596–97
developing a positive matching technology 250 observation 602
psychological contract 471 offers 261–62 paradigm 603
and the employment person specification 246 phenomenology 596–97
relationship 470 processing applications 253 planning and conducting
problem with 470–71 realistic job previews 562 research programmes
how psychological contracts role profiles 246 597–98
develop 470 screening applications 253 positivism 596
significance of 470 selection methods 253–55 processes involved in
psychological tests 257 selection testing 257–60 research 602–05
psychometric tests 257–58 social media, use in qualitative methods 599
pulse surveys 480 recruiting 249 quantitative methods 599
sourcing candidates questionnaires 600
quality circles 482 248–50 research programmes 597–98
quality of working life 171, 202 structured interviews 255 research methodology 598–99
trends 693 surveys 601–02
rating performance 389–90 unstructured interviews 256 triangulation 598
realistic job previews 562 use of competencies 134 resilience 507
recognition schemes 429 use of tests 259–60 resource-based view
recruitment defined 245, see also use of video 256 and competitive advantage 66
recruitment and selection redundancy 289 critical evaluation of 67
recruitment agencies 250 redundancy policy 518 defined 66
recruitment consultants 251 redundancy procedure and human capital
recruitment content 525–27 management 18
marketing 248 references 261–62 and performance 35
recruitment plan 246 regression 609–10 of strategic HRM 66–67
recruitment process outsourcing Regulated Qualifications resource dependence
(RPO) 251 Framework (RQF) 131 theory 67
718 Subject Index
resources 113 analysis 624 strengths-based

resourcing defined 173, 623 interviews 256, 615–16
defined 7, 231 distinction between roles and structured interviews 255, 615
in international firms 562 jobs 173 telephone interviews 256,
strategic approach to 233 generic roles 624 616–17
resourcing strategy 233 generic role profile 628 unstructured interviews 256
retention of employees 283–85 profile 246, 623–24 value-based interviews 256,
return on expectations 348–49 role analysis 624, 628 616
return on investment 348 role behaviour 149 video interviews 256, 617
reversed causality 39, 40 role profile 246, 623–24 selection testing
reward drivers 405 role theory 149 ability tests 258–59
reward management aptitude tests 259
administration of 430–31 safety, see health and safety characteristics of a good
aims 404–05 sales and customer service staff test 259
defined 8, 401, 403 pay 438–40 criterion scores 259
and engagement 224 scenario planning 237 intelligence tests 258
ethical guidelines 51 segmentation, pay 409–10 interpreting test
general pay reviews 430 selection results 259
individual pay reviews 431 choice of methods 255 norms 259
internally equitable pay 409 defined 245 personality tests 258
in international firms 555 interviewing programme psychological tests 257
job evaluation 421–22 256–57 psychometric tests 257
managing reward systems methods 254–55 reliability of 259
430–31 predictive validity 255 use of 257–60
market pricing 420–21 see also recruitment and validity of 259
pay determination 407–08 selection self-determination theory 141
recognition schemes 429 selection interviewing self-directed learning 337, 340
reward policy 518 behavioural event self-determination motivation
reward strategy 415–18 questions 618 theory 201
reward system 404 capability questions 617–18 self-efficacy 200
segmentation 409–10 coming to a conclusion 620 self-managed learning 339
total reward 411–12 common mistakes 619 self-service (HRIS) 124
trends 694 dos and don’ts 620 senior executives, reward of, see
value of the job 408 listening 615 rewarding directors and
value of the person 408 planning the interview 613 senior executives
reward philosophy 405 preparing for the 70:20:10 learning model 337
reward policy 406–07 interview 613–14 sexual harassment policy 518–19
reward strategy 415–18 questions 617–19 shared service centres 89
reward system 404 questioning techniques shareholder value
reward values and beliefs 405–06 614–15 defined 6, 35
rewarding special groups situation-based questions and stakeholders 6
directors and senior 618–19 SHRM, see strategic human
executives 435–38 strength-based questions 619 resource management
manual workers 440–43 useful questions 617 single-loop learning 330
sales and customer service value-based interview skills
staff 438–40 questions 619 analysis 624, 630–32
rewards selection interviews defined 132, 628,
financial 410 competency-based development of 131
level of 407–08 interview 256 soft skills 131
non-financial 411 interviewing techniques SMART objectives 390
total reward 411–12 614–15 smart phones 359
Richer Sounds 271 limitations 257 smart working
role programme 256–57 characteristics of 165
Subject Index 719
defined 164,165 multivariant analysis 610 strategic role of senior HR

social exchange theory 9 null-hypothesis 611 professionals 93–94
social identity theory 141 pie chart 624 strategic role of the HR
social learning regression 609–10 professional 93
concepts of 336 standard deviation 609 strategies, HR see HR strategies
defined 336, 356 testing hypotheses 611 strategy 74
forms of 356 tests of significance 610–11 stress, management of 506–07
learning communities 356–58 strategic approach to HRM 63 structured interviews 255, 615
nature and significance of 356 strategic business partners 89 substance abuse policy 519
social learning theory 336, strategic capability 66 succession planning 266
338, 356 strategic configuration best fit suggestion schemes 481–82
social media model 67 suppliers, selection and
and communications 120 strategic fit management of 92
and employee voice 481 achievement of 67 supply forecasting 239–40
for learning 359 competitive strategies sustainable competitive
for recruitment 249 model 67 advantage 35
social partnership 457 the configurational SWOT analysis 79
social responsibility 6 perspective 68 systematic training 361
social system 23 the contingency perspective 68
‘soft’ model of HRM 10 defined 67 tailoring advertising to different
Soft skills 131 horizontal fit 63 candidates 250
sorting effect 410 life-cycle model 67 talent 265
sourcing candidates 248–50 strategic configuration talent management
spot rates 424 model 67 defined 7, 265–66
stakeholders the universalistic inclusive or exclusive
defined 4 perspective 68 approach 266
and employment relations 6 vertical fit 67 in international firms 554
external 6 strategic human resource make or buy talent 266
and HRM 82 management (strategic policy 266–67
internal 4, 6 HRM, SHRM) potential assessment 269–70
and HR strategy 4 best fit approach 69 process of 268
interests of 4–5 best practice approach 69 programme 266–67
involvement of and bundling 68 strategy 267
multiple-stakeholder critical evaluation of 70 talent on demand 266, 267
approach 11 defined 4, 65 talent identification 269–70
stakeholders analysis 80 and HRM 65 talent development 271
statistics and HRM strategies 74 talent pipeline 266
arithmetic average 608 nature of 65 talent planning 269
causality 610 perspectives on 68 talent pool 266, 268
chi-squared test 611 purpose of 68 talent resourcing 269
correlation 609 resource-based view of task structure 174
frequency 608 66–67 Taylor Review of Modern
frequency polygon 609 strategic configuration 68 Working Practices 26, 29,
histogram 609 and strategic management 66 171
interquartile range 609 strategic HRM skills 571 Taylorism 27
lower quartile 609 strategic learning and team briefing 481
measures of central development team building 188
tendency 609 defined 325 team pay 428–29
measures of dispersion 608–09 L&D strategies 325–26 teamwork 148–49
median 608 strategic management 66 technical competencies 131–32
mode 608 strategic resourcing 233 technical system 23
multi-regression analysis strategic role of HR business testing people management
609–10 partners 94 practices 14
720 Subject Index
testing propositions 610–11 under-performance, dealing and emerging technologies

tests, selection, see with 676 29–30
selection tests unfair dismissal 532 meaning of 27
tests of significance 610–11 union, see trade union nature of 27
three-legged stool model unitary organization 142 what’s happening to work
of HR function 89 unitary (unitarist) frame of 30–31
360-degree feedback 386–87 reference 28, 213, 455 what is going to happen to
timekeeping problems 698 unstructured pay systems 424 work 32
time rates 440 universalistic perspective on work design
total reward 411–12 achieving strategic fit 68 approaches to 165–69
tournament theory 407 US Department of Labor 43 defined 164
trade unions Utrecht Work Engagement Scale history of 164
de-recognition 462 (UWES) 226 requirements 165
managing with trade role of HR 168
unions 456 valency 196 work system design
managing without trade value, how added by HRM and 164–65
unions 456 people practices 35 workforce planning
membership 473 value added 35 action planning 240
recognition 462, 473–74 value chain 40 analysis 237
trading statements 575 value driven 4 approach to 241
training value of the job 408 data collection 237
areas covered 362 value of people, representation defined 7, 235–36
bite-sized training 363 of 20 demand forecasting 237
defined 361 value of the person 408 different types of
evaluation of 349–51 values workers 240
instructional design 641 defined 145 incidence of 236
justification for 362 for managing people 6–7 issues 236
just-in-time training 363 organizational link with business
planning and delivering value set 145 planning 236–37
training events 362 value statement 6 scenario planning 237
systematic training 361 vertical fit supply forecasting 239–40
transfer of learning 362 achievement of 67 systematic approach to
traits 151 defined 63 237–41
transactional activities in HRM models 67 work-life balance 411, 519
transferable skills vertical integration, workplace learning
transformational activities in see vertical fit approaches to 354
HRM virtual learning environment 359 defined 353
trends in HRM virtual organization 144 as experiential learning 353
overall trends 691–93 VUCA environment 25, 649 learning in the flow of
specific trends 603–94 work 319, 353
trust webinars 359 making workplace learning
building trust 461 wellbeing defined 491, 493 see effective 355–56
climate of trust, development also employee wellbeing work intensification 30
of 467 whistle-blowers World Commission on Economic
defined 461 policy 519 Development 78
and the psychological unjust treatment of 54 World Economic Forum 32
contract 467 whiteboarding
TUC 31, 303 wikis 360 zero-hours contracts
two-factor model of motivation World Economic Forum 32 31, 306–07
(Herzberg) 198 work Zoom 314
721

722

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i

Armstrong on Reinventing Performance Management

Armstrong’s Essential Human Resource Management Practice

Armstrong’s Handbook of Learning and Development

Armstrong’s Handbook of Management and Leadership for HR

Armstrong’s Handbook of Performance Management

Armstrong’s Handbook of Reward Management Practice (with Duncan Brown)

Armstrong’s Handbook of Strategic Human Resource Management

Armstrong’s Job Evaluation Handbook

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

How to Be an Even Better Manager

How to Manage People

Human Capital Management (with Angela Baron)

The Reward Management Toolkit (with Ann Cummins)

WITH STEPHEN TAYLOR

Hardback 978 1 3986 0665 4

British Library Cataloguing-in-Publication Data

Library of Congress Cataloging-in-Publication Data

Typeset by Integra Software Services, Pondicherry

List of figures xxxi

PA R T I Fundamentals of human resource management 1

01 The essence of HRM 3

02 Human capital management 17

03 The context of HRM 24

04 The future of work 27

05 HRM and organizational performance 35

06 The ethical dimension of HRM 47

07 Corporate social responsibility 57

PA R T I I The strategic approach to HRM 63

11 The HRM role of line managers 100

PA R T I V Human resource management processes 107

12 Evidence-based HRM 109

14 Digital HRM 119

15 Knowledge management 127

16 Competency-based HRM 131

17 Organizational behaviour 139

18 Organization design 158

19 Work design 164

20 Job design 171

21 Organization development 179

PA R T V I Factors affecting the behaviour of people at work 193

24 Employee engagement 218

PA R T V I I People resourcing 231

25 Resourcing strategy 233

26 Workforce planning 235

27 Recruitment and selection 245

28 Talent management 265

PA R T V I I I Employment practices 275

29 The employee experience 277

30 Managing employment 281

31 Managing diversity and inclusion 298

32 Managing flexibility 303

33 Managing home and hybrid working 309

PA R T I X Learning and development 317

34 The basis of learning and development 319

35 Strategic learning and development 325

36 Organizational learning and the learning organization 329

37 Individual learning 334

38 The process of learning and development 344

39 The practice of learning and development 353

40 Leadership and management development 366

PA R T X Performance management 375

41 The basis of performance management 377