Professional Documents
Culture Documents
HRM325
Strategic Management of
Human Resources
Version 3.0
Published by
The University of Sunderland
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Contents
How to use this workbook
Introduction
Unit 1
Definition and Purpose of Strategic Human Resource
Management (SHRM)
Introduction
The Changing Business Environmen
Linking people management and strategic management
The potential benefits of a strategic approach
Approaches to the strategic management of people
Evaluating the approaches
Summary
References
1
2
6
10
12
25
34
37
Unit 2
Strategic HR Departments
Introduction
HR departments and change
The challenges facing HR specialists
Trends in the management of HR functions
HR service centres: technology and the new division of work
So what is the future role for HR?
Evaluation of the HR Function
Summary
References
39
40
45
55
68
71
83
91
94
Unit 3
Employee Resourcing Strategies:
Planning and Competence Assessment
Introduction
The contribution of human resource planning
Models of Human Resource Planning
Categorising HR Capability: Competence Models
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95
96
99
108
121
136
164
168
Unit 4
Performance Management
Introduction
The Ideas and Assumptions of PMS
PMS systems in different organisations
Setting and Measuring Objectives within PMS
Employee appraisal schemes
Summary
References
171
172
177
191
202
224
228
Unit 5
Reward Management
Introduction
The Role of Reward systems: An Analytical Framework
Base of Rewards
Performance and Incentivisation Scope for Progression
Market Position
Internal versus External Comparison
Centralised versus Decentralised Reward
Degree of Pay Hierarchy
Reward Mix
Process Issues
Reward Systems: Consequences Integration
Reward Strategy in Practice
Conclusions
Summary
References
231
232
233
236
250
250
261
262
266
270
272
272
282
288
291
Unit 6
Human Resource Development Strategies
Introduction
Defining the Purpose of Learning and Development
HRD in the context of Organisational Development
A Problematic View of Strategic HRD
The Role of Learning, Strategic HRD and the Learning Organisation Concept
Developing Effective Learning Processes in Organisations
Developing Strategic HRD Policy
Trends in Organisational Development & Learning: e-learning
Summary
References
293
295
310
311
316
324
337
342
348
353
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Unit 7
Managing Employee Relations:
A Strategic Approach
Introduction
Terminology in Employee Relations
Trends in Employee Relations
Managing ER
Strategic Variables
Partnership agreements
Summary
References
355
356
357
368
385
410
429
432
Unit 8
Managing Change: Culture and Performance
Introduction
Role of HR in Organisational Development
Culture
Change Management
Summary
References
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435
440
446
464
508
524
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students or your colleagues this will make learning much more
stimulating. Remember, if in doubt, or you need answers to any
questions about this workbook or how to study, ask your tutor.
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Introduction
Knowledge and understanding
1)
2)
3)
4)
5)
Skills
6)
7)
8)
9)
Content synopsis
The module begins with a review of the nature of strategy in HRM and
evaluates the various models in achieving strategic interventions in a
range of business contexts derived from strategic management. The
module reviews the relationship of Personnel departments with respect
to designing and delivering HRM interventions, the current and
historical barriers to Personnel leading on HR and change management.
A range of contemporary ideas on redesigning the role of Personnel are
reviewed before the module evaluates the range of HR policies that
make up a strategy recruitment and retention, performance
management, human resource development, employee relations,
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iv
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Unit 1
Introduction
This module considers the management of people. In the past,
organisations have tended to view people in three different ways: as a
cost, as a resource and as an asset. What many organisations are now
realising is that their employees are central to the successful
performance of the organisation and therefore an integrated and
coherent approach to managing people is needed.
This unit will consider why people management has become more
critical for organisations and will look at the formulation of strategies
for dealing with that requirement.
READINGACTIVITY
Please read Chapter 1 of your key text, The Strategic Managing of Human
Resources, Edited by John Leopold, Lynette Harris & Tony Watson, FT Prentice
Hall, which covers some of the subjects of this unit.
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ACTIVITY
In the left-hand column of the table we have listed some examples of changes,
first in the wider environment of business, then in the strategies of
organisations. From your existing background knowledge of HRM, note down
in the second column what the HR implications of those changes might be. We
have given you an example under each heading to start you off.
U n iv ersity of
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gnikrowmaeT
secitcarp
)MQT( tnemeganaM ytilauQ latoT fo noitpodA
Strategic Changes
HR Implications
noissecer cimonocE
sdeen gniniart
seeyolpme emos fo ycnadnuder
Environmental changes
HR Implications
U n iv ersity of
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tnemngila eulav
sdeen gniniart
egdelwonk
dna gnikam-noisiced ,ymonotua eeyolpme
gnikrowmaeT
ruoivaheb
evitaroballoc dna noitarepo-oc eveihca
ot krow ot ,tnemtimmoc ,sedutitta ,slliks
lanosrep-retni dna spihsnoitaler eeyolpme
secitcarp
sdeen gniniart
HR Implications
noitcudorp esaercni ot ecnamrofrep no sucof
Strategic Changes
noissecer cimonocE
sdeen gniniart
Environmental changes
HR Implications
ACTIVITYFEEDBACK
Unit 1 Definition and Purpose of SHRM
The last activity has highlighted the key underlying principle that
although change may come from a strategic response to the business
environment or may be related to the goals of the organisation, people
as well as systems and processes, are important.
SHRM implies more than simply recruiting, rewarding and training
staff. Traditionally, personnel management took an operational,
systembased approach to managing people, for example, in
recruitment and performance systems. Although there is a need for
personnel systems, a strategic approach asks different questions and
requires different levels in the diagnosis of requirements, for example,
in culture and behaviour. It looks not just at the content of HR policies
but also at the process by which people are managed, at how to create
the right climate or culture through the leadership style and at the way
the organisation influences how employees interact.
It can be argued that there are three challenges facing organisations that
must be met if they are to gain the competitive advantage we referred to
earlier (Mabey and Lawton, 1998):
.tnemeganam
.tnemyolpme fo
tahw fo smret ni noitavonni fo egnellahc ehT
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Introduction
This is the stage where the product enters the market. The recruitment
and selection function would, in this stage, aim to attract the best
technical and professional expertise to the organisation.
Growth
In the growth stage the sales of a product increase rapidly. The
recruitment, selection and retention function would, in this stage,
recruit the right number and mix of qualified workers plan its
succession management and manage rapid internal labour market
movements.
Maturity
The product is at the peak of its sales. The aims of the recruitment,
selection and retention function are to minimise layoffs by providing
new opportunities and encourage mobility as company reorganisations
shift jobs around, that is, the challenge becomes one of internal
assessment and deployment rather than external recruitment.
Decline
Sales of and profits from the product fall. The recruitment and selection
function will plan and implement workforce reductions and
reallocation.
ACTIVITY
Apply the model to another HR function, that of employee learning and
development. What would be the aims of the function at each of these stages?
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This model is one attempt to establish the concept of the strategic response
and strategic fit of SHRM.
seicilop
tnemtsujda
tnemyolpme
dna ytiruces
boj etaitogeN
.selur krow ni
ytivitcudorp
evorpmI
ruobal lortnoC
evorpmI
dna ytivitcudorp
.ecaep ruobal
ytilibixelf eveihca
.elarom
dna noitavitom
eeyolpme
dna ecaep
ruobal niatniaM
noitazinagro
dna yhposolihp
eeyolpme/ruobaL
snoitaler
snoitaler
tnempoleved
lanoitazinagro
dna tnempoleved
secivres
tnemeganam
ytilibixelf niatniaM
tnemelpmI
na fo slliks dna
dna gniniarter
ecrofkrow gniega
gnitlusnoc reerac
hguorht
maet tnemeganam
evitceffe dluoM
sreddal reerac
gnihsilbatse nigeb
gniniart eeyolpmE
tnempoleved dna
dna stnemeriuqer
.serutcurts
noitasnepmoc
lamrof hsilbatsE
.stceffe ytiuqe
noitasnepmoc
lortnoc
tnelat dedeen
dna noitasnepmoC
deecxe ro teeM
stifeneb
tekram ruobal
tub tekram
tcartta ot setar
lanretni redisnoc
lortnoC
tsoc rethgiT
lanretxe teeM
stnemevom
dnuora sboj tfihs
snoitazinagroer
sa ytilibom
egaruocnE
.sgninepo
eziminim ot
ecrofkrow
dna sffo-yal
dna snoitcuder
wen edivorp
noitacollaer
tekram
ruobal lanretni
dipar eganaM
.gninnalp
noisseccus
tnemeganaM
.srekrow
Growth
Maturity
etauqeda tiurceR
egaruocnE
dna nalP
revonrut tneiciffus
deifilauq fo
,tnemtiurceR
tseb tcarttA
dna noitceles
/lacinhcet
gniffats
tnelat lanoisseforp
Introduction
tnemelpmi
Human resource
functions
Decline
A table illustrating the Kochan and Barocci (1985) model is shown next. It
displays the lifecycle model breakdown for the main HR functions, including
employee learning and development.
ACTIVITYFEEDBACK
Unit 1 Definition and Purpose of SHRM
HR strategy
noitceleS
airetirc boj
tcatnoc
slaog lanoitasinagro
yllacitsilanretap
seiraidisbus dna
lasiarppA
sdraweR
tnempoleveD
ACTIVITY
Apply the above model to a company that is self-contained but has a strategy of
growth by the acquisition of unrelated businesses. Briefly describe the HR
functions in this type of organisation.
ACTIVITYFEEDBACK
In a company that is self-contained but has a strategy of growth by the
acquisition of unrelated businesses, we would suggest the following:
Selection
This would be functionally oriented; but would vary from business to
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Appraisal
This would be impersonal and based on return on investment
and profitability.
Rewards
Rewards would be formula-based, perhaps return on
investment and profitability.
Development
This would be cross-functional but not cross-business.
10
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ACTIVITY
In the spaces below note down what you think an employee and an organisation
might expect from or understand by the terms commitment, flexibility and
quality. We have done the first one for you as a guide.
tnemevorpmi ecnamrofrep
tnemtimmoC
noitubirtnoc
seitinutroppo tnempoleved
rof epocs dna ytiruces boj
ytilibatnuocca
tnemtimmoc
Organisational expectations
dnoyeb tsurt hsilbatse
Employee expectations
tnemecnahne reerac
.sweiv
lanoitasinagro derahs
tnemtaert
ytilibixelF
tnemecnahne ytilauQ
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11
12
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esitrepxe
dna stcudorp devorpmi
sseccus fo tnemerusaem
tnemevlovni
secruoser fo esu tseb
snoitcirtser on
ytilauq suounitnoc
seimonoce/ycneiciffe
dereffo slliks
tnemecnahne ytilauQ
tnempoleved slliks
krow fo emit
noitasinagro fo epocs/ezis
krow ni noitairav
seiradnuob snoitasinagro
eht erehw gnidiced
seciohc gnitcartnoc
ytilibixelF
tnemtaert
dna daolkrow fo ssenriaf
tnemeveihca
.sweiv
lanoitasinagro derahs
tnemevorpmi ecnamrofrep
ytilibatnuocca
tnemtimmoc
tnemecnahne reerac
rof epocs dna ytiruces boj
seitinutroppo tnempoleved
noitubirtnoc
tnemtimmoC
Employee expectations
Organisational expectations
ACTIVITYFEEDBACK
Unit 1 Definition and Purpose of SHRM
CASESTUDY
Read the following article which represents a contemporary view of the best
practice model.
Piece by Piece
by David Guest and Angela Baron, (People Management 20 July 2000)
Evidence showing that it pays to pursue progressive people management
practices continues to mount. After US research findings to this effect came
convincing UK evidence of the link, provided by a University of Sheffield study
of manufacturing companies.
Now, management perceptions of this link are being confirmed by initial
evidence emerging from the first phase of research being carried out for the
CIPD at Birkbeck College, London. The programme is exploring HR
management, workplace reorganisation and performance as part of the ESRCs
Future of Work programme. It has the advantages of being based on a large
cross-section of companies of varying sizes in the UK, and of presenting the
views of both the chief executives and those responsible for HR.
The Birkbeck research comprises three phases. The first, a survey of 462 chief
executives and 610 managers responsible for HR in private-sector
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Most businesses fail to make full use of modern HR practices. From a list of 18
key HR practices, only 1 per cent of firms use more than three-quarters, 25 per
cent use more than half and 20 per cent use fewer than a quarter.
Chief executives and personnel managers both give a low rating to the
performance of the HR department and effectiveness of HR practices in their
company.
The areas whose performance is most highly rated are practices relating to the
labour market and employment security, with job design and financial flexibility
seen as only slightly effective.
HR managers in firms using the most key HR practices have the most positive
perceptions of employee attitudes and behaviour, which are linked to higher
productivity and improved financial results.
There is little agreement between chief executives and HR managers on a
number of issues. These include the existence of an HR strategy.
The researchers conclude that those who embrace HRM with enthusiasm can
gain a competitive advantage.
The researchers surveyed more than 1,000 chief executives and HR directors,
with matched pairs of responses in 237 companies.
The first key finding is that the take-up of these practices is very low. Only 1 per
cent of respondents have more than three-quarters of the practices in place
and are applying them to most employees. At the other extreme, 25 per cent of
firms have fewer than a quarter of the practices in place. This matters, because
most existing research indicates that the key to success is implementing a range
of practices, rather than doing well in only one or two.
The results confirm that managers believe there is a link between their use of
HR practices and how the business performs. Importantly, most also agree that
this link depends on the quality and commitment of the workers. In other
words, the link is not straightforward. The results suggest that HR practices
affect employee quality, commitment and flexibility characteristics that in
turn are associated with higher productivity and improved products and
services, which feed through to financial results. HR managers and chief
executives do agree that investing in people to ensure their quality and
commitment leads to better results.
A feature of the Birkbeck study, sometimes neglected in other research, is the
importance attached to the effectiveness of HR practices. Both chief executives
and managers responsible for HR emphasise the importance both of having the
right HR practices, and of applying them effectively.
Two dimensions of effectiveness emerge from the Birkbeck study. The first is
the effectiveness of practices in the core areas of personnel work, such as
recruitment, training and job design.
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16
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QUESTION:
From the article identify three positive and three problematic aspects of this
view of HR practice.
CASESTUDYFEEDBACK
You might have come up with the following positive aspects from the chart of
the main findings:
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17
Cost of implementation.
Tensions between the need for production and cost
minimisation on the one hand, and issues of flexibility,
creativity and skills enhancement on the other.
18
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19
Environmental triggers
Strategic objectives
Structural change
Cultural change
Job profiling
Individual behaviour
HR policy response:
recruitment and selection, assessment and appraisal,
performance management, training and development.
Internal integration:
employment relations, health and safety, etc.
It can be illustrated as shown in Figure 1.1, with the first three rows
indicating strategic integration, the rest internal integration:
These reciprocal planning and process issues can be illustrated in the
following model adapted from Buller (1988). At one level of fit the
business strategy of the organisation can inform HR strategy.
This is a oneway flow, from a mainly operational model.
informs
Business strategy
HR strategy
20
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Business strategy
HR strategy
Business strategy
HR strategy
Resource-based approach
Our third model of SHRM is a bottomup view. There are significant
problems with the principles of the two previous models:
21
first at the organisation and its potential, and develops ways to exploit
or enhance the available resources.
In a resourcebased model, the SHRM role becomes one of creating
systems and procedures that focus not on external relationships but on
how staff and their abilities are used. The organisation is seen as a
bundle of tangible and intangible resources based around the
knowledge of products, services offered and the way that they are
organised. This has been called the ...collective learning in the
organisation...the core competencies... (Prahalad and Hammond 1990,
p.82), the coordination of activities and integration of various skills,
technologies and business processes to provide competitive advantage.
Core competencies can include many things:
Add value.
Be unique or rare.
Be difficult to imitate.
Be nonsubstitutable, for example, by technology.
Mueller (1998) develops the resourcebased view and offers what he
calls an evolutionary view founded on a number of key propositions
about the creation of strategic assets or capabilities:
22
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Proposition 1:
Assets may only be developed in slow, incremental and uncertain ways,
not in any linear or planned way. They often grow from the social
structure of the organisation, in patterns of communication, learning,
information exchange and so on.
Proposition 2:
Assets require broadbased commitment over a lengthy period, not a
single initiative. At the heart of this is continuous improvement, and
this is more about process than strategic policy intentions.
Proposition 3:
This stresses the importance of routinising skill formation activities.
Formal and informal learning activities must be effectively captured by
the organisation. There is a need to activate knowledge and develop
skill through specific important activities, explicitly linked to work, the
intention to learn and a culture of learning and knowledge acquisition
and dissemination.
Proposition 4:
This concerns the development of cultures that will allow potential to be
used and developed. Challenge rather than conformity, is encouraged
as a strategic end, while balancing the need to store organisational
value.
Proposition 5:
Organisations need to build barriers to imitation and loss of their
resources, both in patents, copyright and so on, and their people
resources. They will do so only by considering resources not in isolation
but as integrated assets that sustain each other. An example is the
pharmaceutical company that can develop the interdependency of
several strategic assets:
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23
ACTIVITY
With the above propositions in mind, list at least two examples of strategic
assets of the following organisations:
1.
An airline
2.
A computer company
3.
A carrier company
ACTIVITYFEEDBACK
You may have thought of some of the following:
1.
An airline
- landing slots
- strategic alliances
- ticketing flexibility
- service standards
2.
A computer company
- inventive capability
- product bundles
- speed of design to production
- customer systems evaluation
3.
A carrier company
24
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- contracting skills
- required knowledge
- service range and flexibility
- responsiveness
ACTIVITY
In the table below, note down your answers to the questions in the first
column, as applied to the three approaches.
Best fit
Resource-based
seY
seY
Best practice
seY
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25
ACTIVITYFEEDBACK
Best practice
Best fit
Resource-based
seY
seY
seY
seY
seY
seY
seY
ssenisub ehT
ssenisub ehT
elbaliavA
tnemnorivne
secruoser
yciloP
fo noitatilicaF
noitnevretni
seitivitca
seY
seY
tnemnorivne
yciloP
noitnevretni
?seitivitca fo noitatilicaf
CASESTUDY
Read the following article which describes a traditional managerial approach to
HRM in a stable or mature product market undergoing change.
Press for Success
by Steve Crabb and Rebecca Johnson, (People Management, November 2000
pp. 29-36).
Pindar Set, a small, family-owned Yorkshire business, has been typesetting the
Yellow Pages directories for 18 years. Until May 1995, the firm was a
one-customer, one-site business, enjoying a highly profitable 10-year contract
to design and set advertisements for Yellow Pages customers. The arrangement
was very stable, the process and the relationship with Yellow Pages had not
changed significantly for many years, and the structure and management of the
business was, as the company itself admits, decidedly traditional.
All that was turned upside down when Yellow Pages indicated that it wanted to
move to a shorter-term contract with tighter margins and greater
responsiveness to customer demand. And when your sole contractor decides it
is time to change the business, the choice is to respond or die. Pindar Set chose
to respond in style. It was asked for new turnaround times, a new emphasis on
quality and customer service, and was offered three of Yellow Pages own design
studios in Birmingham, Bristol and Manchester to incorporate into its business.
It was impossible to achieve the targets and integrate the new studios without a
26
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radical revision of operations. The way it has set about this transformation has
earned it this years CIPD People Management Award.
Pindar Set beat off strong competition for the award because of the way it put
people management at the heart of its strategy for turning around the business.
In doing this, it has not only succeeded in meeting targets agreed with Yellow
Pages, but has grown the business from 99 employees in 1994-95 to 235 today,
and from a turnover of just below 9 million in 1994-95 to more than 12
million in 1999. The production cost per advert has also dropped by almost
half.
According to chief executive Richard Lumby, Pindar Set was delighted with the
challenge set by Yellow Pages because it necessitated an injection of creativity
into the business and led to a more innovative and flexible relationship with its
customer.
Since 1995 we have been evolving a different relationship and a new
wide-ranging involvement with their business, Lumby says. This, he explains,
has enabled the exchange to become a two-way process, with Pindar Set more
closely involved with Yellow Pages own customers and able to contribute ideas
to the process as never before. Lumby even proposed moving to annual, rolling
contracts, which was agreed. Targets, results and directions are now discussed
between the two companies on a yearly basis.
The firm has also broadened the range of services offered to BT, and Yellow
Pages' new web-design business in Bristol, Pindar Net developed from scratch
four years ago to enable it to respond better to advertisers needs.
The new contract transferred 80 staff and three artwork origination studios in
Birmingham, Manchester and Bristol from Yellow Pages to Pindar Set, nearly
doubling the size of the workforce at the time. The move made sense, as their
design skills fitted well with Pindar Sets production role and enabled the whole
advertisement creation process to come together in one company. Lumby,
together with HR director Bernadette Doyle and Gary Weston, operations
director at the time, put together the necessary change programme to manage
the three new sites and address the sharply reduced margins they now had to
work to.
As a result of the transfer, Pindar Set had a mixture of working arrangements
with some staff working in large departments those based in the original plant
in Scarborough where each person handled only a part of the production
process, while others from the new studios worked in smaller teams with a
broader range of skills. The management team had to deal with the insecurities
of the new workforce as well as trying to establish mutual best practices and
merge the two cultures.
The company entered into a period of self-examination, assessing what it was
doing and how, and what needed to change. One of the new requirements was
that it turn around new advertisement production in a space of five days down
from an average of 25 days previously.
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27
We asked: Are we organised the best way? Are people skilled and deployed in
the right way and is it right that one person does only one part of a task? What
will deliver our service goals?; Doyle says. The result was that, from 1997, the
company set about training all its unskilled staff to do skilled jobs, phasing out
unskilled text-inputting jobs completely. All the unskilled workers upgraded as
planned, despite some initial wariness of the new accreditation process that
was established to ensure consistent standards across the business. Remedial
training was provided where necessary.
Employees were also trained to follow a job through from start to finish,
reducing the internal pipeline from 80 processes to one. And team-working
was introduced in Scarborough to bring it in line with the other three sites.
This meant creating new team-leader roles. Previously senior operators had
supervised work, but had still retained hands-on tasks. The company also
recognised it needed a pool of new team leaders to respond to future growth.
Team leaders were given more responsibility for financial, operations and
people management than before. They now run their sites as
semi-autonomous businesses, with their own profit and loss accounts. This also
required training and a team-leader programme was introduced (see Investing
for Success below).
In the first wave of training, which began in 1998, eight existing team leaders
and five newly appointed people undertook 30 days training over 18 months,
at a cost of around 3,000 a head. Since then, three-quarters of the people who
have been through the programme have been appointed team leaders, and
Pindar Sets 21 team leaders are now regarded as the firms key employees. As
a result, productivity, quality, process flow, flexibility and job satisfaction have
all improved markedly.
The second group of initiatives related to twilight working. All four sites had
been operating institutionalised overtime for a number of years, which couldnt
continue. In 1997 Pindar Set experimented with a new shift working
arrangement between 4.30pm and 1.00am. To start with, 18 new recruits
were hired on a temporary basis at two sites, but the firm now has six twilight
shifts across all four sites, with 60 people working on permanent contracts.
These shifts extended the production window from eight hours to 16, made
better use of premises and equipment and helped to bring fresh blood into the
company the twilight workers became the firms most productive teams.
According to Doyle, this is because there are fewer interruptions in the
evenings. The change has also cut overtime costs by two-thirds and increased
Pindar Sets availability to customers
Finally, the company introduced a flexible working scheme to help cope with
the uneven flow of work from customers. We get peaks and troughs, says
Manchester operations manager Andy Height. From 2000 ads one week to
only 600 the next.
With one weeks notice (and often much less than that, according to Lumby),
employees agree the hours to be worked in the following week, with built-in
safeguards so that they can balance their work and home lives.
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Ian Maclachlan, an artist and trainee team leader, agrees: People are happier
with the work they are doing and they have more control over their jobs, he
says. There was a dead mans shoes syndrome before, but now the company
is growing you can get on the ladder to become a manager a lot earlier if you
want to.
One part of the change programme, however, encountered a significant
obstacle: the company was not able to implement flexible working at its original
base in Scarborough.
Unlike the studios transferred from Yellow Pages, where the staff see
themselves as primarily working in graphic design, the Scarborough workforce
has a traditional printing industry culture with a strong union presence.
The employees there, who were used to shift and overtime working, couldnt
see how they could benefit from flexible working, and were uncomfortable
with the idea of individuals volunteering to join the scheme, rather than terms
and conditions being arranged collectively.
Furthermore, the main print union is generally opposed to annualised-hours
schemes, and there was a risk of an industrial relations problem if the scheme
had been pursued.
Faced with these objections, the company decided to omit its existing
employees at Scarborough from the scheme. We came to the conclusion that
our persuasion wasnt helping, Doyle says.
It was upsetting them and wasnt worth pursuing. We stressed that no one
would be penalised for failing to volunteer. In fact, it is useful to have some
people working core hours, so we could work around it and, provided we
didnt force people into it they seemed content.
In all other respects, though, the employees at Scarborough have embraced the
change programme, including teamworking, multi-skilling and the team-leader
initiative, and four new teams have since joined at the site, all working flexibly.
The change programme has delivered real business benefits for Pindar Set.
Profit before tax plummeted from 3.6 million in 1994-95, the last year of the
old Yellow Pages contract, to 1.4 million the following year and 300,000 the
year after that. Last year, it had climbed back to more than 2 million.
The company has been able to develop new services such as web design work,
improved service levels and higher productivity the number of
advertisements produced per hour has increased from 1.2 to 1.9.
Customer complaints have fallen from a high of 123 a month in 1996 to a
current average of 10, labour costs have been controlled and absence rates are
low (averaging 2 per cent).
No one thing would have worked on its own, Height says. It was everything
coming together at the same time. Its created a real buzz.
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As chief executive Lumby puts it: Weve now got motivated staff who are
hungry for development and bursting with bright ideas.
Investing in success
Pindar Set was clear that it wanted real development for its team leaders to
take on key roles in the business. Rather than one-off management courses, HR
director Bernadette Doyle, operations director Gary Weston and chief
executive Richard Lumby devised a development programme that would take
place over a period of about 18 months, involving 30 days training for each
team leader at a cost of 3,000 per person. This enabled people to put learning
into practice and to have responsibilities handed over gradually, acting as
deputies to existing supervisors while taking part in the training. It was a big
investment for a small company, but it has paid off, they believe, in the results
they have achieved.
The course is run as a series of modules and incorporates a wide variety of
skills, including personal stress management and dealing with stress in the
organisation, motivation, team-building, communication, negotiation,
assertiveness, presentation skills, customer care, production and financial
planning, staff appraisals, discipline and people management skills, recruitment,
health and safety responsibilities, problem-solving and managing change. The
programme uses Coveys Seven habits of highly effective people for personal
development, as well as covering all the legal and procedural aspects of
company business.
Now I know that staff and team leaders dont need constant supervision, says
Manchester operations manager Andy Height. I sometimes think I could
disappear for a year and still find it running smoothly. The team leaders are very
able people who can deal with all the day-to-day business of the company.
Business background
History: Established in 1980. HQ based in Scarborough with divisions in
Bristol, Manchester and Birmingham.
Employees: 99 in 1994-95, 235 today
1998-99
012,252,21
1994-95
010,858,8
764,966,3
183,970,2
288,064
163,521
:revonruT
:)xat erofeb( tiforP
:stsoc emitrevO
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QUESTION:
Summarise the extent to which this organisation has aimed for SHRM
orientation using the following headings.
CASESTUDYFEEDBACK
You might have noted the following:
Beliefs and assumptions
- business-driven production
- what will deliver our service goals as a key driver
- wider job responsibilities require attitude change
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- faster response.
Line management
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ACTIVITY
Write down whether you think that this managerial conception of SHRM can
embrace any or all of the following factors:
Summary
This unit has proposed a number of reasons why organisations need to
concentrate more on achieving effectiveness in the management of their
employees. It has considered a variety of responses. Some of these can
be described as strategic responses (integrated), others appear more
isolated and tactical.
We have spent some time looking at different interpretations of what
SHRM is and attempted to evaluate the strengths of the models of best
practice, best fit and the resourcebased approach. The latter is an
emerging trend, with a focus on assets and capabilities. This delves
deep into what creates competitive advantage, and it is not rational
planning, professional HR policies alone or a focus on satisfying
employee needs. Rather it is to form interdependent organisational
assets: knowledge, learning, capability, experience, and skill continuity.
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REVIEWACTIVITY
Question 1
What are the core challenges facing HR specialists in developing an HR strategy?
Question 2
Give three examples of how different business strategies might affect human
resource policies.
Question 3
What are the suggested benefits of adopting a SHRM approach under the best
practice model?
Question 4
Define the different levels of integration required to meet the best fit model of
SHRM.
Question 5
What aspects of a companys assets underpin the resource-based approach
according to Storey (1995) and Mueller (1998)?
REVIEWACTIVITYFEEDBACK
Answer 1
According to Mabey & Lawton (1998) three core challenges face HR specialists
in developing a HR strategy. They are the management of intangible assets, for
example, the ability to access scarce skills; managing strategic change as
bureaucracies break up and the trend to flexible organisations and job design
create challenges; and developing innovation capability for competitive
advantage.
Answer 2
The implications from the life cycle model of growth, maturity and decline
might be the key HR policy levers. At a more detailed level, single or
multi-product strategies lay greater emphasis on different policy areas. The
important point to consider is the concept of creating a matched response to
changing business strategy.
Answer 3
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References
The Strategic Managing of Human Resources, edited by John Leopold,
Lynette Harris & Tony Watson, FT Prentice Hall, 2004 (Key text for
this module)
Becker and Gerhart (1996) The Impact of Human Resource
Management on Organisational Performance: perspectives, progress
and prospects, Academy of Management Journal 39(4) pp.779801.
Buller P. (1988) Successful partnerships: HR and strategic planning at eight
top firms Organisational Dynamics, Austen pp. 2793.
Fombrun C., Tichy, N.M. and Devanna, M.A. (1984) Strategic Human
Resource Management, New York. John Wiley & Sons.
Guest D. (1992) Employee Commitment and Control in Hartley J. &
Stephenson G. (eds) Employment Relations, Oxford, Blackwell
pp.111135.
Huselid M. (1995) The impact of human resource management and
practices on turnover, productivity and corporate financial
performance, Academy of Management Journal 38(3) pp. 63572.
Kochan and Barocci (1985.) Human Resource Management and Industrial
Relations, Boston MA, Little Brown.
Mabey C. and Lawton L. (1998) Managing Human Resources Unit 1:
Setting the Agenda, Open University Business School.
Mueller F. (1998) Human resources as strategic assets: an evolutionary
based theory in Mabey C., Salaman G. and Storey J. (eds) Strategic
Human Resource Management, Sage/OU.
Prahalad C.V. and Hammond G. (1990) The core competences of the
corporation, Harvard Business Review, May/June pp. 7991
Storey J. (1992). Developments in the Management of Human Resources,
Oxford, Blackwell.
Storey J. (1995) (ed) Human Resource Management: a critical text, London
Routledge.
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Further reading
Beardwell I. and Holden L. (1997) Human Resource Managementa
contemporary perspective, 2nd ed., London. Pitman.
Bratton J. and Gold J. (1999) Human Resource Management Theory and
Practice, 2nd ed. Basingstoke. Macmillan Business.
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Unit 2
Strategic HR Departments
LEARNINGOUTCOMES
Following the completion of this unit you should be able to:
Introduction
In Unit 1 we considered the concept of strategy in the management of
human resources. We now look at the role of the HR department in
supporting a strategic approach. We have referred to the historical
debate surrounding the development of the Personnel/HR function
and how the concept of HRM may provide a new emphasis to the
functional activity. In this unit we review the current options and the
thinking about what the HR function should do and how it should
operate.
READINGACTIVITY
Please read Chapter 1 of your key text, The Strategic Managing of Human
Resources, Edited by John Leopold, Lynette Harris & Tony Watson, FT Prentice
Hall, which covers some of the subjects of this unit.
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ACTIVITY
Use your background knowledge of HRM to identify some of the reasons for
uncertainty faced by HR personnel. Try to note down at least three reasons
ACTIVITYFEEDBACK
You might have noted some of the following:
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Emphasis on strategy.
Clear lines of management.
Integration of key policies.
Storey (1995) suggest that the HRM approach can be assessed in terms
of:
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ACTIVITY
What activities might you undertake in order to market the HRM function
within your organisation? Think of the needs that we have just described and try
to note down at least two things that you could do.
ACTIVITYFEEDBACK
Foot & Hook (1996) suggest the following activities:
1.
2.
3.
4.
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HRM in crisis?
This was the title given by Sparrow & Marchington (1998) in their
foreword to a series of papers in 1996. They suggested that HR
professionals needed increased understanding of three concepts if their
contribution to organisational change was to be of lasting significance in
the face of pressures to become more businessorientated and strategic:
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Confidence
Lack of confidence may stem from a series of criticisms of HR staff for
being:
Identity
For many, the HRM identity of personnel is simply a name change, and
the substance of personnel activities has not changed.
Direction
This is significant. The degree of HR involvement in strategic policy
making as opposed to implementation is problematic. Some argue that
an organisations HR capability is too important to be left to HR
specialists, suggesting that all managers must be involved. In this
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CASESTUDY
Read the rather long but useful article that follows. But before you start
reading, scan the case study questions (that appear after the article) and think
about the questions as you read the article.
Yes, Personnel does make a Difference
by David Guest and Kim Hoque, (People Management, November 1999)
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Big hat, no cattle was never a very apt description of personnel managers. Most
are too modest to wear big hats, and they tend not to be flamboyant. The
personnel management profession has sometimes displayed an alarming lack of
collective self-confidence. When David Metcalf and his team from LSE1
prodded and provoked with a claim that the presence of a personnel manager is
associated with a poorer employee relations climate, they touched a nerve
with a predictable response.
But why does the profession still feel defensive about the need to justify itself?
Most personnel managers at an individual level feel confident that they are
making a useful contribution. But the Metcalf team opened up an old sore
how do we know personnel managers make a real contribution? And does the
evidence support the kind of challenge thrown out by the Metcalf team?
We were asked by the IPD to conduct an independent review of the existing
research material and extend the analysis of the third Workplace Industrial
Relations survey. Our findings are summarised in this article.
Before reviewing the research, we need to explore why the effectiveness of
personnel management gives rise to so much anxious navel gazing. Explanations
can be found in the history of the profession, in the national culture and, more
especially, in the distinctive features of the personnel role. Personnel
management grew as a profession partly in response to the increasing
complexity of larger organisations and partly in response to the need to tackle
difficult problems. As the trend towards less bureaucratic organisations gathers
pace and the problems of industrial relations and selection disappear or change,
organisations may question why they need a personnel department.
Ambivalence towards personnel issues has sometimes been reinforced by a
national culture that gives primacy to financial and relatively short-term issues
over the human side of enterprise. It is often considered, rightly or wrongly,
that personnel represents the soft side of life at work and, as such, does not
need to be taken as seriously as some other activities. One possible indication
of this is that it is not considered a suitable career route for those who graduate
from the more highly regarded MBA programmes.
The contribution of personnel specialists has always been hard to identify
because they work in partnership with line managers and succeed by exercising
influence. In many cases, line managers take personnel decisions, perhaps
within a framework established by the personnel department. Therefore,
although we may be able to identify the impact of personnel decisions, we
cannot always be sure whether the personnel specialists contributed towards
them.
Furthermore, we know that when things go well, people are happy to take the
credit, but when they go wrong, it is easier to blame someone else. Where the
responsibility for personnel decisions is ambiguous, it can be convenient to
blame the personnel specialist.
If personnel managers get results by exercising influence, this places some
emphasis on their influencing skills. One of the consistent findings of surveys is
that the influence of the personnel department is growing. For example in the
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1990 Workplace Survey2, even among finance managers 60 per cent felt that
the influence of the personnel department had increased and only 8 per cent
felt it had decreased. What is not quite clear is whether this reflects the greater
competence and skills of personnel specialists or a growing realisation of the
importance of human resources for business success. One indication that is
might be the latter is that evidence of the steadily increasing influence of
personnel has been reported for so many years that if we were to take it
literally, personnel departments would now be dominating organisations.
Clearly there is some way to go before this is the case.
By exerting influence, personnel managers help to shape the framework of
personnel policy and practice; line managers will generally take day-to-day
personnel decisions, sometimes referring queries and problems back to the
personnel department. It therefore follows that any attempt to seek a direct
link between the presence of a personnel specialist and measures of
performance such as employee relations climate, labour turnover or
productivity will be a fruitless exercise. Other factors and other people are
going to explain most of the results.
It is more useful to take a realistic view of what the personnel department can
do. We know that it can help to formulate policy and practice. To take a simple
example, personnel departments can set up a sound appraisal system, develop
the documentation and procedures, and provide training.
They can monitor the system. But the actual appraisals must be completed by
line managers and the impact of the system ultimately depends on their
willingness to do this seriously and competently. Personnel departments
should have a direct influence on the appraisal system, but only an indirect
influence on its impact.
We will follow this model in our review of evidence about the impact of
personnel management on performance. But first we return briefly to the
issues raised by the Metcalf team. The team showed a negative link between
personnel managers and the employee relations climate. However, different
results emerge depending on how you define personnel managers and how you
measure employee relations climate.
When we take a definition of the personnel manager based on time spent on
personnel activities, professional qualifications, the presence of support staff
and the presence at board level of a specialist personnel director rather than
someone responsible for personnel issues, and also adopt a more cautious
definition of employee relations climate, then the negative links mostly
disappear. In their place we have mainly positive associations, even if they are
generally not significant. It is worth remembering that the survey found a
positive employee relations climate in nearly 90 per cent of work-places and a
poor climate in less than 2 per cent.
Using our model, we do not expect a direct link between personnel
management and employee relations climate. Instead, we expect a link
between the presence of personnel specialists and the existence of a range of
sound personnel policies and practices. We will also expect a relationship
between the existence of these polices and practices, and performance.
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Although responsibility for this second link rests as much with line managers as
with personnel specialists, it can work only if the personnel specialists have
ensured the policies and practices are in place. Even then, the link will not be
straightforward. Personnel is part of a larger system which will impose
constraints arising both outside the workplace e.g. government-imposed
limits to pay rises and inside.
When you start to look at the research into the link between personnel
management, and policy and practice, the first thing that strikes you is that
there is very little, and much of what there is focuses on the company level.
One of the best recent studies is the second Company Level Industrial Relations
Survey3 which emphasises the important role of a personnel director.
In the 30 per cent of cases where there was a personnel director, the personnel
department was much more involved in the formulation of human resource
policy. Foreign-owned companies were more likely to have a personnel
director. Head office HR strategy was very much a child of corporate business
strategy one of the constraints highlighted above. In most cases there was no
clear link between business strategy and HR strategy.
The findings of the Company Level survey are reinforced in a study of 30
successful companies reported by Tyson, Witcher and Doherty4. They found
personnel strategy was strongly influenced by market conditions and that
personnel departments did not promote any human resource strategy based
on a distinctive model. Purcell and Ahlstrand5, in their study of multidivisional
organisations, reach a similar conclusion, suggesting that: What they are
allowed to do limits their role in the management of change. In the process,
their role in strategy formulation, while often dreamed of, remained marginal.
Personnel managers are caught in the middle. They know the theory, perhaps,
but have not the power to enact it.
Not everyone shares this pessimistic view, The Cranfield/Price Waterhouse
International study of personnel management found that 43 per cent of UK
personnel directors claimed to be involved in the formulation of corporate
strategy from the outset6. A study of personnel departments in Scotland
reinforces this - Kelly and Gennard found that personnel directors were
influential in the boardroom but achieved this by focusing on the bottom line
rather than by promoting distinctive approaches to HR management7.
However, we must be cautious in accepting the views of personnel directors
about their influence without some corroboration.
One study that examined the impact of personnel departments looked at 303
NHS Trusts and Units in England, Wales and Northern Ireland8, It found no
relationship between any characteristics of the personnel department and
either policies or ratings of effectiveness. However, the presence of a
personnel director at board level was associated with greater personnel
influence over major organisational decisions which, in turn, predicted
effectiveness.
All these studies indicate that there is little evidence that personnel specialists
make much difference, They have insufficient influence to have a major impact
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Per sonnel funct ions and char act er i st i cs: all est abli shment s
Appraisal
Employee
involvement
boosted
Problem
solving/
QCs
Team
briefing
Merit pay
used for
some staff
Job
evaluation
Sick pay
available
to all
Pension
available
to all
Specialist manager in
workplace
Formal personnel
management qualification
Support staff
Personnel
characteristics
Significant at the
5% level
Source:WIRS 3
Significant at the
10%level
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Here, the measures of performance were HRM outcomes such as quality and
commitment of staff, employee relations outcomes and ratings of
benchmarked quality and productivity. Human resource management appears
to pay off.
The Workplace Industrial Relations Survey does not cover a sufficiently wide
range of HRM issues for us to use it to conduct the same sort of test. In most
cases, perhaps not surprisingly, there is no significant link between individual
practices and outcomes such as absence, employee relations climate and
estimates of productivity. Nevertheless, the small number of significant results,
on balance, show a positive link. Furthermore, the Metcalf team study
combined those items dealing with employee involvement and those dealing
with single status into composite measures and they do find a stronger pattern
of generally positive results.
In summary, the research evidence shows that the presence of specialist
personnel managers is associated with the presence of more HR policies and
practices, including what would be widely recognised as good practices. The
extent to which these are endorsed at board level and presumably integrated
into a coherent strategy is strongly influenced by the presence of a personnel
director on the main board.
The link between practices and outcomes is more tenuous. The key is strategic
integration. What this means is that personnel strategy must fit the business
strategy, the personnel policies must be fully integrated with each other and the
values of the line managers must be sufficiently integrated or aligned with the
personnel philosophy to ensure that they will implement the personnel policy
and practice. This is a tall order which will often require reinforcement through
leadership and through the organisational culture. Where this can be achieved,
then there is growing evidence that a distinctive set of human resource
practices results in superior performance.
We suspect many personnel managers would like to believe this but are unsure
about whether such a claim stands up to scrutiny. As a result, they are reluctant
to promote a distinctive line. The evidence is beginning to accumulate that HR
management does pay off. Personnel managers should be more confident
about getting this message across in their workplaces.
References
1.
2.
3.
52
5.
6.
7.
8.
9.
10.
11.
12.
The good, the bad and the ugly: employment relations in new
non-union workplaces, by D Guest and K Hoque, Human Resource
Management Journal, vol 5, issue 1,1994.
Questions:
What factors are likely to lead to more effective personnel practices being in
place?
What HR factors facilitate successful organisational performance?
What problems do personnel specialists face when trying to raise their profile?
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CASESTUDYFEEDBACK
1.
The article in the last case study offers mixed results for HR in relation to
our previous discussion. First, HRM would appear to pay off in terms of
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Auditing performance.
Devolution.
Decentralisation.
Outsourcing.
Each of these has been adopted to address some of the historical
criticisms of HR departments. For example, auditing attempts to offer a
results orientation and to link the contribution of HR strategy to
business performance. Devolution and decentralisation have both been
associated with maintaining a business focus. Outsourcing is associated
with reducing the costs of HR services and maintaining links to a
sufficiently broad range of objectives but only when required. We shall
now look at each of these trends.
Auditing performance
This is central to the setting up of service level agreements and clear
expectations of HRs role. In some institutions this has gone further and
a fee structure has been established as a bonus for setting budgets that
can be sensitive to internal outcomes and give added value in a business
context. This practice has been prevalent in costing HRs contribution
and also as a basis for open tendering of services whereby the inhouse
function is open to competition from private sector HR consultancy.
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Devolution of HR activities
The objective of devolution is to ensure a more businessled personnel
response to employment issues. It involves the reallocation of personnel
activities from specialists either:
To line managers.
To other specialists, such as the financial controller or
company secretary.
As a specialised service.
As a generalist service.
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Work organisation.
Training.
Recruitment and selection.
Appraisal.
Employee relations.
However, there are no simple and straightforward criteria to guide
devolution of activities. Organisations do not necessarily devolve the
same policies or indeed to the same degree within the policy areas.
However, some activities are more or less likely to be devolved. HR
departments frequently retain strategic areas of the HR function such as
policymaking, pay review processes and the design of appraisal
schemes. It may also retain operational areas such as the monitoring of
performance, provision of advice about disciplinary cases and the
coordination of training. Activities that are likely to be devolved are the
interview process, disciplinary interviews, job needs analyses and the
negotiation of overtime and other work practices.
ACTIVITY
Imagine that your company has decided to devolve certain personnel activities,
as described in the examples given above.
1.
- A line manager?
- An HR specialist?
2.
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ACTIVITYFEEDBACK
Line Manager reaction: Ownership of people issues is critical to company
performance, so your reaction as a line manager might be a feeling of
empowerment and involvement. It might also be a reluctance to take on the
extra responsibility because you lack the necessary skills. You may feel that
personnel specialists have opted out of their responsibilities, or you may feel
vulnerable on legal issues raised in employment.
HR specialist reaction: As a specialist you might react favourably if the
refocusing happened to be on the more strategic aspects of personnel work,
ridding you of the administrative image. You might wish to retain core specialist
areas such as recruitment, selection, and reward. You might have suggested
feelings of loss of skill and control over personnel practices. You may lose
influence in budgeting matters such as expenditure on training and
development.
The benefits of devolution that you may have suggested include:
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Head of department
Central head of HR
HR unit
Figure 2.1: Type A decentralisation
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Head of department
Central head of HR
HR unit
Figure 2.2: Type B decentralisation
Central head of HR
HR unit
Figure 2.3: Type C decentralisation
ACTIVITY
It can be argued that the decentralisation of HR may lead to an inconsistency of
approach. Try to write down some of the implications of an inconsistent
approach, for example, when HR is decentralised from a corporate level to a
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business unit level. We have given one example, but try to think of at least two
more.
ACTIVITYFEEDBACK
Examples that we thought of are:
Outsourcing
As with many business functions, outsourcing has become an important
method of achieving flexibility and reducing costs. The arguments for
outsourcing HR services can be summarised as follows:
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CASESTUDY
Read the article below:
How to outsource Personnel: market testing and compulsive
competitive tendering
by Alan Fowler, (People Management, 20 February 1997)
The compulsory competitive tendering (CCT) of some local government
services dates back to the early 1980s. It began with manual functions such as
buildings maintenance and refuse collection, and has since been steadily
widened by statutory regulations, first to include activities such as leisure
centre management, and later to professional support functions such as
finance, legal services, information technology and personnel management.
The governments current intention is that CCT will apply to 40 per cent of
each councils personnel activities measured by cost an increase from an
earlier figure of 30 per cent, which was already being targeted by many local
authorities.
In parallel with the detailed CCT regulations in local government, market
testing has been introduced extensively throughout the civil service, the health
service and many quangos. It has also been taken up in the private sector,
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Quality factors
Maximum scores
02
51
51
02
ecirP
03
The details of the tendering and market-testing processes are outside the
scope of this article, but an honest, in-depth review of the in-house personnel
function against these criteria would be useful preparation. It might lead to
improvements that reduce the pressure for market testing or, in a CCT
environment, it could strengthen the in-house bid.
Question:
What do you understand to be the main decisions, problems and opportunities
associated with the outsourcing of HR departments?
CASESTUDYFEEDBACK
You probably came up with some of the following:
Decisions
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ACTIVITY
Suppose you had to brief a Chief Executive Officer about the desirability of
outsourcing all or part of a large, centralised personnel department combining
the functions of general personnel activities, resourcing, training and employee
relations. What would you note as the strategic and operational advantages of
outsourcing? What are the operational risks?
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ACTIVITYFEEDBACK
Your notes might highlight and develop the following points:
Strategic Advantages
Results may not emerge. There are cost versus quality issues.
Lock-in and dependency upon third party may occur rather than
skills within the organisations control.
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ACTIVITY
Identify the issues an organisation needs to consider when making a decision on
establishing HR service centres.
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ACTIVITYFEEDBACK
These are some of the issues an organisation needs to consider
Professionalism of services.
Ability to measure service provision, speed of response and
customer feedback; customer service indexes clearly established.
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CASESTUDY
An interesting development of the service centre concept occurs when large
organisations consider changing from cost to business centres based upon
income generation. Now read the short article below:
BAE in HR export drive
by Dominique Hammond, (People Management, 25th October 2001)
Defence company BAE Systems has entered the HR outsourcing market by
turning its personnel function into a separate business that will sell to other
companies.
The new company, Togethr HR, was formed earlier this year in partnership
with business process management company, Xchanging.
Togethr HR was created to sell HR services back to BAE after the company
restructured following the merger of British Aerospace with Marconi
Electronic Systems.
The business process outsourcing market is estimated to be worth over 200
million worldwide. BT has also turned its HR function from a cost centre into a
separate revenue-generating business to capitalise on the growing market for
HR services.
HR outsourcing has become a trend, but it is yet to prove a success, said
Geoff Smith, consultant at William M Mercer. We are certainly seeing a
number of suppliers developing a foothold in the market.
BAE and Xchanging, which each own half of the new company, have jointly
invested $20 million over the next five years to build a single, internet-based HR
software system. BAE previously had 21 different systems for its
100,000-strong global workforce.
BAE has transferred 462 of its 700 HR staff to the new company, most of whom
will be based at a service centre in Preston.
There is a massive market for these services and we are building the capability
to meet those demands, said Alan Bailey, head of environment and business
development at Togethr HR.
Question:
What do you consider to be the potential advantages and disadvantages of this
approach. Try to think of at least two in each category:
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CASESTUDYFEEDBACK
The advantages could include:
Fits into the broader network organisation models where the supply
chain can be integrated.
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ACTIVITY
For an organisation that you have worked for or one that you have knowledge
of, complete the role-assessment survey to assess that organisations HR role.
For each statement, give a score from 1 to 5 where 1 is low and 5 is high.
Human Resource Role-Assessment Survey
by Dave Ulrich and Jill Corner
Current Quality
(1-5)
HR helps the organization...
1.
2.
3.
4.
adapt to change
HR participates in...
5.
6.
delivering HR processes
7.
8.
11.
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12.
14.
15.
16.
HR is seen as...
17.
a business partner
18.
an administrative expert
19.
20.
a change agent
strategic issues
22.
operational issues
23.
24.
business planning
26.
27.
28.
HR works to...
29.
30.
31.
32.
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34.
35.
36.
38.
increasing productivity
39.
40.
3
Employee champion
4
Change agent
noitseuQ
erocS
noitseuQ
3
11
21
51
61
91
02
32
42
72
82
13
23
53
63
93
04
latoT
latoT
erocS
noitseuQ
2
6
01
41
81
22
62
03
43
83
latoT
erocS
noitseuQ
1
5
9
31
71
12
52
92
33
73
latoT
74
2
Administrative expert
erocS
1
Strategic partner
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ACTIVITYFEEDBACK
Clearly, your assessment will be unique to you. However, the role-assessment
survey should have indicated where the balance of HRM sits in your chosen
organisation. A higher score in column 1 indicates a more strategic emphasis, in
2, a traditional personnel role and in 3 a welfare role. A high score in column 4
indicates a complete change of role for HRM.
What should the scoring profile be? Ulrichs theme is to ensure a balance
between the professional and operational activities (administrative
expert and employee champion) and the more strategically linked
activities of strategic partner and change agent. Another way of
understanding the scoring profile is to take a contingent perspective
whereby emphasis is placed on a strategic or operational axis (see
Figure 2.8) depending on the balance of outcomes to be achieved. For
example, at different stages of its life cycle, an organisation might need
to focus on one or more positions.
In the diagram, the strategic axis from top left to bottom right links
strategic partner with change agent and the operational axis from top
right to bottom left links employee champion with administrative
expert.
A dminist r at i ve ex per t
Business focus
Results orientation and
performance enhancement
Professional practice
New policies to support
change or employee
commitment
E mployee champion
Change agent
Achieving commitment
through partnership or
involvement strategies
in times of change
These then are the strategic roles that underpin the delivery of strategic
HRM within organisations and from this point on in the module we will
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map onto these roles the activities and policies that occur within the key
areas of the HR strategy:
READINGACTIVITY
Read the following article about SHRM:
HR with attitude
by Rob MacLachlan
Ill make a prediction, said David Ulrich, halting his two-and-a-half-hour
master class to share a sudden thought with the 2,000-strong audience. Within
five years, a top HR person will change his or her firm, and the stock price will
change too.
The reason? Because it will be seen by the market as a test of the firms
commitment [to good people management]. The implication? Because HR
will at last be widely recognised as crucial to the firms business strategy and top
team.
Ulrich was doing a star turn at the annual conference of the Society for Human
Resource Management (SHRM), the IPDs equivalent in the US. His prediction
was prompted by one of the main conference talking points: the
just-announced sacking of Al Dunlap, controversial chief executive of domestic
appliances manufacturer Sunbeam.
Dunlaps approach had been to improve cash flow and returns to investors by
ruthlessly closing less profitable business units. This had dramatic short-term
results, hyped as the Dunlap solution. But the sacker-in-chief was himself
sacked when Sunbeams board realised he had nothing more positive to offer in
the long term.
Dunlap managed for investors, but ignored customers and employees. He was
a liquidator, commented Ulrich, an edge of anger to his voice. The Dunlap
solution is easy. Generating cash flow this year is easy. But generating cash flow
for the future is more difficult. The important thing is to create sustained value,
and the only way that you can do that is by creating long-term, sustained
performance.
There has never been a better time to be in HR, he believes. Partly this is thanks
to the perception that when everybody was re-engineering, the people
dimensions werent taken on board enough and it didnt have the impact that
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everyone sought. But, more importantly, the opportunity arises because the
challenges facing businesses today all involve building HR capability.
Ulrich comes across as a thinker about business management whose special
interest is HR, rather than an HR specialist trying to find a wider audience. The
difference was summed up by Craig Sturken, chief executive and chairman of
Farmer Jack Supermarkets, one of the leading retail chains in the midwest, who
attended with his HR director and 19 other chief executive-HR director pairs
a one-day partnership forum led by Ulrich at the SHRM conference.
Dave Ulrich is a businessman with an HR influence. Hes not a traditional
consultant who stands at the front making speeches, Sturken said. He
understands whats going on in business.
Ulrich speaks the language of top executives because he concentrates on
linking HR practice with the bottom line. As Mary Holden, Farmer Jacks HR
director, said: Weve seen today how important it is to determine at every
level what we really want to accomplish, and to move that down through every
level of the business.
We need to focus on what we deliver, not on what we do, Ulrich told the
main conference master class on the following day. All the HR textbooks are
incomplete because the chapters focus on roles rather than outcomes. Roles
such as training and pay policy are important, but deliverables are more
important. The sort of questions we should be asking are: how are we going to
introduce cultural change, or build the organisations global capability? Ulrich
believes that what will distinguish successful firms in the future is the way in
which they organise themselves. Indeed, he has said that the only competitive
weapon left is organisation. In a recent Harvard Business Review article1 he
explained: Sooner or later, traditional forms of competitiveness cost,
technology, distribution, manufacturing and product features can be copied.
They have become table stakes. You must have them to be a player, but they do
not guarantee you will be a winner.
Winning will spring from organisational capabilities such as speed,
responsiveness, agility, learning capacity and employee competence. Successful
organisations will be those that are able to quickly turn strategy into action; to
manage processes intelligently and efficiently; to maximise employee
contribution and commitment; and to create the conditions for seamless
change.
This emphasis puts Ulrich directly at odds with Michael Porter, whose thinking
still dominates US boardrooms. Porter, the leading business strategy guru,
teaches that competitiveness depends primarily on capturing market niches by
creating unique products or services for which customers are prepared to pay a
premium. Once you get the business strategy right (in the boardroom), he
seems to suggest, everything else will follow.2
Competitiveness doesnt come out of strategy alone, objects Ulrich. Thats
only half of the game. Competitiveness also depends on whether you have the
organisation you need to execute the strategy. If you dont have a good
strategy, youre clearly in trouble, but having a good organisation is equally
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critical. Yet, in his latest essay, Porter dismisses the organisational side in two
sentences.
By organisation, Ulrich is not referring to structure. It doesnt matter how
many levels of management there are, he says. Whats important are things
such as speed, quality, simplicity, self-confidence, good decision-making. In
other words, the capabilities of the organisation.
He then told SHRM members, My job in HR is to help my executives identify
the capabilities they need to win. He defined 16 broad organisational
capabilities (see List 1) and challenged delegates to identify the four that are
currently most important for their organisations. If you cannot get 70 to 80 per
cent consensus among senior executives about the most important three or
four capabilities that the firm needs to win, he said, you probably arent going
to succeed.
Ulrich would be last to claim that the 16 capabilities are exhaustive. He uses
copious charts and worksheets in his teaching, but he told delegates: Adapt
them, dont adopt them. In this case, his point was to emphasise the
importance of clarity about the capabilities that an organisation needs, and
consensus about the priorities.
But getting senior executives to listen, let alone brokering a consensus among
them, must seem a daunting task to many personnel professionals. Ulrich
himself is painfully aware that the present role and calibre of HR people in many
organisations does not position them to exercise influence at the top level. His
recent Harvard Business Review article, addressed to chief executives and
designed to persuade them to take the initiative on organisational capability,
stated baldly: When more is expected of HR, a higher quality of HR
professional must be found.
His basic position is that the HR function must evolve or die and he strongly
believes, on the basis of 20 years of research, that it must embrace four key
roles if it is to survive. These are:
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as well as it might be. (It can be difficult to bridge the gap. Ive heard academics
claim Im not academic enough, and HR people that Im too theoretical, Ulrich
said.)
He believes that considerable progress has been made in demonstrating HRs
effectiveness, citing in particular the work of Mark Huselid at Rutgers
University,3 which shows that companies bundling HR practices have 33 per
cent greater market value per employee than those that dont. Other work on
the benefits of the balanced scorecard approach, and on HR efficiency and
benchmarking indices, is also promising.
Yet, he says, there are two issues here. Question one: do we have
effectiveness research in place? Id say the score here is four or five out of 10.
Question two: is it known and used by HR professionals? Here its more like
two or three out of 10. When I say to practitioners, talk to me about this, their
eyes mostly glaze over.
The third and fourth competencies managing culture (that is, to recognise
important patterns) and managing change (making it happen) are essential
if HR is going to claim the key roles urged on it by Ulrich. But they are not
competencies that are by any means unique to, or indeed prevalent among, HR
professionals. Thus, the function needs a major shift of emphasis if more of its
number are to become as effective as the best.
But it is the fifth competency, personal credibility, that is regarded as most
important to overall effectiveness. Ulrich explains that someone with high
personal credibility demonstrates, for example, business insight, high integrity,
appropriate risk-taking, chemistry with key constituents, and continuous
learning.
Another crucial factor is a track record of success. Credibility [also] comes
from doing the little things well. Your HR function is as strong as your weakest
link, he told SHRM members.
Yet even when an HR person has all five of these competencies, Ulrich believes,
another factor must be brought into play. And what is the latest sophistication
in this theoretical tour de force? Simply (but how difficult in practice) the ability
to act with an attitude. The key to success in any profession", he claims, is
that once you have the competence, you must act with an attitude. Typical
behaviours might be making confident predictions (based on professional
knowledge) or making bold stands (based on principle).
Ulrich gave several real but anonymous examples, the best of which concerned
a company whose chief executive died suddenly. Half an hour into the board
meeting called to pick his successor, the HR director slammed the table and
objected to the process that was starting. Im going to stop this discussion
right now, he said. This is wrong. Until we have agreed on a model of
competence for the chief executives post, I wont agree to an appointment
being made. The board was then led through a six-hour discussion of the
challenges facing the organisation and the qualities needed in the new chief
executive. A competence model and the desired behaviours were then agreed.
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When the board met several days later, it matched candidates to the model and
chose a successor. The HR director had made a crucial intervention. His
professional knowledge and principles had given him the confidence to act with
an attitude when it was justified and necessary.
Ulrichs parting shot to the SHRM audience hit another nerve. Ive realised one
of the strangest things about acting with an attitude, he said. Most HR
managers had come into HR because they cared about people. For a long time
now, the function has been wary about wearing its heart on its sleeve. But this
starting point, he seemed to suggest, can give HR professionals providing they
have the necessary competencies some of the moral strength to act with an
attitude.
We should continually be asking: is my company really building the policies, the
practices and the procedures that would make this an organisation everyone is
delighted to work for? Because if we dont, we are not only hurting the
company; we are hurting the profession as a whole.
List 1. A question of priorities
What four organisational capabilities is it most important for your company to
excel at?
1
Be intrapreneurial
Manage costs
Manage information
Manage work
10
Be marketplace agile
11
12
Manage stakeholders
13
14
15
81
16
Understanding of business
14
Knowledge of HR practices
17
19
22
Personal credibility
27
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References
1.
2.
What does this article show in relation to our previous discussion about
the evolution of HR departments? Ulrich identifies the importance of
the contribution and results orientation of HR. His restatement of the
importance of bundling of best practice tends to justify the importance
of a strong professional HR practice in the organisation. The article also
confirms the importance of HR upskilling through the adoption of
consultancy skills. Ulrich offers a typically combative and rousing
conclusion, unashamedly unitary and managerial in focus.
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1.
HR Policy Formulation
Includes strategic policy and how well it supports organisational
strategy and goals, and development of core competencies,
culture change, etc. How well does policy support devolution of
functions where appropriate (e.g. education and training,
recruitment)? How well do the enabling policies (to develop
skills, career management, rewards, recognition) work?
2.
Planning
How effective is HR planning, recruitment planning, career
planning, succession and workforce planning? How well is
workforce diversity, job design, organisational structure and
change planned?
3.
Development
How effective is foundation and induction training, professional
development, leadership and management training, career
development, mentoring, staff assignments and movement?
4.
Staff relations
Areas for assessment include management of industrial
relations/employee relations, enterprise bargaining, grievance
resolution, communication, promotion of teamwork.
5.
Performance
Is there a business code of conduct (covering ethics) and how
well is it adhered to? How effective is induction, how is
performance managed, how are staff supervised, how effective is
the appraisal programme? Are rewards and recognition
programmes effective in enhancing performance?
6.
Staffing Practices
How effective is appointment and selection? How competitive is
remuneration (and does it attract staff of the right calibre to
support organisational aims)? How effective is delegation? How
effective and fair is the job classification system, work level
standards? How flexible is the work environment and is it in
keeping with technological developments? How equitable are
staffing practices in promotion, rewards, separation?
7.
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ACTIVITY
With the permission of your HR Manager, consult a cross-section of staff (line
managers, business managers, staff from all levels and job categories), to get
their feedback on the seven functions identified above. You may wish to design
a questionnaire based on the information given in this section to elicit their
feedback.
Having conducted the survey, summarise your findings (in no more than one
page). Identify what works well, what are the areas of weakness/failure and
your recommendations for improvement.
READINGACTIVITY
Read the next article. Although it dates back to 1993, the APAC evaluation of
service model that it describes is still relevant to the auditing the HR function.
When Personnel Calls in the Auditors
by Derek Burn and Leah Thompson, (People Management, January 1993)
It has never been easy for any organisation to make an objective assessment of
the effectiveness of its personnel function or to compare such an assessment
with those of others. Effectiveness, at least to some extent, is relative to the
required or perceived role of the function, and there is ample research
evidence that this role varies widely between organisations.
Ultimately, the test for any personnel unit is whether it contributes to the
achievement of its organisation's business objectives - another major variable.
Broad-based assessments of these kinds are inevitably subjective and do not
lend themselves to statistical comparison.
Yet many personnel managers (and their organisations) understandably feel a
need for more detailed and objective means of assessing their performance and
how this changes over time and compares with other organisations.
APAC the audit of personnel activities and costs, which incorporates audits of
service satisfaction (APSS) and policies and procedures (APPP) - provides just
such a mechanism for setting benchmarks, both in terms of measuring internal
progress and by comparing standards across a broad range of organisations.
Three-tier approach
APAC adopts a three-tier approach to assessing the performance of the HR
function. The starting point module one gathers fundamental data about the
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1:168
208
1.5%
1.7%
650
172pa,
Professionalism
Each attribute is defined in some detail. Professionalism, for example, is defined
thus:
"The standard and quality of services provided is of a level that is
expected of professional practitioners. Ethical standards, objectivity
and independence are maintained, knowledge and technical ability
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Comparisons
The devolution of decision-making to line managers raised questions about the
size and cost of the smaller personnel function that resulted. To make fair
judgments about this, comparisons were needed with similar organisations
elsewhere. In April 1990, when Berkshire began to gather information about
departmental activities, it was difficult to obtain comparative information about
other local authority activities, let alone the private sector, which would have
provided the competitive comparisons sought.
At that time, Berkshire did not know if adopting devolved accountabilities
would significantly affect professional personnel staffing levels in comparison to
other businesses. This question and many others were answered by use of the
original APAC study undertaken by MCP Management Consultants.
This showed that Berkshire's personnel staffing levels and costs as a proportion
of permanent staff are significantly lower than those of other organisations in
both the private and public sectors. Data made available through this and other
subsequent studies have enabled the council to make an objective assessment
of the impact that devolution has made, and continues to make, on its ability to
meet service demands.
snoisiceD
tnemeganaM
eulaV
6.3
1.4
4.2
2.3
1.4
0.3
0.3
4.2
6.2
3.2
7.2
3.4
7.4
1.4
2.4
tnemtimmoC
noitacinummoC
yrevileD
lanoisseforP
4.3
1.3
9.3
0.3
5.4
2.3
2.4
gniffatS
5.4
nempoleveD
2.4
t
5.2
3.3
6.3
1.4
7.3
eeyolpmE
snoitaler
2.2
1.3
0.3
8.2
6.2
oitasinagrO
n
8.2
8.3
5.4
5.2
4.4
3.4
5.2
1.4
4.4
1.3
3.4
4.4
draweR
0.3
sdroceR
6.4
dna htlaeH
5.4
ytefas
Summary
This unit has considered the emerging debate about the role of HR in
organisations.
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We have tracked the historical developments, and have noted that the
idea of HR departments giving way to newlyempowered line
managers is problematic. What happens to professionalism, expertise
and coherence of strategy? We examined the nature of the socalled HR
crisis and looked at the fundamental split. Should, and can, HR become
strategic? What are the consequences for effective HR management?
Like any function, HR needs to be able to demonstrate value added and
adopt flexible structures be they centralised or decentralised, relating to
the business situation. We examined the relative merits of devolution,
decentralisation and outsourcing.
We also looked at the emerging trend of HR Service Centres, personnel
factories of shared services. At the heart of the debate is the role of face
to face aspects of HR and the reality of being properly customer driven.
We arrived at a new balance for HR via Ulrichs four perspectives for
HRs role. What seems to emerge is a clearcut role for HR, central rather
than peripheral, if they can rise to the emerging professional challenge
of policy and process skills.
Finally we briefly looked at the evaluation of the HR function within an
organisation.
REVIEWACTIVITY
Now answer the following questions to refresh your knowledge of this unit:
1.
What are the organisational and specialist changes that are likely to
impact on the management of people?
2.
3.
4.
5.
6.
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7.
What do you understand by the term multiple roles for HR? How
might it overcome some of the weaknesses perceived of old
operational Personnel and new SHRM from Unit 1?
REVIEWACTIVITYFEEDBACK
Answer 1
The likely changes are:
Flexibility debate.
Need for a new basis of managing people; systems to process.
Rebuilding psychological control.
Answer 2
The problems faced by HR departments are:
Devolution of functions.
Decentralisation.
Becoming strategic rather than operational.
Developing audit and value for money indicators.
These trends might lead to a greater focus on business, moving personnel
closer to the activity of the organisation and an evaluation of the contribution
made by personnel.
Answer 4
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References
The Strategic Managing of Human Resources, edited by John Leopold,
Lynette Harris & Tony Watson, FT Prentice Hall, 2004 (Key text for
this module)
Foot M. and Hook C. (1996) Introducing Human Resource Management.
Longman.
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Unit 3
Introduction
The first part of this unit deals with human resource planning and the
structure and role of competence in the human resource system and the
second with strategic options in recruitment and selection and the
development of a human resource strategy.
We shall consider a number of important issues. The first is human
resource planning, labelled as such to reflect the qualitative aspect of
diagnosing personal competence and skills. We shall then consider the
structure and role of competence in the human resource system, moving
on to consider how an understanding of competence can be used to
improve the performance of recruitment and selection activities.
We shall then draw together the knowledge that we have gained so far
to develop a human resource strategy. Competence is at the very heart
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READINGACTIVITY
Please read Chapters 2 and 6 of your key text, The Strategic Managing of
Human Resources, edited by John Leopold, Lynette Harris & Tony Watson, FT
Prentice Hall, which covers some of the subjects of this unit.
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ACTIVITY
Can you think of ways in which to balance the demand and supply of labour
using the four responses, discussed above. We have suggested an action for an
organisation under each of the headings. Try to write down at least one other
under each of the headings in the space below.
Do nothing/tactical (addresses demand)
overtime
Compete/tactical (addresses supply)
recruit staff
Substitute/strategic (addresses supply)
retrain older workers
Act/strategic (addresses demand)
improve employee development
ACTIVITYFEEDBACK
These are our suggestions:
Do nothing/tactical
- overtime
- reduce production output
- outsource.
Compete/tactical
- recruit staff
- schools liaison
- improve the company image.
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Substitute/strategic
99
2.
3.
Or ganisat ional E x it
Retirement
Experienced/Expert
Mid-career
Senior
Management
Professional
Redundancy
Horizontal flexibility
Early career
Post-training move
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stnartne etaudarG
stnemeriteR
tuptuo noitacudE
snoitomorP
TNEMNORIVNE LANRETNI
Quantitative
Qualitative
ACTIVITYFEEDBACK
ecrofkrow eht fo xim sllikS
Quantitative
Qualitative
List at least four examples of data from the external and internal operating
environment that you think will be of use in producing an effective planning
process. We have given one example under each heading to start you off.
ACTIVITY
Unit 3 Employee Resourcing Strategies
Quantitative
Qualitative
TNEMNORIVNE LANRETXE
dna yrtsudni ot sknil ,snoitasilaiceps etairporppA
noitatuper
ot ssenetairporppa dna snoitasilaicepS
seicnega tnemtiurceR
eliforp
slanruoj
lliks fo saera ni secruoser rof setar tekraM
egatrohs
namuh fo seicnetepmoc yek dna egdelwonK
We can now pull the factors from the last activity into a model of the
planning process. Such a process is made up of four steps:
1. Investigation and analysis
The organisation must gather knowledge about:
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4. Decisionmaking
The organisation must then make plans to balance supply and demand
of skills. The influences will include skill levels, development and the
cost effectiveness of accessing a wider skill base. The areas in which
decisions will be taken include:
- recruitment
- retirement and redundancy
- selection and assessment
- outsourcing
- promotion and reward
- development and retraining
- organisation development and culture
- the type of employment contracts
- performance management
- employee relations.
The model shows how investigation and analysis of four areas feeds
into a forecast of the supply and demand profiles of skills. These in turn
feed into the decisions that are made.
If we take the financial services sector, including banks, building
societies and credit/loan agencies as an example, using the above
model we suggest that over the last 1015 years the following picture
might emerge:
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ACTIVITY
Using this analysis, what forecast might you have made if you had been in this
sector (Financial Services)? What decisions might these forecasts have given
rise to?
ACTIVITYFEEDBACK
You might have forecast:
From the last activity feedback you might be able to see how the HR
flows triangle could be fundamentally reshaped in this industry.
Because of deregulation and the expansion of competition for financial
services that were previously protected, banks and loan institutions
have faced demands for increased product ranges, more specialised
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Professionalism in HR Planning
Needless to say, professionalism in HR planning is vital for
organisational success. The first aspect of professionalism is
understanding the customer, the customer requirements and providing
customer satisfaction. As we have already noted, HR is increasingly
viewed as a service a service both to employees and to the business. As
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3.
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ACTIVITY
In 1997 the Ford Dagenham plant was in the spotlight for discrimination against
Asian workers. The case received so much adverse publicity that the Ford
president, Jacque Nasser, had to intervene. Read the short article on this case
at the following website:
http://www.diversityatwork.com/news/dec99/news_europe2.html
Since the serious issues disclosed in 1997, Ford has made wide-ranging changes
to restore its professional image and promote diversity in the workplace.
Now read the article The Business Case for Diversity is Stronger than Ever by
the Diversity Director, Ford Europe:
http://www.hoggett-bowers.com/item.asp?txtID=11433
Another important aspect, which is often overlooked, is
professionalism with respect to upholding the principles of freedom of
association and effective recognition of the right to collective
bargaining. Employees must be able to exercise their rights to freedom
of expression, peaceful assembly and association, as well as a fair means
of collective bargaining without discrimination, including the right to
form trade unions and strike. It is incumbent on HR to incorporate these
rights into organisational policy.
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Underpin change.
Profile people for their development in jobs.
Underpin selection decisions.
Focus education and training, and personal development
plans.
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Organisational competence
We have looked at competence in a general sense. But at this stage we
must clarify what is meant by organisational competence, and HR
competence.
Increasingly organisations are focusing on core competencies and
organisational competence. Core competence and organisational
competence have become buzz words. So what exactly do they refer to?
Core competencies are seen as giving an organisation its competitive
edge, and in many cases is viewed as essential to its survival. The terms
core skills, core competencies and organisations capability (or
organisational competence) are related, but often misunderstood. An
organisations core skills, core competencies and distinctive capability
make up its strategic core. Core skills are associated with an individual,
core competencies with a team, and the organisations combination of
core competencies make up its distinctive capability. This distinctive
capability of the organisation is referred to as organisational
competence. At its simplest, a core competence is a unique capability
that affords some type of competitive advantage to the organisation. It
corresponds to a business process, and involves a combination of skills,
functions, systems and knowledge. To determine if something is a core
competence, one has to ask the question, Does it give the company a
unique advantage over its competitors and help make the company
profitable?
It is strategically vital that the business, in partnership with HR,
develop, extend, protect and exploit its strategic core (core skills, core
competencies and organisational competence) to the full. It is
organisational competence that enables an organisation to perform
more effectively than its competitors, and offer unique advantage to the
marketplace. Core competencies leading to organisational competence
are also likely to be persistent and not readily replicable.
Organisational competence is derived from an organisations people
their skills, experience and knowledge the HR competence.
Increasingly, the HR competences that organisations are looking for are
adaptability, analytical ability, lifelong learning ability skills that are
persistent and applicable in a variety of business contexts. Today, and
especially in sectors of the knowledge economy, greater value is being
placed on generic skills that are highly adaptable to particular situations
and roles, rather than very specialised skills. Thus in the professional
grades, and particularly in the global environment, employers are
looking for HR competencies such as:
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Meta-competences
These are the most general competences and include:
Literacy.
Analytical capability.
Creativity.
Ability to communicate.
Ability to cooperate.
Ability to tolerate uncertainty.
Negotiation skills.
These skills are important at all levels, but particularly for management.
They are also important for adaptability and change. Many of them can
come in part from education, but perhaps even more from heredity,
upbringing, socialisation processes and work experiences.
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Industry competences
These competences are not tied to any one firm in an industry:
Intra-organisational competences
These are organisationspecific competences:
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Unique competences
These competences are firm and taskspecific:
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8. Selfconfidence
States own stand or position on issues: unhesitatingly takes decisions
when required and commits self and others accordingly expresses
confidence in the future success of the actions to be taken.
9. Presentation
Presents ideas clearly, with ease and interest so that the other person (or
audience) understands what is being communicated uses technical,
symbolic, nonverbal and visual aids effectively.
10. Proactive orientation
Structures the task for the team: implements plans and ideas: takes
responsibility for all aspects of the situation.
11. Achievement orientation
Possesses high internal work standards and sets ambitious yet
attainable goals wants to do things better, to improve, to be more
effective and efficient measures progress against targets.
Thus flexible dynamic and organic organisations are producing new
challenges and activities for managers, particularly in the areas of
information collection, dissemination and assimilation. Furthermore,
developmental needs of management takes place through observation,
o
appraisal (360 see later units) and simulated activity mainly through
assessment centres where managers are placed in a range of group
practical exercises to assess behavioural competence where the capacity
to think and act is measured. Competency feedback is given to
managers as to their progress against the organisations strategic
competence. This is a form of strategic alignment of behaviour and
attitudes critical to achieving the integration at the heart of the SHRM
model. Competence feedback is then fed into individual personal
developmental plans, and education and training provided where
appropriate.
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2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
WH Smith model
This model is used to underpin graduate recruitment and development,
and covers nine competences that are sought in each area are as follows:
Written communication:
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ACTIVITY
Using the Pedlar & Burgoyne and the WH Smith Graduate Competence
frameworks, complete a profile of your own level of competence development
against each of the criteria. Try to identify specific evidence and examples from
your working and personal life that illustrate your competence.
Selection decisions
In selection decisions, as we shall see, it is important to collect and
assimilate various forms of evidence to improve decisionmaking. For
example, a selection framework composed of assessment group
activities, application forms, interviews and tests may be used as
follows:
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Application form
This is best for assessing written communication skills.
Interview
This is best for assessing skills of oral communication,
team membership, decisionmaking, motivation, personal
strength and analysis.
Test
This is best for assessing decisionmaking and motivation
skills and, if conducted verbally, oral communication
skills and the ability to present a reasoned argument.
Depending on the particular role for which selection is being
undertaken, certain selection methods are more appropriate than
others. For instance, when selecting call centre staff an assessment of
telephone style/manner is essential. For an engineering apprenticeship,
a numerical aptitude test might be best suited. Whereas, for
management roles, assessment centre group activities are invaluable
as they enable leadership, decision making, negotiation, motivation and
presentation skills to be evaluated in a group context.
As the process of selection becomes more complex, decisions have to be
made more rigorously as we search for key competences that
differentiate more successful strategic performance. Selection and
assessment becomes a key tool for identifying talents and integrating
and fitting them to the organisational purpose.
ACTIVITY
Why is competence analysis seen to be more beneficial today in selection than
traditional approaches, and why might it be a powerful tool to assess the future
direction of organisational change?
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ACTIVITYFEEDBACK
Competency analysis is based upon criteria sampling of actual job performance
factors and, therefore, relates directly to the job demands. By determining both
threshold and differentiator competence, organisations can track and monitor
shifts of core, emerging and declining competence. This can then be assessed
for individuals across the organisation or for individual career development and
deployment.
Emotional Intelligence
In an alternative model of competence, Goldman (1998) identified 25
surface behaviours that emanate from five basic core capacities. These
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Recruitment strategies
An area of HR policy on which the identification of competence as a
strategic formulation will place demands is the recruitment and labour
market strategy. How then do we set up planning systems to achieve
recruitment strategy?
The labour market is changing. The effect of the EU in opening up
employment across national boundaries has been demonstrated by the
introduction of a wide range of international staff with medical
functions in the UK. For many years, engineering and manufacturing,
as well as professional, staff from the UK have been working in Europe.
In recent years, recognising the severe shortage in specific areas such as
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Strategic approaches
Faced with uncertainty, Rynes & Barbour (1990) suggested three
strategic approaches to the labour market:
ACTIVITY
For each of these steps, try to identify a possible example:
1.
2.
3.
ACTIVITYFEEDBACK
You might have included the following:
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Market Research
What does the prospective employee (customer) know and feel about
your organisation? Awareness, favourability and familiarity indices
were created for age and gender.
Segmentation
Segment the geographical areas of the job holder by occupation.
Selling and targeting
Prospective employees were set against the background of the business
vision. Connock did this successfully by promoting Pearl Assurance to
London workers to attract them out of the city to Peterborough. The
promotion involved name awareness to corporate image with specific
companies targeted at selected groups such as school leavers and
housewives.
Broader techniques of recruitment
These include open days, poster campaigns and bus adverts.
Jobs and skills profiles
Wider access to competency/knowledge, skills and attitudes to allow
staff selection.
Recruitment support
This includes:
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ACTIVITY
Online psychometric testing might seem ideal; it is flexible and saves travel
costs and time. Suggest at least two disadvantages of online testing.
ACTIVITYFEEDBACK
You might have thought of any of the following:
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The use of screening tests alone for shortlisting is still practised in the
HR profession. However, structured telephone interviews, biodata tests
and psychometric tests with interviews are already widely used to
reduce candidate lists. eAssessments also provide further opportunity,
as we shall see in a moment.
We need to balance the advantages and disadvantages, safeguarding
the use of online tests and ensuring some of the strategic benefits of cost,
speed, candidate flexibility, without compromising professional
integrity and fairness.
Proponents argue the low reliability of interviews and promote the
speed, autonomy and wider access of potential employees to
information on careers guidance, appraisal and development
information. This allows more control over the process to support the
'sellers' market and power of the applicant predicted by Herriott.
Albery (2001) argues that eassessment allows further technical
enhancement to services through the use of adaptive 'tests' where new
questions can be generated in response to answers given. This test can
be shorter whilst retaining accuracy.
Retention strategies for untapped talent markets
Organisations often focus recruitment on their experience of retention.
Demographic pressures in the UK have reduced the number of school
leavers, particularly as more people enter Higher Education. A review
of skills and competencies has brought a reappraisal in some areas of
the virtue of older workers in terms of experience, customer focus and
retention. This is not a universally held view, as age and qualifications
often still prevail.
Women currently make up 4550% of the workforce in the UK, but with
traditional approaches to child rearing, organisations often lose highly
trained staff for lengthy periods of time, or altogether. The options to
avoid this include:
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ACTIVITY
Suggest what key HR management considerations might be used to develop an
orderly scheme that ensures take-up and promotes commitment and equity in
scheme operation in terms of retention strategies. Try to write down at least
two considerations.
ACTIVITYFEEDBACK
You might have identified the following:
Eligibility criteria published:
- service/position related
- open to scrutiny.
Length of break:
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Job Analysis
We have discussed the attention now being applied to defining
requirements through the design of competence models. At this point
we need to add that the process of job analysis must take place at two
levels to ensure synergy:
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ACTIVITY
1.
2.
Select five incidents in the last year when you did something well and
five incidents when something went less well. (For example, a positive
example of team working might be offering feedback.) For each
incident answer the following questions:
ACTIVITYFEEDBACK
For the first part of the exercise you might have come up with some of the
following:
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Adaptability.
Desire to improve.
Self confidence.
Team working skills.
Accept responsibility.
Broad vision.
Seek performance feedback.
Tolerance of change.
This will form key selection criteria.
Reference details.
Today the aim of selection is to align assessment more closely with the
specific criteria and demands of the particular task. A strategic
approach to assessment is generally associated with attempting to use
specific skills and/or competences for assessment:
In a simulated environment.
Through careful questioning of past activity through
application forms, where a batch of competencebased
information is requested.
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ACTIVITY
Try it yourself. Try interviewing somebody against a competence profile to
ascertain their past experience. Try it from the detailed competence and the
hidden competence standpoint. Be careful to record the evidence carefully
against the profile that you have highlighted. Try the WH Smith model. Be sure
to record only what is said happened and what the person particularly did or
said. Don't spend more than 10 minutes on this; results can be achieved in a 10
minute pilot interview.
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ACTIVITYFEEDBACK
There is no individual feedback to this activity but you may want to reflect on
your findings. You will have built up an evidence base of behaviours that is
probably superior to what a person says they would do. This type of
hypothetical link may be useful to test knowledge; for example, how would you
deal with an angry customer? It may not tell you as much about how they would
react. Clearly the best way is to see them do it or simulate it, but this can be
costly. The behavioural event, structured or focused, interview is a good way of
improving the validation and reliability of the interview and at the same time
focusing closely to strategic behaviour/competence derived from the business
plan.
ACTIVITY
What do you understand by 'fairness' in selection decisions? Note down in a
sentence or two what you understand by this term and how it is achieved.
ACTIVITYFEEDBACK
Fairness is usually thought of as standard, consistent and transparent behaviour
in assessing interview candidates. It might be achieved through any of the
following:
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Confidentiality of information.
Not trying to entrap or ask unfair questions that are not related to
the job.
The concept of 'fairness' in selection involves both the process and the
content of the selection procedures. Many organisations now adopt
very systematic procedures based around:
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ACTIVITY
With Bullers levels in mind, who do you think is responsible for HR planning?
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ACTIVITYFEEDBACK
It seems likely that the collection and synthesis of data into forecasts is going to
be led by a strong HR specialist working in close consultation with senior and
line managers, particularly on the interpretation and meaning of the scenarios.
It therefore seems logical that the creation of integrated business-led HR
policies will be carried out by HR but with strong input, discussion and final
agreement from senior managers from the business. Clearly, Board
representatives need to present and lead the discussion and provide expert
assessment of policy options against business objectives, and ensure a
commitment to decisions and subsequent implementation.
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Figure 3.2: The strategic management process and its implications for HR management.
CASESTUDY
Read the article below to discover some of the answers to What does HR
strategy look like?.
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Effectively plan and control the size and mix of the workforce to
ensure that every employee is utilised fully and able to meet the
challenges of work;
Make full use of the freedoms which are now becoming available to
extend progressively the scope for flexibility in local determination of
pay and other benefits for staff;
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Attract.
Recruit.
Motivate.
Educate.
Develop staff.
This will also increase our ability to retain staff and facilitate improvements in
utilisation.
In broad terms, therefore, three kinds of action will be required:
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The fall in labour supply is exacerbated by the increase in demand for labour
across the economy as a whole and nationally an increase of 2.2 million jobs is
predicted by the year 2000. Competition for staff from other sectors of the
economy will be vigorous particularly for trainees and for those with
transferable skills but also for those trained in specific health service professions
who are prepared to pursue alternative careers.
The combination of these recruitment and retention difficulties with financial
pressures makes it realistic to assume that, at best, it will only be possible to
maintain the workforce at around its present level. It may be advisable to
expect a reduction in the workforce, and the deployment and utilisation of staff
must be planned accordingly.
Such factors would be sufficient in themselves to justify a radical reappraisal of
the way human resources are sought, utilised and developed. However, as an
organisation concerned with the care of people in the community we must also
ensure that the well being and motivation of the people who work for the
Service our most important asset receives a higher priority.
The Action Required
Three kinds of action will be required: to reduce DEMAND for staff, to
improve the UTILISATION of staff in post and to COMPETE more effectively
in the labour market. Such actions are inter-related and none can be pursued in
isolation.
Therefore, to be effective, the Human Resource Strategy must be seen as an
integral part of the overall business strategy.
THE DEMAND FOR STAFF
A reduction in the demand for staff will be achieved in the following ways:
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Demand
Reducing the need for staff and the Services dependence on highly-skilled
personnel is related to the availability of staff in the labour market and to the
control of unit costs, the latter being particularly emphasised in the White
Paper.
Information systems should, as a minimum, offer the following:
The setting and monitoring of targets for turnover and lost time
(including sickness and absenteeism), recording hours of work
and overtime;
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The monitoring of pay levels and local pay policies and the effect
they have on the ability of the Service to fill vacancies (this
information, coupled with that on turnover, retention and vacancy
levels, should help health authorities identify what changes in pay
policy would be the most effective.)
EDUCATION, TRAINING & DEVELOPMENT
(For simplicity, the word training is used throughout this section rather than
education, training and development)
Strategic aims
The RHAs Education, Training and Development Strategy derives from its
mission statement and embraces the following principles:
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Act in, and help provide and/or manage, an integrated service with a
clear understanding of its wider purpose.
The general needs listed above provide a basis for examining/re-examining
training needs within the Service. The prime responsibility for identifying these
needs must rest with health authorities and with every manager in those
authorities. The introduction of individual performance review marks a major
step forward in establishing a systematic assessment and review of individual
training needs. Plans should increasingly contain a standard for the number and
type of staff who should have a specific qualification and the desired level of
training, in order to perform a particular task (e.g. for accident and emergency
departments, at least one member of nursing staff who has received specific
A&E training at an approved course should always be on duty).
The production of realistic manpower plans by each health authority is a first
and fundamental step in the complex process of developing both a district and a
regional overview of manpower needs, and therefore, training needs. It is
imperative that manpower information on both wastage and turnover and
other lost time is collected and analysed in order that manpower plans can be
regularly updated.
In respect of the regionally-managed training services, manpower forecasts
have been based upon Summary Analysis of Strategic Plans projections and
specific training and manpower surveys conducted on behalf of the Regional
Training Council.
Organisation
The RHA is firmly committed to regional self-sufficiency and the devolution of
training activities to the lowest practical management level in the organisation,
including entering into training contracts where possible. These commitments
have to be met within a coherent and recognisable framework across the
region which:
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Funding
The RHA is committed to the belief that it should aim to be self-sufficient in the
supply of staff.
It may not be feasible, however, to supply some types of training within the
region and therefore collaborative arrangements with other training
organisations may be required.
Providers must:
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ACTION
1.
The RHA will consult formally with DHAs on this strategy with the aim
of assisting DHAs to develop their own Human Resources Strategies
during 1990, where they have not already done so.
2.
The RHA will agree with DHAs a set of respective priorities for action,
with target timings where appropriate and will co-ordinate initiatives
around the region to avoid any unnecessary duplication of effort.
REFERENCE
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Jarrold, Ken and Selkirk, Alex (edr) (1992) Putting People First: a human
resource strategy for health services in Wessex, Winchester, Hants., Wessex
Regional Health Authority.
QUESTIONS:
What are the visions and values of the Health Trust?
What are the SBI and SBO?
What are the Corporate and Business Strategic Concerns?
What are the four tasks in relation to Wessex?
What are the key policy areas?
CASESTUDYFEEDBACK
What are the visions and values of the Health Trust?
The aims of the strategy set out the values and the need to utilise skills further.
There is little on participants and stakeholders needs.
What are the SBI and SBO?
The need for change covers the core strategic business issues, and the one
strategic business objective. These are loosely covered by the reference to the
Working for Patrick which will specify these more directly.
What are the Corporate and Business Strategic Concerns?
These are:
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That is why some strategists now are emphasising more flexible or emergent
plans that are more adaptable, what we have referred to before as more
general statements of direction or scenarios of the future.
For employees, of course, these are rather less tangible and related to the
day-to-day world of work that they experience. This will engender less interest
and commitment if this is the case. However as a working plan for the
organisation based on resource planning then it may have a more realistic
framework for organisational decision-making, what we have perhaps referred
to as the resource based view of HR strategy. The difference of approach is
perhaps determined by the need to engage the whole workforce in the process
of HR change. Alternatively, where the size of the organisation is large, more
low key statements of direction and involvement of staff may not be feasible in
terms of assuring consistency of implementation across the organisation or
mobilising knowledge and commitment to change. Although the style and
approach may differ, the imperative for a strategy is not diminished.
The above case study illustrates the possibility for HR strategy. It covers
the relationship between human resources and business strategy. It
offers a comprehensive strategic response or matching strategy as laid
down by the concepts of Unit 1.
The case shows how demand and supply issues are evaluated in a HR
planning process. People management is placed at the centre of the
business outcomes and key HR levers are identified as a basis for
achieving the people outcomes. Strategic HR outcomes are recorded, for
example employee commitment, leadership, flexibility and
performancebased strategy, which we shall address in Unit 4.
Competence is not central to this strategy, which is unusual, but we
might infer the competences required in terms of skill enhancement and
flexibility. This is a multitask operation and a multioccupational
teambased approach. Of course, management competence is at the
heart of the strategy. Finally, we see the level of integration being
attempted from the business strategy to the HR response across each of
the policy areas.
There is much controversy as to the extent to which organisations
actually produce a formal HR strategy and communicate it to
employees. Large organisations, health care and public authorities
including universities have widely engaged in the process. Critics have
concentrated on the impact and reality of the plans and the degree to
which they are implemented.
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Strategy formulation
Establishing vision and values
This describes the kind of company and its business priorities. This has
important implications for the style and climate of the HR working
environment. Schuler et al (2001) describe the Merck Pharmaceutical
mission as the provision of superior product innovation to improve the
quality of life focusing on ethics as well as shareholder returns. Barclays
Bank in the UK has recently launched a campaign of size and strength
but perhaps lost the sense of closeness to customer and service values.
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Strategy implementation
Developing and implementing plan four task model
The four task model amplifies in HR terms what we need to do for
people. The four tasks are:
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Strategic.
Operational, which can be subdivided into:
- outcomes
- processes.
Strategic evaluation
Becker & Huselid (1998) suggest a need to concentrate on evaluating the
translation of unit objectives from strategic objectives, and to be able to
access what the performance choices of the organisation are and the
extent to which the skills, motivation, structure and HR system
influence those choices.
Kaplan & Norton (1992) suggest that evaluation must cover a balanced
set of measures including financial, customer, internal business
processes and the learning and growth perspectives. We shall return to
this balancing of performance measures later in the module.
Other ways of considering the strategic evaluation of HR have been
summarised by OCreery (1997) in four key areas:
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Capability
Assessment
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- number of resignations/headcount
- average length of service
- rate of absenteeism
- levels of supervision/employees
- level of grievances/disputes
- participation in quality improvement activities
- satisfaction with communications and consultation
channels
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ACTIVITY
Suggest at least two design and/or follow-up considerations for such an attitude
survey.
ACTIVITYFEEDBACK
The important design and follow-up consideration for attitude surveys are:
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Confidentiality of survey.
Strategic importance attached to findings and actions.
Summary
This unit has introduced the importance of having HR Planning
systems and processes in place to support HR Strategy. We have
examined the broader context and information now used for planning
and the links to human resource policy decisions. The depth and range
of information to be collected is increasing as witnessed by the
competence models.
The importance of competence is twofold. First, it creates a common
language by which managers can understand and make decisions about
people requirements in a relatively consistent way. Second, it enables
the key link to be made through which business strategies can be
articulated in people terms, to enable HR strategies to be written.
We have identified the components of HR Strategy and discussed the
best of the key resourcing strategies to support its achievement, that is,
recruitment and selection.
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REVIEWACTIVITY
Now answer the following questions to refresh your knowledge of this unit:
1.
2.
3.
4.
5.
6.
7.
8.
REVIEWACTIVITYFEEDBACK
Answer 1
HR planning is seen as having increasing importance in addressing both
quantitative and qualitative approaches to planning, with the strategic
importance of identifying core competencies and sponsoring new techniques.
Answer 2
Tactical methods are to intensify recruitment, introduce overtime, and
outsource work.
Strategic methods are to use substitute/new labour markets, employee
development, and to restructure jobs
Answer 3
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This is a flexible question for you to answer in conjunction with one of the
models in the unit, Pedlar and Burgoyne or WH Smith.
Answer 4
Other systems that can be supported include:
- organisational restructuring
- recruitment
- skills utilisation
- career management
- appraisal, personnel development planning
- reward management
- culture change.
The competence model is the central feature of an integrated human resource
strategy.
Answer 5
The main steps in formulation are:
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- candidate-friendly recruitment
- professionalism in recruitment and marketing the organisation
- use of e-business recruitment
- resourcing strategies retention of talent.
Answer 7
The reliability and validity of recruitment can be improved through more
rigorous approaches to selection with:
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References
The Strategic Managing of Human Resources, edited by John Leopold,
Lynette Harris & Tony Watson, FT Prentice Hall, 2004 (Key text for
this module)
Albery, R. (2001) Frames of Mind: How are safeguards built in?, People
Management, 14 June.
Atkinson, J. (1989) Four stages in demographic downturn, Personnel
Management, August pp. 2024.
Bartram, D. (2001) in Albery, R. Frames of Mind: How are safeguards
built in?, People Management, 14 June.
Becker and Huselid (1998) High Performance work systems and firm
performance: a synthesis of research and managerial implications,
Research in Personnel and Human Resources 16(1), pp. 53101.
Bennison and Casson (1989) The Manpower Planning Handbook.
Maidenhead: McGraw Hill.
Bramham, J. (1994) Human Resource Planning, Wimbledon: Institute of
Personnel & Development.
Buller, P. (1988) Successful Partnerships: HR and Strategic planning at
eight top firms.
Carter, M. (2000) Contract Shift Featuring eProcurement, People
Management, 23 Nov.
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Unit 4
Performance Management
LEARNINGOUTCOMES
Following the completion of this unit you should be able to:
Introduction
One assertion that can be made about the strategic management of
people is that the systems and processes are only a means to an end, to
the achievement of organisational goals. In this unit we argue that to
maximise the benefits of people management, the key factor is the
integration of the HR systems. Performance Management Systems
(PMS) are a key integrator by allowing objectives in a business plan to
be fed into the rest of the HR systems that we encountered in Unit 1.
We need to clarify what we mean by Performance Management
Systems. Bevan & Thompson (1992) offer the following definition
(adapted):
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READINGACTIVITY
Please read Chapter 7 of your key text, The Strategic Managing of Human
Resources, Edited by John Leopold, Lynette Harris & Tony Watson, FT Prentice
Hall, which covers some of the subjects of this unit.
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Distinguishing features
The features that make up PMS can be seen as a series of steps linked to
an overall business strategy, as follows:
1.
objective setting
2.
3.
4.
5.
pay review
6.
ACTIVITY
Imagine that you work for a university or college and you wish to introduce an
integrated performance strategy and system. The strategic objectives might be
oriented towards expanding courses for postgraduate students and addressing
cost effectiveness in course delivery. The business strategy is to:
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ACTIVITYFEEDBACK
The system may look like this:
Step 1: Objective setting
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Business
strategies
Step One
Objective
setting
Ongoing
review
Step Two
Step Three
Personal/job
improvement plan
Ongoing
review
Formal
appraisal
Career
development plan
Training
plan
Organisation
capability
review
Step Four
Performance
rating
Pay
review
Reflecting on your study of Units 1 and 2, you should note that key
words start to reappear:
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Measurement of objectives.
Appraisal decisions.
Performancerelated pay.
Coaching and counselling staff at the job level to enhance
skill and learning capability.
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CASESTUDY
Read the following article on Performance Management:
Performance Management: The New MBO?
by Alan Fowler
Management has always been about getting things done, and good managers
are concerned to get the right things done well. That, in essence, is
performance management the organisation of work to achieve the best
possible results. From this simple viewpoint, performance management is not a
system or technique, it is the totality of the day-to-day activity of all managers.
But if the methods managers use to achieve results are left to their individual
initiative, two problems arise:
There is no guarantee that all the managers will work to a coherent set of
organisational goals and priorities.
Managers vary considerably in competence, so performance standards are unlikely
to be consistent or universally high.
As a result, the history of management consists largely of attempts to evolve
managerial processes which, by systematising good practice, ensure that what
all managers aim for and achieve is what the organisation requires. The recent
emergence of the concept of performance management with its related formal
systems which have already acquired the generic title of PMS is the latest in
a long line of such attempts. Is this just the flavour of the month? Will these
systems be any more successful than previous techniques particularly
management by objectives (MBO), which PMS resembles quite closely? A
broad review of past developments provides some clues.
Several features emerge from a 60-year view. No single theory or technique
has proved to be adequate by itself to secure a high level of organisational and
managerial performance, and none has lived up to initial expectations; but most
have had some lasting beneficial effect, however limited. There have also been
two largely unrelated and sometimes opposing approaches, one concerned
with work processes, the other with the human element with people.
These two streams of development derive from what 1960s theorists
described as the scientific and human schools of management. There are, of
course, more complex and academically sophisticated categorisations of
management theory, but from a practical viewpoint the two approaches of
process-oriented or person-oriented techniques provide a sharper focus.
In simple terms, the thinking behind the evolution of management techniques
seems to be as described in the two boxes below.
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.gnikrow fo yaw
Almost all management techniques and systems developed this century fall into
one or other of these categories. Table 1 shows this in summary form. This is
not an exhaustive list, and it does not include current developments in
performance management or total quality, but it serves to highlight the historic
contrast between the two approaches.
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Work study though essentially process based has been used for
incentive payment schemes. Such schemes reflect a managerial view
that people are motivated by factors other than the sheer logic of a
best method system of working.
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Quality circles. Although the purpose of quality circles was clearly to raise
quality or process standards, the system itself was founded firmly on theories of
motivation through involvement an essentially people-based approach. Many
organisations launched quality circles with great enthusiasm at the end of the
70s only to experience a fairly rapid decline in the interest and commitment of
managers and employees. Some organisations achieved success and some
quality circles have become firmly established, but this seems to have occurred
in only a minority of cases.
In an article in PM [Personnel Management] in February 1985 (Quality circles
why they break down and why they hold up), Ron Collard and Barrie Dale
commented on studies in which some 20 reasons for failure had been
identified, of which company restructuring, employee turnover and lack of
co-operation by supervisors and middle managers were the most common.
[Now] a broader view is possible, and two main reasons can now be suggested.
First, many circles were not compatible with company culture. Participative
shopfloor working sat uneasily within hierarchical and authoritarian
environments.
Secondly, circles were introduced without changes being made to formal
working methods and systems. In a wave of enthusiasm for harnessing the
talents of their people, companies overlooked the need to reshape their
processes for example, the procedures for making design or production
changes. So ideas generated by the circles entered the formal procedures at an
unconventional point in an unconventional way, and were then often lost or
delayed by the unchanged formal system.
Management by objectives (MBO) was the first attempt to systematise the
whole process of management. It was certainly thought to be the answer by
many of its proponents. Yet it too has fallen largely into disuse at least so far as
the detailed system marketed by Urwick Orr, and its derivatives, is concerned.
True, the basic idea has survived that if management is about getting things
done it is as well to define what is required and review progress regularly, and it
forms the basis of todays PMS. But MBO as one specific technique had expired
within 10 years of its much publicised launch. Why? The answers are
particularly relevant to PMS.
First, the standard, packaged MBO system fitted the culture of a few
organisations, but not that of many others. It required a highly structured,
orderly and logical approach characteristics which were more compatible
with traditional bureaucracies than with the opportunistic world of the
entrepreneur. Few managers though many administrators are naturally as
systematic as MBO required.
Secondly, there was only limited recognition of the importance of defining the
organisations corporate values and goals. The emphasis was on the role of the
individual manager. One result was that objectives set in one department could
be inconsistent with those of other parts of the organisation.
Thirdly, schemes were often perceived by line managers as a centrally imposed
additional task, Management development specialists often owned the system
not the line managers who had to put it into effect.
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2.
3.
182
Will todays performance management systems avoid the pitfalls of the past and
achieve the integrated approach which should lead to success? As Table 2
shows, PMS shares many common features with MBO, even though some of
the jargon has changed. MBO divided jobs into their key results areas
principal accountabilities in PMS terminology. Both systems set objectives
within each segment of the job; both distinguish between task-based objectives
and personal development goals. Both require the identification of
performance measures and the periodic appraisal of achievement against
objectives.
But, as Table 2 also indicates, there are some important differences, In
full-blown PMS, the starting point is a definition of the organisations mission,
aims and values a cultural feature not found in MBO. Corporate and divisional
objectives are then identified which reflect or support the corporate mission.
The objectives of individual managers (and then their support staff) are evolved
similarly as part of a cascade of integrated goal and standard setting. Unlike
MBO, which was generally limited in application to managers, PMS schemes are
being extended to all staff. The whole process is far more cohesive and
strategically focused than MBO and consequently stands a better chance of
success.
In most PMS schemes, too, there is a recognition that performance cannot be
assessed solely by quantified measurement. Qualitative performance indicators
are given full recognition, for example, by the use of customer attitude and
opinion surveys. This, too, gives PMS a higher survival rating than MBO.
PMS
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srotacidni ecnamrofreP
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Finally, PMS initiatives tend to be led by chief executives and top management
teams, not by personnel specialists. Middle managers may still react against the
imposition of a performance management system but with less vigour and
much more caution than when central personnel was seen as the prime mover
of an MBO scheme. PMS is becoming owned by line management.
It would be unwise, however, to think that, because of these beneficial
differences, PMS will take root as a permanent best way of achieving a high
standard of organisational performance. Several contra-indications can be seen
in a number of current schemes. In particular, within the appraisal process of
PMS, some schemes are placing almost total emphasis on statistically measured
task performance (the extent to which the manager achieves present goals) to
the exclusion of broader, people-type issues of personal competence and
development.
It is curious that this trend is particularly apparent in a number of local
government schemes where, in the past, the argument has been that many
public service functions are not susceptible to quantifiable assessment. Some
local authorities seem to feel a need to demonstrate that they can be just as
macho as the private sector, and consequently consider it a weakness to pay
any attention to behavioural or personal factors.
Too much reliance is still being placed on objective-setting and review as an
annual event. In todays fast moving world, any idea that effective performance
management can be tied neatly to a single annual date is patently absurd. Far
more effort is needed to build the fundamental principles of goal-setting,
appraisal and supportive action into the ongoing and informal management
activity. In short, what is needed is an attitudinal or cultural change not just the
adoption of a largely administrative process.
This potential cause of failure is exacerbated by another unwelcome tendency
for schemes to become administratively complex. One public sector scheme
now requires the completion of an eight-page appraisal form in accordance
with the terms of a 48-page management manual a classic example of the
process becoming an end in itself rather than being a practical aid to better
performance.
Schemes are being hastily introduced in some organisations, almost as a matter
of fashion, without adequate thought being given to the practicalities of
achieving the objectives which are being set. Both the process and the people
aspects are being given too little attention.
On the process side, managers are being encouraged to set collective and
personal goals before procedures have been changed to aid implementation or
adequate attention has been given to the resource implications. Managers go
along with this initially, partly because there is a tendency in the first flush of
enthusiasm for people to set themselves unrealistic targets. The chief executive
in one scheme is known currently to be working towards eight broad
objectives and 52 short-term goals, involving over 100 performance indicators.
Some disappointment seems likely.
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Enthusiasm for total quality management has emerged separately from the
development of PMS in some organisations. Two sets of processes then
emerge, not wholly in mesh and potentially giving different signals to managers
and employees about priorities and values.
No confident prognosis is possible. Some schemes are likely to succeed and
become, in effect, their organisations way of managing. The scheme a term
which implies a discrete activity will become the company style. Others can
be guaranteed to fail: their over-emphasis on the process, or incompatibility
with the prevailing company culture, are the seeds of their own destruction.
There is an opportunity here for personnel managers, provided they give up
ownership of any particular system or approach and act instead as integrators
and facilitators.
(Fowler,1990)
QUESTIONS:
1.
2.
3.
CASESTUDYFEEDBACK
1.
- isolated objectives
- lack of ownership
- overly formal, once yearly event
- not embedded in development
- over-emphasis on quantifiable objectives.
2.
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Thus, Fowler advocates more integrated systems that flow from the
work environment but critically reflect the style and interrelationships
of employees. In other words, they are explicitly linked to fitting in with
the desired organisational culture.
You may recall the best fit model and the relationship of culture and
structures, including job design. The SHRS principles rely heavily on
attempting to manage and form effective corporate cultures. This in
turn relies on attempts to align individual staff culture with
organisational culture. The range of issues included within PMS, for
example, reward, development and so on, and the style of delivery,
such as involving or judging, will influence this culture. We shall
resume these discussions later in the unit.
Appreciating that people are strategic assets (intellectual capital assets),
organisations are increasingly adopting the people approach. There is
thus a shift for HR departments from ownership, management and
control of people, to facilitating involvement and ownership of the
scheme.
PMS facilitates the strategic management of people by:
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ACTIVITY
Use these three examples to reflect on the following issues. Note down a brief
description of each in the table below:
Example 1
Example 2
Example 3
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ACTIVITYFEEDBACK
Check your responses against ours below:
Example 1
Example 2
Example 3
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lamrof ylriaF
lamrofnI
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lamrofnI
oN
seY
seY
tnemeganam eniL
yreV
oN
seY
ylhgiH
lamrof ylbaborP
dna gnikrowmaeT
dna gnikrowmaeT
tnemeganam maet
tnemeganam maet
dedeen slliks
dedeen slliks
lamrof slliks
snoitautis
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ACTIVITY
Using the two principal models of SHRM, best practice and best fit, identify
the likely orientation of PMS in the light of the examples introduced above.
ACTIVITYFEEDBACK
Best practice models generally emphasise high investment in human resource
development. Effective employee processes tend to be highly important.
Therefore we might expect to see examples of the following:
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ACTIVITY
Take a few minutes to think about the basis of performance objectives. On
what basis do you think they should be defined?
ACTIVITYFEEDBACK
You might have suggested some of the following:
Financial targets/improvements.
Quality targets.
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Productivity/output targets.
Achieving task objectives.
Developing skills.
Getting good customer feedback.
You should bear this feedback in mind as you now look at the nature
and scope of objectives.
Reducing costs.
Achieving sales targets.
Meeting preset manufacturing volumes.
Achieving percentage customer satisfaction levels on
service delivery.
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ACTIVITY
Suggest similar examples for:
A sales manager.
An HR manager.
An industrial relations manager.
A purchasing manager.
ACTIVITYFEEDBACK
Our suggestions are:
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Person-related objectives
These involve behavioural outcomes in terms of how the job is
performed, for example, contributing to teamwork and quality
activities, or communicating with customers.
Differences in the way that organisations specify and emphasise targets
often reflect the nature of the business and the culture of the
organisation. Some organisations concentrate on the outcomes and
deliverables, others on improving process capability, leaving
relationships as the basis for achieving better performance. Hence, there
are some common trends in the nature of the performance relationships:
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READINGACTIVITY
The creation and exploitation of intellectual assets is now viewed as a strategic
corporate objective in today's knowledge economy. Knowledge management
is vital to competitive advantage and market leadership. However, the biggest
challenge in effective knowledge management is not the IT challenge but rather
the human challenge. How do organisations bring about changes in individual
behaviour and promote team-working?
Read the article 'A primer on Knowledge Management' that identifies the
challenges for organisations, its people and the role HR can play in bringing
about change.
http://www.acca.org.uk/publications/studentaccountant/57627
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ACTIVITY
Note down what factors, other than individual or financial, we can use in order
to define objectives and measures.
ACTIVITYFEEDBACK
You might have noted any of the following:
Stakeholder views.
Environmental issues.
Quality.
Customer satisfaction, workforce/process flexibility.
Business process effectiveness.
Market penetration.
Lead firms.
You might ask why these other measures are relevant. In SHRM terms
we are seeking to understand both what people do and how people
work to ensure that we maximise the potential and knowledge of the
workforce through a commitmentoriented strategy. SHRM values
include building employee commitment and generally integrating
employees, resources and stakeholders such as suppliers, customers
and interest groups such as government and the public, as well as
stakeholders in the traditional sense.
To achieve this wider concept of integration, commitment and value
alignment towards organisational goals, organisations have
increasingly sought ways to promote recognition of these wider needs
and indeed to measure these outcomes. One way that has been
introduced is the balance scorecard technique, balance referring to the
balance of stakeholders interests with a view to building a wider base
of commitment. Organisations now recognise that the employee/
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CASESTUDY
Read the following short article which gives an explanation of the balance
scorecard technique.
Balancing the scorecard at Sears
As part of its transformation under the new chief executive officer (CEO),
Arthur Martinez, Sears believes that Compelling Place to Work, Compelling
Place to Shop, and Compelling Place to Invest are three critical success
factors that will in the long run sustain the success of the company. The logic is
simple: by creating a Compelling Place to Work, associates behaviours will be
changed in ways which, in turn, create a Compelling Place to Shop. As a result,
customers are more likely to visit Sears again and thus be retained as steady
clientele. Through repeated shopping by loyal customers, Sears then becomes
a Compelling Place to Invest, as productivity and financial results both attract
and retain shareholders. In order to make this model work, however, Sears
understands that all senior managers must be evaluated on the basis of their
performance on all three critical success factors, not just on financial results.
Their bonuses should also be significantly tied to the measures in these critical
factors.
To ensure that all senior managers buy into this model, Sears has undertaken
an extensive and comprehensive study to assess whether the model is in fact
working as it predicts. In the first and second quarters of 1995, a Sears task
force collected hard data from 800 stores. It collected 300,000 data points and
utilised vigorous statistical tools to assess the strength of relationship among
the three critical success factors: Compelling Place to Work, Compelling
Place to Shop, and Compelling Place to Invest. The results, though
preliminary, are impressive. Sears reported that for every 5% improvement in
associates behaviours, customer retention was increased by 1.3%, revenues
by 1.04%, and profit by 0.4%.
What does this mean to Sears? It means that if Sears succeeds in improving
associates behaviours by 5% (e.g. from 50% to 55%), its revenue will be
increased by $300 million (Searss current revenue is approximately $230
billion)! It is also important to note that this enormous increase in revenue does
not require additional head count or payroll, but simply an improvement in
employee work environment. Moreover, line managers (not HR) are critical to
the creation of such a positive work environment.
The Sears example is distinctive as it not only translates soft business issues
(people) into hard (financial results), but also identifies people as the driver of
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business growth and success. Based on the above logic and findings, the
bonuses of all senior managers at Sears are now tied to a measure called Total
Performance Index, of which 25% of the Index is based on Compelling Place
to Work, 25% based on Compelling Place to Shop, and 50% based on
Compelling Place to Invest. By restructuring the bonus system, Searss senior
managers are encouraged to focus not only on the financial outcomes, but also
on the process and capability that contribute to such outcomes.
(Source: Yeung and Berman, 1997: pp. 325-8)
QUESTIONS:
How would you interpret the SHRM being attempted?
How would you feel about this type of management communication as an
employee?
Note your answers to these questions in the space below the article.
(Note that the mathematics of the article could be viewed in a different way.)
CASESTUDYFEEDBACK
1.
2.
Your answer here will, of course, be unique to you. There can often be
a difference between the management rhetoric and the reality of the
working experience. These statements reflect a high emphasis of
message. In cultures where this type of value alignment does not
work, resentment and alienation, or conformity, can be the employee
response. Organisations need to be sure that a wide range of HR
systems adequately demonstrate management commitment to these
values and support the public message as well as ensuring the
possibility of integration.
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Goals
and
values
Market
Assistance
User
satisfaction
Quality
Financial
Efficiency
and
productivity
Flexibility
Delivery
Cycle time
Waste
Figure 4.1: The Performance Pyramid from Lynch RS and Cross (1995)
The remaining levels of the model relate to not only how effectively
functional departments fulfil their roles in respect to the internal and
external objectives but also how well the crossfunctional business
processes succeed in achieving appropriate delivery deadlines, waste
reduction and coordinated services. This is a holistic and deep
assessment of organisational effectiveness. It provides a broader basis
to support a PM system beyond narrow departmental/functional
objectives.
We see the goals and values of the organisation driving the process at
the top followed by a dual concentration of an external focus of the
market and an internal focus of financial and cost performance. Such
measures might include goals and values whose business definitions
are the core values of the organisation:
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ACTIVITY
Before we move on to look at some of the supporting HR processes to achieve
these HR outcomes, take a few minutes to reflect. Using the ideas in Units 1
and 2, and perhaps your own experience, try to identify some of the
considerations and conditions that might lead to a more effective PM system.
ACTIVITYFEEDBACK
Some of the points that occur to us are:
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ACTIVITY
Summarise the main purposes that you consider an effective appraisal scheme
might fulfil.
ACTIVITYFEEDBACK
You might have thought of the following :
(This feedback is adapted from Randell (1984).)
Auditing
Evaluating performance
smaet dna
elbane ot sdohtem krow gninialpxe dna gnitcudnoc ,no gnisivda
Developing individuals
Motivating staff
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Control orientation
The starting point and assumption is often that somebody up there
acting as a controlling authority is saying that we need to stimulate
effective performance and develop targets, offering reward for above
average achievement. This is often perceived by staff negatively. The
message is construed as forcing staff out or creating insecurity through
subjective judgements. Control over lives and careers will be eroded.
The consequence of this monitoring and control through feedback,
which is further enhanced by working measures, tends to elicit the
following responses:
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Developmental orientation
The starting point is different. It is the need to inform, to leverage higher
performance from control. The development appraisal does not start
from the manager in control but the need to deal with the uncertainty
in the mind of the employee. This is an employee who genuinely wants
to know how they are performing and what the organisation thinks of
their contribution and would, as a result, want to clarify their job role
and enhance their career. The employee is addressing the matter for
themselves. The situation moves from the employee as the starting
point, not wanting to be told but helped through problems and
limitations, whatever the source. The employee needs support to
enhance contribution and the matching of their skills with
organisational needs. This is the bottomup, empowered view that, on
the surface at least, is attractive, as the demand to develop and a
learning climate are likely to evolve from such an attitude.
The intended outcomes could be as follows:
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CASESTUDY
Organisations are looking to introduce appraisal systems that reduce bias and
scope for employee complaints about fairness, whilst encouraging challenging
self-appraisal and openness to objective feedback that leads to individual and
organisational development. Three examples of appraisal systems from
Hewlett Packard/Shell, Nuclear Electric and BA are given in the article below:
360-Degree Feedback
Under a 360-degree appraisal system, staff receive feedback from a variety of
sources, such as other managers, team members, customers and subordinates.
Benefits of wider feedback
Advocates of 360-degree appraisal have reported a number of benefits over
traditional appraisals. They believe that:
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It also includes feedback to your appraiser on how you see their performance
as a supervisor.
Before your appraisal
You will be given time to prepare so use it wisely. Think about what you want
to talk about and how best to explain your views.
When fixing the time and date for the discussion your appraiser will explain
what you need to do and hand over the three forms. This is an opportunity for
you to ask any questions you may have about the process.
A description of the key areas of your job will appear on the main form. You are
asked to comment on these, your performance over the past year and any ideas
for improvement. You are also asked to write about your career aspirations
and development needs.
Think about the technical skill and knowledge needed for your type of work.
Do you need specific training to help you do a quality job?
On a separate form, to help with these thoughts, you are asked to consider
your performance against a set of non-technical competences. These are
common to all jobs and are considered important to achieving business success.
Different jobs will require different levels for each competence and the form
will be marked with the required level for your job as a reminder.
The upward appraisal form will help you prepare to give feedback to your
appraiser. Keep this form with you until the appraisal. The other two forms
should be returned to your appraiser before the meeting.
At your appraisal
It should be a two way discussion so please consider the following points:
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How you are doing you regularly discuss progress and feedback
with your manager.
KRAs were agreed in line with the business plan and were reviewed
quarterly with the primary focus on BA performance enhancement.
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QUESTIONS:
Having read the descriptions of the Hewlett Packard/Shell, Nuclear Electric
and BA appraisal systems, use the table below to rank as high, medium or low,
the emphasis placed by each scheme on the purposes of appraisal.
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Purpose
HP/Shell
Nuclear Electric
BA
ecnamrofrep fo noitaulavE
ecnamrofrep gnissessA
ssenevitceffe krow gnikcehC
sevitcejbo detcerid nwod-poT
sevitcejbo del-ssenisub gnikniL
detaler yaP
gninnalp noisseccus dna gniniarT
snoitatcepxe gnitacinummoC
kcabdeef level draoB
ffats gnitavitoM
ffats gnipoleveD
laog fo elyts gninrael gnilbanE
gnittes
CASESTUDYFEEDBACK
Schemes that prioritise aims 1 to 6 as high to medium would suggest an
orientation towards judging and controlling staff. Schemes prioritising aims 5
and 7 to 12 as high to medium show operating sensitivity to learning and
development processes and the developmental framework. Aim 5 is pivotal
and neutral.
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Now try the next activity, also based on the three examples of appraisal
systems.
ACTIVITY
Compare and contrast the benefits of the case examples provided in the
previous activity. From your study so far answer the following questions in the
space below:
1.
Which of the appraisal systems adopts (a) a best fit and (b) a best
practice approach to SHRM?
2.
3.
4.
ACTIVITYFEEDBACK
1.
2.
We can see that Hewlett Packard/Shell and Nuclear Electric have dual
objectives in their appraisals: to engender performance enhancement
but to do so through change of attitudes, commitment to
improvement, experiential change and focus towards working with the
organisation for success. BA has a shorter-term focus, performance
driven and shaped by results. However, we should see these as
contingent upon circumstances. BA indeed went through an earlier
culture change progression.
3.
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You might have concluded that the Hewlett Packard/Shell and Nuclear
Electric schemes were emphasising change of attitude and culture, and
the concentration on employee satisfaction and process. The BA
scheme is results- and task-driven reflecting the strategic perspective
at the time.
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4.
Let us now look at the specific design options that arise from these
orientations.
Types of appraisal
Corbridge & Pilbeam (1998) offer a useful overview of the main types of
appraisal, which include:
Topdown schemes.
Selfappraisal.
Upward appraisal.
Peer appraisal.
Multidirectional appraisal.
Top-down schemes
The most traditional form of appraisal, this emphasises both
subordinate feedback and the lead on objective setting coming from the
top. The problems often cited with this form are:
Self-appraisal
Selfappraisal is rarely used, as are independent forms of appraisal. It
encourages greater ownership and participation in the appraisal
scheme through selfreflection and helps ensure full preparation for the
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Upward appraisal
Upward appraisal has been increasingly used to reflect the growing
trend for organisations to recognise that they have a duty to provide
effective working systems for employees. It is also predicated on a
number of things, notably the internal customer relationship, and a
shift in the hierarchical shape of organisations to more collegiate
arrangements. Perhaps one way to represent this trend graphically is as
follows. The first two models show the top down and self appraisal
systems.
Management
Employee
Information.
Objectives.
Feedback on performance.
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Employee
Management
ACTIVITY
Imagine that you are designing an appraisal system and want to incorporate
upward appraisal. Sketch a diagram of how the system might look, using a
similar format to the figures above.
ACTIVITYFEEDBACK
Our diagram is shown on Figure 4.4. The triangle is now inverted, with
management in a new relationship with their employees. Employees are seen
as the lead deliverers of customer services. Management's role is to facilitate
effective work systems in a new working relationship.
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Employee
Management
Peer appraisal
Peer appraisal involves members of teams evaluating each other. One of
the arguments for this type of system is the pressure to treat internal
working relationships as internal customer relationships using similar
feedback systems to external customer feedback techniques. As we saw
when we reviewed the Personnel function, this method of feedback can
often be further developed into full service level agreements. It is
however complex to run in order to get the multiple channels working
and assimilated. There are also sensitivities involved and careful
development of staff is required in using such schemes. However, with
the increasing uptake of team working, peer appraisal is a notional form
of appraisal to use to expand nonhierarchical integrated HR systems.
Multi-directional appraisal
Also called 360degree appraisal, there are key similarities here with
peer appraisal. However, the key difference is that multidirectional
appraisal deliberately sets out to collect data from outside the
immediate team and often from external customer feedback. Its key
advantage is to overcome the criticisms of impracticalities and lack of
knowledge of a single appraiser. As we have seen, it can be complex
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READINGACTIVITY
An illuminating example of how the scheme can be set up comes from the
financial institution, JP Morgan. Read the article below:
INCORPORATING PEER REVIEW IN APPRAISAL
Performance management at the investment bank JP Morgan has at its head an
unusual appraisal system. Each employee of the rank of officer (a term which
covers the majority of employees) is required to ask up to five colleagues who
have worked with him during the past year to submit confidential appraisals of
his performance. In addition, anyone else in the company is entitled to submit
an unsolicited appraisal on any other individual they have worked with and it
may be positive, negative or a mixture of both. Such unsolicited appraisals
cannot be given anonymously: the person co-ordinating the assessment has the
right to discuss their views further with them, but the identity of the unsolicited
appraiser is not revealed to the subject of the appraisal. The manager of the
appraisees department collates the feedback, and summarises it in a document
which also contributes his own assessment. This document is discussed with
the employee, and forms the basis of a performance ranking on which
promotions, pay rises and bonuses will be made.
(Mabey et al,1998)
You may recall that 360degree appraisal design schemes offer us the
maximum availability of performance information from various
stakeholders. Transparency of information and feedback aligns itself
with parallel customer surveys that are now being applied to the
internal integration of stakeholders.
CASESTUDY
Read the article below about 360-degree schemes:
Circular Argument
by Clive Fletcher, (People Management 1998)
Multi-source feedback systems, usually called 360-degree feedback, have been
adopted with such enthusiasm that they are now commonplace. They normally
involve target managers being rated by subordinates, peers, bosses and
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The second concern is whether the ratings given in 360-degree feedback really
are more objective than those of a traditional appraisal. The system undeniably
gives more perspectives on an individuals performance, but are assessments by
subordinates and peers any less prone to bias? There is evidence to support its
use in appraisal. For example, data from a variety of organisations has indicated
that appraisees are more satisfied with ratings from multiple sources rather
than from one alone. But the research mostly tends to highlight the potential
pitfalls.
Shell lacking
When the purpose of ratings becomes evaluative rather than developmental,
up to 35 per cent of those giving the ratings change their assessments and the
changes can be in either direction. This seems to support the notion that trust
may be affected. The research findings are not reassuring in relation to
accuracy, either. A study of a pilot 360-degree feedback system run at Shell
showed that it was not measuring the competencies it was supposed to, and
that it had other shortcomings in terms of its psychometric qualities.
Fortunately, the same study showed that Shells newly redesigned system did
work much more effectively.
There is broad acceptance that 360-degree feedback can be a valuable
developmental tool. Feedback of this sort has a potentially powerful impact,
and the general view is that it is better to expose people to it as part of a
development exercise before attempting to use it in appraisals. But the
research findings should make people wary of grafting it on to appraisal
systems. This is not to say that it cant be used successfully, but it does need to
be handled with care.
There are several issues that have to be addressed if 360-degree feedback is to
be switched from a primarily developmental tool to a primarily appraisal tool:
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the dangers are clear to see. Developing and running such systems is not rocket
science, but there is no excuse for not making some simple checks to see that
they are working in the way intended, as opposed to merely finding out
whether participants feel good, bad or indifferent about them (important as
that might be).
Examining the distribution of ratings by, say, checking whether the individual
items on the form line up with the competencies they are supposed to, will
reveal a great deal about the quality of the system. There are various other
evaluation measures that can be taken, but they are more long term in nature.
Many organisations are intent on making multi-source feedback part of the
appraisal process. Many individuals who have been using feedback for
development purposes have voiced alarm about this trend. This is perhaps
justifiable, considering that some firms try to apply 360-degree feedback in this
way without considering the implications.
But while it can all go wrong, it does not necessarily have to. Given a
professional approach (only some aspects of which I have mentioned), it is
possible to make this kind of feedback a valuable input to performance
appraisal.
QUESTION:
Summarise the key problems of the scheme. What does Fletcher advocate to
ensure that the 360-degree schemes offer greater success?
CASESTUDYFEEDBACK
Fletcher stresses the importance of the following:
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Watch out for the stress factor of such ratings and balance the
appraisal with other forms of appraisal.
Pilot the scheme and use the results to adjust the process.
Start where there is least resistance or where the process
can be introduced in a controlled way.
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Summary
In this unit we have looked at the design of Performance Management
Systems (PMS) and specifically at appraisal systems.
The distinguishing features of a PMS include: the communication of a
vision of the organisations objectives to all employees setting of
departmental and individual performance targets formal review of
progress toward these targets review of outcomes leading to defined
training, development, learning and reward outcomes and evaluation
in terms of improving organisational effectiveness and endorsing the
use and value of human capability. We saw that it was necessary to fit
appropriate PMS to the culture, history and organisation of the
company.
Central to the PMS is the process of setting and measuring performance
management objectives. Key issues here are the nature and scope of the
objectives, their link to corporate objectives and to individual and
organisational capability resources.
We looked in detail at employee appraisal schemes. There is a
challenging array of possible purposes for such schemes and they may
be designed with either a control or developmental orientation. We
looked at various types of appraisal: top down, selfappraisal, upward,
peer and multidirectional appraisal. Finally, we looked at some of the
problems associated with appraisal schemes. There may be an absence
of clear targets and performance assessment, a system not linked to
reward, inconsistent or inequitable discussion. Appraisal schemes can
be simplified when in skilled hands and they can evolve, once an
effective interpersonal culture of appraisal has been established.
You should now try the selfassessment questions before going on to the
next unit.
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REVIEWACTIVITY
Question 1
What are the key assumptions supporting PMS that enable it to support the
achievement of SHRM?
Question 2
How does organisational culture affect the design of PMS? Give two examples
of how this would affect practice.
Question 3
What is the key PMS principle that ensures the integration of individual and
organisational objectives?
Question 4
How would you adapt the design of your appraisal scheme to fit an
organisation:
REVIEWACTIVITYFEEDBACK
Answer 1
The key assumptions of PMS that enable it to support the achievement of
SHRM are:
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The effect of pay and reward levels can be divisive and a defence
mechanism.
Answer 6
The key roles are as follows:
Managers
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Communication of objectives.
Formulating team goals.
Consultative.
Encourage development.
Take and give feedback.
Follow up development action.
Co-ordinate service users feedback using the 360-degree
approach.
Employees
References
The Strategic Managing of Human Resources, edited by John Leopold,
Lynette Harris & Tony Watson, FT Prentice Hall, 2004 (Key text for
this module)
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Unit 5
Reward Management
LEARNINGOUTCOMES
Following the completion of this unit you should be able to:
Introduction
Thinking about reward entirely within the performance management
framework can be problematic, as reward in its broadest sense serves
several purposes. For example, it has nonpay and intangible aspects
that relate to motivation and recognition. This involves other areas of
HR such as job design, structuring and development. These are dealt
with elsewhere in the module. However, given our assertion about the
meaning of strategy for HR, we must follow the central principle of
integration. In this respect, reward system choices sit firmly within the
performance relationship and it is under this heading that we shall
address the reward choices available to HR strategists.
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READINGACTIVITY
Please read Chapter 8 of your key text, The Strategic Managing of Human
Resources, Edited by John Leopold, Lynette Harris & Tony Watson, FT Prentice
Hall, which covers some of the subjects of this unit.
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Number of structures.
Integration of job structures.
Reward mix
Base of Rewards
The main choices upon which to base pay are:
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ACTIVITY
In the table below we have described some features of each of these reward
bases. Take a few minutes now to note down examples of organisations that
you may know or have read about in the business press that primarily rely upon
each of the three dimensions. Try to give at least three examples of each.
Base
Example organisation
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seigetarts ytilibixelf
lanoitcnuf fo tnemhsilbatse eht dna gnilliks-itlum
gnisserdda snoitasinagro
.sessecorp
noitcudorp ro stcudorp wen nopu desab
snoitasinagro gnireenigne dna gnirutcafunam
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.ecitcarp ecalpkrow otni detnemelpmi
yltcerid dna dessessa eb nac taht gniniart
fo stinu dna seludom denifed dnuora desab
esaercni mret-trohs a sa desu netfO .dradnats eht
evres ot secivres dna stcudorp ot noisiver rojam
a ecudortni ro lliks-er ot gnitpmetta snoitasinagrO
snoitutitsni laicnanif
yrtsudni aidem dna TI
sEMS
retaw
snoitasinagro gnirutcafunam
seicnega cilbup
slatipsoh
ACTIVITYFEEDBACK
.ecitcarp ecalpkrow otni detnemelpmi
ACTIVITY
In the table below we have described briefly a number of forms of incentive.
Some may be familiar to you, some not. Alongside each one note down briefly
how you think each of these might impact upon (a) an individual employee and
(b) management. You will find that the feedback to this activity is substantial;
you are not expected to achieve all of its content in your brief notes.
Incentive
Impact on employee
Impact on management
Individual bonuses
Positive
Positive
Negative
Negative
lanoitidda :
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Positive
Positive
Negative
Negative
yllamron :
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.seeyolpme ot
kcab diap si gnivas fo noitroporp
tes A .stsoc fo oitar eht ybereht
dna gnikrow fo ycneiciffe
lanretni eht gnivorpmi rof
Incentive
Impact on employee
Impact on management
Positive
Positive
Negative
Negative
Positive
Positive
Negative
Negative
Positive
Positive
Negative
Negative
Positive
Positive
Negative
Negative
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.raelc yltneiciffus
.ytivitca drawer/tceffe
ton semoctuo/sevitcejbo
Negative
Negative
.ecnamrofrep
.tseretni redlohekats
dna ecnamrofrep lanoitasinagro
ni tseretni lanoitasinagro
dna ruoy fo tnemngila
dna pihsrenwo fo esnes weN
Positive
.ffats ot kcab
detacolla si tiforp fo noitroporp
a ,erugif tiforp xat retfa
teserp fo tnemeveihca no desab
yllamron
Positive
.seugaelloc
dna uoy neewteb ylworran
oot deilppa fi evisivid eb dluoC
.ecnamrofrep evorpmi nac yeht
.knil
ecnamrofrep mret-gnol elttiL
Negative
Negative
.llib yralas eht ni gnirrucer-non
dna evitceffe-tsoc ylevitaleR
.krow egareva
evoba fo tnemeveihca rof yap
lanoitidda :
Incentive
Impact on employee
Impact on management
Individual bonuses
Positive
Positive
ACTIVITYFEEDBACK
Strategic Management of Human Resources
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.secruoser yap fo noitubirtsid
riafnu fo sisab eht dna lortnoc
fo mrof a sa srotces esoht
ni nees si ti yllareneG .secivres
desitavirp dna stsurt htlaeh
,tnemnrevog lacol .g.e ,ytilauq
tcudorp dna ecivres remotsuc
devorpmi drawot sedutitta
eeyolpme tfihs dna erutluc
egnahc ot gnikees snoitasinagro
ni yllaisrevortnoc desU
.yranoitalfni sa nees netfo si PRP
sa tnatropmi osla si ecnamrofrep
lanoitasinagro no tcapmi ehT
.sgninrae fo %05-02 ot etauqe
netfo nac stnemyap ecnamrofrep
erehw ,stnemnorivne
tnemeganam roines dna
.ecnereffid
Negative
Negative
.noititepmoc dna
secrof tekram ot erom deraeg
era ohw dna SMP deificeps-llew
a depoleved evah taht
snoitasinagro ni lufsseccus eroM
si semoctuo elbarusaem dna
denifed ot yap gnitegraT .krow
fo sdradnats ecudortni ot epocs
sreffo dna demrofrep krow
fo ytilauq dna tnuoma eht revo
lortnoc fo mrof a sa nees netfO
.sevitcejbo lanoitcnuf
dna laudividni ot deknil yllamron
sevitcejbo teserp fo tnemeveihca
eht nopu desab :
Incentive
Impact on employee
Impact on management
Positive
Positive
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.eulav erahs
stceffa ecnamrofrep ruoy woh
ees ot tluciffiD .spihsnoitaler
lanoitcasnart ni yksir
dna derrefed era taht sdrawa
.gnirutcurtser
Negative
Negative
.noitasinagro
eht htiw yats ot denilcni
erom leef thgim uoY .gniod
si noitasinagro eht llew woh ot
denutta erom eb yam uoY .slaog
lanoitasinagro ot tnemngila
dna tnemtimmoc setomorP
.stekram ruobal evititepmoc dna
.ygetarts
noitneter dooG .tnemtimmoc
dna eulav erahs gnitomorp
dna sseccus snoitasinagro
Positive
.ynapmoc eht
ni serahs fo drawa eht ro ,etar
laitnereferp a no desab ,etad
erutuf a ta serahs yub ot snoitpo
fo drawa :
Positive
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.atad
ecnamrofrep noitatneserper
erusne ot sweiver shtnom
xis dna doirep setar esaB
.troffe sraey 2-1 .g.e ,llams
si stroffe eeyolpme fo ycaidemmi
.egnahc ecivres
fo ycnerapsnart etomorp
Negative
Negative
.stsoc
dna sevitcejbo lanoitasinagro
rediw no sucof uoY
.erutluc )RPB( gnireenigne-er
ssecorP ssenisuB dna
MQT eht stroppus tI .maet a ni
.cte ,RPB ,MQT .g.e ,noitatneiro
tnemevorpmi siht ni etapicitrap
ot ffats wolla taht ecalp
ni era smetsys troppus evitceffe
ni tnemevorpmi tuoba gnirb naC
Positive
.seeyolpme ot
kcab diap si gnivas fo noitroporp
tes A .stsoc fo oitar eht ybereht
dna gnikrow fo ycneiciffe
lanretni eht gnivorpmi rof
sisab eht eb nac hcihw demrof
si oitar A .emocni selas eht dna
secivres dna sdoog gnicudorp
fo tsoc eht gnivlovni noitauqe
na nopu desab :
Positive
.secivres
lanoisseforp yllaicepse krow
fo smrof ynam ni noitubirtnoc
ruoy elgnatnesid ot tluciffiD
.tnemeriuqer seihposolihp )MQT(
tnemeganaM ytilauQ latoT rediw
.nopu derusaem
era yeht tahw no ylelos
etartnecnoc ffatS .tem ylisae ton
era slaog ediw-noitasinagro ot
laudividni gnitaler fo sucof rediW
Negative
Negative
.drawer lanoitidda
.erutluc semoctuo na etaerc nac
dna tnemevorpmi elbarusaem
.airetirc
ecnamrofrep detaler-emit
ro tsoc ,emulov ni )snoitasinagro
ecnarusni ni ycarucca
dna ycneiciffe gnissecorp .g.e(
secivres ro stcudorp lanoitidda
gnisahcrup no desab :
Incentive
Impact on employee
Impact on management
Positive
Positive
This review of the options available to build incentives into reward has
revealed a number of important issues. We can summarise some of
these as follows:
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ACTIVITY
Now consider your own views on the following statements. Indicate whether
you agree or disagree with them.
Agree/disagree
Agree/disagree
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Agree/disagree
ACTIVITYFEEDBACK
This exercise has been about identifying your own attitude and values to
reward against the following features of reward strategies:
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ACTIVITY
Organisations have to deal with these expectations and sometimes need to
re-shape them as they see organisational and labour market priorities changing.
This re-configuration takes place in the nine divisional areas that we have
identified.
Before we move on to look at the market aspects of reward, let us now look at
the link between variable pay and different human resource outcomes.
At this point we have attempted to demonstrate the potential links between
forms of pay incentive to shape organisational behaviour and culture in HR
outcomes that will benefit organisational performance. Using a scale of high
(), moderate (), neutral (=) and negative () impact, note your views (in the
table that follows) on the impact of each type on motivation, commitment,
cultural change, quality, teamwork, competence and flexibility.
(You may experience the dilemma that a feature is potentially both negative and
moderately to highly positive. This is to be expected and is part of the careful
decisions that HR managers must weigh as we saw in the concluding comment
made in the feedback to the last activity. If this occurs, note down an
organisation that illustrates this point and reflect on why this might be the case.)
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esu
dna poleved
elpoep
slliks ro
secnetepmoc
eht
htiw deknil
noissergorp
yaP
Competence/
skill-related
pay
ecnamrofrep
fo sgnitar
no desab
tnemyaP
Performancerelated pay
etareneg
yeht selas eht
fo egatnecrep
a no desab
elpoep selas
rof stnemyaP
Commission
mus pmul a sa
diap sseccus
rof sdraweR
Bonus
yap
cisab ot dedda
stegrat fo
tnemeveihca
ot detaler
stnemyaP
lliks/
ytilibixelF
ecnetepmoC
krowmaeT
ytilauQ
egnahc
larutluC
tnem
-timmoC
Individual Incentive
noit
-avitoM
NOITINIFED
EPYT
TCAPMI
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ACTIVITYFEEDBACK
ecirp rehgih
ta erutuf
ni lles ot
ytinutroppo
htiw serahs
fo noitacollA
Share option
segatnavda
xat
htiw tiforp
ot deknil
si yap hcihw
ni emehcs
derosnopstnemnrevoG
Profit-related
Pay
sesaercni
eulav dedda
ot detaler
seeyolpme
ot sesunob
hsac
fo stnemyaP
Gain-sharing
stiforp
ynapmoc
ot detaler
serahs
ro hsac
fo stnemyaP
stegrat fo
tnemeveihca
ot detaler
smaet ffats
ot stnemyaP
Team pay
nekat emit
ro tuptuo
ot detaler
stnemyap
roolfpohS
lliks/
ecnetepmoC
egnahc
krowmaeT
ytilauQ
larutluC
Group bonus
ytilibixelF
Team
tnem
-timmoC
noitavitoM
NOITINIFED
EPYT
TCAPMI
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ecirp rehgih
ta erutuf
ni lles ot
ytinutroppo
htiw serahs
fo noitacollA
Share option
segatnavda
xat
htiw tiforp
ot deknil
si yap hcihw
ni emehcs
derosnops
-tnemnrevoG
Profit-related
Pay
sesaercni
eulav dedda
ot detaler
seeyolpme ot
sesunob hsac
fo stnemyaP
Gain-sharing
stiforp
ynapmoc
ot detaler
serahs
ro hsac
fo stnemyaP
Organisational Profitsharing
stegrat fo
tnemeveihca
ot detaler
smaet ffats
ot stnemyaP
Team pay
nekat emit
ro tuptuO
ot detaler
stnemyap
roolfpohS
Group bonus
Team
esu
dna poleved
elpoep
slliks ro
secnetepmoc
eht
htiw deknil
noissergorp
yaP
Competence/
skill-related
pay
ecnamrofrep
fo sgnitar
no desab
tnemyaP
Performancerelated pay
etareneg
yeht
selas eht fo
egatnecrep
a no desab
elpoep selas
rof stnemyaP
Commission
mus
pmul a sa
diap sseccus
rof sdraweR
Bonus
yap cisab
ot dedda
stegrat fo
tnemeveihca
lliks/
ot detaler
ecnetepmoC
stnemyaP
Incentive
ytilibixelF
Individual
egnahc
krowmaeT
ytilauQ
larutluC
tnemtimmoC
noitavitoM
NOITINIFED
EPYT
TCAPMI
Market Position
Rewards are usually aligned with supply and demand in the labour
market. Job categories with a shortage of resources will command a
higher pay structure. Some large organisations have very complex pay
structures based upon internal relationships of salary grading systems
and pay rate. These can often be seen as important to sustain an internal
sense of fairness in terms of job demands placed upon different job
categories. From an internal job evaluation perspective, these
relationships provide equity and the basis for what is called
distributive justice.
However, organisations are often faced with significant external
turbulence within labour markets. For example recent trends include IT
specialists, accountants, specialist insurance activities, electronics
engineers and so on. Organisations often have to face paying what the
market demands and to ignore internal fairness and relationships.
Therefore, reward strategy needs to determine the following questions:
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ACTIVITY
Before reading further, consider the following questions and note down your
responses:
1.
If you were trying to establish a market rate for a range of jobs, what
factors would you need to take into account to achieve effective
attraction and retention strategies in the labour market?
2.
3.
ACTIVITYFEEDBACK
1.
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You might like to note some of the readily accessible sources of pay
information:
But how do organisations collect and present what can be quite complex
information? Normally organisations establish spreadsheets for
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Presentation of data
HR professionals have been criticised for not being sufficiently
analytical in their methods. The collection and presentation of data to
improve decisionmaking is an area where HR needs to ensure that it
can perform well. You will recall, from your earlier studies in statistics,
the set of techniques you might apply to pay data to improve the
legitimacy of HR decisionmaking.
CASESTUDY
First read the article below on salary surveys:
How to design and run Salary Surveys
People Management, September 1996.
There are several reasons why information about other employers salary
levels could be valuable. An adverse trend in staff turnover may be related to
pay falling behind market trends; it could help to identify appropriate pay rates
when recruiting staff to new types of job; or a trade union may be pressing for
pay rises by quoting higher salaries allegedly offered by other employers. More
generally, organisations need to be aware of comparative salary levels,
particularly if they have a policy of maintaining pay at a set relationship to the
market.
There is a range of proprietary sources of salary data. Some are available only to
subscribing organisations participating in surveys run by specialist
consultancies. Others, such as the DfEEs annual New Earnings Survey, are
published. Such sources can help to monitor salary levels and trends, but their
wide coverage often makes it difficult to match jobs precisely.
More focused salary data may be obtained through membership of a salary
survey club a group of companies that have agreed to exchange information
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QUESTIONS:
1.
2.
3.
How would you build confidence and support for the exercise?
CASESTUDYFEEDBACK
1.
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2.
3.
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Selection of factors.
Selection of levels of factors.
Determining the value of the factors points are usually
awarded in an arithmetic progression.
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Levels
5
052
081
002
521
051
521
051
003
002
041
001
001
002
051
051
021
57
57
052
001
001
08
05
05
003
05
05
04
52
52
Factors
.1
.2
seitilibisnopseR
.3
gnikaM noisiceD
.4
ytixelpmoC
.5
tnetnoC
Clearly from this example, each job or job family can be scored. In more
complex schemes the main factors will be subdivided. Each of the five
factors would need to have set criteria to enable a judgement to be made
by the evaluators. Organisations can develop their own statements but
there are a number of internationally respected and applied schemes
that have a long history of successful use.
Effectiveness of JE
Before we leave this section, let us review some of the advantages and
disadvantages of job evaluation more generally.
ACTIVITY
How would you react to having a job you were performing included within a
job evaluation exercise?
How would you have to be managed in order to gain your support?
ACTIVITYFEEDBACK
Your responses here are, of course, unique to you but you might have included
some of the following points:
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The case for job evaluation would include the following points:
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ACTIVITY
From your experience and reading to date, what might be the key features of
organisations that facilitate the reduction of hierarchy in pay structures?
ACTIVITYFEEDBACK
You could have suggested any of the following:
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1.
2.
3.
4.
ACTIVITY
What would you assess the advantages and disadvantages of graded structures
to be?
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ACTIVITYFEEDBACK
The advantages of graded structures include:
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noitatneiro evitcelloc
ytivitaler yap raelc
metsys tnerapsnart/desidradnats
metsys dna sdradnats fo erutluc
noitatneiro laudividni
seiradnuob fo ytilibixelf
lortnoc tsoc
New Paradigm
noitavonni/tnempoleved
Old Paradigm
Reward Mix
Pay is normally seen as the most central feature of the Reward Strategy.
However, increasingly, employees in western economies are paying
greater attention to certain deferred benefits such as pensions. As the
cost of running occupational schemes grows with an ageing population,
employers are beginning to shift away from providing lucrative and
comprehensive coverage. How do we determine the level of investment
between salary and benefits? What do we mean by benefits? How can
organisations use benefits strategically?
First let us try an activity to define what we mean by benefits.
ACTIVITY
Spend a few minutes listing as many reward-based benefits as you can think of.
ACTIVITYFEEDBACK
Compare your list with these. Armstrong & Murliss (1989, p.257-8) have
identified six categories of benefits addressing different employee and
employer needs:
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The choice made in terms of which benefits are included in the package
and whether they are in terms of availability or value, helps give
strategic orientation to benefit policies.
One of the critical issues that particularly large organisations face can be
expressed as two questions:
ACTIVITY
Indicate how far you agree with these statements by scoring them as follows:
rehtieN
eerga
ylgnortS
5
ylgnortS
ron
eergasid
eergasid
eerga
1
cisab rewol a tpecca ot deraperp eb dluow I
morf deniag yap llarevo rehgih eveihca ot emocni
.sevitnecni ecnamrofrep
I woh ot sa seciohc lanosrep gnikam ni eveileb I
eht referp dluow erofereht dna emocni ym dneps
peek dna stnemyap hsac esimixam ot ynapmoc
.muminim a ot nwod stifeneb
sedivorp taht ynapmoc a rof krow ot referp I
eb dluow dna ,ylimaf dna flesym rof noitcetorp
wolla ot hsac llarevo decuder tpecca ot deraperp
.eseht edivorp ot noitasinagro eht
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ACTIVITYFEEDBACK
There is no overall right and wrong answer to these questions. They reflect
personality and cultural issues of preference. They do illustrate different
perceptions and questions of the one size fits all approach to securing
employee commitment. Organisations have to decide on a so-called clean
cash (rather than a complex mix of benefits) approach to a more paternalistic
approach. Organisations that prefer a harder performance orientation where
careers are becoming less secure and more transactional, are tending towards
clean cash and employee mobility.
However, commitment and strong corporate cultures do not always emerge
from this type of approach. Strong cultures, as we see later in the module, are
associated with closely integrated values between the individual and the
organisation and high performance. There is an ongoing reappraisal of work/life
balance in Europe. This is partly brought on by a platform of legislation rights,
but also partly led by an employer reappraisal of retention and psychological
contracting. Broader based benefits policies do offer some advantages in this
respect.
Purpose
ffats tcarttA
tcartnoc lacigolohcysP
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Process Issues
There are two strategic issues here:
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ACTIVITY
Take a few minutes to write down your thoughts as to how staff might be
involved in pay decision making. Try to suggest at least three ways.
ACTIVITYFEEDBACK
You might have come up with some of the following:
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CASESTUDY
This case study takes a controversial look at Reward Strategy.
Read the article below, then in no more than 300 words offer your own view of
trends in reward strategy, evaluating the proposition that Reward
Management interventions do more harm than good.
Pay per view, proposing the motion:
by John Purcell, (People Management, 3 Feb. 2000)
Research into individual performance-related pay (IPRP) in the UK over the
past decade has failed to show that such systems have an effect on
performance. Instead, the growing conviction is that a pay system can at best
have no effect on performance, but, at worst, it will damage competitiveness.
In other words, a bad pay system has the potential to do more damage than a
good one has to bring benefit.
The reality revealed by such research contrasts starkly with the claims made in
conference brochures and popular books about the efficacy of new pay
systems. This is an important issue. Why, for example, despite the evidence,
does the government force IPRP into schools and other parts of the public
sector? How can we explain the frequent failure of IPRP to lead to better
individual performance, and what are the consequences?
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Most people in receipt of IPRP are in the middle range of performance. We can
expect 10 per cent of staff to be in the top-performing bracket and 5 per cent to
be in the poor-performer category. The rest, all 85 per cent of them, will get
average awards that are similar to the going rate. Most of them have no
prospect of getting into the top bracket next year, so the incentive is minimal.
We could live with this if the outcome of the pay system were neutral, but often
it is negative, costing more than any benefit achieved.
In fact, few organisations know how much the pay system costs to run. Not
only are there the direct costs of the pay clerk or specialist pay manager; there
are also the indirect costs of time spent by line managers in day-to-day
management of the system not to mention the amount of time employees
spend talking about the inequities of the system.
The more complex the pay system, the more it costs to administer and the less
likely it is that pay objectives will be met. Take a skills-based pay system studied
by my colleague, Annette Cox, in a small engineering company. Here there
were eight attributes to be judged by the supervisor, ranging from skills to
punctuality and willingness. These eight factors were weighted to produce a
pay outcome. Nobody understood it.
The fashion is to link pay systems to business objectives, cascaded down. This
sounds good until you realise that, according to recent studies, well over half of
employees, including some managers, dont know what these objectives are.
All control systems distort behaviour that is what they are there for.
Unfortunately, if a particular target is chosen, the tendency is to take your eye
off other equally important aspects of performance. Line managers are
frequently unclear about what targets to set for the coming year for IPRP, and
some invent things or focus on pet topics.
At a deeper level, the whole idea of linking pay to performance is based on two
questionable assumptions. First, it perpetuates the illusion that companies are
rational, top-down, directed organisations and that managers have the
foresight to know what to do in the forthcoming year. This is the myth of the
all-seeing boss. In reality, change is quicker and messier than that.
Second, and even more worrying, is the belief that people need incentives to
get them to behave in an acceptable way. Employees cannot be trusted, it
seems. Economists have a lot to answer for with their assumptions that people
will be lazy and self-seeking with guile unless there is a reward carrot (or the
stick of unemployment) available. This is the foundation for most economic
theories of reward. They never change, despite all the evidence that employees
place much more value on non-financial satisfaction and the rewards of a job
well done.
Complex targets and poor line management administration cause problems
with pay systems. Most of these centre on the lack of justice, both procedural
and distributive. Once this is challenged, the first casualty is the employees
trust in management and the system.
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baby out with the bath water but rather, be taking steps to make these
interventions more motivating and effective.
When I started out as a consultant in the mid-1980s we used to do a lot of
diagnostic reviews for clients. They produced thick reports with lots of analysis
and change options, but often little change resulted.
Today, we are in a different climate. The pace of change in economic and
product cycles, social and technological developments is ever faster, and pay
and reward practices are not isolated from these shifts. Towers Perrins latest
study, in the summer, of reward management in 460 organisations across
Europe found that 94 per cent had made significant changes in the past three
years, and 98 per cent planned further interventions.
They are using rewards to reinforce the achievement of business goals, and
aligning pay systems with the needs of their changing organisations. This means
being less hierarchical and more customer-orientated, team-based and focused
on contributions.
New ideas are being tried be it sharing all your takings in a day with
employees, as Ikea did recently or introducing broad-based share options for
employees, like Asda. Companies are looking for competitive advantage
through their people.
In an economy that is increasingly based on knowledge and service, and in
which pay costs can often represent three-quarters of total operating
expenditure, companies that do not invest that resource in the most effective
way to reinforce their strategy will be overtaken by competitors that do.
Take some examples from my work. There was the insurance company that
paid its direct sales force through commission on product margins: difficult to
change, I agree, when commission is an ingrained and long-standing part of the
industry culture and ensures very high payments for high performers. But what
about customer service? A disastrous year in the 1990s culminated in it being
fined for mis-selling pensions, with commission-based pay schemes being
identified as an important contributor. The new chief executive subsequently
made it a top priority to reform this pay system, to focus on service and quality.
Then there was the water company with 2,000 staff, 98 grades and over 100
separate pay allowances, which meant that water inspectors and technicians
were earning over 50,000. It was difficult to change, but would you want to
justify it to customers and regulators?
So whats the answer? In the Towers Perrin study, 68 per cent of companies
that restructured base pay and 84 per cent of those that linked pay and
performance reported operating difficulties. These included ineffective
employee communications, poor performance management and lack of
support from senior management.
I believe the solution lies in adopting a much more inclusive and evolutionary
approach. As well as considering business strategy, organisational capabilities
and long-term goals when we plan and execute our strategic reward
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Christmas, said Mark Chamberlain of Reuters. But they were full of ideas for
making new reward systems work and explanations of why they often went
wrong. No one suggested it was easy.
Professor Chris Hendry of City University led the attack on factors that
undermined the process: bureaucratic organisations that saw pay as a lever of
control, chief executives for whom reward provided a handle, HR managers
wanting to draw attention to themselves and consultants that needed a new
product
Their experience could be summed up as follows.
Look at the whole bundle of rewards not just pay: people leave
because the job is not satisfying or interesting, or because they feel
their boss is treating them badly.
Keep it simple.
Many agreed that involvement and communication were the keys to success.
Rick Henson described how BOC was using a reward system designed by
people from the shopfloor: It may not be very elegant, but there is pressure
from the staff to make it work.
Stephen Perkins, who is director of the Strategic Remuneration Research
Centre and chaired the debate, concluded: There seems to be incredible
naivety about reward. We need to think about reward in its broadest sense, and
direct engagement with staff creates the right environment. The answer is not
as black and white as it might seem.
CASESTUDYFEEDBACK
So what might you have spotted as factors bringing harming effects on staff
commitment and support? You might have noted:
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The key is to involve staff and align with the culture. This would
appear attractive but not always possible, as we have seen in
the case of the best-fit and best practice divide.
Clearly reward goes to the heart of the central tension within SHRM, and that is
more of a reason to include it within the decision-making framework of SHRM.
The conclusion would seem to be that more sophistication is required in
reward planning rather than less.
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CASESTUDY
The next case study examines incentives and Employee Value Alignment
Now read the article below. Developing interest and commitment to a share
option plan incentive was a big step within an international environment unused
to such arrangements. How was the success of the scheme explained by the
author of the article?
The Big Issue.
By Arkin Anat, (People Management, 3 February 2000)
A 98 per cent take-up for an employee share scheme is remarkable by any
standards. In a developing country with no tradition of employee share
ownership, this level of participation is extraordinary. Yet Eze Onyenro, head
of HR for Reckitt Benckiser in Nigeria, was recently able to tell head office that
all but nine of the 450-strong local workforce had signed up to the companys
global stock profit plan.
There has been a groundswell of interest in the plan in other countries where
employee share ownership is virtually unknown. Around 45 per cent of the
companys workers in Greece, for example, have signed up almost as many as
in the UK, where support for employee share ownership forms a key part of
the governments strategy for a stakeholder society.
If take-up is a measure of success, weve been phenomenally successful, says
Stephen Turley, director, group compensation and benefits, for Reckitt
Benckiser, the company formed from the merger of Reckitt & Colman and the
German company Benckiser last year. If another measure of success is
pressure on us to bring in the plan where we havent yet introduced it, then
again its been very successful.
That being the case, you might expect Turley to advise other international
businesses to roll out employee share schemes of their own. But he urges
caution, arguing that no company contemplating a major restructuring should
launch what is by definition a long-term benefit.
The last thing you want to do is introduce a benefit that says to people we
value you and wed like you to save for a three-year period, and then a year
later find that the business needs restructuring and employees have to go, he
says.
Even without the threat of restructuring, an employee share scheme may not
be appropriate. A company that wants to keep its administrative burden to a
minimum or does not have a clear reason for promoting employee, share
ownership should steer well clear, according to Turley. You have to think
about what you are trying to achieve and what resources you are prepared to
throw at it, he says.
Senior managers at Reckitt & Colman knew exactly what they were trying to
achieve when, two years before the merger, they decided to extend a
long-established UK stock profit plan to the companys operations in the rest of
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people how the plan would work. But the companys head office in Windsor
was still inundated with queries from around the world. At times, Williams was
receiving around 50 e-mails and faxes a day from local managers who had
already been briefed.
Other than this investment in communication, the plan has not proved expensive
to run. While the centre bears the administrative costs, national businesses foot
the bill for legal and tax advice and other costs linked to introducing the scheme.
These local costs typically come to around 10,000 a negligible amount for a
national subsidiary employing hundreds of people, but an astronomical sum for
smaller operations. Since the aim of the scheme was to give every employee the
chance to join up, the centre gives financial support to businesses that cannot
afford the introductory costs. This happened in Austria, where the company has
only four employees all of whom signed up to the plan.
Participating employees cannot lose, since even if the companys share price
drops, they can still take their cash tax-free at the end of the savings period. But
will their employer also benefit?
It is early days, as the plan has yet to be introduced in South America and several
other parts of the world. But Williams is convinced that, where it is operational,
the business is already benefiting, with feedback from Eze Onyenro and other
HR managers suggesting that it is a useful recruitment and retention tool. Its
harder to say whether the plan is also creating a one-company vision, but
Williams hopes that an audit will eventually establish whether it has changed the
way participants think about the business.
Turley believes that the plan probably has made a difference. I wouldnt go so
far as to say that it aligns employees interests with shareholders interests, he
says. But it does reinforce the link between what they do in the business and
what is happening to it at a global level"
Business background: Reckitt Benckiser:
Number of employees: 21,500 worldwide (16,500 of whom were formerly
Reckitt & Colman employees).
History: Formed in December 1999 from the merger of Reckitt & Colman and
Benckiser, a largely German-owned business with headquarters in Amsterdam.
Main business activities: Manufacture and sale of household cleaning and
pharmaceutical products. Brands include Finish, Vanish, Dettol, Disprin and
Lemsip.
Value: Before the merger, Reckitt & Colman and Benckiser had a combined
market capitalisation of 5,360 million.
Management: In what has become a reverse takeover, all the top jobs in the
new group have gone to people from Benckiser, the smaller partner. The new
directors plans for the global stock profit scheme have yet to be announced.
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CASESTUDYFEEDBACK
The success was attributed to an inclusive and evolutionary approach (Process
Issues). Business goals and employee needs were at the centre of the
partnership. One Company vision was the business objective based around
achieving control and cultural alignment. Integration is a key objective.
Conclusions
In concluding this unit let us examine a final case study which draws
together some of the issues discussed.
CASESTUDY
Case study MPL Ltd
by Angela Bowey, Alan Fowler and Paul Iles (Unit 10 Reward Management
B884 Human Resource Strategies, 1992)
(For reasons of confidentiality, a pseudonym is used for the company involved,
and some inconsequential details have been changed to avoid identification.)
MPL Ltd is a UK company involved in publishing and related services with 230
staff and a turnover in 1990 of about 30 million.
There are three divisions:
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The exhibition and seminar divisions are roughly equal in scale and together
account for the rest of the turnover and profit. The companys business plan
anticipates that the magazine division will remain at about its present size, but
that the exhibitions and seminar divisions will expand (and improve their
profits) until together they account for at least 40 per cent of the turnover.
Each of the three divisions can contribute to the others business. The
magazines have given the company a good general reputation for quality and
expertise in its specialist field. The journals can publicise the other divisions
activities, but also draw on the seminars for editorial and news items.
Exhibitions can be linked to many of the seminars and conferences. Some
professional societies engage MPL for the production of conference reports
and papers, the administration of their conferences and the running of
exhibitions.
MPLs organisational policy is to maintain as flat a structure as possible by
keeping the number of managerial or hierarchical levels to four, and to facilitate
the interchange of staff between divisions in order to develop a multi-skilled
and flexible work force. The structure of the organisation is shown in Figure
5.1.
chief
executive
managing
editor A
finance
director
exhibitions
manager
conference
manager
marketing
director
managing
editor B
(2) senior
sub-editors
news
editor
features
editor
art
editor
production
editor
personal
assistant (PA)
sub-editors
reporters
journalists
graphic
designers
production
assistants
personal
assistants to PA
The company has a mission statement to become the market leader for
quality in its field and a defined set of core values. These include:
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2.
2.
3.
individual performance.
Salaries for all below the Chief Executive are set, however, within three broad
salary bands, which in January 1991 were:
1.
2.
3.
New staff are recruited into the bands appropriate to their jobs at an individual
salary that has regard to:
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In most cases, recruitment is to some point in the lower half of the relevant
salary band.
Each year, the company decides on a percentage for a general pay increase.
This is based on:
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additional pension benefit there are complex Inland Revenue and National
Insurance issues involved. It has also become evident that limiting choice to
these four benefits will not meet every employees needs or expectations. One
senior manager has said she needs neither life insurance nor private medical
insurance as her husband has excellent family cover from his employer. Also,
she does not want a larger car or enhanced pension rights, so can she take the
value of the benefits she does not require as an addition to her salary? Issues of
this kind had not been resolved by mid 1991.
QUESTIONS:
1.
2.
3.
To what extent does the reward strategy integrate with the culture of
the organisation?
4.
CASESTUDYFEEDBACK
1.
2.
3.
286
general approach to the benefits package, which does not for example
award longer holidays to managers, may help minimise status
differences and reinforce a group feeling.
4.
This concludes our review of how reward strategy feeds into the
performance management framework, offering us choices and
flexibility in the strategic management of people. Figure 5.2 of the
reward system illustrates the relationship of the different aspects and
objectives of managing reward. The shaded section illustrates the areas
necessary to form decisions that will make up a reward strategy and
how this integrates with other aspects of the SHRM equation, in
particular organisational performance.
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Business strategy
Personnel strategy
Reward strategy
Performance
management processes
Base pay
Job evaluation
Employee benefits
Recognition, responsibility,
achievement, development,
growth
Variable pay
Pay surveys
Pay structure
Total remuneration
Reward system
management
Improved individual/
team performance
Improved organisational
effectiveness
Summary
In this unit we have looked at the strategic issues in the design of reward
systems. We have noted the importance that reward systems play in
achieving organisational strategic objectives. We have identified
different approaches to achieving performance related reward policies,
and have examined the different components of the reward policy
framework. We have also assessed the impact of external market factors
and internal change, and have noted how these influence reward
strategy. We have considered several practical applications of these
issues through a series of case studies.
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REVIEWACTIVITY
Question 1
Explain how reward strategies and systems can support the achievement of
organisational objectives.
Question 2
What would you include within a reward strategy for an organisation?
Question 3
Give three examples of how reward strategies can contribute to HR-led change
in organisations.
Question 4
Explain what we mean by benefit strategy. Give three examples of how
benefits can be used strategically.
Question 5
Identify how external market forces and internal change may influence reward
strategy options.
REVIEWACTIVITYFEEDBACK
Answer 1
Reward strategies can assist by focusing employee behaviour toward the
following goals:
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You could include in your answer Lawlers nine points and the three strategic
phases of evaluation/ranking, determining structure and pricing.
Answer 3
You should have noted the following:
Performance culture.
Commitment culture.
Improving organisational flexibility.
Supporting improvement/quality enhancement.
Supporting organisational assimilation/management.
Answer 4
A benefits strategy explains how benefits can be used to secure commitment,
loyalty or assist with engendering commitment through giving greater
employee control and choice over their remuneration. The strategic variables
are identified by Armstrong & Murliss (1989) and reflect a bundle of benefits
that can be used to achieve organisational results and enable appropriate
employee behaviour. The examples you may have come up with are as follows:
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References
The Strategic Managing of Human Resources, edited by John Leopold,
Lynette Harris & Tony Watson, FT Prentice Hall, 2004 (Key text for
this module)
Armstrong M (1996) Employee Reward People in Organisations, London
Institute of Personnel Management
Armstrong M. and Murliss H. (1989) Reward Management: a Handbook of
Salary Administration, 2nd ed London Institute of Personnel
Management.
Bowey A, Fowler A and Iles P (1992) Unit 10 Reward Management B884
Human Resource Strategies, Open University
Committee on the Financial Aspects of Corporate Governance and
Cadbury Committee (1992) Report of the Committee on the Financial
Aspects of Corporate Governance: The Code of Best Practice London, Gee
Study Group on Directors Remuneration (1995) Directors
Remuneration: Report of the Study Group Chaired by Sir Richard Greenbury
London, Gee ISBN 1860890121
Income Data Services in the UK (1995)
Lawler, EE (1984) Pay and Organisational Development Addison Wesley,
quoted in page 174 Employee Research Michael Armstrong IPP 1996.
Lawler EE (1984) Strategic Human Resource Management, New York, J.
Wiley, 1984
The National Institute of Economics and Social Research (1994)
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Unit 6
Introduction
Learning and development, in the context of organisational
development, is probably the area of highest strategic focus in HRM
today. The purpose of this unit is to develop a strategic model of
learning, development and educational activities within organisations.
In today's knowledge economy the attraction, retention and growth of
talent is fundamental to achieving competitive advantage and high
performance. Organisations pursuing a highperformance culture
recognise the criticality of Learning and Development in the context of
the development of human capital and organisational capability more
generally. It is widely recognised that an organisation's competitive
edge and ability to succeed in the future is derived from its intellectual
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assets, and less so from its portfolio of products, services and offerings
at any particular time.
READINGACTIVITY
As an excellent introduction to this unit and to appreciate the critical
importance of Learning & Development in today's high-performance culture,
read the following Accenture research report 'High Performance Workforce
Study 2004' at:
http://www.accenture.com/NR/rdonlyres/D55AA2A6-850F-4589-AADB-553
C10A7109D/0/Accenture_High_Performance_Workforce_Study_2006_v2.p
df
In this unit we shall examine the key processes associated with the
learning cycle and the basic ideas of how adults learn in organisations
through education, learning and development. We will explore the
broader purpose of development processes within organisations. We
shall show how individual and collective developmental efforts at all
levels can have a positive impact upon business performance and thus
demonstrate the value of the investment in human resource
development (HRD).
This unit will focus upon mapping the interrelated factors that can
define strategic HRD. These include:
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2.
3.
4.
The next activity helps you to explore and understand these purposes.
ACTIVITY
1.
2.
What examples can you identify under the four strategic purposes of
HRM given above? Try to think of at least one for each. For example,
addressing skills gaps might mean multi-skilling and training to achieve
workforce flexibility.
ACTIVITYFEEDBACK
1.
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The second part of this activity might have led you to start developing
the learning, development and education equation against the four
strategic purposes:
Skills gaps: multi-skilling and learning to achieve workforce flexibility;
management development to meet skill/attitude changes.
Catalyst for change: cultural change programmes (see Unit 8) where
organisations seek to change the ways employees think about their
organisation; that is, commitment.
Achieving competitive advantage: progressive training to cultivate
high calibre applicants; advanced career development schemes,
including job or career changes, to enhance retention and attraction.
Creating learning environments: move away from formal courses
to more person-specific development according to need; strategic
secondment and projects for self-development; Total Quality
Management (TQM) schemes to untap employee knowledge and
knowledge dissemination; on-job structured development via
coaching, counselling and mentoring schemes to develop the
individual.
1.
2.
3.
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4.
5.
Employees are involved in, and own, the outcomes of the HRD
needs analysis. Activities are relevant to their work.
6.
7.
B U S IN E S S S T R AT E GY
SENIOR MANAGEMENT SUPPORT
Principle 6: senior managers promote learning culture
Principle 7:VET/HRD align with culture
MOTIVATION OF TRAINEES
Principle 5: shared diagnosis of training
need and relevance of programme(s)
chosen
H U MA N RE S OU RCE S T R AT E GY
recruitment
and selection
appraisal and
assessment
reward and
recognition
career
development
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ACTIVITY
What SHRM practices do you think might support a learning environment?
Note down at least two.
ACTIVITYFEEDBACK
You might have mentioned:
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Commitment
Indicators
Principles
si elpoeP ni rotsevnI nA
ot dettimmoc ylluf
ni elpoep sti gnipoleved
smia sti eveihca ot redro
.ecnamrofrep snoitasinagro
.sevitcejbo dna
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.noitasinagro
eht dna meht rof htob ,eveihca
dluohs seitivitca tnempoleved rieht
tahw dnatsrednu ylraelc elpoeP .level
laudividni dna maet ,noitasinagro
ta sevitcejbo dna smia sti ot
.sevitcejbo dna
ni si elpoep fo tnempoleved ehT .6
.sevitcejbo
dna smia snoitasinagro eht tuoba
detlusnoc era spuorg evitatneserpeR
.meht eveihca
.elor rieht
Planning
.elpoep fo tnempoleved
eht ni ytinutroppo fo ytilauqe
gnirusne ot dettimmoc yleniuneg
si noitasinagro eht eveileb elpoeP
.spuorg tnereffid
fo sdeen eht esingocer dna ecalp
ekat sreganam dna tnemeganam pot
yb debircsed snoitca dna seigetarts
cificeps eht taht mrifnoc elpoeP
.elpoep
fo tnempoleved eht ni ytinutroppo
fo ytilauqe erusne ot gnikat
yltnerruc era dna nekat evah yeht
taht snoitca cificeps ebircsed nac
sreganaM .elpoep fo tnempoleved eht
ytinutroppo fo ytilauqe gnirusne
.sisab
raluger dna ylemit a no kcabdeef
evitcurtsnoc dna etairporppa
eviecer elpoeP .desingocer
si noitasinagro eht ot noitubirtnoc
rieht taht eveileb elpoeP .desingocer
si noitasinagro eht ot noitubirtnoc
rieht woh ebircsed nac elpoeP
.ecnamrofrep selpoep rehto evorpmi
ot degaruocne neeb evah yeht
woh fo selpmaxe evig nac elpoeP
.ecnamrofrep
Indicators
Evidence
Principles
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.sevitcejbo
eht gniveihca ot etubirtnoc
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A U.K. Strategic Model for Staff Development The IiP Standard (April
2000).
.seitivitca tnempoleved ot edam neeb
evah taht stnemevorpmi ylemit dna
tnaveler fo selpmaxe evig nac elpoeP
.ecnamrofrep no
.slaudividni
ni tnemtsevni sti fo
tcapmi eht sdnatsrednu
elpoeP ni rotsevnI nA
Evaluation
.ylevitceffe
poleved dna nrael elpoeP .9
.tnempoleved rieht
gnitroppus ni evitceffe era sreganam
rieht woh ebircsed nac elpoeP
.elpoep fo tnempoleved eht troppus
ot gnikat yltnerruc era dna nekat
evah yeht taht snoitca fo selpmaxe
evig nac slevel lla ta sreganaM
.tnempoleved rieht
troppus ot gniod eb dluohs reganam
rieht tahw dnatsrednu elpoeP
.elpoep fo tnempoleved
sti evorpmi
.ecnamrofrep
ot redro ni ylevitceffe
.elpoep
fo tnempoleved eht gnitroppus
.elpoep
Indicators
Action
Principles
Evidence
Unit 6 Human Resource Development Strategies
CASESTUDY
The next case study concerns a building society. (Note: A building society
considers that it performs the function of a bank. One of the key changes
discussed is the process of demutualisation, that is, opening up the companys
ownership to investors, making the companys performance acceptable to
shareholders.)
Read the case study question (below the case study) before you proceed to
read the article. You may wish to keep the question in mind as you read the
article.
Hat Trick
by Mark Whitehead. (People Management, 29th July 1999, p38 40)
Remember the men from the Bradford & Bingley building society? Sturdy
bowler-hatted City chaps oozing old-fashioned reliability,
Mr Bradford and Mr Bingley were the kind of gentlemen to whom you would
be happy to hand over your hard-earned cash. It would be as safe as houses. But
the besuited partners were pensioned off not long ago when the society
decided it was time to update its image.
A combination of circumstances, triggered by the arrival of new chief
executive, Christopher Rodrigues in 1996, led to a major upheaval with
far-reaching implications for management and staff. At its Bingley head office, in
the picturesque Airedale Valley of West Yorkshire, only a few miles from
Bradford, and at more than 500 branches and estate agents scattered in towns
and cities across the country, change was in the air.
Of the UKs building societies most of which date back to the days when
industrial workers needed a cheap way to house themselves the Bradford &
Bingley is the second largest. And, as its 150th anniversary approaches, things
are changing.
The bowler hats, for so long the organisations trademark, remain. But now, in
a newly-designed logo, they appear as a set of brightly coloured motifs with a
somewhat surreal air.
The new design says much about how the society now sees itself. In a radical
programme of change, middle and top managers have gone through a rigorous
development programme aimed at transforming the way the society operates.
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Many of the old core values remain, but new ones are being grafted on to make
the whole operation more flexible, dynamic and customer-focused.
We needed to do something quite radical, says Margaret Johnson, training
design and development manager. Many of our customers treasured our
traditional values of reliability and dependability. We knew that they trusted us
more than the banks and other financial institutions. But with all sorts of new
players arriving on the market we knew we couldnt survive as a traditional
building society. We had to develop and modernise our management thinking
and the way we operated.
The roots of the revolution at the Bradford & Bingley go back to the great
liberalising period of the 1980s, when the order of the day was to free up
markets and offer consumers more choice. Mortgages, once the virtual
monopoly of building societies, started to become available from banks and
other financial organisations. As well as buying their baked beans and washing
powder, shoppers in supermarkets could access savings and banking facilities.
The telephone came into its own, with bank accounts and various other
financial services becoming available down the line. Customers wanted quick,
easy access to their money and mortgages.
But change was some time coming at the Bradford & Bingley. Mr Bradford and
Mr Bingleys pride of place in the societys advertising, and their images in its
logo, continued until the early 1990s.
More recently, the pressure mounted when diversification brought new
challenges. The society decided to buy the Black Horse chain of estate agents
from Lloyds Bank, and Mortgage Express, a specialist business-to-business
operation. The number of Bradford & Bingley high street outlets doubled
overnight to more than 500 and a completely new area of work albeit one
closely linked to the societys traditional mortgage lending business opened
up.
Facilitating the smooth merger of the three organisations, so that managers and
staff work together to maximum effectiveness, has been a central objective in
the development programme.
A third major challenge came earlier this year when the societys members
voted by a substantial margin to demutualise and re-establish as a commercial
company. As was the case at several other building societies before them, the
move came in the face of advice to the contrary from the societys board, but
the members were seemingly determined to take advantage of the potential
windfalls. The final vote will be held next April and managers have accepted that
demutualisation is likely to go ahead in about 18 months.
All of these events confirmed the wisdom of the decision to call in experts to
help managers and staff to deal with the changes ahead.
In the first phase of the change process, a brief programme called People
First was put into effect three years ago, using a mix of outside consultants and
internal HR professionals, to challenge some of the old ways of thinking and
prepare the ground for new ideas.
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More recently, two further programmes have pushed the process forward.
About 260 middle managers underwent a three-day programme at Henley
Management College aimed at developing their leadership skills within a
changing organisation. Cranfield Business School was appointed to take
responsibility for 76 senior managers in a five-day programme with similar
objectives. In devising a seamless programme, consultants from the two
institutions worked in partnership with Christopher Rodrigues; John Melo,
Bradford & Bingleys HR director; Dawn Beadle, head of organisation
development; and Margaret Johnson.
Both courses started by examining, in ruthless detail, the context in which the
society currently operates. These sessions, entitled Winning in a New World",
aimed to reveal what was needed to be successful in todays competitive
market place.
The workshop sessions then examined the Bradford & Bingley and the way it
worked. These sessions included, for example, senior managers explaining
some of the societys financial facts and figures that most staff had previously
been unaware of.
The third and final phase of the programme involved intense scrutiny by
individuals of their own strengths and weaknesses and those of their colleagues.
This activity was based largely on a process of 360-degree appraisal and the
results of Myers-Briggs Type Indicator questionnaires that were filled in by
course participants in advance.
Rob Davies, a visiting faculty member of Henley Management College and a
director of Henley-based Interactive Skills, who helped to devise the courses,
says the key to success was to involve people fully in the process.
It was clear that it wouldnt work if you waited for the people to decide what
needed to change, he says. The key message of the programme was that
everyone needed to take responsibility for their own role in dealing with all the
new challenges out there.
The changes put in train were dramatic and it was to be expected that not
everyone would welcome them. Some of our managers who are now in their
fifties had been with us since leaving school and had always worked in the same
way, Beadle says.
It was the biggest change they had ever experienced in their working lives.
They were being asked to completely change their orientation. There were
three main reactions to the change taking place. Some people pretended that it
was not really happening and that it would go away if they ignored it. Others
went along with the new ways of thinking, but assumed that they could return
to the old ways of working once the courses had finished and the fuss had died
down. A third group embraced the change programme enthusiastically.
Brian Wilkinson, senior audit manager responsible for the Bradford & Bingleys
branches, has seen his role transformed. He had been thinking for some time
about his departments function and decided it could do more to support the
societys business objectives. Traditionally, the audit team was seen as a group
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of people who descended on a branch once a year, inspected the books and
then disappeared. But it now spends about half its time in a consultancy role
helping branches to achieve best practice. Wilkinson reasoned that the less
time branch staff spend on dealing with errors and discrepancies, the more
time they could spend dealing with customers, attracting and retaining new
business and improving results.
The new strategy quickly won full backing from senior management but, at the
time, it was a big step to take.
The timing of the Henley course couldnt have been better for me, Wilkinson
says. I had been doing a lot of thinking about the role of internal auditing and I
wanted to change things. We were seen as the financial police who held back
the organisation with constant red tape, but I thought we were there to
promote better practice which would in turn benefit the business.
Henley helped me with my personal development, he adds. I had to come out
of the comfort zone and bring my team with me. It gave me the confidence to do it.
I thought I was taking a really big risk, but the more I talked to the organisational
development team here and the people at Henley, the more I realised it wasnt
such a big gamble. It was simply taking the first step that was difficult.
Management structures have also changed. There had been a traditional
hierarchy in which every member of staff worked to their line manager and up
through a chain of command to the top. But now matrix management in
which someone can work for different bosses at different times is more
prevalent, particularly in the HR and IT departments.
The whole project has been aimed at improving customer service, in line with
modern research which shows that attracting and retaining customers has as
much to do with the way they are treated as with the quality of the product on
offer.
Counter productive
I went into a branch a couple of years ago with a question about my
mortgage, Beadle says. The woman behind the counter went away with it
and came back saying she couldnt do anything and that them at head office
would sort it out. I nearly died I couldnt believe this was the kind of thing
being said to customers.
That sort of response would be much less likely now. One of the concrete results
of the change programme is that the old divisions have been broken down. Now,
head office staff apparently think nothing of contacting colleagues in the offices to
discuss ideas, which at one time would have been virtually taboo.
The new approach is crystallised in the customer value proposition adopted
by the Bradford & Bingley and used as a central motif in the Henley and
Cranfield courses. Far more concrete than many vision statements, it says
simply: We help and advise our customers to find the right home and the right
loan, to save for tomorrow and invest for the future, and to protect their
families and possessions
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QUESTION:
See if you can identify the principles of strategic HRD at work and the extent to
which a range of HRD development processes have been utilised in an integrated
way to support the change process. Note these and link them to the Shepherd
and IiP models by noting alongside each one the relevant principle number(s)
(Shepherd) and IiP indicator(s). We have done one for you as a guide.
IiP
Shepherd principle
7-5 ,3-1
HRD Principle
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We have, thus far, established a broader strategic purpose for HRD that
covers formal and more informal continuous processes. We have seen
how it requires mutual commitment of resources and personal
commitment from both senior management and individual staff. We
have also seen how a broadbased planned approach is fundamental to
organisational development processes.
.tnempoleved reerac ,maet tcejorp ,maet
tidua ,erutcurts lanoitasinagro ,lasiarppa
Shepherd principle
IiP
7-5 ,3-1
21 ,01-8
7 dna 6
9-6 ,2
9 ,1
21-9 ,7-6
7-5 ,3 ,1
5 dna 2
9 ,7 ,2
flesti ledoM
21-8 ,5-4 ,1
8 ,4 ,1
3 dna 1
11,01
11-01 ,7-6
.pot
eht morf evird tnemeganam roines si erehT
.ytivitca
gniniart lamrof dnoyeb seog hcihw ,troffe
egnahc detargetni na fo ertnec eht ta si DRH
.slliks pihsredael
wen fo tnempoleved lamrof si erehT
.erutluc
dna elyts lanoitasinagro fo tnemngila
eht dna regrem eht htiw stsissa DRH
.desserdda era spag sllikS
HRD Principle
The case clearly reveals the relationship of HRD to the achievement of strategic
change. HRD is used in the following ways:
CASESTUDYFEEDBACK
Strategic Management of Human Resources
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READINGACTIVITY
Please read Chapter 13 of your key text, The Strategic Managing of Human
Resources, Edited by John Leopold, Lynette Harris & Tony Watson, FT Prentice
Hall, which covers the subject of developing management capability.
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CASESTUDY
Read the short case study below:
The role of training in turnaround
In the period 1985-8, Lucas has spent around 40 million per annum on
training which was equivalent to about 2.5-3 per cent of its total sales revenue.
This expenditure was viewed as an investment in that learning and
development was being called on to act as a major agent of change. The
in-company consciousness of the key role of training was high. It was not seen
as a poor-relation, peripheral activity, but as a potent source of change. The
highlights of the contribution made by training in this company are:
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Question:
Why do you think the approach was not seen as successful by the shop floor
staff.
CASESTUDYFEEDBACK
You probably found from the case study that shop floor staff reported that their
experiences of training were few. The company also emphasised cost-cutting,
thus undermining the message on investment in learning and development.
The Lucas case highlights an apparent difference between organisational
intentions and practice, and the value placed by staff upon different forms of
development, and the consequent reaction to developmental activity. At Lucas,
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training was owned by the company and did not necessarily meet the needs of
each individual. We will return to this point later in the unit.
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Learning
SHRM
Performance
Change
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Pedlar et al (1991). This is shown in Figure 6.3. There are five essential
components of a learning organisation, and feeding into these five
essentials are eleven processes and structural enablers. For example, a
learning approach to strategy and participative policymaking enable
the strategy that is the first essential component.
Learning approach
to strategy
S t r at egy
Participative
policy making
Information
T he
L ear ning
Company
Reward flexibility
Enabling structure
S t r uct ur es
Boundary workers as
environmental sources
L ook ing out
Inter-company law
Learning climate
L ear ni ng oppor t unit ies
Self development for all
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ACTIVITY
Now spend a few moments reviewing the LO blueprint expanded overleaf to
include some explanation. Think about an organisation you have either worked
for or read about. Spend a few minutes completing a quick diagnosis, scoring
each of the eleven characteristics on a scale from 1 to 5, where 1 is low and 5 is
high.
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2.Participativepolicymaking
1.Thelearningapproach
Commitment to
airing differences
and working
through conflicts.
5.Internalexchange
Departments
speak freely and
candidly with
each other, both
to challenge and
to give help.
Managers facilitate
communication, negotiation and
contracting, rather than exerting
topdown control.
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Departments, sections
and units are able to act
on their own initiatives.
Company policies
reflect the values of
all members, not just
those of top
management.
Systems of accounting,
budgeting and reporting
are structured to assist
learning.
3.Informating
You can get feedback
on how your section or
department is doing at
any time by pressing a
button.
4.Formativeaccounting
Accountants and
finance people act as
consultants and
advisers as well as
Control systems
scorekeepers and
are designed and
bean counters.
run to delight their
customers.
The financial system
The nature of
reward is
examined in
depth.
6.Rewardflexibility
Alternative reward systems are
examined, discussed, tried out.
Flexible working patterns
allow people to make
different contributions and
draw different rewards.
We are all
involved in
determining the
nature and shape
of reward
systems.
321
Appraisals aregeared
more tolearning and
development thanto
rewardand punishment.
7. Enablingstructure
We have rules and
Departmental and
other boundaries are
seen as temporary
structures that can
flex in response to
changes.
Weregularly meet
withour competitors
to shareideas and
information.
9.Intercompanylearning
We participate injoint
learning events with our
suppliers, customers and
otherstakeholders.
Weengagein joint
ventures with our
suppliers, customers
and competitors, to
develop new products
and markets.
Weusebenchmarking inorder
to learn fromthe best practicein
other industries.
If something goes
wrongaround here
youcanexpect
help, support, and
interest in learning
lessons from it.
We receive regular
intelligencereports on
the economy, markets,
technological
developments, socio
political events and
worldtrends and
examinehowthese
may affect our
business.
10.Learningclimate
Thereis ageneral
attitude of continuous
improvement always
tryingtolearn anddo
better
When youdont
know something,
its normal to ask
arounduntil you
get the required
help or
information.
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ACTIVITYFEEDBACK
Your scoring will be unique to you and the organisation that you have chosen. A
score of 40 or more probably denotes that the organisational practices are
moving towards a LO. A score of 20 or less suggests either an ad hoc or
fragmented approach to learning.
ACTIVITY
The LO concept and practice has attracted criticism. What problems have you
found in any organisations that you have worked in or know well, in successfully
implementing the LO model? (You may want to look again at the jigsaw in the
last activity)
ACTIVITYFEEDBACK
From your work to date you might have noted the following problems:
Managers skills and ability to provide the conditions and support for
learning, for example, providing opportunities for coaching and
counselling.
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2.
3.
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Goals of Learning
The goal of learning can be depicted as shown in Figure 6.4.
The top block of Figure 6.4 represents the purposes of strategic HRM:
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Basic financial
awareness
Behavioural analysis
training
Unstructured process
workshop
Interview
skills
Role negotiation
exercise
Operations
training
Outdoor
development
Mentoring:
structured self-development
Lecture syllabus
Case study
Programmed learning
Behaviour modelling
Role plays
Action learning
Job rotation
Business simulations
Gestalt groups
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.ssergorp
.tnemmoc dna
gninrael fo erutaN
smetsys
.kcabdeef lanosrep
.elbaliava secruoser
gnisu gninrael rof elbisnopser
fleS .)etairporppa fi ,krow dna(
fo erutaN
tnempoleved
.noitisiuqca
.elbawonk yletamitlu
.metsys dednuobnu na
.trepxe si reniarT
Experiential
elor reniarT
Instrumental
snoitisoppuserP
ACTIVITY
Think of your own career to date. What value have you and your employer(s)
placed on training and your own self-development? In your current situation are
you responsible for your own learning and development?
CASESTUDY
Read the article below and as you read consider the question of what the key
features are that the effective manager needs to consider.
How Managers Can Become Developers
by Alan Mumford (Personnel Management, June 1993)
The manager of a hotel is called from his office. An angry customer has
complained to the receptionist that he had been interrupted in his bedroom
three times in the space of half an hour by a cleaner, the housekeeper, and
someone checking the minibar. The manager takes his new deputy with him
an interesting experience for you and they both listen while the customer
repeats his complaint.
The manager goes through the reasons why three different employees arrived
in such a short space of time: It is, of course, part of our policy of providing
excellent service. The customer departs, still expressing dissatisfaction.
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The hotel manager and deputy return to the managers room. The manager sits
behind his desk, blows out his cheeks and says So how would you have
handled him?
A great deal of management development occurs in this way. An unplanned
experience, a question from one manager to another, a discussion reviewing
facts and opinions, a decision about what to do in a similar situation. Potentially
these are all the elements of an effective learning cycle.
There are some other things we know about this kind of experience. First,
managers constantly claim that they learn from such experiences. Secondly,
they rarely recognise at the time that they are learning, they think they are
simply managing. Thirdly, they may not have been introduced to the idea of a
complete process in which the elements of learning are balanced. Finally, and
most significant, helpful interventions by the boss are all too rare.
There are three main developments in the increasing provision of work-based
learning for managers. Although they overlap both chronologically and in terms
of content, they have been action learning (Reg Revans), the learning
organisation (Peter Senge, Mike Pedler, John Burgoyne, Tom Boydell), and the
competency approach (Richard Boyatzis).
The shift towards work-based learning has occurred in part because of the
powerful intellectual contribution of such people, but an even more important
driving factor, perhaps, has been the demands of consumers for valid and
relevant development.
In fact, the three parts of the theoretical drive towards work-based learning
coincides with the accidental reality of informal development stressed in the
hotel scenario above. Not only are they all centred on learning from real work,
they all demand that management development should succeed in putting life
into an old management responsibility. If we accept that managers have a major
responsibility for developing those who work with them, all the themes
demand a major effort from those managers.
In the UK the competency approach adopted through the Management
Charter Initiative with its emphasis on applied prior learning or crediting
competence will require successful intervention by bosses in a form which
has not seriously been tackled in most organisations.
The stimulus provided by the theories mentioned above, and the demand from
managers for effective help with their development, mean we have to combine
three elements to produce an effective management development system:
Self-development: A recognition that individuals can learn but are unlikely to
be taught, and that the initiative for development often rests with the individual.
Organisation-derived development: The development of those systems of
formal development beloved of personnel and management development
specialists.
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the project group the director calls this person in and says: I
would just like to talk over some of the things that are
happening on the group. How do you think things are going?
These examples, like the hotel case with which we began, contain some
recognition on the part of the boss (or, in the last case, the mentor) that the
work situation offered an opportunity for learning. Unfortunately such
examples are relatively rare, and that is why our first concern in helping
managers to help others learn must be with helping them to recognise
opportunities, and then to use them more effectively.
The big 0
Managers and, sadly, some management development advisers think too often
in terms of what I call the Big 0: We have this splendid chance for you to move
from sales into marketing. Even more to the point: We are moving you to
work for Jane Smith instead of John Brown. You will find she is a quite different
sort of manager.
Presenting individuals with this kind of opportunity is usually better than not
providing them with an opportunity at all. However, we need to give much
more detailed attention to exactly what kind of learning opportunities are likely
to exist within the Big 0. What new experiences will be on offer? What are the
differences in the work? Who are the new and different people the younger
manager may encounter?
The best way to help managers to help others is to get them to start by
considering the kind of experiences from which they have learned. The
following exercise has the advantage of being both simple and immensely
productive:
Identify the two most helpful learning experiences you have had, and the
two most unhelpful.
Once the general ground of learning from experience has been established, it is
possible to go to a more specific exercise:
Think of an experience of being helped by another manager. What was the
experience, and what did the other manager do to help you?
It is possible to ask people to do these exercises without any stimulus or
suggestion of what they might consider. An alternative or supplementary
approach is to give them a list of situations in which a manager can offer
assistance to others. The list is lengthy but includes learning from a new project,
membership of a task force, confronting difficult colleagues and reviewing
completed tasks.
The crucial point when helping managers to recognise such opportunities is to
get them to consider first the activity or the situation, and not to ask them to
think initially about learning opportunities at all. Managers think in terms of
activities, not learning opportunities!
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It is often a discovery for managers that things they have considered purely as
work activities are learning opportunities as well. Like the Molire character
who discovered he had been speaking prose all his life, they can be helped to
see what they have always taken to be natural work can be used also as a
creative learning opportunity.
Our main concern must be to facilitate learning through our understanding of
real work in the managers world, rather than attempting to impose separate
management development processes. Take the following examples:
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behave in other aspects of their managerial life, it also provides immediate practical
examples through which a manager can be encouraged to work.
Wrong emphasis
Perhaps this is why some formal management development processes have not
worked as effectively in the past as we would have liked. We have put too much
emphasis on planning ahead, and not enough on enabling managers to use,
understand and then build on their past learning experiences. Once managers
have been engaged in helping to interpret, re-interpret and better understand
their past work experiences, they can be encouraged to help others to go
through the same process. Beyond this there lies the rosy future of better
identified future learning opportunities.
In a sense there is plenty of anecdotal evidence that the kind of approach
suggested here can work. Some managers have always given time and attention
to the development of their subordinates. The question is not whether some
managers do it naturally, but whether we can encourage more managers to do
it, equally naturally but with some previous encouragement and thought.
My experience on this is hopeful. I find managers are intrigued, stimulated and
enjoy the kind of activities described here. Again comparisons can be drawn
with appraisal training. All too often this is approached by the management
developer with a firmness of purpose only equalled by the unwillingness of
managers to participate. The situations and processes described here
recognise and build on things which managers are aware of, rather than
imposing something which is all too often outside their experience and their
sense of commitment.
Managers develop others for a variety of reasons. Sometimes the formal system
instructs them to do so. Sometimes they expect to reduce problems by
increasing the ability of their subordinates to handle problems on their own.
Nor should we ignore less self-centred reasons. For at least some of them what
I call the principle of reciprocity occurs. Managers like helping to develop
others not just because of the direct return in the sense of performance, but
because they get a glow of satisfaction from having helped someone.
The task of helping managers to develop others does not have to be as difficult
as management development systems have seemed to make it, if we base our
guidance on using real situations, rather than contriving special management
development processes.
References
Mumford, Alan. Management Development: strategies for action, 1PM, second
edition, 1993.
Honey, Peter and Mumford, Alan. Manual of learning opportunities, Honey,
1989.
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CASESTUDYFEEDBACK
Mumford offers the following key aspects for managers to consider:
The lessons from the hotel scenario in the case study: indicate that
work situations offer opportunities for learning.
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ACTIVITY
From your knowledge of organisational structure and culture write down at
least three of the trends in organisational structure that might, in your view,
stimulate an effective learning culture.
ACTIVITYFEEDBACK
You might have included any of the following:
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High
Pattern 1
Pattern 2
Pattern 3
Intermittent
Institutional
Integrated
Level of visible
training and
development
High
338
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)ertnec
tnemssessa
secneirepxe
yadyreve
gniwollof
noitanimon-fleS
hguorht ,enoyrevE
noitcelfer ,weiver
esab-ecnetepmoc
tnempoleved-fles
.g.e( sisongaid d
seitivitca
gniwollof
detceles esohT
X ni esruoc
gniniart a gnideen
sa demeed esohT
?DRH ni
setapicitrap ohW 7
gninrael
lanoitasinagro
fo egnar ediW
latnempoleved
sesruoc ,stneve
dengised seitivitca
rof laitnetop
stnemngissa dna
lanosrep teem ot
lanosrep
slaog gninrael
dna tnempoleved
na si DRH
rehtar hcaorppa
fo krowten
a naht
lamrofni
,emmargorp
dna ,snoitcaretni
no gnisucof
erofereht si
dna -nO
)laidemer
netfo( gniniart
detneiro-sisirc
boj-eht-ffO
?fo tsisnoc
DRH seod tahW 6
erutcurts
lanosrep
boj-eht-ffo
reerac laudividni
dna suounitnoc
sdeen
laudividni ot yaw
emos ni deknil
era semmargorp
gniniarT
lacitcat
dna laemeceip
si gniniarT
?neppah
DRH seod nehW 5
Process
egatnavda
evititepmoc
dna noitavitom
,noitavonni
ecnahne
srotitepmoc
lanosreP
gnippat fo yaw A
tnempoleved
laudividni
tem sdeen
ot ytivitaerc
fo daeha yats ot
nopaew laitnesse
na sa neeS
?detcepxe
deggulp
pag slliks A
era semoctuo
DRH tahW 4
htworg
fo yaw a sa neeS
gnitaerc fo yaw A
gnitavitluc
ytilatnem a
egnahc lanidutitta
hcae yberehw
ot pihsredael dna
ssenisub snosrep
etatilicaf
elohw eht si
lanoitasinagro
ssenisub
deknil
si ti hcihw htiw
scitcat larutcurts
dna stnempoleved
rehto fo
rebmun a fo enO
?dedrager
DRH si woH 3
stegdub
nwo rieht
decnanif
latnempoleved
ylgnidrocca
na sa neeS
nevowretni si DRH
dna tnemtsevni
yadyreve htiw
yrrac stnemtraped
dna ecneirepxe
semit drah
tegdub gniniart
lartnec a morf
ni detanimile
ot ;tsoc a sa neeS
Fully Integrated
rediw troppus oT
ot etubirtnoc oT
lanoitasinagro
dna ygetarts
smrof noitasinagro
gnikam-noisiced
stnemelpmi dna
dib stnemtrapeD
ro kcab tuc eb
?dednuf
slaog
ycilop sti
Focused
DRH si woH 2
lanoitasinagro ot
snalp
ecruoser namuh
rediw deef oT
knil yrassecen oN
.smelborp cificeps
sserdda oT
?detaitini
DRH si yhW 1
Purpose
Fragmented
Formalised
HRD audit
checklist
Strategic Management of Human Resources
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?deviecrep
DRH si woH 31
Prevailing culture
semmargorp
fo esu eroM
sdohtem fo egnaR
esab-noitasinagro
sedulcni
.g.e( lairetam d
ecnatsid/nepo
esac ynapmoc
dna gninrael
)seiduts
tnempoleved-fles
seuqinhcet dna
sloot cimedaca
esu ot ycnedneT
tnetnoC )c(
egnahc laicifeneb
ecudortni ot
sesruoc
a tpoda sreniarT
a slevel lla tA
RH sa elor rediw
hcraes sselesaec
stnatlusnoc
sgniht evorpmi ot
fo egnar redaorb
a ni slliks erom
eriuqer sreniarT
gnittes moorssalc
ni reviled sreniarT
ffatS )b(
egdelwonk
yreviled lamrof
rof sselnu
sdohtem
gniriuqca
fo egnar rediW
yllareneG
selyts gniniart
evitcerid-non
gnisu evitcerid
si gniniarT
elytS )a(
?dereviled
DRH si woH 21
seitinutroppo
gninrael
fo sisylana
si gninrael
sa sekatsim
sisahpme retaerG
degaruocne elpoeP
a sa gninrael no
ekat ot
htiw ,ssecorp
sksir evitcurtsnoc
desisahpme osla
gniniart lliks htiw
,desab-egdelwonK
desab egdelwonk
yllaicepse ,sesruoc
no sisahpmE
?fo tsisnoc
DRH seod tahW 11
detset
saedi wen dna
nward snoisulcnoc
tnuoma gnisaercnI
yadyrevE
boj-eht-no fo
si ecneirepxe
tnempoleved
,no detcelfer
boj-eht-no emos
htiw ,boj-eht-ffo
ylniam gniniarT
tnemnorivne krow
eht fo tuo ecalp
sekat gniniarT
?neppah DRH
seod erehW 01
Programme
tnempoleved
srehto
dna nwo rieht rof
devlovninu
ytilibisnopser niaM
lanoitcnuf yrevE
tnempoleved rof
a si reganam
reganam lareneg
reganam
metsys gniniart
deef slasiarppa
reganam enil
;reviled sreniarT
ylegral sreganam
enil ;reviled
)lanretxe ro
lanretni( sreniarT
?DRH
sretsinimda ohW 9
hcaoc/rotnem htiw
ni tnemevlovnI
egdelwonk ,sllikS
htiw ,seitivitca
edutitta dna
gnieb gninrael
boj ni deriuqca
dna deggol
elbisividni elor
deweiver ylbissop
DRH morf
dehsilbatse
ylsuoiverp
slaog gninrael
htiw ecnadnettA
)serusserp krow
ot eud dellecnac
netfo( esruoc
no ecnadnettA
?etapicitrap
yeht od woH 8
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ACTIVITY
Source: Willie, 1990, pp. 85-8
.cte ,lairetam
srotitepmoc dna
tnemtiurcer
ni serutaef DRH
noitasinagrO
snoitasinagro
a sa dedrager
fo tnemetats
gniniart cissalc
noissim/slaog
stiurcer yb dnuorg
noitasinagro
eht yb
dedrawer seirots
sseccus gniniarT
,slanruoj lanretni
,yticilbup ynapmoc
ni noitnem
lanoisaccO
?DRH no decalp
si eulav tahW 41
tnemnorivne
lanretxe
sdeen
dna lanretni
lanoitasinagro
htworg lanosreP
nees noitasinagrO
gniniart eht
ylralucitrap ,deulav
gninrael a sa
eb ot tlef metsys
ot noitubirtnoc sti
,ynapmoc
ro etelosbo
gnillifluf
yltnatsnoc
ot tnavelerri
snoitasinagro
dna gnirotinom
slaog
/laudividni
lacitpecs eroM
tsrow ta yenom
fo etsaw a ro tseb
ta yruxul a sa neeS
laudividni eht
fo tnempoleved
lufpleh
.laudividni eht
sa tsrow ta emit
tlef noitasinagrO
trap elbaulavni nA
decneirepxe nehw
hguorht tifeneb ot
lufpleh sa
fo tnempoleved
deviecrep lleW
fo etsaw a ro tseb
ta drawer a sa
deviecrep gniniarT
seeniart yB )a(
CASESTUDY
Read the article below, in which Sloman reviews the new platforms for
learning, e-learning.
E-learning: Forewarned is Forearmed
by Martyn Sloman (People Management, 5th April 2001)
Readers who know their Old Testament will recall the writing that appeared on
the wall at King Belshazzars feast. The message indicated that the Babylonian
leader had been weighed in the balance and found wanting and that the days
of his kingdom were numbered.
Today the writing is on the wall for training professionals. Like the unfortunate
Belshazzar, we are being weighed in the balance as the e-learning revolution
transforms the context in which we work. Our kingdom may not be obliterated
by the Medes and Persians, but the warning is clear: we will not be able to add
value to the modern economy and our own organisations unless we develop
new ways of thinking and working.
Fortunately, many training professionals are already doing just that. Among the
organisations I studied while researching my latest book, there are plenty of
examples of good practice. Perhaps the most impressive is Motorola
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- many of the soft skill modules available on the system were used
once and found to be both trivial in content and difficult to access;
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One part of the training managers traditional role, the monitoring and
evaluation of resources, will continue to be critical. But the arrival of e-learning
means that time, rather than spend, is becoming the most critical issue. Time
for individual learning competes with other organisational demands, and these
are constantly growing. Demand for better work-life balance is also increasing,
yet the ability of the connected economy to deliver training any time, any
place threatens to intrude further into individuals personal time and space.
Time, therefore, is likely to become the focus of training evaluation.
This does not mean that expenditure on training no longer matters. Investment
decisions (increasingly concerned with buying technology-based systems) must
of course be analysed rigorously. But e-learning calls for a new type of decision
making.
The traditional resourcing decision facing training managers was
straightforward: courses were costed and budgets set on the basis of these
costs. With e-learning, the investment decision is a project decision: an initial
investment is required that will lead to ongoing savings. Fortunately, there is
considerable experience of such costing in IT departments, and it is to them
that training managers must look for guidance.
It is not only the training manager who has to heed the writing on the wall. The
roles of those who develop and deliver training are also changing. It is possible
that three functional specialisms will emerge: design, delivery and learner
support. In its 1998 report Models for Learning Technologies, Roles, Competencies
and Outputs, the American Society for Training and Development (ASTD)
identified eight roles for implementing learning technologies, its term for
e-learning. These reflect the emerging functional distinctions.
They include the designer, who determines content and learning methods; the
implementor, who works with technical staff to provide logistical support; and
the instructor, who facilitates learning either in a live broadcast or a high-tech
classroom. The first of these roles clearly fits into the design function, while
those of implementor and instructor would be part of the delivery function.
Then there is the organisational change agent, described in the ASTD report as
someone who helps an organisation to adapt to new technology and see its
value and benefits This role embraces learner support, the third specialism in
the emerging distinction. But it is important to note that thinking and practice
among US organisations is far less advanced in the softer areas of learner
support than it is among their European counterparts, where a strong tradition
of softer interventions gives trainers a real chance to take a leading role.
None of this is to say that classroom-based training, the core of the job or
consultancy portfolio for many CIPD members, is doomed to extinction. For
the smaller training consultancies, traditional delivery methods may even enjoy
a renaissance. A standard piece of advice to businesses operating in the new,
connected economy is give your product away free; make your money
through services. Basic training content could, on this basis, become a
commodity with the premium gained from effective customisation of delivery
especially in the classroom. Put another way, for small training consultancies,
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the future may lie in high touch (one-to-one or group delivery) rather than
high technology.
Overall, training professionals need to develop new ways of thinking. For too
long the e-learning agenda has been driven by those who created the technical
opportunities. It is essential that those who will manage their implementation
respond appropriately. The potential gains from doing so are enormous. We
can take comfort from the fact that, although the writing is indeed on the wall,
our situation is not as dire as King Belshazzars. According to the Old
Testament, he was slain on the night of his feast.
CERN opens door to virtual classroom
There can be few organisations better placed to introduce web-based training
than CERN, the European Organisation for Nuclear Research. It was there in
the early 1990s that a team headed by Tim Berners-Lee, building on earlier
developments in IT, invented the World Wide Web in effect, the publishing
arm of the Internet.
The 6,000 physicists who share their time between their home universities and
CERN are computer-literate and accustomed to learning independently, as are
many of the employees in the organisations Geneva headquarters. Yet only a
few of the 200 internal training sessions that CERN runs each year in subjects
ranging from office administration to software engineering are currently
supported by e-learning tools.
Because we are a public, non-profit-making organisation, I havent had the
resources to promote this activity, says Mick Storr, head of technical training.
I decided to make this available and, bit by bit, the highly motivated people are
starting to use it and telling their friends. Its spreading by a process of osmosis.
While this tentative venture into web-supported technical training relies on
content provided by external suppliers, CERN has been working on a second
e-learning project that will exploit its own lecture and seminar programme.
Developed in collaboration with the University of Michigan, this makes CERN
lectures, together with any supporting visual materials used by the lecturers,
available online.
Ultimately, everyone attending these virtual classroom lectures will be able
to watch them in real time and interact with the lecturers. This already happens
in some parts of the world, notably Finland. But it is in developing countries,
where universities may not have the academic resources that CERN has at its
disposal, that this project could have the biggest impact. Storr, who was closely
involved in the development of the web, is convinced that electronic learning
will take off. One of the best ways that the web can be used is for education
and training, he says.
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QUESTION:
Having read the article, note down the positive and negative features of
e-learning with respect to developing a comprehensive HRD strategy and
learning organisation.
CASESTUDYFEEDBACK
You might have noted down the following:
The positive features of e-learning include:
Accessible development.
Self-paced learning.
Devolved and decentralised learning.
Time and space flexibility for learning.
Best used and currently used mainly for knowledge acquisition.
Learning design skills increase for development.
The learner, not the trainer, has control over the pace and timing of
their learning.
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It assumes a generic content to meet all needs; one size fits all
approach.
Summary
This unit has attempted to define a broader purpose for HRD, that of
providing a clear strategic contribution to the organisation. The
emphasis shifts from training toward development.
The unit sets down the principles that define HRD and sets them within
the wider context of organisational and HR strategy. We have presented
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REVIEWACTIVITY
Question 1
What are the four key purposes of a HRD strategy?
Question 2
From your work on the units to date, what are the factors that are demanding
closer attention to HRD in organisations?
Question 3
What do we mean by the terms adaptive and generative learning in
organisations?
Question 4
What is a learning organisation? Why might it offer a more strategic approach
to HRD?
Question 5
How do you define the managers role in supporting learning in organisations?
Question 6
Define the three goals of learning. How do they relate to the strategic purpose
of HRD?
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Question 7
What sort of organisational structures would you recommend to support a
learning organisation?
Question 8
Define the key activities that need to take place to support a HRD strategy?
REVIEWACTIVITYFEEDBACK
Answer 1
The four key purposes of a HRD strategy are:
Pace of change.
New knowledge.
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Globalisation.
Answer 3
Adaptive learning relates to incremental improvement, building on existing
knowledge. It is typified by models of continuous improvement such as TQM.
Generative learning relates to transformational processes, where the basic
principles are questioned and revised thinking the unthinkable. It could be
said to be the defining quality of a learning organisation.
Answer 4
Pedlar et al's (1988) definition of a learning organisation is one that facilitates the
learning of all its members and continuously transforms itself. The blueprint for
such an organisation is contained in the model of the 11 attributes, which reflect
a strategic approach:
Inter-company learning.
A learning climate with help and support when things go wrong.
Self-development opportunities for everyone.
Answer 5
Senge (1990) uses terms such as designer and teacher and creative tension.
Mumford (1982) offers a more practical list of roles that managers perform to
support learning. Effective managers:
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Answer 6
The three goals of learning are the acquisition of knowledge, situation specific
skills and self-development. Knowledge and situation specific skills provide
competitive advantage, and self-development can create a learning climate and
act as a catalyst for change.
Answer 7
The structures to support a learning organisation should be:
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References
The Strategic Managing of Human Resources, edited by John Leopold,
Lynette Harris & Tony Watson, FT Prentice Hall, 2004 (Key text for
this module)
Argyris C & Schon D (1978) Organisational Learning Reading, MA,
AddisonWesley.
Burgoyne J (1999) Manager Learning Development BACIE Journal. Vol. 3
No. 9. Oct. pp. 15860.)
Deeks E (2001) CIPD Survey shows manual staff are poor relations in work
placed training People Management 19th April 2001
French,.W. & Bell, C. (1999) Organisational Development Prentice Hall,
New Jersey
Handy C (1976) Understanding Organisations Harmondsworth, Penguin
Honey P & Mumford A (1982) Manual of Learning Styles
Janis I.L. (1972) Victims of Groupthink, Boston, Houghton & Mifflin
IiP (2000) A UK Strategic Model for Staff Development
Kolb D et al (1974) Organisational Psychology: An experiential Approach
Prentice Hall, New Jersey
Lant J.K. , Milliken F.J. & Batra B. (1992) The Role of Management
Learning & Interpretation in Strategic Persistence & Reorientation: An
Empirical Exploration. Strategic Management Journal 13, pp 385 608.
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Unit 7
Introduction
Industrial relations in Britain has undergone significant change over the
last 20 years. These changes have been less pronounced in Europe but,
nevertheless, pressures there have instigated some change. Similarly
industrial relations in the US has seen major change, as international
barriers brought about by globalisation begin to affect the commercial
landscape and industrial base of market economics.
In line with the environmental shift, there has been an internal shift in
many organisations with respect to HRM as we have seen in the
preceding six units. SHRM, where it has been deemed to be practised in
a coherent way, sits uncomfortably with the traditional forms of
industrial relations. The original proponents of SHRM based upon a
corporatist view saw SHRM as an alternative to industrial relations (IR).
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READINGACTIVITY
Please read Chapter 14 of your key text, The Strategic Managing of Human
Resources, Edited by John Leopold, Lynette Harris & Tony Watson, FT Prentice
Hall, which covers some of the subjects of this unit. You may also wish to refer
to sections of Chapters 3 and 15.
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Parttime employment.
New technology.
New lean working practices.
Downsizing.
Outsourcing functions.
Enhancing flexibility, structurally, in terms of skill
acquisition and cognitively, with respect to flexible
mindsets and approaches to learning.
All these have diminished union and employee control. Perhaps in the
new century the tide is again changing, as union membership shows
signs of increasing although nowhere, as yet, to the level of pre1980.
Increasingly EU directives impact employment matters in the UK.
These span a number of areas including regulation of working time,
equal employee rights for parttime and fulltime employees, rights of
employees in employment transfers. Additionally the following EU
directives are to be implemented in the future:
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http://www.dti.gov.uk/er/europe/directives.htm
Recent legislation on employment relations, Employment Act 2002,
covers a raft of familyfriendly rights, covering increased rights for men
and women through new maternity leave, adoption leave, flexible
working arrangements for parents etc. The Employment Act 2002 also
covers dispute resolution in the workplace, improvements to
employment tribunal procedures, including the introduction of an
equal pay questionnaire, provisions to implement the Fixed Term Work
Directive, a new right to time off work for union learning
representatives, work focused interviews for partners of people
receiving workingage benefits and some data sharing provisions.
HR professionals need to be aware of wideranging changes which took
effect in 2003/2004:
Occupational stress.
Holiday pay as a legal right for all workers.
ACTIVITY
Before continuing, reflect for a moment on your own attitudes to union
membership.
1.
2.
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ACTIVITYFEEDBACK
a)
The second part of the activity is a matter of your personal opinion but you
might like to consider how media coverage influences your choice and
value systems. Are unions portrayed positively? What is your reaction to
this portrayal? You might like to reflect on whether your reaction would
be different under condition of IR and ER work practices.
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Trade unions in the UK have made great efforts in the last 15 years to
improve their public image and attractiveness to a society that generally
has adopted the spirit of the individual and the customer, community
loyalty having widely, although variably, diminished throughout the
UK.
ACTIVITY
What attempts have you seen by trade unions to improve their attractiveness
for membership and improve their image?
ACTIVITYFEEDBACK
You might have noticed improved services to members in the areas of:
- information
- legal advice and support
- secondary services such as financial advice and various product
and service discounts
- training provision
- womens forums and services.
You might also have noticed improvements in their organisation such as:
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Proponents of best fit SHRM might use this as a case for questioning
the best practice view of SHRM and continue the rather tenuous
relationships IR and ER have within the SHRM paradigm. IR/ER has
often been regarded as potentially divisive and therefore acting as a
barrier for organisations trying to practise SHRM, where alignment of
individual and corporate values is seen as the central issue for
integration. Membership of TU suggests commitment to third party
organisations and value systems. Nevertheless, collective bargaining
eventually resolved the dispute and the parties are again working
together at UPS.
European trends
High commitment practices and universalistic approaches to IR have
always been less in evidence in Europe. Brewster et al (2000) place most
European countries firmly in the contextual paradigm whereby the
relationship between managers and employees is strongly influenced
by the society in which organisations operate. So we find UK and US
models of HRM have undergone significant critique in Europe. Even
the HR terminology gives us an insight into the values placed on
systems. Flexibility is often regarded as atypical work by the European
Commission and vulnerable work by many trade unionists. HRM
tends to retain a national ethos rather than organisational ethos.
However, European models are under considerable pressure to change,
witnessed by recent mass trade union demonstrations in Italy (March
2000) in response to government rather than organisational
management pressures. A EU Commission Report (1995) states that
high level of labour inflexibility and unemployment are obstacles to
growth. Brewster et al (2000) highlight the increasing level of flexible
working across Europe, Japan and Australia, particularly in the area of
shortterm and fixed term working. Only 50% of European workers
(CRANET 1999/2000) have fulltime permanent jobs. What is the
impact upon workplace ER?
Brewster et al (2000) highlight the continuing divergence of collective
versus individualised communication between Europe and the UK. As
we have seen, individualism is one of the key features of a move
towards SHRM in most models, even where a collective tradition exists.
Brewster et al draw upon the CRANET survey of 1999/2000, which
compares individual, written, verbal and collective forms of
communication. High levels of collectivism were particularly apparent
in Denmark, Netherlands and Scandinavia, where representation
channels were still of significance. This is an interesting reflection, as
works councils begin to become more important within ER systems.
The Brewster et al study provides an important insight into, and offers
valuable evidence of how, communications are being used to support
changes in the management of ER. Brewster et al offer a view that
individual forms of communication can be seen as alternative to, rather
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ACTIVITY
We have listed the key features of the changing contract of employment below.
Alongside each one note what effect, in your view, these features will have on
ER. We have done the first one for you as a guide.
Features
RE fo noitasilaudividni
ni egnahc :erutcurts cimonocE
htworg EMS ,esab lairtsudni
txetnoc lagel dna lacitiloP
:ecnereferp laudividni dna laicoS
snoinu nioj ot ytisneporp
noitasilabolG
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skcolb
edart ssorca sthgir eeyolpme dna ruobal lasrevinu
fo ytilibissop eht setinu noitasinagrO edarT dlroW
gniniagrab
evitcelloc dna noitatlusnoc evisnetxe otno erusserp
stup evisnopser tekram dna remotsuc eb ot erusserP
noitasilabolG
seiradnuob
lautriv dna lanoitan ssorca seeyolpme fo noitasinagrO
snoinu fo egarevoc aidem dna egamI
seiteicos remusnoc desilaudividnI
seinapmoc lanoitanitlum
lortnoc ot setats noitan dna UE nihtiw snoinu fo rewoP
sthgir gniruces ni elor tnemnrevoG UE dna elor noinU
sthgir tnemyolpme dna namuh fo smroftalp lageL
pihsrentrap laicos rof troppus UE
sthgir tnemyolpme dna noinu rof troppuS
tnemevom
noinu fo noitasilanoitanretni dna noitasilabolG
ruobal
esinagro ot ytiliba ssel sessenisub rellams ot evoM
RE fo noitasilaudividni
ot sdael ytilibom reerac dna gnikrow-emoH
krow
Features
You might have noted the following, which is not an exhaustive list:
ACTIVITYFEEDBACK
Strategic Management of Human Resources
Managing ER
The continuing conceptual problem we are faced with for SHRM is as
follows. ER is characterised by an attention to the conflicts of
employer/employee interests. It deals with governance and the
distribution of power between the parties, as contained within
collective agreements and the collective bargaining process. It deals
with sanctions and areas where either party can veto the others
decisionmaking power. This is a rather different agenda and intention
from that of the SHRM corporate agenda. We will argue below that
these tensions always lie beneath the surface, and that consensus has to
be earned and legitimised through a combination of effective
management practices with respect to ER and may, within the
organisational life cycle, require a more collective orientation to secure
trust and consensus.
We now focus on the management strategies for ER.
In this part of the unit we will look at:
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Out er Cont ex t
Economy and Society
I nner Cont ex t
Sector
Organisational
ownership
ER
practice
Legal
environment
Organisational size
Systems perspective
Outer and
inner context
Employment
Relation
Institution
Management
strategy
Collective
Bargaining
Conflict
resolution
and
negotiation
process
Works
councils
Communication
frameworks
T.U.
strategies
Employment
Relation
Practice
Employee
expectation
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Externally determined
rules
.g.e ,level lairtsudnI
lanretni gnortS
ynamreG
,gniniagrab evitcelloc
Highly regulated
Internally determined
rules
droF .g.e
noitatlusnoC
tnemeganaM
g.e ,evitagorerp
Minimally regulated
ACTIVITY
Imagine that you are in the position of having to make some decisions about the
management of ER in an organisation. Spend a few minutes listing the decisions
you might have to make.
ACTIVITYFEEDBACK
You might have come up with the following:
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Systems actor
In this model managers seek to maintain stability through a framework
of institutions, processes and rules through which the organisation can
respond to the environment.
Strategic actor
Management can exercise purposeful discretion or choice in making
decision (goals and strategies) in relating IR strategies and business
strategies.
Agent of capital
Market laws of the capitalist system constrain management to a view
of labour as a factor of production, cost and efficiency. The method of
legitimising its authority to the workforce will vary according to
market circumstances, for example, direct control, joint determination
of rules or responsible autonomy.
These models have resonance with our strategic response and fit of
SHRM and contingencybased fit given varying market circumstances.
For example, management may adopt the following approaches:
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These models imply a variable SHRM/ER strategy over time (best fit).
Proponents of best practice would advocate the longerterm benefit of
partnership and commitment to union and employer through high
investment in ER practices to build trust, transparency and confidence
in management strategies to deal with market turbulence. This
approach is a variant on the new psychological contract debate in Unit 2
where we considered the new deal based upon reduced employment
security, whereby commitment is rebuilt around providing support to
staff through the transitions. In ER terminology this might mean:
ACTIVITY
In addition to the traditions, customs and practices of their location, region or
nation state, managers are not isolated from their communities and value
systems. Managers often believe that unions are a necessary check and balance
and provide for equitable relations. Unions, like charities, do good work for
vulnerable employees. After all, most managers are employees as well!
If you were a manager what might you consider the advantages and
disadvantages associated with dealing with trade unions to be?
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ACTIVITYFEEDBACK
Pragmatically, as a manager you might hold the following positive views about
unions:
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CASESTUDY
Read the next article from Legal and General.
Keeping Watch Case Study: Legal and General
by Digby Jack, David Pottinger and Peter Reilly (People Management, 14
September 2000, p.38-40)
To what extent do organisations and employee representatives ever sit down
and discuss their motivation for entering a partnership deal? Moreover, how
often do organisations review their employee relations, especially if they have
made a conscious change to the arrangement? There is a natural tendency to
sail along, believing all is well. This is fine until you run into an iceberg.
Some organisations are very positive about partnership, seeing it as a practical
approach to employee relations that allows management to facilitate
organisational change. Other companies would define partnership more in
terms of creating a set of shared values and gaining employee commitment to
common goals in a way that allows the business to prosper and the workforce
to benefit.
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For trade unions, there is the chance to be better informed and more influential
on strategic business matters. More specifically, unions have sought to win
undertakings from employers on matters such as employment security or
training.
But there are critics who see partnership as an illusory concept. Those on the
left of the political spectrum say it leaves employees unable to defend their
interests against the interests of capital. They fear that unions, far from gaining
influence, will be co-opted by management into their projects, effectively
neutralising any chance of opposition. Critics from the right would argue that
partnership hampers managements ability to manage or, as the president of
the CBI, Sir Clive Thompson, believes, that it may even provide a Trojan
horse through which unions could gain undue influence.
The partnership concept does look flimsy whenever an agreement breaks
down. Were the recent troubles experienced by the high-profile partnership of
Rover and the T&G anticipated, or did they emerge suddenly to the surprise of
one or other of the parties?
One obvious way of minimising the chances of this happening is to monitor the
partnership closely. This is what Legal & General and MSF did in April. The two
had first agreed their deal in 1997.
All in the same boat
The objectives of the partnership agreement between Legal & General and
MSF are:
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QUESTIONS:
1.
2.
CASESTUDYFEEDBACK
1.
Systems actor
Through the joint partnership agreement, management and unions
were seeking actively to create stable employee relations through a set
of rules and procedures:
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ACTIVITY
Below are listed the principal features of partnership. Refer back to the article
in the last case study, re-reading it if necessary, and note down how these
features of partnership were fulfilled in the context of the model introduced
earlier in the unit.
Success of the enterprise
Building trust and greater employee involvement
Recognising the legitimate role of partners
Employee security-company flexibility
Sharing success
Informing and consulting staff
Representation of employee interests
ACTIVITYFEEDBACK
You may have noticed the following:
Success of the enterprise
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- acceptance of change
- better recognition of management decisions
- faster decision-making
- more staff involvement and control.
Informing and consulting staff
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new positive shift, to drive the employer agenda through individualistic and
direct relations with their staff; for example, communication, involvement and
so on. Partnership perhaps offers a third way that addresses a combination of
needs: regulation, governance, commitment, low conflict and progressive
agendas built around purposeful development and growth. You will be asked to
reconsider this later in the unit.
Style
Characteristics
lanoitidarT
tsilanretaP
evitatlusnoC
lanoitutitsnoC
citsinutroppO
Table 7.2: ER and Management Styles, Source; Purcell J and Sissons K (1983, p.112)
383
Sophisticated
human relations
Individualism
Paternalism
Sophisticated
consultation
B ar gained
Const it ut ional
Modern
paternalism
Traditional
None (unitary)
Adversarial
Co-operative
Collectivism
Figure 7.2: Individualism vs. Collectivism in ER, Source: Storey and Sisson (1993, p.47)
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Strategic Variables
We have now located the generic options available. We must now turn
to the decisions that contribute to a strategic management model. We
are discounting agent of capital and systems actor strategies as not
really offering us a realistic route if we are trying to develop SHRM.
However, it must be recognised that in some businesses certain features
of the systems actor (stylised rules and procedures) may be necessary to
secure the commitment of and acceptance by staff. We shall concentrate
on the strategic actor approach.
In this part of the unit we shall look in more detail at four aspects of the
strategic management of ER:
Collective bargaining.
Involvement and participation.
Conflict resolution.
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CASESTUDY
Read the article below
In Place of Strife?
by Gregor Gall and Eila Rana, (People Management, 14 September 2000)
Gregor Gall
June 6 was a watershed for trade unions in UK it was the date from which
applications for statutory union recognition under the Employment Relations
Act 1999 (ERA) could be submitted to the Central Arbitration Committee
(CAC). But the day itself was purely symbolic because, in the years before the
ERA became law, the industrial relations landscape had already begun to
change.
Despite the serious criticisms that unions make of the ERA, it has clearly helped
to revive their fortunes. There have been 748 recognition agreements listed on
my database since 1995. From 1995 to 1998 between 80 and 100 new
recognition deals were signed annually, bringing 100,000 workers under union
recognition over the four years. In 1999, a further 260 were signed. So far this
year, more than 100 have been concluded, bringing another 150,000 workers
under union recognition.
But not all the data on deals signed gives the number of workers covered: my
own research suggests that one could safely double these numbers to 500,000
workers. Among the recent scalps have been Virgin Atlantic, Barclaycall,
Tilbury docks, Chunghwa electronics, Newsquest newspapers and United
Parcel Service.
The turnaround is impressive, although hardly an earthquake when compared
with the decline of trade unionism that went before. The 1998 Workplace
Employee Relations Survey shows that the proportion of organisations with
union recognition fell from 53 per cent in 1990 to 42 per cent in that year. The
Labour Force Survey records a similar decline in the proportion of workers
covered by such agreements. This stood at 49 per cent in 1993, but had
dropped to 43 per cent by 1998.
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These figures illustrate the scale of the task facing the unions, although they
exclude the recent growth. Allied with the increases in union membership
recorded since 1998, the new deals could start to reverse the decline.
The TUCs Trade Union Trends surveys, coupled with my own information
from unions, reveal more than 600 current campaigns for recognition covering
500,000 workers. In 170 of these cases, covering around 80,000 members,
unions have already recruited more than half of the relevant workforce the
proportion that can trigger automatic recognition under the legislation.
Successful high-profile campaigns featuring household names could boost
future campaigns. And, of course, although unions are seeking voluntary deals,
they can threaten employers with the CAC.
But this is not only a numbers game. To HR practitioners, the kinds of new deals
being signed and where, by whom and under what conditions are also
important. They will influence not only the conduct of industrial relations in
those organisations themselves, but also the behaviour of other organisations.
Before considering these questions, it is worth noting that the rise in
recognition agreements is more than just the product of the ERA.
The Labour government has helped to engender a climate in which many
employers are less inclined to behave unilaterally, and this has legitimised a
union role in organisations. The act is itself part of the changed industrial
relations environment.
Increasing numbers of employers are realising that there is a positive business
case for dealing with their workforces through unions, and that it is more
efficient, effective and democratic than treating employees as a collection of
atomised individuals. Many organisations have been persuaded to sign
voluntary deals, aware that they may be better able to influence their content
by reaching an agreement in a more comfortable, unpolarised and lower-risk
environment. Such employers also realise that delay could leave them facing
more serious, and more credible, recognition campaigns as the unions become
more active in recruiting and organising.
Partnership is in vogue at the moment. But of the 748 deals on my database,
no more than 150 describe themselves or have been described as
partnership agreements. This is somewhat surprising, because there is
pressure to sign such deals and they receive disproportionate media coverage.
Even among those that are described in this way, few comply with the TUC
model for partnership, which includes principles covering job security,
openness and the quality of working life. For most people, partnership is a
vague term that may describe the atmosphere in which the deal is struck, or the
relationships between negotiators, rather than its content.
Most deals are, in terms of content, standard recognition agreements covering
rights of information, consultation, representation and negotiation. This is
partly because of the influence of the union officers who help to draft them and
partly because employers prefer to stick to statements of fact rather, than to
produce wish-lists with vague promises on issues such as job security.
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way. Those using company councils to deflect interest in trade unions often find
that councillors become willing advocates of recognition. Harder tactics can
create martyrs who become rallying points for the other workers. Manzour
Chaudhary, the owner of the London-based Pricecheck supermarkets,
conceded recognition last year following the dismissal and demotion of several
staff, who then became the focus of the recognition campaign (see Eila Ranas
article).
Overall, the situation is much improved from the unions point of view, but only
time will tell whether they can use this bridgehead to regain further ground. On
the basis of the 1976-1980 experience, when ACAS could require recognition
but was rarely used, we shouldnt expect the CAC to be directly involved very
much. Rather, its influence will depend on the shadow that it casts.
Eila Rana
Whether its the calm before the storm or a permanent change in relationships
at work, no one yet knows. But union recognition legislation seems to have
brought about an amiability between management and unions that has
surprised all involved.
Unions seeking recognition are finding that many of the doors that they once
pushed in vain are falling open. Managers whose knowledge of unions is derived
from the horror stories of the past are discovering a degree of helpfulness from
the other side that they had never anticipated.
Although Gregor Galls research shows that most recognition agreements are
not partnerships, employers and union representatives who spoke to PM
agree that there has been a welcome spirit of co-operation in drawing them up.
The proposition unions are putting to employers is different from what it was
a generation ago, says Robbie Gilbert, chief executive of the Employers
Forum on Statute and Practice, a body set up to lobby over the detail of
legislation. More are approaching companies with an offer that seeks to
provide workforce representation in a way thats not necessarily going to make
life disruptive for the employer. They are asking: How can we work with you?
Weve been surprised at the extent to which the voluntary approach seems to
be the dominant one. Unions are approaching organisations informally to talk
to them about recognition, rather than banging in a formal request under the
legislation. This is to be welcomed. Very few cases have gone to the Central
Arbitration Committee.
Gall points out that recognition claims have focused on the softer targets, either
in traditionally unionised sectors (see panel) or in sectors with no union
experience. Among the latter are a number of voluntary organisations.
MSF is expected to sign an initial voluntary agreement with NCH Action for
Children, a national charity, this month. Negotiated jointly with public-sector
union Unison, the deal is significant because the charity has never recognised
trade unions throughout its 131-year history.
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Two years ago, its joint consultative committee a forum comprising managers
and staff expressed concern about the way that the committee was working
and suggested that matters could be improved.
Earlier this year, the charity called in an independent consultant to run staff
workshops explaining the options available for employee representation. A
subsequent staff ballot revealed overwhelming support for recognition. On a
45.5 per cent turnout, 79.8 per cent voted for recognition and 92.8 per cent
chose a joint agreement with MSF and Unison.
The senior management team had wanted to establish a works council but,
with such a clear mandate from staff, the charity has approached union
recognition positively. John Monks [TUC general secretary] has been saying
for a long time that the new way is the right way, says Janice Cook, the
charitys director of HR. Trade unions have worked hard to move towards the
partnership model. It doesnt mean youre not going to have conflict, but if you
have a strong partnership agreement underpinning that, youll work through
it.
Cook welcomes the more intelligent, collaborative, non-bureaucratic
approach taken by unions. But at mental health charity Scope, a similar claim for
recognition fell on stonier ground. A staff survey in 1997 revealed that 66 per
cent were in favour of recognition, but it drew only a 17 per cent response rate.
Without a clear mandate for recognition, managers opted for a works council.
But Marie Taylor, assistant director of personnel, says that it would have been
easier to recognise a union. Scope may review its decision in the future.
MSF has also recently signed a voluntary recognition deal with the National
Lottery Charities Board (NLCB). A postal ballot of staff revealed that 90 per
cent were in favour of union recognition on a pretty good turnout, according
to Stephen Bubb, the boards former HR director.
Bubb once a union man himself was determined not to involve the unions
when NLCB was founded in 1995. Today he is a convert to recognition, a living
testament to the change in the UKs industrial relations climate.
In the early days of setting up NLCB, I preferred to do things myself without
having to negotiate things with a union, but I did pay the price for that, he
admits. We didnt get the buy-in and the communication or the feeling of
involvement. As an employer, the NLCB has got above-average terms and
conditions, but staff never had the same satisfaction that they would have got
had they won them through hard-fought negotiations.
NLCB already had a staff forum but, according to Bubb, MSF brought more
professionalism to the process. We saw the union as a positive part of our
communication channels with staff, he says. Organisations that dont see
unions in that way are losing out. Unions have moved on and they do recognise
the importance of a different, partnership approach.
And Bubb admits that the organisation would eventually have been faced with a
recognition claim. Far better to take the initiative and earn Brownie points,
he says.
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Richard Bransons Virgin Atlantic airline is another company that has taken the
bull by the horns. It headed off the possibility of a CAC-enforced staff ballot by
arranging its own through the Electoral Reform Society. The only group to give
clear backing for recognition was the pilots. Branson, who had spent two years
politely declining requests from the British Air Line Pilots Association (Balpa)
for recognition, has now begun talks. But requests from other unions for similar
discussions have been turned down.
Balpa officials believe the ballot result vindicated their softly-softly approach.
We didnt think it would be sensible to take any sort of action against Virgin,
says Keith Bill, communications officer for Balpa. We knew the legislation was
coming along and we would rather enter voluntary agreements because we
find you get more out of them. The Virgin Atlantic press office declined to
comment.
A tougher battle for recognition was fought by the T&G with a small
supermarket chain in north London, Pricecheck. It involved dismissals,
demotions, pickets, boycotts all the paraphernalia of old-fashioned
confrontation. But even here, relations between the union and management
have apparently improved since a deal was struck.
Dave Turnbull, the unions regional industrial organiser for catering and retail,
says that the staff, including some store managers, approached the T&G for
help in a claim for premium payments for working on Christmas Day and other
bank holidays. At first, proprietor Manzour Chaudhary rejected the idea of
unions. I will not recognise any union, he was quoted as saying. If staff dont
like it, then they dont have to work here.
Seven ringleaders among the 100 staff were either dismissed or demoted,
including T&G shop steward Iftakar Ul-Hak.
The T&G started tribunal proceedings and mounted a boycott campaign,
picketing shoppers outside Pricecheck stores. Eventually, Chaudhary settled
the tribunal cases out of court and recognised the union. We have quite a good
relationship, Turnbull says. He tells me he doesnt know what he was
worried about in the first place.
Turnbull believes that the tribunal cases, the boycott campaign and the looming
recognition legislation prompted Chaudharys change of heart. Employers like
him, with no experience of dealing with unions, have seen things like the
miners strike on television, but have no idea what a normal, day-to-day
relationship between employers and unions is like, he says. Its not
confrontational but about improving communications and protecting our
members. Its not a big deal.
Chaudhary was contacted by People Management but was unavailable for
comment.
Gilbert agrees that many managers have over-hyped unions. He says that half of
todays managers have never dealt with unions and that their views are
coloured by memories of the 1970s.
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But, while the new legislation is helping unions to gain a foothold in previously
inaccessible organisations, some managers think that the old language of
collective bargaining, recognition and ballots is undermining employee
relations.
The language that hangs around the new law is old-fashioned and probably
frightens people, especially small and medium-sized employers, says Lesley
James, CIPD vice-president, employee relations, and a member of the DTIs
partnership funding panel. My personal experience and view is that unions
have a place, but that the agenda for them needs to get modern and the
language needs to get modern.
Tilburys watershed
Tilbury docks earned its place in union history during the dispute that followed
the abolition of the National Dock Labour Scheme in 1989. Hundreds of
dockers were dismissed and it took four years for them to win their unfair
dismissal cases in one of the UKs longest-running tribunal cases.
So the re-recognition agreement struck this year between Forth Ports, the
docks current owner, and the Transport and General Workers Union, has a
special significance to the union. Graham Stevenson, T&G national organiser
for transport, describes the Tilbury agreement as a watershed.
The new deal came about after Forth Ports, a major operator on the east coast
of Scotland, bought Tilbury in 1995. The firm was less hostile to unions than the
docks previous owner and had long-standing agreements with the T&G
elsewhere. After a gap of almost five years, during which attitudes on both sides
at Tilbury changed, the new deal was negotiated.
We see a stable relationship with the unions as a benefit to the company and
customers, says Alexander Morrison, director of personnel at Forth Ports.
But we needed a period of time to establish ourselves, assess the situation,
draw up a proper agreement and reassure our customers.
Stevenson says that the company had some reservations at first. Tilbury had a
reputation for militancy and the management team that originally derecognised
the union was still in place.
About two years ago it became clear that there would be union recognition
legislation, he says. An agreement at Tilbury was merely a matter of time.
With Forth Ports signed up, the T&G is now targeting independent companies
that operate on the companys land at Tilbury.
QUESTIONS:
1.
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2.
How does the TUC (the national body representing all trade unions in
Britain) view partnership arrangements? How might this be different
from the employee perspective?
3.
4.
What are the adversarial trends that are developing to defy the new
legal provision?
5.
CASESTUDYFEEDBACK
The article provides a wide-ranging review of the changing nature of IR/ER in
Britain in the late 1990s. The scale of the research is broad and provides a
significant view of change across a wide range of business sectors. ER is not just
the provenance of large manufacturing locations but is relevant to all sectors
such as the new growth sector of call centres or service centres, the
so-called office-factories.
1.
2.
3.
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5.
Collective bargaining
The second of our strategic variables is collective bargaining. As we saw
earlier, collective bargaining was seen as the very essence of the IR/ER
process. The institutions and procedural agreements determining the
bargaining unit, bargaining level stages and bargaining rituals, were
pivotal in UK IR, whereas European states had welldefined state
support roles and the US focused more on detailed collective
agreements. Collective bargaining defined IR.
We have seen how unions have been encouraged to operate as one
union within each organisation to avoid rivalries. We have also seen
that where multiple unions exist, to represent different categories of
staff, a single table agreement is frequently used. We should also note
that in Britain, and increasingly in Europe, the level of bargaining is
shifting from national, regional and industry level to the level of the
enterprise. This is a twofold shift:
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ACTIVITY
Note down what you consider the disadvantages of decentralised bargaining
might be.
ACTIVITYFEEDBACK
You might have noted that the disadvantages could include:
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respond to skill demands. A clear example of this tension has been met
by the national engineering union IG Metall, in negotiation with Osram
in Angsburg in the late 1990s (Marsh, 1997). Marsh highlights Osrams
threat to transfer production to Italy without changes to working time
and shift working, including weekend working to improve
productivity. Osram highlighted the need for a more flexible plant, as
opposed to regional agreement to address productivity, customers and
specific plant technology issues. The deal exchanged flexibility for job
security. The agreement kept the German business unit ahead on
productivity despite high flexibility, and lower cost plants had already
been identified in China and Britain. The agreement reached was done
so by circumventing national agreements.
As we can see, both employers and trade unions are making key
decisions about the use of collective bargaining, and the size and level of
bargaining to underpin wider strategic goals. Employers are weighing
up the relative advantages of securing commitment through bargaining
as a form of participation against the risk of delay and resistance to
change. However, collective bargaining is still a key component of
ER/IR strategy. The willingness of the parties to cooperate on
bargaining by including a broad agenda is at the heart of the benefit of
placing ER as one of the central features of SHRM in certain
environments and contexts. The agenda includes employers needs to
restrict costs, enhance flexibility and willingness to change and
employees needs for security, continued employability through
training and a voice in business decisions.
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Industrial democracy.
Works councils.
Industrial democracy
Designed to put worker representatives on the Board of Directors in the
1970s to democratise the workplace, the experiments never really
worked and do not really match employees, unions or marketled
economies. Managers felt constrained in decisionmaking, unions felt
uncomfortable in being incorporated into management functions,
whilst the whole process became a largely bureaucratic extension to
companywide consultative processes.
The pressures to involve staff and engage them in participative policy
making and workplace involvement have been brought about by a
number of SHRM related issues. From managements view these are to:
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Works councils
Works councils are a relatively recent introduction to the ER/IR agenda.
They have been introduced by an EU directive as a statutory means of
supporting cooperative relations between employers and
employees/unions, to enhance organisational performance. The
compliance rate is variable. Councils or voluntary agreed alternatives
have been developed within the statutory guidelines.
The European Works Council (EWC) Directive provides for EWC or
other agreed information and consultation procedures that may include
collective bargaining with recognised trade unions, to be established in
any multinational organisation with at least 1,000 employees,
including at least 150 in each of two member states. Management or
union (or 100 employees) may initiate the request to form an EWC.
The minimum standard is:
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Conflict resolution
The final strategic variable is conflict resolution.
At the individual level grievance procedures (employee orientated) and
disciplinary procedures (employer orientated) provide a framework of
governance or rules by which matters will be dealt with. It is a set of
procedural rules to ensure that conflict is handled in a transparent way
and that each party recognises the legitimacy of the other to raise
matters of concern and have them dealt with fairly and openly.
Establishing grievance and disciplinary procedures is based on the
premise that a structured system of handling of conflicts and
disagreements will achieve a number of positive outcomes as follows:
1.
2.
3.
The key issues for our discussion of how choices about conflict
resolution fit into our development of a strategic perspective on
managing employee relations is built around two central issues:
1.
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best case that recognises these needs. Such a process is felt to emphasise
the importance of the internal processes and culture of dialogue. Hence
the inclusion of pendulum arbitration has been encouraged as a means
of last resort conflict resolution within a package of new style employee
relations aimed at consensus building, providing a realistic view of
business need and employee rights to a voice and involvement in
business developments.
This concludes our review of how mechanisms of procedures for the
resolution of conflict might be adapted into an SHRM template and be
integrated more effectively to ensure that organisations that are faced
with the need or choice to engage with and develop a business led
approach to employee relations may do so whilst avoiding the apparent
disadvantage of the old style industrial relations, which in SHRM
commentator eyes did not support the development of effective
business strategies.
Partnership agreements
We have been building up to defining what we mean by partnership for
some time. In the UK, the Involvement and Participation Association
(IPA) launched a project in 1992: Towards industrial partnerships: A
new Approach to Relationships at Work (IPA 1992). The document was
endorsed by a joint body of employers and trade union leaders. The
document identified three commitments and four building blocks.
The commitments were:
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ACTIVITY
In what ways does partnership support the goals of SHRM?
ACTIVITYFEEDBACK
You may have noted the links to the four SHRM activities of flexibility, quality,
integration and customer responsiveness, and generally the performance
enhancement goal. Partnership enshrines the need to make jobs and
organisational processes flexible without unreasonable union interference,
providing managers involve, communicate intentions to and fully develop staff
for changes. Enhancement of quality and innovation are firmly in the
organisational domain of decision making to meet customer needs. The shift
from personnel, rules and procedures to HRM can do responsiveness is
apparent.
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ytiruces eeyolpmE
ytilibixelf mumixaM
sseccus derahS
Building Blocks
esirpretne eht fo sseccuS
Principles
ACTIVITYFEEDBACK
eciov dna noitatneserpeR
Building Blocks
seitrap eht fo elor etamitigeL
tnemevlovni dna tsurT
elcriC eulB/AB ytiroirp evitcejbo ssenisuB
Principles
ACTIVITY
Unit 7 Managing Employee Relations
The list in the last activity provides the one example of the key HR levers
that can provide effective integration of the partnership approach. The
original conceptualisation of HRM is often used in a more restrictive
way, to denote individualistic ER operating without unions, as a unitary
policy outlook focusing on employer and corporate culture.
A broader best fit approach emphasising stakeholding, mutuality and
alignment of values based on balancing interests, seems to offer more
promising prospects whereby SHRM is not marginalised in
environments that support collective ER as an alternative to or in
parallel with individual ER. SHRM, therefore, might be seen to have
wider business relevance. Certainly the WIRS 4 survey data would
support this view. SHRM can, therefore, represent broader interests
than those of management. Under these conditions Ulrich (1997)(see
Unit 12) sees a full spectrum of HR interventions covering Business
Partner, Administration (Policy and Reward Practice) Expert, Change
Agent and Employee Champion. Sceptics may argue that this is still
social manipulation and the incorporation of union objectives and
purposes.
CASESTUDY
The article below represents the changing nature of workplaces and the
growth of new key labour markets, which have largely been outside the
organisational scope of trade unions. It considers whether the typical
workplace offers us the opportunity to practise SHRM in a strategic sense. The
case also illustrates some of the pitfalls of adapting SHRM and integrating
effective ER strategy.
As you read this case you might like the following question:
1.
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the average length of time in each call centre job and in some cases annual
turnover can be as high as 80%. With a tightening labour market, employers
have been forced to jack up pay and improve conditions to attract new recruits.
Some are now even providing on-site jacuzzis.
But, despite its meteoric growth and the added impetus of the Internet, most
observers believe the call centre will turn out to be only another way-station in
an accelerating industrial revolution. With further call-switching to lower
labour-cost centres abroad, the expansion of e-commerce and rapid advances
in speech recognition technology, call centres are eventually likely to start
closing as quickly as they opened.
The OTR Group, a communications consultancy, recently forecast that
automation would eliminate 40% of all call centre staff within the next five
years. But BT believes that will prove exaggerated. People will still want
human contact, a spokeswoman says.
CASESTUDYFEEDBACK
You may have identified the following:
SHRM practice:
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Call centres have grown rapidly during the 1990s and the early part of
the new millennium, employing large numbers of staff within high
unemployment areas of the UK. Since the article in the last activity was
written, call centres, often the derivatives of large blue chip
organisations, have reviewed ER practice. Wider management training
exemplified by the University of Sunderland Service Manager
Certificate for an international insurance organisation, together with a
wider range of employee involvement strategies, have alleviated some
of the tensions raised by the article. However, the case is still relevant in
highlighting potential weakness of the SHRM principles: hard
(employee as a cost) versus soft (employee as a resource) strategy.
Before we leave the theme of partnership we should briefly review the
key employee process embraced within the involvement and
participation family. They are critical for underpinning the criteria of
partnership.
Employment security.
Employee voice.
Fair reward.
Investment in training.
He emphasises the need for a change in corporate governance that aims
to improve fundamentally workplace relationships of trust, respect and
leadership commitment. This, he believes, leads to a sense of insecurity
and lack of commitment and identity within organisations. He criticises
organisational shorttermism and lack of longerterm investment that
promotes an enhanced stakeholding. A stakeholder company might be
described as an organisation that balances the interests and roles of
shareholders, employees, customers and suppliers, and other interested
parties such as government and the community, the public.
Marks (1998) identifies the criteria against which the TUC measure a
stakeholder company as follows:
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CASESTUDY
Read the case study below, and as you read reflect on the following case study
questions:
Mindful of Powercos dual strategy of shaping employee relations
arrangements to the circumstances of its regulated distribution and supply
business and its non-regulated businesses (in particular electrical appliance
retailing):
1.
2.
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3.
2.
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None of this, however, should mask the sustained expansion and success of the
industry in terms of capital investment, technological change and productivity
growth.
The 1989 Electricity Act has brought substantial changes in the organisation and
operations of the industry. In introducing the governments plans for the
industrys privatisation the Secretary of State for Energy declared that his
proposals were aimed at transforming a producer-dominated industry into a
consumer-led industry. This has subsequently entailed the break-up of the
CEGB and the creation in its place of three competing power-generating
companies in England and Wales National Power, Powergen and Nuclear
Electric. In Scotland, the successors to the integrated area boards are Scottish
Power and Hydro-Electric, together with the nuclear generator, Scottish
Nuclear.
Privatisation also created 12 regional distribution companies in England and
Wales (the RECs), whose powers and responsibilities significantly exceed those
of the former area boards. They exercise control over the transmission grid
through joint ownership of the separately constituted National Grid company;
they are able to buy bulk electricity from whichever generator they wish; and
they may enter the field of generation themselves. The RECs operate under a
public electricity supply (PES) licence which places upon them the statutory
obligation to meet demand formerly held by the CEGB. Compliance with the
terms of the licence, which also requires the companies to separate different
businesses (distribution, supply, appliance retailing, electrical contracting,
telecommunications, etc.), is monitored by the Director General of Electricity
Supply (DGES) at the Office of Electricity Regulation (OFFER). A principal role
carried out by the DGES the Regulator is to supervise the prices charged by
the RECs to their customers for the distribution and supply of electricity in
which they have regional monopolies. These so-called regulated businesses
are responsible for the management and operation of the physical distribution
network in the franchise area and the purchase of electricity from generators
and its sale to consumers respectively. Taken together the distribution and
supply businesses may typically account for 90 per cent of profits with the
non-regulated activities (appliance retailing, electrical contracting,
telecommunications, etc.) accounting for the rest.
Several implications arise from the regime imposed as a result of privatisation
so far as the RECs are concerned.
1.
Decisions by the DGES to cut the future allowable level of prices the
RECs may charge their customers for electricity are likely to affect the
companies projected income and profits levels. Consequently,
managers are under pressure in such circumstances to cut operating
costs and increase efficiency to compensate. A strategy of
diversification involving expanding non-regulated businesses may also
be chosen as a route to top-up profits.
2.
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4.
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addition, there were formal disputes procedures with stages at local, district
and national levels plus arbitration and a parallel three-tier union-based
machinery of consultation.
Several important outcomes resulted from such arrangements.
1.
2.
3.
4.
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In sum the business priorities in the core or main businesses are to retain and
build on the traditional base by a combination of cost reduction, increased
efficiency and improved standards of customer service.
The non-regulated businesses
A second plank in company strategy is to vigorously pursue the exploitation of
potentially profitable opportunities in non-regulated business areas. Such an
approach is designed to reduce the dependence of Powerco on profits from
the regulated business, particularly at a time in which it will be increasingly
exposed to competition in these traditional markets as a consequence of the
decision to permit domestic consumers to buy their electricity from
competitor power companies in 1998. A major element in the strategy for the
non-regulated sector of activities is the expansion of electrical appliance
retailing. The company inherited a string of high street electricity showrooms
from its predecessor area board but has since embarked on an ambitious
strategy of opening up out-of-town superstores located in retail parks, a
number of which are outside its heartland area. Moreover, Powerco has
acquired additional such stores plus a number of high street shops from another
REC, again geographically remote from company HQ. Plans have been
announced for further expansion. As a result of such growth almost 60 per cent
of sales come from superstores, and the losses in electrical retailing chalked up
in pre-privatisation days have given way to growing profitability. This
turnaround in fortunes has been against a background of intense competition
and PES licensing rules which prohibit the cross-subsidising of retailing
operations by the much more profitable distribution business. A key factor has
been the employment of managers from the retailing sector who have sought
to change the culture from being an arm of a state-owned industry to a
free-standing business which can compete with the established giant electrical
goods retail chains. In addition, however, staff have been subject to a pay freeze
on basic rates for the past year.
Powercos retailing operations are less well unionised than the core business
around 50 per cent of staff are in membership. Membership has been falling
following privatisation, particularly as a result of the companys expansion into
the poorly unionised superstore sector. The vast majority of union members
are in either the AEEU, covering groups such as delivery drivers and after-sales
service staff, or in Unison which organises shop sales staff. The share of total
membership is two thirds to Unison, one third AEEU.
While Powerco continues to recognise unions for bargaining purposes in its
high street locations it has yet to follow suit in respect of its retail park stores.
The survival of the retailing business would seem to depend to a large degree
on an aggressive market-place presence and sustained pressure to drive down
costs, which inevitably focuses on staff deployment and pay, given the
labour-intensive nature of the operation.
Powerco maintains a contracting business which undertakes a range of
industrial, commercial and domestic electrical work and has recently added to
its portfolio the supply of double-glazing and cavity wall insulation. Trading
conditions have, however, been very difficult on account of recessionary
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2.
The salary scales specified in the pay structures applied throughout the
company as a unified entity; thus the pay rate and other terms and
conditions of employment of a person, in a given grade, would be
identical whether he/she worked in electricity distribution or retailing.
3.
4.
5.
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CASESTUDYFEEDBACK
1.
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3.
Summary
Our starting position for this unit was that IR/ER might not fit the
SHRM paradigm. This might seriously limit its appeal and utility.
Investigating the components of, and values behind, IR/ER and
partnerships arrangements reveals that significant benefits and options
are available in securing employee commitment, flexibility and
performance enhancement through the careful selection of appropriate
and wellmatched ER strategies. So, far from discarding ER from the
strategic appraisal, managers within defined limits include ER firmly
within the strategic model to shape attitudes, behaviour and
organisational culture.
In studying this unit we have addressed the significant environmental
and historical as well as cultural issues that shape the ER landscape and
influence management choice. Not least amongst these influences is the
mindset of managers and their perspective on whether ER is a viable
and legitimate area in which to devolve powers, or whether market and
business objectives should prevail. As we saw in Unit 2, Ulrich (1997)
would advocate the employee champions role in HRM as an important
agent of strategy. Ulrich probably had in mind the need for managers to
lead on ER as an alternative to unions. However, as we have seen,
SHRM is shifting from a more straightforward integration of employee
interests with those of the organisation and its shareholders to a more
sophisticated integration of various stakeholder interests within and
across organisational boundaries through the customer, community
and employee value chain.
This unit has attempted to address the option of using this more
complex level of integration to secure wider commitment. This unit, and
in particular the discussion around partnership, could be said to mark a
major step in strengthening the validity of SHRM, giving greater weight
to the best fit approach, and indeed offering breadth of relevant
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REVIEWACTIVITY
Question 1
What are the primary constraints on management decision making in IR/ER?
Question 2
What are the primary strategies and operational choices available to managers?
Question 3
Recommend and differentiate a preferred IR/ER management style to meet
SHRM best practice, SHRM best fit and SHRM resource-based view (RBV)
objectives.
Question 4
What are the main ER practices that will support the achievement of SHRM?
Question 5
Identify three distinguishing features of New Industrial Relations and
partnership agreements.
Question 6
How can ER strategy achieve cultural change within organisations?
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REVIEWACTIVITYFEEDBACK
Answer 1
The primary constraints on management decision making in IR/ER are national
culture and IR systems, organisational limits and culture management, and
employee preference for individual and collective ER practices.
Answer 2
The primary strategies include partnership, consultation, constitutional
approaches and adversarial approaches. The operational choices involve
recognition of trade unions, collective bargaining, conflict resolution and
involvement and participation
Answer 3
SHRM best practice: ER heavily based upon tasks level involvement and
participation.
SHRM best fit: Partnership to IR/constitutional practices.
SHRM RBV: Paternalism to ER with extensive use of I&P practices closely
assimilated with learning rather than procedures.
Answer 4
The main ER practices that will support the achievement of SHRM include
involvement and participation practices that are normally associated with
achieving SHRM objectives. These operate at the task and power levels.
Answer 5
New Industrial Relations is characterised by:
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References
The Strategic Managing of Human Resources, edited by John Leopold,
Lynette Harris & Tony Watson, FT Prentice Hall, 2004 (Key text for
this module)
Bassett P. (1986) Strike Free, London Macmillan
Brewster C., Mayhew W & Morley M. (2000) New Challenges for European
Human Resource Management, London, Macmillan
Cranfield Network (1999) CRANET survey on European Human Resource
Management Cranfield University
Cully M., OReilly A. and Millward N. (1998) Workplace Employee
Relations Survey: First Findings London Department of Trade and
Industry
Deary S. and Ireson R (1999). The impact of industrial relations climate,
organisational commitment, and union loyalty on organisational performance:
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Unit 8
Introduction
As the process of change continues to accelerate, change management is
a fundamental competency needed by HR professionals. Today
organisations are increasingly focusing on creating a highperformance
culture to compete effectively in the knowledgebased and globalised
business environments they operate in. Creating such a
highperformance culture often involves a paradigm shift in
organisational thinking, working practices and in the behaviour of its
people. HR is the stabilising influence and change champion in bringing
about this shift.
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READINGACTIVITY
As an introduction to this unit, read the article 'An Overview of Change
Management' at the BPR Online Learning Center website:
http://www.prosci.com/change_management_overview.htm
Note the two perspectives of change management; organisational change
management and individual change management. Both are areas of strategic
HRM focus.
READINGACTIVITY
Read Chapter 9 of your key text, The Strategic Managing of Human Resources,
Edited by John Leopold, Lynette Harris & Tony Watson, FT Prentice Hall,
which covers some of the subjects of this unit.
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ORGANISATIONAL
CULTURE
MANAGEMENT
DEVELOPMENT
ORGANISATIONAL
CLIMATE
I MP R OV E D
OR GA N I S AT I ON A L
P E R F OR MA N CE
MANAGEMENT
OF CHANGE
EMPLOYEE
COMMITMENT
ORGANISATIONAL
CONFLICT
We shall discuss in depth in this unit the aspects of culture and the
management of change. Before moving to this a brief word should be
included on other contributory aspects (for further information go to
Mullins L, Management and Organisational Behaviour (1999) 5th edition
Financial Times. Prentice Hall. Especially chapters 22 and 23)
Employee climate
This can be described as the intersection of people to organisations and
employee to the manager relationship. This is made up of several
interactions personal and organisational goals, formal structure and its
impact on behaviour, the process of management decision making,
conflict resolution and communication in terms of securing
commitment and goal alignment, leadership style, etc.
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Employee Commitment
a
Informed
Involved
Pride
Trust
II
c
Sharing in
success
c
Accountability
for results
I
Sense of
belonging
to the
organisation
II
Sense of
excitement
in the
job
a
III
Confidence
in
management
leadership
Authority
Dedication
III
c
Competence
Figure 8.2 Three pillar model of commitment (Martin P, Nicholls J: Creating a Committed Workforce).
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Organisational conflict
There are contrasting views of conflict. Mostly organisations determine
conflict as destructive and seek to minimise or suppress conflict as
damaging. This could, from an employee relations perspective be seen
as a unitary view whereby common interests prevail. Alternatively
organisations can view conflict more positively as a creative and
innovatory force. Organisations subscribing to a stakeholder viewpoint
(i.e. inclusive of different internal and external interests) and actively
promoting diversity might see different viewpoints as a good basis for
learning and change. Organisations are often criticised for creating
cultures that exclude certain types of people or viewpoints. How
organisations view grievances raised by staff is often a good indicator of
this culture. Those organisations that create the impression in staff that
to use a grievance procedure suggests failure and is not the done thing'
may find it difficult to surface real attitudinal views as a basis for
change. Those that are able to have a healthy engagement with
grievance procedures and have managers skilled in surfacing and
dealing with conflict are now regarded as possessing advanced skills
for organisational change as we shall see below. The identification of
sources of conflict and the confrontation through problem solving and
high involvement strategies are important change management skills.
The rationale being that organisations should focus less on performance
reducing compromises and avoidance, but focus on diligent processes
of resolving through evaluation of information and involvement of staff
in the outcomes. Employees may not always like the outcome but the
objectivity of the process may go a long way to improving commitment
to the result and reduce resistance. Confidence in organisational
governance procedures is an important element in building trust and
commitment a key commodity in effective organisational change.
Management development
In the previous units we have discussed the important role of the
manager in SHRM. Indeed it has been seen as a critical role in
embedding SHRM practice. In Unit 6 we introduced the role in terms of
learning. In Unit 3 the role pivoted around the performance enhancing
relationship. The manager is able to bring about and or consolidate
change is becoming ever more important. Such managers have to move
beyond relying on positional or traditional professional expert models
to manage effectively in the 21st Century. Becoming a leader as opposed
to the more administratively geared person (i.e. making existing
procedures work ) to providing a wider and longer term view a set of
vision, values and missions and to be able to sustain the organisation
around these. To be able to create an environment that encourages and
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READINGACTIVITY
Visit the 'What makes a great place to work' section on the Great Place to Work
Institute website at:
http://www.greatplacetowork.com/great/index.php
Read about the Institute's best place to work model, and the business benefits,
financial results, cultural dimensions relating to employer of choice organisations.
Also read the feedback from employees from such organisations.
ACTIVITY
Many countries are facing difficulties in recruiting and retaining civil servants,
particularly in high skilled areas. To help governments enhance the
competitiveness of the public sector and improve its image and attractiveness,
the OECD is helping governments in transforming the public sector into an
Employer of Choice. To this end the OECD conducted a project on the
"Competitive Public Employer" in 2001 by examining the issues across a
number of OECD countries.
Read the OECD overview report which addresses the problems, challenges
and proposed resolutions at the following website:
http://www.oecd.org/dataoecd/37/29/1937556.pdf
Also, read the country case study relating to Denmark:
http://www.oecd.org/dataoecd/37/9/1937604.pdf
Many of the issues addressed are applicable across a number of industries, and
are not just confined to the public sector.
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ACTIVITYFEEDBACK
The motivational factors you would have identified as being relevant from the
Denmark study, and the steps you would take in transforming your company
into a better working place would depend on the unique circumstances of your
company. But wherever your organisation is on the scale of becoming an
Employer of Choice (or indeed it may already be an Employer of Choice),
organisations should always strive to do better and seek ways of further
motivating employees in achieving common organisational goals.
Ethical dimensions
Organisational development also has an ethical dimension. It requires
ethical sensitivities in issues relating to equality, diversity management,
flexible labour, voluntary and involuntary employee separations
resulting from restructuring and downsizing, performance
management and rewards. The pull from the business may often be in
conflict with employee welfare, and HR's role is in fairly balancing the
conflicts and taking an ethical stance. HR also plays a vital role in
establishing an ethical organisational culture by communicating codes
of ethical conduct, providing training in ethics, monitoring compliance
to ethical standards and managing compliance.
READINGACTIVITY
Read Chapter 4 of your key text, The Strategic Managing of Human Resources,
Edited by John Leopold, Lynette Harris & Tony Watson, FT Prentice Hall, for a
detailed coverage of ethics and strategic human resourcing.
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Workforce diversity
An important role for HR in organisational development is the
promotion of workforce diversity. Leading organisations are now
focusing on diversity as an asset to be leveraged, and not as something
to be managed or paid lip service to. Such organisations view workforce
diversity as adding richness, synergy, and, most of all, business value.
Accepting this point, and gaining its acceptance in others, is perhaps the
most essential leadership competency for leveraging diversity. It is a
key part of organisational development. Without this competency, no
organizational diversity effort can have a lasting positive impact.
Prioritising workforce diversity requires the setting of diversity
objectives including cultural awareness and acceptance, work/life
balance, integration of people with disabilities and the advancement of
women, and building a diverse management team. Managers, in
particular, should be made aware of the value of workforce diversity
and the enormous business benefits of capitalising on the skills and
talents inherent in all segments of the community.
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Culture
Having examined the role of HR in organisational development, let us
now focus on culture. In this section we will look at:
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SHRM
tnemyolpme
snoitaluger
serudecorp
tnatropmi serudecorP
Dimension
Beliefs and
Assumptions
serudecorp naht
snoissim dna seulav larutluC
stcartnoc tnemyolpmE .1
serudecorp dna seluR .2
rof krowemarF .3
noitca tnemeganam
seeyolpme gnirotinoM
seeyolpme gnirutruN
netfo desisahpme-eD
desilaudividni
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448
U n iv ersity of
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egnahc-rof-gniniagrab emos
ynaM
weF
wolf detcirtseR
wolf desaercnI
ruobal fo noisiviD
krowmaeT
serudecorp lennosreP
snoitnevretni
sevitatneserper
sledom
sevitatneserper noinu
edart htiw snoitaleR.12
tnemeganam ruobaL.02
sevitcejbo ygetarts
ytivitca
elohw a sa noitasinagro
sedarg dradnats ot
ecnamrofrep maet
snoitidnoc kroW.91
noitanimreted yaP.81
noitceles ffatS.71
Key Levers
tnemegaruocne dna troppus
eeyolpme gnivlovni ,noitatilicaF
slliks
noitaitogeN
tnemeganam dezirP.61
eussi na sa
nees ton ytirap elpmaxe rof ;woL
noitasidradnatS.51
)seeyolpme
morf noitacinummoc
ot sreyolpme
smsinahcem noitatlusnoc-tnioj
ot gnirrefer yllausu(
noitacinummoC.41
ffats
,pihsredael lanoitamrofsnarT
serudecorp
sreganam enil/ssenisub/lareneG
sreganam yeK.31
elor tnemeganaM.21
Line Management
HR
SHRM
ruobal fo tnemeganaM
ecivres remotsuC
segnahc laemeceiP
MRH ot lartneC
wolS
tsaF
snoisiced fo deepS.11
nalp etaroproC.01
sevitaitinI .9
snoitaler
lanoitasinagro ot yeK .8
Strategic aspects
Dimension
You should also note the close relationship that structural control,
coordination and job design can have as an influence on culture,
particularly through:
ACTIVITY
Spend a few moments noting your attitude and beliefs about the following
statements concerning organisational culture. Rate them on a scale from 1 to 5
where 5 represents a strong degree of agreement with the statement and 1
total disagreement.
Statement
Rating
1
1
2
.spord
elpoep gnikam no sisahpme taerg ecalp dluohs noitasinagro ehT
.smelborp
ecudortni naht rehtar ,taht no dliub dna sseccus tsap tsurt ot retteb si tI
.egnahc lacidar
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450
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yhtapitnA
msinoitalosI
msitavresnoC
.snoitcnuf tnemeganam
ni ffats fo tnemevlovni dna tnemrewopme ,ytilibatnuocca fo eerged ehT
noitanidrobuS
.tnemecnahne
ecnamrofrep dna gnivlos melborp no tcapmi eht dna erutluc emalb fo ecnadiovA
noitasilanosrepeD
ytilanoitomenU
ACTIVITYFEEDBACK
.snoitaler laicos poleved ot
ecalp a naht rehtar dedrawer eb dna mrofrep ot ecalp a si ecalpkrow ehT
.sevirra
ti nehw dnopser ot naht ksir ssessa dna nalp ylluferac ot retteb si tI
Statement
Rating
ACTIVITY
The business values listed below have appeared frequently throughout our
study of the strategic management of people. Evaluate each of them using
Bates criteria for judging culture. We have made our own suggestion
concerning the first one as a guide.
Entrepreneurialism
You might consider this has a negative rating on conservatism.
Entrepreneurialism is about development and experimentation.
Enterprise
Culture of customer orientation
Continuous improvement
Market orientation/sensitivity
Teamworking
Empowerment
Involvement/commitment/participation
Partnership
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ACTIVITYFEEDBACK
Our suggestions are as follows.
Entrepreneurialism
You might consider this has a negative rating on conservatism.
Entrepreneurialism is about development and experimentation.
Enterprise
Enterprise suggests performance enhancement, avoidance of blame culture,
going beyond contract in the 27 points terms (as per the 27 points in Table 8.1).
It is anti-conservative.
Culture of customer orientation
A culture of the customer is reflected heavily in antipathy, where the primacy
of the stakeholder is seen as high; for example, low antipathy/high empathy for
corporate considerations. It is high in empowerment to satisfy the customer.
High personal involvement means low depersonalisation.
Continuous improvement
This represents a receptiveness and enthusiasm for change (low
conservatism), high accountability and willingness to accept responsibility,
that is, low dependency/subordination/inflexibility/commitment. You may
like to reconsider the original perceived benefits and outcomes of SHRM.
Market orientation/sensitivity
Market orientation/sensitivity and responsiveness can all be scaled on the
depersonalisation, subordination and conservatism measures.
Teamworking
This emphasises unemotionality. On the one hand, we want team members
to be able to deal with feelings and relationships (this is important for learning,
change commitment and so on) in an objective, unemotional, natural way
rather than let it be destructive. On the other hand, commitment is about
emotional engagement with wanting to do better, go beyond contract. We
need team members to take empowerment and ownership in self-managing,
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Learning
This is the key to unlocking the intangible assets and knowledge in the
organisation, an essential behavioural attribute or mindset. It underpins each of
the cultural frameworks offered by Bate. In SHRM terms, it is the key to
performance and change, the cultural key.
Power distance.
Uncertainty avoidance.
Individualism.
Masculinity.
Power distance (PDI)
This is the extent to which members of society and organisations accept
or highlight the distribution of power and authority, for example, clear
status and hierarchy as opposed to equality and empowerment.
Uncertainty avoidance (UAI)
This the degree to which members of society and organisations feel
threatened by change and ambiguous situations, and set up planning
systems to avoid uncertainty, for example, rulebased procedures and
careful planning as opposed to flexible, responsive, risktaking
behaviour.
Individualism (IDV)
This is the extent to which people believe that the wellbeing of the
family (organisation family) is more important than their own interests.
Masculinity (MAS)
This is the extent to which achievement through successful acquisition
of possessions, money and promotion prevail over the caring and
nurturing values of social relations. For example, performance related
pay, individualism and the success of individual objectives as opposed
to teams, learning and organisationbased reward.
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456
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.drawer detaler-ecnamrofrep
,elpmaxe rof ,stluser eveihca ot tluciffid ti dnif yam noitubirtnoc
lanosrep no setartnecnoc taht MRHS os sseccus lanosrep dna laudividni
eht fo tluc eht esisahpme-ed yam yteicos tsivitcelloC .laudividni eht
fo erutluc a htiw detaicossa netfo si SAM hgiH .serusaem tsilaudividni hgih
dna ssendetaler ecnamrofrep fo erutluc a no tcapmi yam serocs SAM hgiH
ytinilucsaM
.krowmaet
evitaroballoc dna evitarepo-oc tsniaga krow nac ssenevititepmoc laudividnI
.krowmaet dna tnemevlovni rof epocs timil yam serocs VDI hgih niagA
msilaudividnI
ecnadiovA ytniatrecnU
ecnatsid rewoP
ACTIVITYFEEDBACK
Masculinity (MAS).
Individualism (IDV).
Uncertainty Avoidance (UAI).
Power Distance (PDI).
Thinking about what we have done so far, note down, against these headings,
some of the implications for SHRM policies.
ACTIVITY
Unit 8 Managing Change: Culture and Performance
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.detpecca eb lliw sevitcejbo puorg ro laudividni
hcihw ot tnetxe eht no tcelfer ot deen lliw sreganam ereH :
IDV/MAS
.serutluc emos yb
suoregnad deredisnoc eb dluow lasiarppa del-tnempoleved yb degaruocne
noitinifed boj tcirts fo edistuo ruoivaheb tnemevorpmi ro ksiR :
UAI
PDI
tnemeganam
ecnamrofrep
dna lasiarppA eeyolpmE
MAS
UAI
IDV
.serutcurts
cinagro susrev citsinahcem ni sreganam fo ytirohtua ;serutcurts gnikam
noisiced fo ytiralc dna ngised boj redisnoc ot deen lliw sreganaM :
PDI
ffats fo tnemtimmoc
dna noitavitoM
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PDI/UAI
.level
IDV
snoitaler eeyolpmE
IDV/MAS
UAI
.detsiser eb
lliw senil ytirohtua dna boj sessorc taht tnempoleved dna tnempoleved-fleS
.noitasinagro eht nihtiw slevel tcelfer taht gniniart fo smetsys lamrof
ruovaf lliw IDP hgiH .semoctuo 5 tinU eht weiver ot ekil thgim uoY .ssecorp
eht ni elor sreganam eht fo noitpecrep eht si ereh lartneC .ecalpkrow eht
ni tnempoleved-fles dna gninrael susrev gniniart lamrof no sisahpme :
PDI
tnempoleveD
.ytiuqe nopu
desab metsys riaf tlef a ot yrartnoc sa meht ees ro smetsys drawer hcus
yb detavitom eb dna slaog laudividni dna evititepmoc eusrup lliw slaudividni
hcihw ot tnetxe eht dna ,ycnerapsnart dna ytilamrof fo eerged eht si yek ehT
.sdeen eeyolpme htiw tnemngila dna ecnatpecca
gnicneulfni ni rotcaf yek a ;drawer lanoitidda fo smetsys desab-noitasinagro
ro maet tsniaga yap detaler ecnamrofrep sedulcni :
IDV/MAS
UAI
PDI
ygetarts draweR
ACTIVITY
Note down in the grid below some examples of organisations that have strong
cultures and that you believe have been undergoing management-led culture
change.
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Organisation/industry
Pressure to change
Cultural shift
ACTIVITYFEEDBACK
You might have listed a wide range of organisations but the following are
typical:
Cultural shift
morf dertnec remotsuc/tneilc oT
Pressure to change
ycneiciffe tsoc/noitasitavirP
noitatneiro ytinummoC
Organisation/industry
seirtsudni leets dna gninim laoC
ytirohtua cilbuP
seirtsudni gnirutcafunaM
ytilibixelf dertnec
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/snoitacinummoceleT
gnirutcurtser labolG
seirtsudni yticirtcele
ACTIVITY
Reflect for a moment on your own experience and answer the following
questions.
1.
- You didnt mind because it meant that you didnt enter into
conflict and it kept friendship alive or was the easier option.
U n iversity of
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2.
3.
ACTIVITYFEEDBACK
There are no right and wrong answers here. These are mindsets that reflect
your view as to the most appropriate relationship between employees and
organisations and, essentially, individual preference as to whether and how to
adapt your behaviour. However, in answer to the first question, you might
naturally have been more ambivalent about changing your behaviour where
your (deeply-held) value system was not being questioned. This is exactly the
culture change issue at stake in organisations. The deeper the need for
organisational change, the more likely it is that it will challenge individual roles.
Therefore, either the power and pressure to change from the organisation
must be greater, or the level of assistance from management to see the need
for and to value the change must be stronger.
Etzioni (1988) made the point that there were three employee cultural
orientations to employment achieved through structural design:
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Change Management
In this section we will look at:
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CASESTUDY
The article below produces a clear agenda to assist with effective change. Read
the article and, in the grid printed after it, identify the best practice activities
that are recommended and for each of them, suggest which HR policy levers
would best support them.
Vision only works if communicated
by Antony Aitken and Ian Saunders (People Management, 21 December 1995)
Many people claim to know about change, and yet too many projects are still
managed badly. Over the past 18 months, Transition Partnerships has carried
out research to discover what people actually do during the different stages of a
change management programme. We wanted to know why it was that some
companies manage change successfully and others do not.
The research focused on those changes that are either triggered by, or are in
some way related to, information technology. We were interested in
discovering the views of specialists in different disciplines and concentrated on
line management, human resources and IT. A questionnaire was created in
three versions and 400 sets of these were distributed. This led to 152 individual
responses from 63 separate organisations. We also carried out 22 additional
interviews.
By describing two of the projects and highlighting some of the best-practice
ideas that emerged from the research, it is possible to give the flavour of its
results. It should be pointed out that our sample may be biased in favour of
success, since people tend not to talk about their failures. One contact refused
to contribute, saying: Not likely. The project was a disaster!
So, what factors led to successful change? In line with other research, a notable
theme in our interviews was the need for active commitment from the top. It
was clear from the examples of outstanding performance that a large part of
their success was due to the vision and leadership of top management. At least
four multi-million-pound projects failed to realise their potential benefits
because of a lack of vision among senior managers.
The need for the personnel function to take more of a lead was another issue
that emerged. Only one-third of HR managers, and fewer than one-sixth of line
managers, reported that HR change management experts had been responsible
for the planning and implementation of change.
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Do you have a clear reason and focus for the change? Is the outcome
measured in relation to your business objectives?
How well do you understand the degree of change? Just under half of
the sample recognised they were re-engineering the business.
Can you alter the way that things are done? Of our respondents, 51
per cent reported that their organisational culture, power politics
and existing systems obstruct success.
Do you fully exploit IT? Only 5 per cent were sure that they did
although 56 per cent gave what could be described as a positive
response.
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468
HR policy lever
U n iv ersity of
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CASESTUDYFEEDBACK
The article provides a clear framework for managing change. You might have
identified the following:
HR policy lever
redlohekatS
ygetarts
erutcurts desab maet
ledom noitasinagro gninrael
tnemngila dna gnilledom noitelpmoc
gninnalp RH
tnempoleved dna gniniart fo ecnalab
latnempoleved
gninrael launitnoC
semoctuo ssenisub dna tnemevlovni resU
RH fo elyts no sucof
noitatnemelpmi
noitacinummoC
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1.
2.
ACTIVITY
We will explore this framework in the next two activities, first looking at
assumptions about the intentions of change.
Table 8.2: Change Mangement Assumptions and Implications. Source: Mabey C et al. (1998).
dootsrednu
dna derolpxe seigoloedi ,snoitisopsiderp
,sweiv gnireffid hcihw ot tnetxE
?gnikees-nrettap ro gnivlos-melborP
?gninaem gniganam ro elpoep gniganaM
?lacorpicer ro lanoitceriD
ssecorp egnahc
egnahc sI
Implications
snoissucreper
cimetsys rof retac ot edam stnemegnarrA
?detecafitlum ro etercsiD
?lanoitaler ro lanoitaR
?gnillortnoc ro elballortnoC
egnahc sI
Implications
yltnereffid
sgniht od ot ssenevisnopser larutluC
yltnereffid sgniht od ot ssenidaer laruoivaheB
?lamron ro tnaiveD
?elbarised ro gninetaerhT
?cimedne ro lanoitpecxE
egnahc sI
Implications
ACTIVITYFEEDBACK
1.
Your response will be unique to you but you may have concluded that
the readiness to support change would be low and therefore the
resistance will be high. You will need to work hard at the need
through education and careful involvement of staff to gain
commitment. You may also have to use your resource power to
overcome resistance or indeed use both on different types of
resistance.
2.
ACTIVITY
What are your likely considerations as a manager if implementation is:
Controllable?
Multifacted?
ACTIVITYFEEDBACK
The implementation is likely to be fairly speedy and directive. Some
systems may be set up to deal with any resultant pressure.
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Determine the
future state
W her e do we
want t o be?
Managing the
transition
5. Targets for
change
1. Agree organisational
purpose and
mission
6. Implement change
and developmental
activities
Diagnose the
present state
7. Evaluate and
reinforce
change
W her e ar e we now?
2. Assess outer and
inner context
3. Gather data
4. Gain involvement
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Internationalisation.
Market driven triggers: product, cost and customer
technology driven.
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The economy.
Suppliers availability/quality.
Government policy.
Competition existing/new entrants.
Customer needs/expectations.
Shareholder perspective.
Public opinion.
Legal environment.
Media concerns and values.
Technology.
Market and product innovation.
Inner context
U n iversity of
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NOW
FUTURE
STRATEGY
TASKS
RELATIONSHIPS
(up, down and across
the organisation)
DO
WAYS OF
WORKING
FEEL
THINK
ygetartS
esnopser fo leveL
woN
erutuF
ro derutcurts lleW
egnahc tegraT
sksaT
cimanyd
tnemeganam lamroF
spihsnoitaleR
/citsinahceM
gnikrow fo syaW
cinagro ro evitpircserp
elbixelf dna
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Also, we should not forget that in order to achieve the full benefit of this
analysis, we are not dealing with facts and information alone. The
degree to which we involve staff in this process sends other messages
about our intentions and perhaps signals our management approval to
change our style. Step 4, gaining involvement through the investigation,
demonstrates this point.
Step 4: Gaining involvement
The OD approach, as we saw in the unit on learning organisations, is to
advocate a participative approach where the speed of change permits.
Therefore, how we conduct the diagnosis will, it is argued, affect the
overall outcome of the change itself and commitment of staff to the
outcomes. In itself the process of involvement and participation is likely
to send cultural signals about what the organisation wants from its staff
and how it wants them to behave and perform. So how can we best
maximise the involvement of staff in the diagnosis of the present state?
Pugh (1993) identifies six rules for maximising involvement in the
change process:
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Top down
Change can be effected in one of three ways:
The matrix is a useful audit tool to meet the inner/outer context for
change. It can also be used as a blueprint for planning the levels and
orientations of a change strategy.
Table 8.3: Pugh OD matrix with possible change interventions (in italics)
process consultation,
teambuilding
gnitroper etairporppani
sehsalc
etairporppani ,ecnadiova
serudecorp
redesign work
relationships
(socio-technical systems),
self-directed working
groups
sroirepus
dna sreep htiw tcilfnoc ni
redael ;detcepser ,detsurt
,slaog fo ecnatpecca
dna gnidnatsrednu
roop ,noitapicitrap
,erehpsomta ,spihsnoitaler
gnikrow etairporppanI
eveihca
ni secnereffid tnorfnoc
redefine responsibilities,
change reporting
relationships, improve
co-ordination and liaison
mechanisms
sgnileef
devlosernu ,seitiroirp
evitceffe fo kcaL
neewteb noitarepo-oc
tinubus ;evitcepsrep
deriuqer ,noitasimitpo
Group level
intergroup confrontation
(with third party as
consultant), role
negotiation
ot tluciffid noitcaretni
,noititepmoc evissecxe
,tcilfnoc ,stinubus
Inter-group
level
fo kcal ,noicipsus
;dootsrednusim
ygolonhcet cisab
erutcurts noitasinagro
change strategy,
location,
physical set-up; culture
,noitidnoc lacisyhp ,tekram
ruobal ,serusserp tekram
,gnittes lacihpargoeG
- etairporppani
survey feedback,
organisational mirroring
segnahc latnemnorivne ot
;etairporppani ro denifed
Organisationa
l level
)?metsys
Structure
Behaviour
Context
Unit 8 Managing Change: Culture and Performance
Bottom up
Horizontal/sideways.
The first two approaches are selfexplanatory. The third,
horizontal/sideways change, relates to change initiated and promoted
by teams of people at different levels of the organisation.
The approaches are characterised by the following strengths and
weaknesses:
egnahc rojam ni
derongi stcaretni
sevitcejbo evird
gninrael/tnemrewopme
yticapac
serutcurts
seugaelloc morf
detaneila/detalosi ffats
tnemtimmoc redaorb
pihsrentrap wen sesilobmys
egnahc syawedis/latnoziroH
gnitsixe sessap-yb
tnemtimmoc hgih
sevitcejbo fo noitulid
egnahc pu mottoB
pihsrenwo
sesimorpmoc etairporppani
ecap wols
stseretni redlohekats
ecap tsaf
sevitcejbo fo ytiralc
secruoser
tnemtimmoc wol
ecnatsiser
Weaknesses
pihsrenwo-non
Strengths
480
U n iv ersity of
Su n derla n d
U n iversity of
Su n derlan d
481
482
U n iv ersity of
Su n derla n d
,lanoitamrofni na ta
tuoba gnignirb
level lacinhcet
larutluc latnemadnuf
gnisilaicoS
ssecorp gninrael ticilpxE
demmargorp ,dennalP
evitanirtcodnI )D(
erutluc
noitisoppo mrasid
ouq sutats
egnahc elacs-egral
elacs-llams yb detaitini
srotaitini
noitalupinam neesnU
skrowten lamrofni sesU
lortnoc
dna rewop no desaB
evisorroC )C(
tnempoleved suounitnoC
noitatnorfnoc
ton ,noisulloC
tnetni
evitailicnoC )B(
snoitca/snalp deliateD
derotinom ,nwod-poT
egnahc ro sisirc ot sdael
troppus
fo htdaerb ,slliks skcal
xelpmoc-non
ytirohtua fo ecruos
elpmis erehw noitautis
si erutluc weN
seulav
egnahc dipaR
,gnorts a ot dael
tnessid sesilibom
lanoitidart seltnamsiD
evian yllacitilop si
evisserggA )A(
Approach
Characteristics
It can ...
U n iversity of
Su n derlan d
483
ACTIVITY
The next two activities help your understanding of these models.
Table 8.5: Generic Model 2, Change Strategies, Source: Kotter and Schlesinger, 1979
rewop
ecnatsiser
srotaitini
smelborp ecnatsiser ot
detalupinam
elbaredisnoc ssessop
srotaitini egnahc eht
dna ,laitnesse si deeps
evisnepxe
noicreoc
ticilpmi
dna ticilpxE
noitatpo-oc
dna
noitalupinaM
egnahc a ni tuo
a si ti semitemoS
ecnailpmoc rof
,gnimusnoc-emit eb naC
tnemtsujda fo esuaceb
tnemeerga dna
noitaitogeN
smelborp
smelborp
troppus
dna noitatilicaF
nalp egnahc
yrev eb naC
ynam fi gnimusnoc-emit
egnahc eht
yrev eb naC
ot dettimmoc eb lliw
fi gnimusnoc-emit
eht gnitnemelpmi
na ngised srotapicitrap
egnahc etairporppani
ot rewop elbaredisnoc
tsiser
tnemevlovni
etaruccani ro noitamrofni
Advantages
fo kcal a si ereht
dna
noitapicitraP
noitacinummoc
dna noitacudE
Approach
Disadvantages
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U n iv ersity of
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spets reilrae retfa segnahc ot dnopser
6
C/A
.6 petS
evoba spag
slliks ot eud ecnatsiser esiminim spleh hcihw
egnahc lliks dna ruoivaheb fo gnidnatsrednu
3
C/B
C/B
.5 petS
.4 petS
evitcejbo
eht gnidnatsrednu dna gniyfiralc ni devlovni
2
D/B
.3 petS
.2 petS
.1 petS
Bates model
Kotter and
Schlesingers
model
ACTIVITYFEEDBACK
spets reilrae retfa segnahc ot dnopser
.6 petS
evoba spag
slliks ot eud ecnatsiser esiminim spleh hcihw
egnahc lliks dna ruoivaheb fo gnidnatsrednu
retaerg rof wolla ot troffe DRH elbaredisnoC
.5 petS
.4 petS
evitcejbo
eht gnidnatsrednu dna gniyfiralc ni devlovni
.1 petS
.2 petS
.3 petS
Bates model
Unit 8 Managing Change: Culture and Performance
Kotter and
Schlesingers
model
ACTIVITY
Spend a few moments identifying what the key HR policies might be that
contribute to change and what impact they will make. (Hint: you might like to
review the HR planning framework and the question of demand and supply of
skills and competence.)
ACTIVITYFEEDBACK
Education
Communication
Participation
and
involvement
U n iversity of
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Negotiation
and agreement
Coercive
methods
CASESTUDY
Let us now look at a change programme managing the transition, worked out
using OD process in a real life setting.
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After having been through the case study, you will be asked to apply OD to
your own organisational setting.
First read the following example of OD from Hampshire County Council (Note
the case study is interspersed with material relating this case study to other aspects
of this module or to new areas of teaching relating to this unit. Where this is done,
the text is shown in italics.):
Example: Hampshire County Council
OD is a process based on change. It relies on re-educative strategy through
experiential learning. Hampshire County Council used a range of role-playing
and simulation exercises to bring about a change in the way people thought
about their roles and services in the surveyors department, linking
performance directly with the culture of the organisation.
Hampshire County Council surveyors department engaged in a process of
simulation and role play to consider attitudes to and belief and values about
change. To become more business focused, the first stage of experiential
development involved role-play in the following stages. Employee groups
completed the following tasks:
Unfreezing.
Developmental.
Transitionary change activity.
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488
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How did the consultants gain a real life perspective of what the culture was like at
Hampshire County Council? Only so much can be gained from off-site exercises and
their advice needed to be based on a rich diagnosis of status and information to set
targets for change. Much data can be collected from surveys and questionnaires but
the consultants in the Hampshire case believed this was not enough. They
developed the practice of gaining a better insight by forming a cultural snapshot.
HAMPSHIRE COUNTY COUNCIL, THE STORY CONTINUED
Lisney & Allen (1993) take this a stage further and show how development
processes take place at Hampshire County Council, which are an excellent
example of the process consultation and OD process in practice.
Managers with an engineering background in particular want abstract concepts
translated into concrete images. Many staff, too, found it easier to describe
their perceptions of the department in graphic rather than abstract terms. Staff
were asked to draw pictures in answer to questions. One question asked of
staff was to draw a picture of working life. One staff member drew a picture of
a ship being tossed around in rough seas with managers not on the bridge
looking ahead strategically but sheltering down below. This was a vivid way of
gaining insight into employee feelings and perceptions of management style.
Another metaphor for the method that was adopted was that of a holograph: a
three-dimensional picture you can walk around and view from different angles.
Each employee is part of this picture, but each sees it from a different
perspective. Ask just one person to describe the scene and a two-dimensional
picture will result. Talk to staff throughout the department and the sum of their
perceptions creates the rounded image.
The plan, therefore, was to interview a cross-section of staff and supplement
this by direct observation, all to be undertaken by the external OD specialist to
ensure the assessments were not unwittingly biased by too close an
involvement in the change programme.
The observational element consisted very simply of standing in corridors, looking
at what was going on, loitering with intent to understand. Interviews involved staff
from every level who responded to an introductory letter which explained the
exercise, stressed that it was voluntary, and guaranteed confidentiality.
Each interview took over an hour, was friendly and non-threatening in style,
encouraged staff to speak freely about the department, and had three stages. In
the first stage the emphasis was on familiar ground: a description of the
persons work, significant people and typical working incidents. Next,
interviewees were encouraged to describe the department as they thought a
visitor might see it. The final stage went deeper and sought meanings behind
the way things were seen to be done. Interviewees were invited to describe
their perceptions of the department by drawing pictures, a technique that
produced a rich and illuminating range of metaphors.
When the interviews were completed, the consultants task was to identify the
common themes that represented the shared culture of the department. These
perceptions could be reported back to top management without breaching the
U n iversity of
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QUESTIONS:
With the example from Hampshire County Council in mind, think of your
current organisation, or a previous organisation that you have worked for or
one that you know very well.
1.
2.
3.
4.
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CASESTUDY
Read the case study below :
Organisation development in British Telecom
by Colin Price and Eamonn Murphy
A good deal of attention has focused, in recent years, on excellence as a
desirable goal for organisational zeal (and, indeed, passion!), and on the
Japanese and American companies who have shown the way by sustaining
very high standards over many years. Inevitably the implication of much of the
research has been despite the carefully expressed caveats of the various
authors that one can achieve similar successes by imitating the most attractive
characteristics of these top companies. The plain fact is that success is only
likely to result if the desired future state of the organisation is visualised with
sufficient clarity and the hard work of getting closer to it is done each working
day by the managers and staff who are committed to a shared vision of the
future. This article describes the methodology, results and lessons learned
from the management of an organisational change programme which has
concentrated on this less glamorous and more painstaking approach.
The Organisation
British Telecom Western London District (BTWLD) is a major operating unit of
British Telecom employing over 6,000 staff and having a turnover of several
million. BTWLD provides telecommunications services to both residential and
business users over approximately one fifth of the area of Greater London. The
District is structured in a relatively traditional way, having a District Board and
Divisions within the District for Business Systems, Consumer Products,
Network Business, Marketing, Finance and Personnel/Support Services.
The need for change
BT has been subject to radical change over the last few years. Those changes
include privatisation, liberalisation and deregulation; increasing competition
U n iversity of
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B. W here do we
want to be?
A. W here are we
now?
The where are we now? question was answered by the Board analysing, in
some depth, data gathered by the consultants through extensive individual
interviews, group interviews and questionnaire application. The data was
collected from all levels of management, together with representative samples
of employees. The results were certainly interesting and produced quite a
stimulus for change. The dimensions of organisation culture that gave greatest
cause for concern were:
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mirrored in the behaviour of Board members and their senior managers. The
characteristics must be evident in:
a)
deeds and not just words this means the use of personal time in being
seen to participate actively.
b)
W here do we
want to be?
F Inter-divisional
.
problem solving
forums
D. Skill development
G. Regular climate
surveys
A. Team building
E. Employee involvement
programmes
C. Communications
programmes
W here are we
now?
B. Objective setting
Figure B. The fishbone, showing strategy.
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a)
Team Building has generally followed the action research model data
collection on an inter- and intra-group basis, feedback to whole teams
and actions arising out of the energy created as a result of feedback.
The Finance division, for example, were able to take a long hard look at
how they were meeting the needs of the business and local managers
and established a sufficiently clear focus to provide a more customer
orientated service in a short space of time at a point where it was
particularly valuable for them to be able to do this (devolved budgets,
increased local autonomy, etc.).
b)
c)
d)
495
processes, clear divides between work hierarchies, etc but little genuine
progress can be made until large numbers of staff become committed to the
changes. So far only small numbers have been involved in workshop events and
climate surveys. These surveys suggest that much more work needs to be done
to make the necessity for change more evident and the opportunity of
involvement more real. The next planned step is to hold a series of interactive
seminars with the District General Manager during which the current business
realities will be discussed and staff will have the opportunity to explore the
implications for them and their work.
So is it working?
The OD programme does seem to have been of significant help so far.
Evaluation results from each activity show extremely positive results,
subjective evaluation from senior managers is overwhelmingly positive, and
commercial performance is well up (coincidence or causal?).
But the real test of success is being capable of responding to continual change in
the environment. We are not at that stage yet. We are getting there. One thing
is sure though that the organisation and the consultants have learned many
lessons from the strategy. Here are just a few:
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The installation of a steering group who can grasp the right moment
when refreezing can happen when enthusiasm is still high and
workable strategies have been established to take the next few
practical steps is one way of refreezing. In our case this group
consists of several line managers who are located in key operational
situations in each division across the District.
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QUESTIONS:
1.
2.
3.
4.
5.
What lessons can be learnt from this case in relation to your prior work
on Unit 6?
6.
At the point where the case stops, how successful had the organisation
been in your view?
CASESTUDYFEEDBACK
1.
2.
3.
498
Many of the internal forces working against change are detailed in the
second paragraph. The external features are essentially drivers for
change. In addition the surveys revealed some important forces for
change emerging from the inner context that can be developed and
form the basis of the change programme. Notably a dedication to
customer service. There is a keen sense of organisational loyalty that
can form the basis of building a commitment to support change and
align new value systems. The surveys identified recognition of the need
to change and a willingness, which as we will see is one of the key
facilitators of change.
U n iv ersity of
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5.
You will have reinforced you views on the relationship of the purpose
of change in achieving business objectives. You will have reviewed how
a sustained mix of change strategies are necessary combining
communication, education, participation and HR systems, and how
such changes are used to unfreeze and reinforce planned change. The
case illustrates the need to address resistance through behavioural
interventions at the individual and group level. The complex and
dynamic relationship of consultants during a change programme is well
illustrated by the case and the role of the internal management. A range
of factors supporting successful change is identified.
So what are the problems faced and lessons learnt with this
programme? The lessons learned by the consultants and managers give
us an indication. One of the key points would be keeping a sense of
direction over long periods and overcomplicating change for
employees. This is where a frequently cited criticism comes in, that is,
the use of jargon and gimmicks which are cynically received by
employees. Starting with change at the top is clearly important but an
over reliance on this can create a top dependence when you want to
build commitment and empower staff. It is important to consider the
need for bottom up involvement and commitment in change. Similarly
the lessons of the case demonstrate the great possibilities for slipping
back and over dependence on consultants, which becomes apparent
when the consultants start to stand back and the level of line manager
ownership is fully tested. The client needs to take ownership of the
change and related implementation as soon as the recognition and
commitment has been achieved.
6.
499
Clear priorities.
A clear problem.
Available data.
Limited people involvement.
Limited timescale.
Clear issues.
Unbounded problems however tend to involve:
Varied interests.
Unclear problems or no clear solutions.
Not knowing what needs to be known.
Uncertainty.
Complicated and contextual issues.
HR issues and problems tend towards the unbounded.
To address the complex issues of problem resolution, how we
implement change becomes as critical to the success as the selection of
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2.
3.
4.
5.
Stage 1
denial
Stage 2
defence
Stage 3
discarding
Stage 4
adaptation
Stage 5
internalisation
performance
self-esteem
U n iversity of
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Individual intervention
Coaching and counselling approaches to performance and
development are likely to engage staff in reviewing their own
needs and reflecting more on how others see them. Jointly
explaining learning objectives becomes an important process
issue.
2.
Group activities
The process of teamwork is critical to understand internal
communication patterns, processes of decision making and
member satisfaction with this. Leader/member roles, methods of
conflict resolution, cooperation, concerns for member welfare, all
require analysis.
3.
Intergroup activities
These involve, as we saw from the Hampshire Council example,
enabling teams to be able to confront perceptions and differences.
Mabey & Pugh (1997) describe how the HR facilitation must help
the groups to go through a number of phases:
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Organisational activities
These are normally associated with attitude surveys based upon
a number of criteria, for example, work design, work satisfaction,
satisfaction with communication, decision making, leadership
and so on. This is increasingly being extended to include
feedback from outside the organisation via customer/supplier
service feedback techniques that seek to give a view of the
customer perception. Clearly 360degree appraisal is an exercise
that can be incorporated into this wider view of survey feedback
techniques. Business Excellence and the European Foundation for
Quality (EFQM) offers a useful framework for evaluating an
organisational internal perspective against criteria which gives a
holistic view of the effectiveness of the organisations strategy.
ACTIVITY
Learn about the EFQM model by visiting the EFQM website at:
http://www.efqm.org/model_awards/model/excellence_model.htm
The EFQM model can be a powerful tool for participative feedback and policy
making. Organisations have choices in using the techniques at all levels and
using it as a basis for setting change agendas and setting project and team goals.
It also provides a useful ongoing index that can be reviewed on a regular basis
with full feedback from the results. This fits the notion of organisational survey
and benchmarking, as this can be compared across organisations.
U n iversity of
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ACTIVITY
What constitutes success?
a)
b)
How would you convince them that engaging your services might lead
to sustained change?
ACTIVITYFEEDBACK
a)
You might have come up with a list containing the following factors for
the facilitation of successful change management:
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- you are independent and can therefore gain the trust of staff.
- it is easier for you to collect soft behavioural data that staff
may not divulge to management.
- you are less reliant upon people within the organisation for
your future work success, therefore you can develop a more
objective view.
505
So far we have implied that to be able to gain trust at all levels of the
organisation, an external facilitator may be necessary. We have also
implied that an external facilitator may also be critical in helping the
organisation, including its senior managers, to understand fully the
complexity and nature of the change required, the unlearning that we
discussed in Unit 5. Indeed, the ability to give feedback and alert senior
managers to their need to change behaviour can only be done from
outside the organisation. In most change situations such as introducing
new budget systems, introducing new capital equipment or a
marketing campaign, the project sponsor and the expertise are clear.
This is not so with culture change where management may equally be
part of the barriers to change.
ACTIVITY
Spend a few minutes considering the relative merits of using the following types
of people for leading change projects. Note down the possible advantages
below each heading.
Line manager
506
External HR consultant
U n iv ersity of
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ACTIVITYFEEDBACK
You might have suggested the following advantages:
External HR consultant
knil
snoitasinagro rehto
seitiroirp
evitcepsrep
Line manager
,seuqinhcet fo egdelwonK
citylatac
tsilaiceps ;seitilibisnopser
dna sisongaid ni esitrepxe
ecruoser namuh fo yreviled
seigetarts
As was hinted at in the earlier British Telecom case, the reality is that a
partnership exists. Organisations require internal support and require
external project management skills to take up ownership of the change
after the consultancy intervention. Very often consultants are criticised
for telling the organisation what it already knows, charging a lot of
money and walking away unaccountable for the outcome! This unit will
hopefully allow you to appreciate the skill of a consultant, who helps
the organisation to find out what it knows or doesnt know, which may
have been deeply hidden. External consultants can help the
organisation to unlearn (Unit 6). Also the consultants skills extend to
helping the organisation to agree, decide on and implement the
solution. No wonder the organisation can argue that they did it and
wonder at the value of the consultant! It is arguable that without the
facilitating skills, the organisation would not be where it is.
We have noted the importance of change agents, and the invaluable role
external consultants can play. However, it must be emphasised that,
U n iversity of
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READINGACTIVITY
Refer again to Chapter 13 of your key text, The Strategic Managing of Human
Resources, Edited by John Leopold, Lynette Harris & Tony Watson, FT Prentice
Hall.
Note, in particular, the three management development typologies advocated
by Alan Mumford:
Type 1: informal managerial - accidental process
Type 2: integrated managerial - opportunistic proceses
Type 3: formal management development - planned processes
Summary
This is a wideranging and important unit for the module. This unit
focuses on one of the central pillars of SHRM, the ability to assess and
mobilise intangible assets (culture) towards more effective
organisational performance. It is central to the development of long
term organisational capacity to change. It is not just about changing the
organisation, but allowing the organisation to learn the skills of
clientdriven change. This is a core competence for any organisation.
The unit is also crucial to the core focus of SHRM, that is:
1.
2.
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REVIEWACTIVITY1
This first review activity relates to a case study which helps us review the
practical implications of change and the relationship to SHRM.
This is a lengthy task and you will need to set aside an hour or so to address the
issues. It will involve you in drawing down material from all aspects of the unit.
Read the case study that follows. Then imagine that the Council has asked you
to act as a consultant to review progress to date. In particular:
1.
2.
The Council asks whether you feel that the change programme has
been successful or not. Particular attention should be given to the
criteria involved and the time-scale. The quoted observation of
Goodman and Dean may be instructive in this regard.
3.
You are then asked to review the steps involved in the introduction and
implementation of the programme, with a view to identifying any
possible errors or weaknesses (the contents of Table 1.1 may be useful
in this regard).
4.
We end the case with the two options facing the Council. Which
approach would you recommend they use, and why?
5.
U n iversity of
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509
CASESTUDY
Source: Martin G and Beaumont P (1996) Organisational Change and Human
Resource Management: Progress to Date? in McGoldrick A (ed) Cases in
Human Resource Management Pitman Publishing
Introduction
The organisational culture metaphor has been of growing importance in
illuminating the processes of organisational change (Morgan 1986, Brown
1995), although it is not without its critics (see, for example, Anthony 1993).
The increased popularity of this perspective has had two major effects. First,
there has been an enhanced recognition of the fact that the processes of
organisational change involve much more than simply changing formal
organisational structures; and second, changes in human resource management
practices (HRM) have almost invariably been an important dimension of the
change programme.
Background to the case
The latter development, however, has not been without its controversies and
debates. Initially, attempts to produce organisational turnaround via a new or
changed set of HRM practices produced considerable debate regarding what
were the individually most powerful levers of change, and in what particular
order or sequence they should be used for maximum effectiveness. For
example, were changes in compensation/reward practices a more powerful
source of change compared to replacement and promotion within the ranks of
management (Beaumont 1993, pp 50-1)?
More recently, this debate has entered a new phase, with important questions
being asked about the overall approach to or model of the change process. The
traditional model of change consisted of the following key elements:
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511
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egnahc
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U n iversity of
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513
514
U n iv ersity of
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Mission
We shall lead the way to new horizons for the city of..., where the quality of life makes people proud to
stay
Values
Communications
1
Change
Organisation
ot stpada hcihw noitasinagro gnipoleved ,gninetsil ,gnirac a fo erutluc eht seulav licnuoC ehT
.egnahc
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Recognition
People
.evil ew hcihw ni tnemnorivne eht dna enoyreve rof noitaredisnoc dna tcepser wohs lliw eW
.ytilauqe dna ytingid ,ssenriaf fo tnemniatta eht eulav eW
Individual
.laitnetop lluf rieht gnihcaer ni meht troppus lliw dna slaudividni fo tnempoleved eht eulav eW
dna saedi ssucsid ot modeerf rieht dna meht fo detcepxe si tahw fo egdelwonk slaudividni eulav eW
.sweiv
Team
.krowmaet hguorht ytic eht rof slaog ruo eveihca ylno nac ew eveileb eW
.ytlayol fo gniretsof eht dna gnidliub-maet eulav eW
lliw ew hcihw no snoitca ruo fo traeh eht ta ytic eht fo elpoep eht stup hcihw noissim ruo eulav eW
.degduj eb
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series of public, corporate and departmental launches were held over time
involving presentations, the distribution of documentation and
question/answer sessions.
The second step in the change programme involved a variety of policy/practice
initiatives concentrated in the two-year period from March 1993 to March
1995. These were essentially as follows:
1.
2.
Business planning. This was introduced into all divisions of the Council
with each department within the divisions required to produce an
annual Action Plan. These were to be linked to the five-year corporate
planning framework. All Chief Officers attended full-day workshops on
each of the following: leadership, mission and values, business (or
leadership) planning, and performance indicators.
3.
4.
Team briefing and teamworking. Team briefing was introduced into all
major divisions, and each department was encouraged, with the help of
facilitators, to develop high-performance work teams which would
involve empowering staff at all levels.
5.
Finally, it is worth noting what the change programmes did not involve.
Changes in reward/compensation arrangements were absent from the
programme, and the degree of change in organisational structures was very
limited, at least, beyond that of delayering (see Eccles 1994, pp 204-17).
In summary, we have a large-scale, though fairly conventional organisational
change programme of the corporate-wide, senior management-led,
attitude-change type. The question then becomes, what has been its impact?
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The initial leadership strategy document had undertaken to audit the changes
every two years, and in 1994 the first such assessment was undertaken.
The assessment exercise: Key Findings
The key findings presented here arise from the staff/employee audit
undertaken in late 1994. In considering the findings presented, the following
points should be noted.
This assessment was undertaken by a group of academics, rather than
the original management consultants involved in the change
programme.
The questionnaire developed by the academics included many of the
same questions used in the original (1992) benchmarking survey so that
comparisons over time could be made. However, some additional
questions (mainly biographical ones) were included, in order to
facilitate examination of any revealed differences across the workforce
as a whole (see Table 1.5).
The response rate to the questionnaire in 1994 was 64 per cent
(compared to the 42 per cent in the original benchmark survey)
although this varied considerably between divisions. In general, a low
response rate came from the manual-dominated divisions (e.g. public
works 30 per cent, parks 55 per cent), with much higher return rates
coming from the white-collar divisions (e.g. housing 78 per cent,
planning 80 per cent).
For reasons of space, the full set of tabulated responses to all the questions
asked cannot be presented here. However, some of the key findings obtained
for the Council as a whole are set out in Table 1.4.
In considering the significance and implications of these findings it is worth
noting the following observation (Goodman & Dean 1982, p 229):
An act is not all or nothing; it may vary in terms of its persistence, the number of
people in the social system performing the act, and the degree to which it exists
as a social fact. The problem in some of the current literature on change is the
use of the words success or failure. This language clouds the crucial issue of
representing and explaining degrees or levels of institutionalisation. Most of the
organisational cases we have reviewed cannot be described by simple labels of
success or failure. Rather we find various degrees of institutionalisation.
In interpreting the results of any employee attitude survey there are a number
of points which should be borne in mind (Beaumont 1993, pp 165-74). First,
such a research instrument can, by definition, produce only a snapshot involving
a single-point-in-time set of results. Second, complex, multi-dimensional
constructs cannot be probed in any in-depth, qualitative fashion. Third, the
overall levels of satisfaction obtained are particularly sensitive to the precise
wording of individual questions. And finally, there is likely to be considerable
variation in the answers between different parts of the workforce. In general,
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Table 1.4 Assessment of the change programme: some key findings (workforce as a whole)
.licnuoC eht fo noissim eht tuo tca dna dnatsrednu sreganam
dna seugaelloc hcihw ot tnetxe eht gninrecnoc snoitpecrep ni tnemevorpmi tnerappa on saw erehT
.9
Mission
.erofeb naht elbahcaorppa erom gnieb sa nees ton era sreganam dna ,detroper era stnemtraped
nihtiw swolf noitamrofni ni tnemevorpmi tnacifingis on ,syevrus kramhcneb eht ot derapmoC
.8
Communication
.sehcaoc sa sreganam fo ecnamrofrep eht dna tnempoleved reerac mret-regnol gninrecnoc stsixe
noitcafsitassid hguohtla ,fo devorppa dna deton si gniniart fo ytilauq dna tnetnoc eht ni htworg ehT
.7
Individual development
.detroper gnieb stnemtraped ni srekrow dna sreganam neewteb tirips
maet fo esnes elttil htiw ,emitrevo enilced a laever gnikrowmaet evitceffe gninrecnoc snoitpecreP
.6
Teamworking
.emit revo denilced ,gnihtyna fi ,sah snoisiced noitseuq ot ytiliba dna saedi wen
fo tnemegaruocne noitacinummoc ,noitatlusnoc fo level eht htiw noitcafsitas eeyolpme ,lareneg nI
.5
.4
Recognition of achievement
.snoitseggus ekam ot meht gnigaruocne ni rotcaf
rojam a neeb dah emehcs eht taht tlef tnec rep 03 ylno hguohtla ,tnemevorpmi rof snoitseggus
edam evah ot demialc tnec rep 14 ,emmargorp eht fo erawa erew ffats fo tnec rep thgie-ythgiE
.3
.2
Organisational commitment
)derewsna noitseuq ralucitrap
eht no gnidneped( tnec rep 36 dna tnec rep 57 neewteb degnar noitcafsitas fo level llarevo ehT
.1
for instance, women workers and older workers report relatively higher levels
of satisfaction a result which has been attributed to their (lower) levels of
expectation. Such variation was certainly a feature of this survey, with some key
findings being reported in Table 1.5.
Unit 8 Managing Change: Culture and Performance
deubmi eb ot ylekil erom erew sedarg lanoisseforp ni seeyolpme dna sreganam roines ,ffats redlO
.1
taht eveileb dna licnuoC eht fo egami evitisop a evah cilbup eht taht leef ,noissim fo esnes a htiw
.sremotsuc morf kcabdeef ot snetsil ylevitca tnemtraped rieht
eht gninrecnoc snoitpecrep evitagen erom yltnacifingis dah stsop detomorpnu ni seeyolpme launaM
.2
.3
.4
.eriannoitseuq eht tuohguorht ycnednet lareneg a saw siht ;srekrow elamef naht
dna srekrow launam ,srekrow elam yb edam neeb evah ot ylekil ssel erew snoitseggus tnemevorpmI
.5
.6
naht noitcafsitas fo slevel rewol detibihxe yllausu rotces etavirp eht htiw noititepmoc ni stcartnoc
eht dna smuesum dna seirellag tra sa hcus slanoisseforp yb deffats ylniam erew hcihw snoisivid
.tnemtraped stcetihcra
Table 1.5 Variation in responses within the workforce: some key findings
The contents of Table 1.5 generally suggest that the change programme has
most positively impacted on the already converted or the most easily
converted groups of employees. In short, the results suggest that the notions of
a management culture and an organisational culture are not one and the same
thing (Anthony 1993).
The current state of play
The material set out in Tables 1.4 and 1.5 was fed back by the academics, albeit
in much greater detail than here, to the Council in early 1995. The Leadership
Strategy Group of the Council then considered two options. One was to use
the Councils usual internal communications media (the staff newsletter and
briefing groups) to convey the results and findings back to staff/employees. The
other option was to use a more specialised survey feedback approach seeking
possible responses and suggestions at the individual departmental level.
Now answer the questions that were posed to you as Consultant at the
beginning of this review activity.
REVIEWACTIVITY1FEEDBACK
1.
519
Change takes time and whilst early success is important, we should not
read too much into this. Formal changes may have been well
integrated; for example, structural change, communications and
management roles. There is a sense of expert-led imposed change at
present. Are there too many policy initiatives for people to cope with?
Low response rate to the questioning may suggest growing alienation.
Not much progress has been made on the bottom up and sideways
initiatives yet. Team spirit is declining and critical understanding of the
mission, central to OD and the alignment of values, is not in place. How
can the organisation take the change to new levels? Check out again the
Pugh Matrix and related techniques and the clarity of the message of
the desired culture.
3.
4.
5.
REVIEWACTIVITY2
Much of the casework has served to reinforce our knowledge of change
management. This is particularly so for the final case exercise (in the last review
activity). However, to round off the module check your progress by answering
the following questions.
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Question 1
What are the three perceptions for the intention to change? How will this
influence management strategy?
Question 2
What sort of criteria might we use to measure or understand culture that
might be shared and communicated?
Question 3
What are the generic and specific steps associated with planning change in an
OD model?
Question 4
Identify three key change strategies and rank them in order of importance for:
a)
b)
Question 5
What is the relationship of culture to performance? How might we evaluate the
impact?
Question 6
What is the difference between organisational and corporate culture? Is culture
changeable?
Question 7
What key SHRM policies are likely to contribute to effective OD driven change?
Question 8
What is the overlap between SHRM and OD?
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REVIEWACTIVITY2FEEDBACK
Answer 1
Change is:
a)
b)
threatening or desirable
c)
deviant or normal.
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Answer 7
The key policies are learning based approaches to development and
performance management.
Answer 8
The overlap between SHRM and OD involves:
Integration.
Whole organisation.
Process/policy driven.
Competence and process based.
Learning.
Emphasis on capability.
Capacity to change.
Flexibility and commitment/ownership.
Employee relations.
References
The Strategic Managing of Human Resources, edited by John Leopold,
Lynette Harris & Tony Watson, FT Prentice Hall, 2004 (Key text for
this module)
www.csr.gov.uk DTI Corporate Social Responsibility Unit.
www.csracademy.org.uk DTI Corporate Social Responsibility
Academy.
Bate (1990) A description, evaluation and integration of four
approaches to the management of cultural change. British Academy of
Management Conference, Glasgow, September, cited in Open
University (1992) B884 Human Resource Strategy, Unit 5 p140 141.
Bate P. (1992) The impact of organisational culture on organisational
problem solving in Salaman G et al (eds) Human Resource Strategies.
California, Sage
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