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Lecture Summaries 2011-12

EBH300 Critical Perspectives on HRM
Dr Geraint Harvey

EBH300 Critical Perspectives on Human Resource Management

Dr Geraint Harvey

EBH300 Critical Perspectives on Human Resource Management Lecture Summaries Dr Geraint Harvey g.harvey@swansea.ac.uk Room 433, Grove Extension (ext. 3037)

Introduction Welcome to your final year at Swansea University School of Business and Economics and to EBH300 Critical Perspectives on Human Resource Management! In this module I will be critically analysing a variety of ways in which HRM is believed to contribute to the performance of the firm. This handbook contains a written summary of each of the lectures. These provide you with a basic summary of the arguments I present they are not comprehensive and further reading is required. If you are not competent in using the Digital Library, then please seek help as you will be required to use this resource to locate the recommended readings. I have also posted a second document in the Course Documents section of the modules Blackboard site containing Powerpoint slides that cover the content of each of the lectures (excluding those weeks in which you have a formative assessment). These will not reflect the presentations you will see in the lecture dont be alarmed. I will be using Prezi in the lectures, but the Powerpoint slides will cover the same material. The slides are designed to facilitate your learning on this module and contain suggestions for further reading. The module will be split into Section A, which focuses on Strategic HRM, and Section B that covers the outcomes of HRM. In the exam (January 2012) you must answer two questions: only one question from each of these sections. We will discuss the syllabus further in the first lecture. I hope you enjoy the module (as much as it is possible to enjoy a module)! Harvey.

Adding Value the Resource Based View of HRM

Introduction This title of this topic, Adding Value, reflects the central theme within the Resource Based Theory (RBT) of HRM. At its heart is the proposition that the human resource, or human capital pool, is potentially a source of sustained competitive advantage for the firm. Exponents of this view argue that while the human resource meets three of the four criteria required of a resource for it to provide the firm with a sustained competitive advantage (rareness, inimitability and non-substitutability), it does not necessarily meet the fourth - that the resource must be valuable. Champions of this view claim that HRM practices are the keys to unlocking this potential and ensuring that the human resource is valuable. It is an attractive argument, but there are numerous problems with this approach. Ultimately, there is a fundamental problem in linking HRM with a SUSTAINABLE competitive advantage. However, this theory is useful in understanding ways in which HRM contributes to the competitive advantage of the firm.

The AMO Rubric of Performance Before discussing the resource based theory (RBT) of HRM, it worth beginning with an account of the AMO rubric of performance (see Boxall and Purcell 2008: 5) that underpins the RBT of HRM and several other theories of HRM that will be covered on this module. Lets begin with three reasons why an employees performance may be poor. First, it is possible that the employee is simply unaware of how to perform well in their task or in some way lacks ability to perform well. Second, it is possible that the employee might choose not to perform well: that they might be unwilling to do so. If the employee is not properly motivated, then they might choose not to do so. Indeed, an employee might be unwilling to use their skills as a sanction against the firm that feel has in some way offended them. Finally, it is quite possible that the employee would be unable to perform well because the nature of their job is restrictive and precludes discretion, thereby forcing employees to do the most basic task. The AMO rubric explains employee performance as a function of three dimensions. It is argued that performance improves when employees have the ability (A) to perform the task required of them, i.e., the performance of the employee is directly linked to the knowledge, skills and abilities of the employee, which is a central feature of the resource based theory of HRM, simply because the employee is able to do the job only when they understand what to do and how to do it. Employee performance improves when they are motivated (M) to work, that is, when the employee is willing to contribute additional effort. Motivation is very important in explaining the way in which HRM contributes to firm performance through the employee. Finally, employee performance is dependent upon the opportunity (O) for employees to do so. It is important to note that each of these dimensions must be achieved in order for performance to increase. For example, without the ability to contribute, motivation and opportunity are wasted because the employee is unable to contribute. Without motivation, the employee maybe inclined not to take advantage of opportunities to use their abilities in order to contribute. And without opportunity for expression increased employee ability and motivation are redundant as the employee who possesses the skills and is willing to use them cannot do so.

The Resource Based View of the Firm Resource based theory (RBT), also known as the resource based view (RBV) of the firm because of its questionable credentials as a theory (see Priem and Butler 2001), has been highly influential in the strategic management literature. Advocates of HRM, such as Patrick Wright1, have drawn on resource based theory to explain the way in which HRM works to enhance firm performance. RBT is based on the notion that the firm possesses a series of resources that provide that firm with a competitive advantage. Penrose set out her theory on the growth of the firm. She argued that the firm was an organisation of productive resources, distinguishing two types, namely physical and human resources. Resources have been described as any feature of the firm with value creating properties (Boxall and Purcell 2008: 88).

Patrick Wright is a doyen of the HRM debate and luminary of the Institute of the Centre for Advanced Human Resource Studies (Cornell University). You will find many interesting working papers at the CAHRS website. You will also find many scholarly articles on HRM published by Patrick Wright.

This might include aspects of the business that are not directly owned by it, such as the talents and interactions of the people who work in it. By a resource is meant anything which could be thought of as a strength or weakness of a given firm. More formally, a firms resources at a given time could be defined as those (tangible and intangible) assets which are tied semi-permanently to the firm. Examples of resources are: brand names, in-house knowledge of technology, employment of skilled personnel, trade contacts, machinery, efficient procedures, capital etc.. (Wernerfelt 1984: 172) Jay Barney has argued that resources have the potential to provide the firm with a sustained competitive advantage, rather than a transitory advantage, if the resource met certain criteria: if the resource in question was: 1. valuable (for example, in terms of increased productivity, efficiency or quality of work); 2. rare (so that competitors could not simply buy the resource in); 3. inimitable (so that the resource could not simply be copied); and 4. non-substitutable (so that competitors were not simply able to replace the resource with an alternative substitute). The Resource Based View of the Human Resource Wright and his colleagues (1994) have applied Barneys (1991) RBV framework to HRM to explain the way in which the latter works to provide the firm with a sustained competitive advantage through its people. They begin by defining the human resource as the pool of human capital under the firms control in a direct employment relationship (Wright et al. 1994: 304). Using the RBV framework, they illustrate the ways in which the human resource meets the three criteria required for a resource to provide a sustained competitive advantage. First, they argue that the human resource is potentially valuable, as both the demand and the supply of labour are heterogeneous (Wright et al. 1994: 306). By this they mean that firms require people to complete different jobs requiring different skills (demand) and that people differ in the type and level of their skills (supply). Possession of the necessary skills means that the possessor is [ONLY] potentially of value to the firm. We will return to this shortly. Second, the human resource is believed to be a source of sustained competitive advantage because it is non-substitutable. Many firms have mechanised completely the role of many personnel. Assembly lines are now often operated by machines rather than people. However, the authors suggest that the human resource is, indeed, non-substitutable despite such developments because of the ability for the employee to learn new skills: if a firm has obtained individuals with high levels of cognitive ability, then constant training in state of the art technological knowledge ensures that the resource does not become obsolete (Wright et al. 1994: 312). People can retrain to develop new skills whereas machinery might become outdated just think about advances in technology over recent years and the technology that has consequently become obsolete. Technology has changed. However, people are still required to operate the new technology. Moreover, people are responsible for developing new concepts and ideas people are creative.

Third, Wright and his colleagues (1994: 307-8) suggest that the human resource is rare. Ostensibly, they note, this seems like flawed thinking for wherever unemployment exists then there is a surplus of labour. Indeed, there has been for some time efforts to limit or eliminate the need for specific skills by designing simplified jobs to which specific skills are irrelevant. Think about McDonalds and the elimination of the need for any food preparation ability. Fiona Wilson describes the standardised work process at this famous fast food business thus: A bible, an operations and training manual, demonstrates the proper placement and amount of ketchup, mustard and pickle slices on each type of hamburger available. Lights and buzzers tell the crew when to take French fires out of the fat, the French fry scoops specify the size of the portion and allow the worker to fill a bag and set it down in one continuous motion, specially designed ketchup dispensers squirt the correct portion of ketchup. Crew are also told in what sequence the products customers order are to be gathered, what arm motion is to be used in salting the batch of fires, and to double fold each bag before presenting it to the customer. Only minor variations in the execution of its routines are allowed. Customers are referred to as guests so that all customers are potentially treated with respect and courtesy. (Wilson 1999: 42) It is true that jobs such as the ones described above, often labelled McJobs, might be performed by almost anyone and in this context it is fair to question the rareness of the human resource. Nevertheless, many jobs require a higher level of contribution from employees, necessitating higher levels of knowledge, skills and abilities (KSA). Wright and his colleagues (1994: 308) cite evidence that demonstrates that cognitive ability is normally distributed in the population and is therefore, rare. As the requirement for KSA increases, so does the rarity of the human resource. Boxall and Purcell (2008: 99) comment that the most common indicator of KSA, and consequently the potential value of the employee, is cognitive ability. This is because firms require employees to be flexible and adaptable to deal with the dynamic competitive environment and the subsequent changes in the workplace. Studies have shown that high cognitive is rare and so the firm with the highest levels of cognitive ability are those with the more valuable resource. Fourth, the competitive advantage achieved through the human resource is, perhaps more so than any other organisational resource, inimitable because of the barriers to imitation. A resource that provides a sustained competitive advantage must be inimitable so that the competitor is unable simply to copy the resource. Barney (1991) identifies several barriers to imitation. The first of these is described as the unique timing and learning specific to the firm. This barrier emphasises the importance of historical events and opportunities that do not repeat themselves exactly. Members of the firm learn from these unique events and are able to exploit these unique opportunities. Advantage, Barney claims, is not secured at a single point in time but is the cumulative outcome of historical decision making and opportunity. Ultimately then, sustained advantage is not the result of a single decision, but the outcome of a series of decisions made throughout the history of the firm. The notion of unique learning is specific to the human resource (can an inanimate resource learn?) It is argued that through learning, the human resource becomes more effective, whether by making better choices because of mistakes made previously or by working more efficiently, for example. This is extremely important for it ensures that competitors are unable to imitate any resource that provides a competitive advantage, especially in the case of the human resource, without having experienced the very same unique events and exploited the very same unique opportunities. Wright et al. (1994: 309) claim that a firm might have accumulated a workforce with a high cognitive ability over time, by

selecting skilled employees and by developing the abilities of existing employees. Over time this culture of skills development may produce a distinctive way of working entirely specific to the firm one which a competitor is unable simply to copy. The second barrier to imitation is the social complexity of the firm. Boxall and Purcell (2008: 92) describe social complexity in this way: As firms grow, they inevitably become characterised by complex patterns of teamwork and coordination, both inside and outside the firm... Productive work communities, such as outstanding schools and universities, take time to build and are inherently complex systems. The network of these internal and external connections is a kind of natural barrier to imitation by rivals, a prime reason why firms in some industries try to recruit an entire team of employees. This appears to be the inspiration for Muellers (1996) conception of social architecture, which refers to the deeply embedded routines of interaction within the firm. Wright et al. (1994: 310) comment that the relationships developed over time are simply too complex to dissect. In basic terms, the argument runs that a deal between two firms (A and B), struck by representatives of either firm is not necessarily only the result of the relationship developed between the two people involved. The deal may have come about because the representative of firm A has a long standing relationship with other members of firm B, or has previously experienced good customer service. The social complexity of these relationships obfuscates the source of the competitive advantage and so competitors are not simply able to replicate it. A third barrier to imitation is causal ambiguity, that is the ambiguity surrounding the exact cause of the firms competitive advantage. It is argued that it is not clear, especially in terms of the human resource, what it is precisely that creates the advantage. For example, the competitive advantage of the firm may result from a particular service provided. A firm is able to offer that service because of the way in which members of the firm cooperate, the product is not *merely+ the sum of separable outputs (Alchain and Demsetz 1972, cited by Wright et al., 1994: 310). A consequence of this causal ambiguity is that it may be extremely difficult to identify the exact source of the competitive advantage. What about HRM? It is important to reiterate that HRM are not the source of sustained competitive advantage. HRM policies practices are neither rare nor inimitable they might be adopted easily and those of successful firms might be readily copied. However, HRM contributes to the sustained competitive advantage of the firm through their impact on the human capital pool. They write, although HR practices are not themselves sources of sustained competitive advantage, they play an important role in developing sustained competitive advantage through the development of the human capital pool, and through moderating the relationship between this pool and sustained competitive advantage by affecting HR behaviour (Wright et al. 1994: 318). HRM works in a number of ways. For instance, selection, appraisal, training and compensation systems might be used in order to attract, identify and retain high quality employees (Wright et al., 1994: 319). Thus the firm is able to generate a human capital pool with high cognitive ability. In order to ensure the human resource realises its potential, HRM policies, such as *r+eward systems, communication systems, training programmes and socialization systems, might be used to encourage employees to behave in a valuable way, from the employers perspective such as increasing productivity.

Problems with the RBT of HRM There are a number of problems with the RBT of HRM presented by Wright and his colleagues (1994)2. These relate to the sustainability of the competitive advantage HRM provides and are best explored with reference to the criteria for a resource to provide a sustained competitive advantage. Rareness in order for the human resource to provide a sustained competitive advantage it must be rare. People are rare if they have high cognitive ability. Therefore, a sustained competitive advantage is only achievable through a workforce with high cognitive ability. That these people are rare implies that the overwhelming majority of the labour force does not have high cognitive ability. Therefore, the argument suggests that the firm is unable to achieve a competitive advantage through the majority of its employees. Moreover, that HRM only works through the rare employee with high cognitive ability suggests that it is, in fact, irrelevant for the majority of the labour force as it can provides no benefit. Non-substitutability there is a problem with the notion that people are non-substitutable, even those that possess high cognitive ability and are consequently rare. In describing the contribution of HRM, Wright and his colleagues suggest that through sophisticated recruitment and selection, HRM provides the firm with a rare human capital pool. Therefore, whereas employees may not be substitutable by technology, they may be substituted by other employees. Inimitability most damning, perhaps, is the semantic problem whereby is it nonsensical to suggest that a replicable managerial initiative, such as HRM, can provide the firm with a sustained competitive advantage. Whereas Wright et al. (1994) point out that it is the inimitable human resource, or human capital pool, that is the source of sustained competitive advantage and not HRM, which is imitable, they then proceed to illustrate how HRM might provide the firm with a rare human capital pool with high cognitive ability. At this point there are two alternatives: either HRM works or it does not. 1. If HRM works, first, through sophisticated recruitment and selection that provides the firm with a rare human capital pool and second, by the use of reward system, training and so forth, the firm is able to achieve a competitive advantage through its people. In this instance, sustained competitive advantage is impossible because any competitor is able to adopt HRM, without needing to know the specific source of the competitive advantage, because such an advantage appears to be an inevitable outcome. There may be barriers to imitation, but there is no need to imitate the successful firm because the cause of success is its human capital pool, which HRM is able to generate and cultivate for the firm. 2. If, on the other hand, HRM does not work, then what is the purpose of HRM? Usefulness of the RBT of HRM Although there are significant problems with this theory of HRM, Boxall and Purcell (2008: 106) consider the benefits of the theory for our understanding of the way in which HRM works. Interestingly, they do not dispense with the possibility that HRM is able to provide the firm with a sustained competitive advantage, despite the difficulty of defending this position.

There is also a robust critique of the RBV more generally by Priem and Bulter (2001).

The theory is less problematic if the benefits of HRM are discussed in terms of competitive advantage rather than sustainable competitive advantage. First and foremost, Boxall and Purcell (2008: 107) note that the RBV of HRM is useful because it acknowledges the importance of people in providing the firm with a competitive advantage. Second, the concept recognises the potential value that people offer the firm and examine the ways in which HRM adds value through the human resource. To this end, recruitment and selection enables the firm to obtain excellent human talent. The benefit of HRM does not end there. Returning to the AMO rubric of performance, through training and development HRM might also develop the skills of the employ and their ability to add value to the firm. Incentives provided by reward and appraisal systems potentially motivate employees to add value. Finally, work reorganisation and employee involvement and participation schemes offer the opportunity for the employee to add value.

Suggested reading: Barney, J. (1991) Firm resources and sustained competitive advantage, Journal of Management, 17(1), pp. 99-120. Boxall, P. and Purcell, J. (2008) Strategy and Human Resource Management, Basingstoke: Palgrave. Chapter 4. Wright, P., McMahon, G., and McWilliams, A. (1994) Human resources and sustained competitive advantage: a resource-based perspective, International Journal of Human Resource Management, 5(2), pp. 301-26.

I also refer in this document to: Mueller, F., (1996) Human Resources As Strategic Assets: An Evolutionary Resource-Based Theory, Journal of Management Studies, November, 33 (6), pages 757-785. Priem, R.L. and Butler, J.E. (2001) Is the resource based view a useful perspective for strategic management research? Academy of Management Review, 26(1), pp. 22-40. Wernerfelt, B. (1984) A resource based view of the firm, Strategic Management Journal, 5(2), pp. 17180. Wilson, F. (2004) Organizational Behaviour and Work, Oxford: Oxford University Press.

Supporting Strategy the Best Fit Theory of HRM Introduction The title of this topic, Supporting Strategy, reflects the central theme within the best fit theory of HRM. The theory of best fit prescribes a contingent approach to HRM and argues that for the firms HRM strategy to be successful it must fit with various features of the firm such as its stage of development or its business strategy, for example. We will focus primarily on the proposition that HRM must fit with business strategy, and in so doing, HRM works by encouraging employees to demonstrate behaviours that support the business strategy. For example, Ryanair is an exemplar of the cost leadership strategy firm. The HR practices support this strategy by seeking cost reduction from its employees such as paying a low basic wage and charging its staff both for training and their uniform. In contrast, Google is a knowledge economy firm that adopts a differentiation approach. As such it requires highly skilled and innovative people who are able to develop new products in a highly dynamic environment. Consequently, according to the theory of best fit, to achieve success through its people these firms would benefit from very different HRM strategies. Within the theory of best fit, HRM is a strategy led activity, as opposed to HRM as a strategy leading activity. This means that HRM does not influence business strategy, but that it is designed to support the strategy of the firm. The theory of best fit is a compelling argument. We will, however, consider the problems associated with this conception of how HRM works. You will also find an excellent summary in chapter 3 of Boxall and Purcells (2008) Strategy and Human Resource Management.

The Principle of Best Fit There are several themes within the broader best fit perspective. Ultimately, proponents of best fit argue the firm can achieve a competitive advantage through its people when the HR strategy is appropriate for, or fits with, certain aspects of the firm. Best fit HRM theorists have argued the need for: external fit that HRM is appropriate for the firms stage of development (Baird and Meshoulam 1988); internal fit that the HR practices implemented are complementary so that they reinforce one anther rather than contradicting and undermining one another (Baird and Meshoulam 1988; see also Baron and Krepps 1999 and Bowen and Ostroff 2004); and fit with business strategy that HRM must support the business strategy (Schuler and Jackson 1987), e.g. by reducing costs or by encouraging employees to demonstrate behaviours desired by the firm. This document will now consider each of these in turn. External Fit Baird and Meshoulam (1988: 121) write of external (or vertical fit) that, *t+he human resource management activities are most effective when their stage of development matches the stage of development of the parent organisation (1988: 121). HRM activities, like systems and structure, should fit the firm so that more flexible styles of HRM would better suit new start-up firms, while more formal, professionalized HRM would be necessary for mature and larger firms with a greater number and range of employees. The authors propose five stages of development, each requiring different HR activities. These are summarised below. At the outset of operations, or initiation stage, the new organisation will be managed by the founder. This fledgling organisation will be characterised by informality and limited products and markets. At this stage of development there is very little need for sophisticated HRM, which extends only to cover salary administration, hiring and terminations. Indeed, at this stage, a discrete HRM department or function is unnecessary as the owner or founder is likely to be involved in all activities and to make all decisions, including those pertaining to HRM. The latter may be devolved to line management during stage one as the firm develops. During the second stage of development, the functional growth stage, the organisation will be characterised by technical specialisation, dynamic growth, expanded product lines and markets. Consequently, the organisation will require a more formal structure to deal with this growth and the attendant increase in operational complexity. HR activities will have been devolved to line management who will, subsequently, require assistance in, for example, finding the necessary quantity and calibre of people. As the number of staff increases, people management becomes more complex and there is a far greater need for a formal HRM department or function to deal with all aspects of HRM, especially recruitment and selection, compensation and training.

The third stage, labelled controlled growth, will be characterised by professional management and diversified product lines. Due to competitive pressures, measurement and control of process and cost becomes more important. The twin objectives of cost effectiveness and productivity become extremely important at this stage. HRM activities such as performance management become very important so that management is able to monitor and amend employee performance. Stage four, or functional integration, is marked by further diversification leading to the creation of teams or divisions. HRM is necessary to manage the decentralisation process and to provide coordination between the sub-functions. HRM activities such as planning and compensation management become very important to reduce duplication and to ensure employees are striving to meet organisational goals. The fifth and final stage, strategic integration, requires that the firm is flexible and adaptable. At this stage, HRM is devolved: line management take responsibility for getting the best from employees within their span of control.

Internal Fit The concept of internal fit recognises that elements of HRM can be contradictory. For example, teamworking promotes co-operation and privileges collectivism. In contrast, individual performance related pay provides rewards employees who meet personal objectives, goals or targets. This practice undermines collectivism. If both practices feature in the same HRM system then this system will send out mixed messages to the employees about what is valued by the firm. Confused by what it is the firm values, employees are unlikely to engage in valuable behaviours. And so, any benefit is lost. Alternatively, theorists have warned against firms repeating costly practices that add no further value to the firm. For example, a firm that already operates a reliable and effective recruitment and selection process will gain very little by implementing further practices such as assessment centres or psychometric testing in the recruitment process. Baron and Krepps (1999) identify three types of desirable consistency in HRM, so that it conveys a very clear message to the employee. The first is defined as complementary fit, or single employee consistency, and involves ensuring that where firms use expensive selection approaches they also invest in training and promotion policies that aim to reduce labour turnover, certainly among key employees. If key employees exit the firm then investment in recruitment and selection is wasted. Therefore, investment in recruitment and selection should be accompanied by investment in other areas of HRM so that the firm is better placed to retain key staff, thereby reaping rewards from their investments. Moreover, the success of recruitment is dependent upon the type of HRM system used by the firm. Firms with better employment policies are for that very reason more attractive to employees (think about Google). The second desirable consistency, among employee consistency, recommends achieving equity in the treatment of a group of employees. The authors prescribe standardised employment conditions, at

least for the same occupational group, so that the HRM system is fair. This is important because of the possible negative impact of perceived inequity. Adams (1965?) has argued that perceived fairness motivates employees, who contribute (or provide input) based on their experience of outcomes, in terms of remuneration, for example, not only for themselves but for their colleagues. Not only will the employee adjust their contribution if they perceive inequity in terms of their own input and outcomes, but also if they feel that their input and outcomes and those of their colleagues are inequitable. That is, employee A may be expected to reduce their input if they feel that a colleague is either receiving the same benefits for less work, or increased benefits for the same amount of work relative to employee A. Finally, temporal consistency is achieved by maintaining a consistent approach across a period of time. The way in which an employee behaves in work depends not only upon their treatment at the current point in time, but also on their experience. For example, positive attitudes and behaviour might be expected among employees of a firm with a positive history of employment relations that has recently implemented extensive development and increased remuneration. However, it is less likely that these policy changes would lead to a similar response among employees of a firm with a track record of poor employment relations and antagonism between management and staff. This perspective is further elaborated by Bowen and Ostroff (2004), whose notion of HRM system strength, relies upon the complementarity of HRM practices. Bowen and Ostroff suggest that HRM works by relaying a signal or message to employees concerning those behaviours desired by the firm, from which the firm derives competitive advantage. HRM policies, they aver, indicate to employees how they should act. The fulcrum of their argument is the necessity for a strong situation, or strong HRM system, to ensure that employees interpret the HRM signal in the manner intended. Drawing on evidence from prior studies, they comment that employees interpret the messages sent by HRM idiosyncratically whereby two employees interpret the same practices differently (Bowen and Ostroff 2004: 206). It is, for the authors, the strength of the HRM system that leads to convergence in understanding of the message sent by HRM and, consequently, desirable employee behaviour. Fit with Business Strategy A final strand of the best fit theory of HRM advocates aligning HRM with the business strategy of the firm. Miles and Snow (1984) identify three types of strategic orientations: defenders, prospectors and analysers. Defenders operate in narrow and relatively stable product market domains with limited product line and succeed through efficiencies (e.g. McDonalds). Prospectors continually search for product and market opportunities and aim to compete through innovation and prime mover advantages (e.g. Google). Efficiency is a much lower priority for the prospector. Finally, analysers have stable operations but constantly monitor the market for opportunities to emulate creative rivals through fast follower strategies (e.g. IBM). These strategic orientations require very different HRM strategies. For example, staffing and development strategies vary between the three. Defenders opt to manufacture the skills they require by training in-house: training that is entirely focused on the skills needed for the specific and repetitive task in hand. Prospectors opt to buy in the skills they need because their focus and orientation changes frequently due to the dynamism of their environment. It

would be extremely difficult if not impossible to anticipate and prepare the skills needed. While analysers adopt a strategy that is a mix of both HRM strategies identified. The business strategy requires occasional change and so in-house training to perform the regular tasks is supplemented by buying in as and when required. In terms of performance appraisal, defenders focus on the operational process, seeking standardization and consistency. A key objective of the business is to achieve quality through working in a prescribed way. The work is marked by comprehensive standard operating procedures (SOPs). Ultimately, in this kind of firm it is the means (the way in which people work) that is monitored as much as the end (the output). In contrast, prospectors focus on the outcome rather than the process by which this has been achieved. People in the firm are expected to contravene traditional ways of working, if more productive ways can be exploited. Whereas the process is important to the analyser, performance management will reflect elements of both systems. As for remuneration, incentive pay in the defender firm will be based on meeting SOPs and (piece rate) objectives. Reward equity will be internally focused and pay does not reflect the competitiveness of the firm, simply how well the person is doing the job (e.g., personal performance related pay). Prospectors have an external focus, aiming for external equity in order to retain knowledge workers, and so that pay reflects how well the company is performing (profit related pay). Once again, the analyser firm would adopt a reward system that reflects elements of both discussed above. A similar framework has been developed by Schuler and Jackson (1987). They utilise the generic strategies discerned by Michael Porter (1985). Porter advised that firms pursue a distinct competitive strategy: that of cost leadership achieving the lowest costs in the sector (for example, easyJet, the largest low cost airline in the UK); or differentiation achieving a quality advantage over competitors (for example, British Airways, the UK premier full service airline). Porter advises that firms should try to avoid getting stuck in the middle of any of these strategies as this will inevitably lead to problems. Schuler and Jackson argue that these strategies require specific behaviours from employees. For example, if management chooses a competitive strategy of differentiation (innovation) this would call for high levels of creative, risk-oriented and co-operative behaviour. The HRM policies required to achieve this would include sophisticated recruitment and selection to deliver highly skilled individuals, and work organization that emphasises autonomy, encourages risk and tolerates occasional failure. However, if the firm wants to achieve cost leadership then the emphasis would be on a more austere recruitment and selection process, and training and development focused on attaining specific, job related skills. The Rutgers model of HRM, as it is called, holds that HRM is a business strategy led activity and that the HRM policies introduced should support the strategy of the firm. For example, a cost leadership strategy is most suitably served by a HRM system ensures that the employee conforms to rules (control is important), and so appraisal is based on rules and behavioural conformity. Employee skill is likely to be low and labour turnover is tolerable. Therefore HR planning is unnecessary and focused on job analysis (work is also to be reduced to its most rudimentary level). There is no necessity for an elaborate remuneration system and reward will be unsophisticated. In order

to achieve the cost reduction strategy, base pay will be low. Internal equity will be important and so the HRM system should ensure consistency and fairness across employees within the firm. External equity in pay, or pay that is equal to that of employees with the same role in other firms, on the other hand, is unnecessary as employees can be replaced easily and so labour turnover is tolerable. Incentives, if any exist, will be basic (for example, piece work). Employee development will be based on the job in hand to make employees more effective and efficient at what they do. There is unlikely to be any beyond the job development as this will incur unnecessary cost. In contrast, an appropriate HRM strategy for the differentiation firm will include appraisal based on long term goals rather than immediate results. Appraisal will be commitment based rather than control oriented. Employee autonomy will be important and people management will emphasise the importance of large complex projects rather than discrete tasks. HR panning will be focused on the long term. The firm will be heavily populated by knowledge workers, with high levels of tacit understanding, and so staff retention is a priority of the HRM system. HR planning, recruitment and selection are crucial in order to ensure that new employees fit with the firm as well as with the job. Person specification is extremely important because the role of employees is subject to change in such a dynamic environment. The reward system will demonstrate high external equity to enhance continuance commitment3, so that employees are discouraged from exiting the firm, at least for better pay. Reward incentives will play a crucial role and will promote innovation. Job security will be high and a central objective of the HRM system will be to enhance job satisfaction and affective commitment4 to retain tacit knowledge. Training and development will be focused on the long term aimed at developing skills that may not be immediately applicable but which may be of benefit. The Problems The strategic fit argument is compelling. There are, however, problems with a HRM strategy that is entirely based on a particular business strategy. Boxall and Purcell (2008: 64-73) present a thorough critique of the various best fit theories of HRM. On the Rutgers Model of HRM they comment that the response of the employee is taken for granted and that the model discounts the possibility of an emotional response to HRM strategy. This is especially problematic for a firm that adopts an austere HRM strategy to support its cost reduction business strategy. Such a HRM system is likely to inspire dissatisfaction in the workforce, members of which might express this dissatisfaction subsequently through exit (i.e., leaving the firm) or voice (e.g., imposing sanctions on the firm). And, after all, labour turnover is only ever tolerable if the vacancy left by the departing employee can be filled easily. A cost reduction HRM strategy has the potential to repel employees. If the firm pursues policies and practices that are extremely unattractive to potential employees then they may be less likely to want to work for the firm. Sanctions imposed by workers can be extremely problematic. For example, the cabin crew
3

Continuance commitment is commitment based on a rational evaluation of the transactional benefits of remaining with the firm.
4

Affective commitment refers to the emotional bond the employee forms with the firm. This form of commitment is not based on a rational assessment of the benefits, but on a sense of attachment.

strike at British Airways in 2010 cost the airline an estimated 7 million per day. Employees of Wal Mart, the US retail convenience giant, is facing an ongoing campaign by former and existing staff, which has contributed in part to the failure of the firm to establish itself in areas of Europe because local residents have resisted its plans. Boxall and Purcell also argue that there is a lack of sophistication in the description of competitive strategy within models that link HRM with competitive strategy. They suggest that many successful firms demonstrate elements of both cost reduction and differentiation strategies. Moreover, firms often have complex workforces, which require multiple HR systems (2008: 69). An airline is a good example with which to explore the idea of multiple HR systems. The airline employs a wide range of employees from baggage handlers to check in staff and from cabin crew to flight crew. Within the airline, very different HR systems are used for each of these groups. In the same way, the authors question the validity of linking HRM to business strategy within a multinational company that operates across diverse national boundaries. They cite evidence to demonstrate that effective policies in one national context are problematic in others. Boxall and Purcell also identify the temporal dimension to business strategy: that the strategy of the business may change over time. When the business strategy changes so must the HRM strategy. Even with a change of HRM strategy, there is no guarantee that employees will subscribe to the changes. As mentioned above, employees do not always respond automatically and rationally. Such a change might lead to discontent. A final criticism focuses on the contextual factors that affect the choice of HR strategy irrespective of the business strategy (see Boxall and Purcell 2008: 72). They argue that the choices made by management are in fact restricted by a number of factors and that these influence management choice. They categorise these are economic and socio-political factors. If the HRM strategy is based solely on economic factors, then it is perhaps possible to achieve fit. However, they argue that the considerable influence of socio-political factors restrict management in their approach to people management. Benefits The theory of best fit fundamentally ignores the human in human resource management and the complexity of both business and HRM strategy. However, it demonstrates the significant role played by people in the success of the firm. Also, it suggests a way in which HRM works to provide the firm with a competitive advantage. At its heart is the proposition that HRM sends a signal to the employee about what is valued by the firm and how the employee should behave. Whereas there is no guarantee that employees will respond as planned, this represents a coherent account of the contribution of HRM strategy to the competitive advantage of the firm.

A very good summary of this debate can be found in chapter 3 of Boxall, P. and Purcell, J. (2008) Strategy and Human Resource Management, Basingstoke: Palgrave. Other useful sources are: Baird, L. and Meshoulam, I. (1988) Managing Two Fits of Strategic Human Resource Management, Academy of Management Review, 13(1), pp. 116-128. Schuler, R. and Jackson, S. (1987) Organizational Strategy and Organization Level as Determinants of Human Resource Management Practices, Human Resource Planning, 13(3), pp. 125-142. Schuler, R., Jackson, S. and Storey, J. (2001) HRM and its Link with Strategic Management, in Storey, J. Human Resource Management: a Critical Text, London: Thomson. I have also referenced: Baron, R. and Krepps, D. (1999) Strategic Human Resources: Frameworks for General Managers, New York: Wiley. Bowen, D.E. and Ostroff, C. (2004) Understanding HRM-firm performance linkages: the role of the strength of the HRM system, Academy of Management Review, 29(2), pages 203-221. Meyer, J.P., and Smith, C.A. (2000) HRM Practices and Organizational Commitment: Test of a Mediation Model, Canadian Journal of Administrative Sciences, 17(4), pp. 319-331. Meyer, J.P., and Allen, N.J. (1991) A three-component conceptualization of organizational commitment, Human Resource Management, 1, pp.61-89. Zhou, J. and George, J.M. (2001) When job dissatisfaction leads to creativity: encouraging the expression of voice, Academy of Management Journal, 44(4), pp. 682-696.

Enriching Work: Job Enrichment and the Theory of Best Practice Introduction Previously, I have presented theories about the way in which HRM works that largely ignore the views and response of the employee. An alternative theme within the debate, which follows the human relations school of thought, focuses on the human in the human resource and suggests that the firm is able to achieve a competitive advantage through its people if the system of people management, or HRM, improves the employee experience of work (or enriches work) and in so doing creates the conditions for the employee to go the extra mile for the firm. The additional benefit of HRM, from this perspective, is that it also contributes to the social legitimacy of the firm because it necessarily benefits the employee. And so, HRM leads to mutual gains in that it provides benefit for both the employee and the firm. In this document I will consider several key contributions to the job enrichment debate (N.B., the job enrichment debate predates the emergence of HRM by around 20 years). I will also illustrate how these have influenced thinkers within the field of HRM and discuss Pfeffers theory of best practice along with the Bath model of HRM. The problems associated with the theory of best practice will also be considered and its contribution to our understanding of how HRM works will be evaluated. Job Enrichment The concept of job enrichment emerged in the late 1950s and 1960s and is associated with the work of Frederick Herzberg. Hitherto, traditional managerial thinking privileged money as the primary motivator: it was assumed that people would respond in a rational economic way to monetary incentives (so that the offer of additional financial rewards would guarantee enhanced performance from employees). Herzberg argued that a financial incentive may well encourage somebody work harder to achieve a target at a specific point in time. However, such an incentive would be necessary every time additional effort is required. And that, for Herzberg, simply isnt motivation. Herzberg viewed money an inadequate motivator and focused, instead, on other aspects of work as a source of motivation. He argued that employees wanted more from their work than financial reward. N.B., whereas Herzberg claims that money is, by itself, an ineffective motivator, he also acknowledges its importance in the employment relationship. Satisfactory pay is a key hygiene factor and is required in order to prevent dissatisfaction if dissatisfied, then the employee is unlikely to be motivated. Instead, he focused on intrinsic factors and claimed that employees would be motivated by things like a greater challenge from work, greater control over the organisation of their work, and recognition for having completed the job well.

He developed what is widely known as the two factor theory of motivation: two factor because job characteristics could be categorised either as motivators or hygiene factors. Hygiene factors include salary, job security, working conditions and interpersonal relations, and determine whether the employee experiences dissatisfaction (and consequently demotivation) or not. Hygiene factors are not a source of satisfaction or motivation. These factors are known as extrinsic factors because they are imposed by management and have no link with the job itself: they are extrinsic, or external, to the job. The motivators on the other hand, such as the opportunity for personal growth, recognition, responsibility and a sense of achievement, determine whether the employee derives satisfaction from their work. These factors are intrinsic to, or inherent in, the job and are the source of motivation. For Herzberg then, both hygiene factors and motivators are required in order to motivate employees, and consequently, to enhance firm performance. The HRM system deals with both the hygiene factors and motivators. Consider how the HRM practices you covered last year, such as performance appraisal, reward management, employee involvement and training and development operate as hygiene factors or motivators. Job Characteristic Model Hackman and Oldhams (1980) job characteristics model (JCM) is built on the concept of job enrichment. They claim that work is enriched if it has five (core) job characteristics. These characteristics lead the employee to perceive three desirable psychological states. Employees who experience these psychological states are then more motivated towards higher levels of productivity and quality, and lower levels of absenteeism and labour turnover. It is important, the authors maintain, that the employee experiences meaningful work so that the employee cares about what they do. Three job characteristics are necessary to instil this psychological state. First, the employee must have a considerable variety of activities to perform so that they have the opportunity to demonstrate their skill variety. Second, the work must also offer considerable task identity, in that it involves the completion of a whole and identifiable piece of work (rather than a small part, so often the case with assembly line work). Finally, for work to be meaningful it must play a significant part in the development of the end product so that the employee is able to see their contribution in the final good or service. A second desirable psychological state is responsibility for outcomes of work. This is achieved by allowing the employee a high degree of task autonomy, or substantial freedom, independence and discretion in the scheduling of work and determination of the procedures used when carrying out the work. Free to use their discretion in the conduct of their work, the employee perceives an enhanced sense of responsibility for the output and for any problems that arise. Moreover, the employee is believed to derive a greater level of satisfaction in their work on successful completion of the task.

A third desirable psychological state is knowledge of the results of their work activities. This is achieved through effective feedback mechanisms so that the worker possesses information about the actual results of her or his performance. Consider how the HRM practices you covered last year, such as performance appraisal, reward management, employee involvement and training and development might improve the five job characteristics in this model. Hackman and Oldhams model develops that of Herzberg in one very important way. The job characteristics model incorporates an additional dimension - a set of factors that moderate the impact of an improvement in the five job characteristics on the psychological state of the employee. These moderators are: the knowledge and skill of the employee, the growth need strength of the employee and finally context satisfaction or satisfaction with the extrinsic facets of the job. If the knowledge and skill of the employee is deficient then the employee will be unable to perform the redesigned job effectively and so there will be no improvement in performance. The growth need strength of the employee, or the employees need for or interest in personal development, is important because the employee must have a desire to develop within their role in order to benefit from autonomy. If they have no interest in development, then an improvement in the job characteristics is unlikely to have any impact on the employees psychological state and consequently on their performance. Finally, Hackman and Oldham, like Herzberg, suggest that context satisfaction, or satisfaction with the extrinsic facets of the job, such as pay, working conditions and management style, has the potential to nullify the effect of job characteristics on the employees psychological state. By incorporating moderators in their model, Hackman and Oldham avoid the criticism based on a neglect of the psychology of individual difference, made of Herzbergs two factor theory. However, whereas this model responds better to the psychology of individual difference it ignores issues of context. For example, it has been argued that the JCM is of far greater relevance to higher skilled work than to low skilled work. Moreover, the model offers a narrow conception of the characteristics of work and does not provide for an emotional respond to work redesign, such as stress that might result from the additional responsibility.

Best Practice

Job enrichment involves redesigning work so that the employee is better able and more motivated to do their job. Pfeffers (1998) theory of best practice follows this logic, but he goes further to prescribe a set of best practices that equip the employee with the skills and opportunity to best perform their job and

motivate them to greater performance. In defining a universal list of best practices, Pfeffer contributes to the job enrichment debate by specifying precisely what management must do in order to improve work and thereby the performance of the employee. The practices are not context specific and so provide an advantage to the firm irrespective of its business strategy. Whereas the theory of best practice contrasts sharply with the theory of fit with business strategy (i.e., the Rutgers model of HRM), it is important to note that it is entirely congruent with the concept of internal fit (Baron and Krepps 1998). Pfeffer first produced a series of 16 best practices (Pfeffer 1994) that lead to a competitive advantage through the employee. He subsequently condensed this list to seven in a later publication (Pfeffer 1998). The first of these seven is employment security. Employment security is important, Pfeffer argues, because fear of losing ones job inhibits innovation and preparedness give discretionary effort to the firm. Likewise, job insecurity also impacts on productivity and efficiency and so it is relevant even for firms that have a cost leadership strategy. Pfeffer offers the example of the highly successful Lincoln Electric, a firm that between 1948 and 1998 had not laid off any staff. Throughout difficult periods the firm redeployed its workforce rather than make them redundant, for example, manufacturing staff were sent out into the field to sell products rather than make them. In order to guarantee employment security, he argues, the firm must have an effective recruitment and selection policy because it is important to get the right people into the firm in the first place. Employment security also builds trust and encourages employees to take a long term perspective of their jobs. The current financial crisis has been attributed to the sale of inappropriate financial products, such as mortgages, to people who were unable maintain repayments, and the problems this caused the financial system when resold creating toxic debt. Therefore, an example of advantages of encouraging a long term perspective among employees offered by Pfeffer has considerable contemporary resonance: In a bank that hires and lays off loan officers quickly to match economic fluctuations, the typical loan officer will worry only about booking loans just what they have typically been rewarded for doing. With employment security and a longer term perspective on the job, the bank officer may be more inclined to worry about the repayment of the loan and about building customer relationships by providing high levels of service. Although a specific loan officers career may prosper by being a big loan producer and moving quickly from one bank to another, the banks profitability and performance are undoubtedly enhanced by having people who take both a longer term and a more comprehensive view of their jobs and of the banks financial performance. This is likely to occur, however, only with the prospect of long-term continuity in the employment relationship. (Pfeffer 1998: 99) Pfeffer points out that employment security does not mean that the firm must retain poor performers. Rather, employment security means that employees are not quickly put on the street for things, such as economic downturns or the strategic mistakes of senior management, over which they have no control. (Pfeffer 1998: 100)

A second best practice, selective hiring, is afforded considerable importance. In order to get the right people the firm must: 1. Generate a large applicant pool through exceptional recruitment. Pfeffer uses the example of a Southwest Airlines (SWA) recruitment process which yielded 98,000 applications, from which 16,000 people were interviewed and only 2,700 (only around 3 per cent of the total recruitment pool) were hired. A recent estimate has it that Google receives around 3000 applications for work per day! 2. Clearly define the critical skills and attributes needed. To find the best people, the firm needs to be clear what they mean by best. 3. Fit the candidate to both the job and the firm, so that the employee has the suitable skills and personality. 4. Select on the basis of attributes that are difficult to change, so that these are congruent with the job and the firm. Pfeffer maintains that it is important to select on the basis of person specification or fit with the company (difficult to change) rather than whether they have the specific skills required or fit with the job (which are easier to train). Skills can be acquired, but attitudes are difficult to alter. Pfeffer offers the example of the experienced pilot who was rejected by SWA because he was rude to a receptionist. There are, Pfeffer argues, benefits of a comprehensive recruitment and selection process beyond simply finding the right person. He suggests that those who are selected after a rigorous recruitment and selection process are more likely to form an emotional bond with the firm, that is, they are likely to develop affective commitment because only those who truly wanted the job would have persevered through such a painstaking process. Moreover, such a process promotes the feeling among those selected that they really are part of an elite group. It is argued that they would derive satisfaction from having made it, which then manifests itself in increased motivation. A third best practice is the use of self managed teams (SMT), wherein workers enjoy greater autonomy and discretion, and this effect translates into intrinsic rewards and job satisfaction; teams also outperform traditionally supervised groups (Pfeffer 1998: 104). The advantages of SMT include: 1. a reduced need for, or removal of, supervision as hierarchical control is replaced by peer-based control. Peer based control is far more effective because people are less likely to let down a friend than they are to let down a supervisor. Also, SMTs increase the responsibility that the employee feels both for the work they do, thereby increasing concern with quality; 2. idea sharing and innovation as colleagues work together to develop more creative solutions to problems, rather than individuals doing the job their way; and 3. the removal of layers of the firm. Supervisors are no longer required, saving the firm money, while administrative functions are incorporated into the teams.

This last point appears to be inconsistent with employment security. However, Pfeffer comments that eliminating functions need not necessarily entail eliminating people from the firm. These people can be retrained and redistributed elsewhere in the firm. A fourth practice is high pay contingent upon firm performance. Pfeffer argues that this allows employees to focus on their job rather than worrying and complaining about their pay pay negotiations can be extremely time consuming and costly for firms. Contingent pay can take various forms, for example, gain sharing, profit sharing, stock ownership, pay for skill, team incentives and so on. Share ownership became very popular in the 1990s. Pfeffer argues that when employees are owners, they act and think like owners thereby investing more time and effort in the firm. Moreover, conflict between capital and labour can be reduced by linking them through employee ownership. At Starbucks, he notes, even part time workers receive stock options. It is suggested that an effective share ownership system can make employees feel as though they are entrepreneurs and that the firm is their business leading to higher levels of performance. Other alternatives include paying for skill acquisition (knowledge based pay), or pay for learning new skills. This is consistent with employment security as the multi skilled employee can be redeployed rather than made redundant. Contingent pay based on firm performance is important because it promotes a sense of equity if the firm performs better because of the labour of its workers then they should share in the success. This reward technique also motivates staff as the success of the firm is aligned with the employees own rewards. Moreover, it ensures that the firm is not tied into incentive pay that it may not be able to afford. A fifth practice is training, crucial because firms rely on the skills and initiative of front line employees to resolve problems, to initiate changes in work systems and to take responsibility for quality. Training is a necessary condition of maintaining a skilled and knowledgeable human capital pool. The sixth best practice is the removal of status distinctions. The presence of status difference in the organisation serves only to convey the message that some workers are not as valuable or valued as other workers. In order to ensure that members of the organisation feel valued, the reduction of these status differences should happen. This may be achieved in two ways. Status difference is conveyed symbolically, through the use of language (using exclusionist terms that few understand) and labels (titles, Mr. and Dr.), physical space (size and location of office) and dress (ties and uniforms). It is also conveyed substantively in the wage differential. Peffer claims that reduced status differential gives everyone a sense of common fate and purportedly increases commitment. Finally, Pfeffer identifies information sharing as important for two reasons. First, sharing of information on financial performance, strategy and operational measures conveys to employees that they are trusted. Second, it informs people about how they are able to contribute, after all, even motivated and trained people cannot contribute if they dont know how. An evolution of best practice is the Bath People and Performance model, developed by John Purcell and his colleagues at Bath University, which identifies the HRM practices that trigger organisational commitment and job satisfaction among employees. It is argued that these affective states encourage

discretionary effort (effort over and above that usually expected or required) and organisational citizenship behaviours among employees. Purcell and his team identify 11 HRM policy areas of import. This model incorporates elements of Pfeffers best practice and Hackman and Oldhams job characteristics model. In accordance with Pfeffers best practices, the Bath model includes job security; training and development; recruitment and selection; and teamworking. The Bath model also acknowledges the importance of information sharing, identifying involvement and communication as key to the successful HRM system. In terms of pay, Purcell and his team recognise the importance of achieving pay satisfaction among employees. Career opportunity and work life balance feature in the model as well as performance appraisal and job challenge/autonomy, which are central to the job characteristics model. Like this earlier model, the Bath model also identifies factors that moderate the impact of these practices on the psychological state of employees. The principal moderator in the Bath model is the front line manager (FLM), whose ability to engender an environment of encouragement, trust and respect in the work place is crucial to the effectiveness of HRM. Purcell and his team found that employee experience of HRM varied considerably based on the efforts of FLM to introduce the policy. For the Bath team it is the development of a conducive relationship between FLM and employees that determines the effectiveness of HR practices. Ultimately then, employees must be encouraged to buy into HRM they must feel that management are genuine, that they can trust management not to renege on agreements to training and job security in order for employees to believe in management and to believe in HRM. The Problems The best practice model is a laudable attempt to illustrate the benefits (to the firm) of creating work that is better for the employee, as the employee should, in return, offer additional effort to the benefit of the firm. However, it should be noted that employee participation, beyond financial schemes, is limited within this model. The degree to which employees have influence over work is omitted from the model. Employees are not given meaningful input into the work, but are nevertheless expected to respond in a positive manner. Therefore, this model of working might be far more problematic for the employee than a traditional work environment in which the employee is able to express their voice. Indeed, the model allows no room for collective representation or trade unions. It adopts a thoroughly unitarist perspective in the sense that it predicts a harmonious workplace in which there is no conflict of interests. Just what would happen to the employee who objects is unclear. Moreover, the theory is based on a positive response from employees who go the extra mile for the firm because of their improved experience of work. The theory is based on mutual gains. There is always the possibility that mutual gains are not possible. In the event of a financial crisis for the firm, cuts made are likely to impact on the employee. Consequently, employees are experience of work deteriorates and with it the additional effort made towards the goals of the firm. Boxall and Purcell (2008: 65) critique the model because of the ethnocentrism of best practice. For example, the best practices are derived from evidence of work within the US. There is very little concern given to diverse national contexts. Research has provided overwhelming evidence against a universal set

of HR practices based on national variations not only in law but also in cultural practices and management styles. Cultural norms and the unique history of different societies always make some difference to the methods of labour management, if not to the ultimate goal of employers for profit. Benefits The model very clearly demonstrates the ways in which HRM contributes to the performance of the firm through the employee. Moreover, it considers the impact of HRM on the employee and suggests that an effective HRM system will be beneficial to both the employee and employer.

Complementary reading Elements of this lecture can be found in chapter 3, once again, of Boxall, P. and Purcell, J. (2008) Strategy and Human Resource Management, Basingstoke: Palgrave. Other useful sources are: Fried, Y. And Ferris, G. (1987) The validity of the job characteristics model: a review and meta-analysis, Personnel Psychology, 40, pp. 287-322. Hackman, J. And Oldham, G., (1976) Motivation through the design of work: test of a theory, Organisational Behvaiour and Human Performance, 16, pp. 250-79. Huczynski, A., and Buchanan, D., (2007) Organizational Behaviour, Harlow: Pearson. Chapter 8 (for an introduction to Herzbergs two factor theory) and chapter 20 (for an introduction to the Bath People and Performance Model) Kinnie, N., Hutchinson, S., Purcell, J. and Swart, J. (2006) Human Resource Management and Organisational Performance in Redman, T. and Wilkinson, A. (eds) Contemporary Human Resource Management (2nd ed.), Harlow: Pearson. Pfeffer, J. (1998) Seven Practices of Successful Organisations, California Management Review, 40(2), pp. 96-124. Purcell, J. (2004) The HRM-Performance Link: When, How and Why does People Management Impact on Organizational Performance?, John Lovett Memorial Lecture, University of Limerick. (ON BLACKBOARD) Purcell, J., Kinnie, N., Hutchinson, S., Rayton, B., and Stuart, J. (2003) People and Performance: How People Management Impacts on Organizational Performance, London: Chartered Institute of Personnel and Development.

Strengthening Culture: HRM and Organisational Culture Introduction In this document I will be introducing the concept of organisational culture and how culture is believed to impact on the performance of the firm. Organisational culture is commonly used to discern the firms core values, set out by the founder and relayed to and shared by other members of the organisation. Advocates claim that culture conveys what is valued by the firm and might be succinctly described by a member of the organisation as the way we do things around here (Deal and Kennedy 1982). The strength of the organisational culture determines the degree to which the employee shares the firms core values. Sharing the values of the organization, the employee is more likely to experience affective commitment and thus will be more inclined towards greater effort in achieving organisational goals, which he or she holds as their own. Essentially then, it is proposed that a strong organizational culture encourages the employee to internalize the goals of the firm and work hard to achieve these because achievement of the firms goals is important to the employee. Several policies and practices associated with HRM are believed to strengthen organisational culture. However, as I will show later, organisational culture is associated with negative as well as positive consequences. Moreover, there is no consensus on this perspective of culture and critics have argued for a more sophisticated understanding of the concept that moves it beyond the control of management. Organisational culture It is generally recognized that organisations have something, whether it is described as a personality, philosophy, ideology, climate or culture, which goes beyond economic rationality and gives the organisation a distinctive identity. One perspective of organisational culture is that it encapsulates the values, beliefs and meanings created by the founder of the organisation, which are then espoused by management in the organisation and shared by members of the organisation5. These values, beliefs and meanings convey, to members of the organisation, the ways in which the organisation is unique and how it operates. In the 1980s, culture became an extremely popular focus for management consultants, with exponents such as Deal and Kennedy (1982)6 and Peters and Waterman (1982)7 claiming that almost every problem experienced by the organisation could be related in some way back to the culture of the firm. Advocates claim that organisational culture enhances performance because of its powerful motivational effect on the employee. Essentially, a strong culture encourages people to do a good job because they want to do a good job. They want to do a good job because they want the organisation to succeed. They
5

This perspective is one of several. It is the unitarist or structural functionalist perspective of culture. Corporate cultures: the rites and rituals of corporate life, Massachusetts: Addison-Wesley. In search of excellence: Lessons from Americas best run companies, New York: Harper and Row.

want the organisation to succeed because they share the same values, beliefs, objectives etc.. Peters and Waterman (1982:76) quote Nietzsche in their explanation of the motivational power of culture, He who has a reason why to live for can bear almost any how. Culture provides the why in the workplace. It provides members with the reason to do what is required of them because they share the values, beliefs and goals of the organisation what is important to the firm is important to the employee. Advocates also claim that a strong organisational culture renders supervision unnecessary because control is internalised and consequently, the employee effectively self monitors. Moreover, it has been argued that a strong culture can weaken trade union influence as culture aligns the employees goals with those of the organisation. The employee is then less inclined to seek third party representation to look after their interests because their interests and those of the organisation are the same. The absence of trade unions from the workplaces is viewed as beneficial by those who believe that trade unions inflate employee wages and obstruct management. There are other views of the role of the trade union as we shall see in later sessions. Also in the 1980s, Edgar Schein developed a model of organisational culture that remains widely used. Schein (1985) considers culture on three levels each distinguished by its visibility to, and accessibility by, non-members of the organisation. The most obvious and superficial layer of culture is labelled the visible artefacts of the organisation. These depict what is valued by the organisation. This level of culture is readily apparent to the outsider and includes such things as mission statements and employee dress code. A second level, organisational values, contains the beliefs widely shared by members and guide the organisation. One oft cited source of organisational values is the founder. Originally, a single person or small group has an idea for a new company and brings together a core of people who share the vision (or values). This group creates an organisation, brings in others and begins to build a common history. A third and final layer, consists of basic assumptions. Legge (1995: 189) writes of these that they are the underlying taken-for-granted assumptions that determine how group members perceive, think and feel. These assumptions are learned responses that originate in espoused values and have resulted in successful adaptive behaviour, such that the original values become so habitually validated that they drop from conscious recognition. The basic assumptions are invisible preconceptions and taken for granted understandings held by individuals with respect to human behaviour, the nature of reality and the organisations relationship to its environment. These are extremely difficult to access and are both the key to and present the greatest challenge to successful culture management according to Schein (1985). A strong culture will result from the coming together of people who share basic assumptions just as corporate culture initiatives can be undermined when people do not share the same basic assumptions. The three levels of culture interact. Visible artefacts convey organisational values, which generate shared values (obviously this is more easily achieved if the firm employs like minded individuals). Over time, these values are confirmed as basic assumptions, which influence the way in which the employee

behaves. The basic assumptions reinforce the values of the firm through the behaviour of the employee, which also then act as visible artefacts, i.e., a visible expression of the organisational culture. Whereas management is unable to manipulate basic assumptions directly, it is possible for management to manipulate values and visible artefacts, which influence basic assumptions. Therefore, this model suggests that management is able to influence firm culture.

Organisational Culture and HRM David Guest, a leading HRM scholar, proposes three ways in which HRM contributes to organisational culture through selection, socialization and enforcement (see Guest 1994). First, in conjunction with selecting people on their suitability for the job, people are selected on the basis of their fit with the organisation, i.e., how well their personality and attitudes are aligned with those of the firm. The strength of organisational culture depends on the homogeneity of group membership (the extent of shared values, for example) and the length and intensity of their shared experiences. The organisation is able to appoint like-minded people and the values of the firm are strengthened. Second, the employee learns about a company culture through the process of organisational socialization. Socialisation is the process through which an individuals pattern of behaviour and their values, attitudes and motives are influenced to conform to those seen as desirable in particular organisation. Formal socialisation involves inducting employees into the firm, instructing them on what is and is not acceptable and introducing them to the values of the organisation. Formal socialisation might take the form of employee induction, ongoing training and interaction with senior management. Finally, organisational values are enforced by reward systems and discipline. The employee may be rewarded extrinsically or intrinsically for conforming to the values of the firm and demonstrating the behaviours desired of employees. Alternatively, the organisation is able to discipline employees for behaving in ways that contravene its values. If the advocate perspective of organisational culture is accepted, then HRM is able to contribute to the performance of the firm by strengthening culture in the ways described above. However, it is important to consider alternative perspectives of culture and the potential dysfunctional consequences of organisational culture. Alternative Perspectives of Organisational Culture (and the Implications for HRM) Thus far, we have focused on what is commonly known as the functional perspective of culture. From this perspective, culture is seen as something the organisation possesses, or has. Consequently, management has some degree of control over culture. In contrast, others have argued that culture is not only an expression of managerial values, but that it comprises a variety of viewpoints and conflicts within the organisation. Culture is controlled by management. It reflects managerial values and strategy

and employee acquiescence, but also the dissent of employees and their conflicting attitudes. And so organisational culture is what the organization is. This is the social constructivist perspective. Linda Smircich has claimed that the organization could amend its processes, its systems and indeed the makeup or composition of its workforce. According to this perspective, Legge (1995: XX) writes that culture is a system of shared cognitions, of knowledge and beliefs, or as a system of shared symbols and meanings or even as a projection of the minds universal unconscious infrastructure. It is both produced and reproduced through the negotiating and sharing of symbols and meanings it is both the shaper of human action and the outcome of a process of social creation and reproduction. This perspective rejects the notion that culture possesses any objective, independent existence which imposes itself on employees: culture cannot be easily quantified or measured. Culture is produced and reproduced continuously through the routine interactions between organizational members. Hence organizational culture exists only in, and through, their social interactions. It is therefore, highly questionable whether management can manipulate or change culture. It does not mean that senior management have no control over culture, only that actions taken by senior management in terms of missions and espoused values will not necessarily have a uniform or the desired impact on employees, who will interpret the signals and contribute to the culture based on those interpretations.

Are Strong Cultures Desirable? If we return to the functional perspective once again, there is evidence that strong organisation cultures can be problematic. Peters and Waterman, who extol the virtues of culture, also point out the possible disadvantages of a strong culture. First, they note the possibility that a strong culture repels very good employees whose values are not congruent with the firm. In this way, the firm not only stands to lose high calibre employees, but the strength of the culture might undermine the recruitment process, driving away possible recruits. Peters and Waterman (1982: 77) state that, you either buy in or get out. Theres no halfway house for most people in *strong culture+ companies. One very able consumer marketing executive told us, You know, I deeply admire Proctor & Gamble. They are the best in the business. But I dont think I could ever work there The cultures that make meaning for so many repel others. In fact, the employee might respond to culture in a variety of ways aside from buying in to the culture, i.e., when the culture is effective in the functionalist sense, or exiting the firm because the employees values and those of the firm are different, i.e., checking out. Other responses include faking it, whereby the employee demonstrates the outward behaviour required because he/she knows they have to, but does not internalize the culture and this can lead to stress (see Hopfl et al., 1992). Finally, the employee may fight it. This leads to conflict in the workplace as the employee resists the culture. A potential consequence of this is that the employee checks out.

A second undesirable consequence of strong culture is organisational inertia. The strength of organisational culture is dependent upon the homogeneity of the workforce that employees are similar in that they share the same values. A disadvantage of workforce homogeneity is that it reduces beneficial conflict and stifles creativity and innovation. REF THOMAS Finally, a strong organisational culture can act as powerful obstacle to change. This is because employees fundamentally believe that the organisation is doing the right thing and in the right way. Consequently, any change will be resisted by employees who are faced with a challenge to what they believe in. It is extremely difficult to achieve change to the way things are done around here where there is a strong organisational culture. On this point, Legge (1995: 190) comments that, ...it is possible that a particular value may not affect all performance-related organisational processes in the same direction. Sharing meanings may have a positive integrative effect, but at the same time inhibit an organisations ability to learn and adapt. Organisational Culture and HRM Legge notes that there is causal ambiguity in the relationship between culture and HRM. Whereas it may be the case that HRM policies and practices inspire a distinct/powerful organisational culture, it is as likely, however, that the organisational culture determines the adoption of HRM policies. For example, a firm that has a strong people management culture might adopt widespread HRM policies and practices because it is in line with the culture. And so, organisational culture determines the HRM policies and practices implemented rather than HRM influencing the culture of the firm. Organisational Culture and Firm Performance Legge also points to the lack of empirical evidence that supports the proposition that strong cultures lead to high performance. Whereas successful firms with a strong culture have been identified in support of the link between culture and competitive advantage there has been no research into weaker firms that might also have a strong culture. She argues that in this absence of such data, we can speculate that strong cultures might be found in weak firms as well as high performing firms. Finally, Legge comments that firm performance is the result of numerous variables and so it is extremely difficult to measure the degree to which culture contributes to firm success.

Complementary reading Legge, K. (1995) Human Resource Management: Rhetorics and Realities, London: Palgrave. Chapter 6, (this is essential reading!) Huczynski, A., and Buchanan, D., (2007) Organisational Behaviour, Harlow: Pearson. Chapter 19 (on organisational culture). Den Hartog, D.N. and Verburg, R.M. (2004) High performance work systems, organisational culture and firm effectiveness, Human Resource Management Journal, 14(1), pages 55-78.

Guest, D.E. (1994). Organisational psychology and human resource management: towards a European approach, European Work and Organisational Psychologist, 4(3), pages 251-270. Morgan, G. (2006) Images of Organisation, London: Sage. Chapter 5 (on organisational culture). Thompson and McHugh (2002) Work Organisations: chapter 13 (on organisational culture and HRM).

Increasing Flexibility

There is no summary for this lecture. The following source covers all the material we will cover in the lecture. Legge, K. (1995) Human Resource Management: Rhetorics and Realities, Basingstoke: Palgrave. Chapter 5

Intensifying Work: The Labour Process and HRM Introduction In this document I will be discussing the labour process. I will introduce some basic Marxist principles and the contribution of Harry Braverman to the labour process debate. I will consider the changes to work organization introduced by Frederick (F.W.) Taylor and Henry Ford. I will also identify the similarities between HRM and the Principles of Scientific Management and evaluate the proposition that HRM is a means of intensifying and degrading the work of people in the organization. One view of HRM is that it enriches work, providing the employee with a more satisfactory experience, inspiring commitment and increased productivity. In direct contrast is the argument that HRM leads to productivity gains by intensifying the work of employees, thereby forcing them to work harder. The labour process (or intensification) theory of HRM suggests that firms reorganise work to intensify, and indeed deskill, the work of employees to achieve efficiency and a cost advantage, that benefits the firm but not the employee. In this way, HRM may be seen as an exploitative means of managing people that entails the simplifying, standardising and speeding up of work and as an extension of Taylors principles of scientific management. Taylor and the Principles of Scientific Management As a shop superintendent at Midvale Steel Company, Taylor observed that few machinists ever worked at their full capacity. He referred to this a natural soldiering, claiming that it was only natural, or instinctive, for people to take it easy. He also identified systematic soldiering, or purposeful and deliberate efforts to reduce the amount of work carried out in order to maximise employment. Systematic soldiering was inspired by the belief that an increase in output would result in redundancies. After all, if 40 people were able to do the work of 50 then 10 people may lose their jobs. Systematic soldiering was possible, Taylor argued, firstly, because of poor management control that enabled workers to work slowly and secondly, as a result of worker discretion over their choice of work method. Taylor claimed that the latter led to wasted effort as employees used untested and inefficient rules of thumb: that is, methods believed to be efficient rather than methods that had been scientifically proven to be efficient. Taylors aim was to structure work in such a way that it allowed the employee to work in the most efficient manner possible. He considered human activity in terms of machinery. And so, as there was a best machine for the job, so too could there be a best method of carrying out ones job. Taylor sought to eradicate wasteful effort and suboptimal working (rules of thumb), by identifying one best way of performing work and ensuring that workers did not deviate from this method. Each job was reduced as a series of discrete tasks, each being timed, examined and rearranged so as to result in the most efficient form of working. His analysis covered a wide range of variables such as the size of the tools and of the worker, the materials used and the range of motion.

Taylor claimed that his methods would eliminate deliberate and unintentional tardiness. He also believed that employees should be rewarded for their efforts. Put another way, Taylor believed that employees would be motivated to work in the manner he prescribed by offering monetary incentives he was an advocate of what has become known as performance related pay. He professed that maximum prosperity to the employer, coupled with maximum prosperity for the employee ought to be the two leading objects of management. During his experiment at Bethlehem Steel, wages increased by 60%, while his methods led to an increase in productivity of 300%. THINK: if Taylors approach provides mutual gains (maximum prosperity for employee and employer alike) why should his ideas be resisted? CLUE: consider the implications of the complete standardisation of task and of a total lack of discretion over ones work. THINK: what are the problems with Taylors view of work and of people in the workplace? Henry Ford was influenced by scientific management. The success of the Ford Motor Company would be built on an efficient production system. In order to mass produce Ford motor cars it was essential that the firm maximised the efficiency of staff. Ford is credited with the invention of the assembly line, a mechanism that allowed management to control the speed of work by manipulating the speed at which the line moved. Ford was also a committed advocate of work standardisation. Motor vehicle assembly had previously been performed by skilled craftspeople who would be responsible for a significant and complex task in the production process. The complexity of task and of craft skill had three very important consequences: first, ensuring that management were unable to control the speed of work; second, affording the craft worker significant structural importance (that is, the craft worker was essential to the production process and could not readily be replaced); and third, enabling the craft worker to demand a wage premium for their skills. Following the lead of Taylor, Ford reduced the manufacture of the motor car to discrete tasks that could be performed by anyone in order to increase managerial control or the production process and reduce the firms reliance on skilled crafts people. Thus, aside from allowing management to freely intensify work, the assembly line deepened the trend towards deskilling and task fragmentation (Thompson 1989: 79). The fast pace and monotony of work on the assembly line ensured a high turnover of staff. Although the job was deskilled and almost anyone could do it, training costs were high and so staff turnover was costly. In order to encourage employees to remain, Ford doubled the salary of his employees and reduced the length of the working day. And so, Fordism (as it is known) represents a paradox it is associated with a rise in the standard of living of workers at the firm, but also with further deskilling and intensified work. Braverman Harry Braverman, an American sociologist, has argued that scientific management was not exclusive to manufacturing but that it was increasingly adopted in all forms of work. In his influential book, Labour and Monopoly Capital: the Degradation of Work in the Twentieth Century, Bravermans (1974) central

thesis was that work was being deskilled as a result of the ever increasing use of Taylorist principles of management. Managers, he argued, were systematically reducing the autonomy and discretion exercised by workers in how they performed their jobs, thereby deskilling the work. He differentiated organisational deskilling and technological deskilling. He defined the former as the process of separating task conception from task execution. That is, the separation of mental labour (i.e., decisions on how work should be carried out, this was to become the preserve of management), from manual labour (i.e., the actual conduct of the work). Organisational deskilling was achieved by eliminating the autonomy and decision making of the employee, who would, as a result, become easily directed, controlled and replaced. Technological deskilling, on the other hand, occurs where technology is used to replace the skills of people, and indeed, the people themselves. Paul Thompson (1989: 78) writes that, New forms of machinery offer capital the opportunity to extend by mechanical means what had previously been attempted by means of organisation and discipline. Thompson (1989: 79) cites Gorz who encapsulates this sentiment more succinctly, Science, then, has helped to turn work into a strait jacket. Braverman claims that deskilling has moved beyond the manufacturing sector and into administrative and clerical work. Of the latter, he writes the computer will be to administrative workers, even at lower and middle management level, what the assembly line was to manual employees (cited in Thompson 1989: 80). Despite interest in the human relations approach to work organisation in the 1930s and onwards, Braverman insists that Taylorism had not been replaced by a human relations approach, but that scientific management was becoming more pervasive. He argued that schemes of job enrichment were no more than adaptations of Taylorism. THINK: how might job enrichment and job enlargement, especially, be perceived as a form of work intensification? These adaptations were necessary, Braverman argues, not because of any altruistic desire to improve the lot of the workforce, but because dissatisfaction and resistance in the workplace and changes in the labour market required management to enhance the acceptability of work intensification. It is this argument that has been used by critics of human resource management, who view HRM as an insidious management manipulation of work to extend control over employees. Bravermans ideas built on the Marxist critique of capitalist production and provided the foundation of the labour process debate. Marx and the Labour Process The labour process is necessary in order to create goods or services that serve the needs of mankind. Capitalism is based on the accumulation of surplus. In other words, capitalism involves making more money than is needed. In this system, it is not sufficient that goods and services yield only the value equivalent to the cost of their production. The surplus value, or valorisation as Marx labels it, generated by the worker through their labour power becomes the legal property of the employer. The capitalist system encourages the producer of commodities (the output of the labour process such as a car) to

exchange these for a price greater in value than the costs incurred in production. To maximise this differential, it is important for the producer to increase profit, either by increasing the value of the commodity or by decreasing the cost of its production. The capitalist system thereby provides the motive for management to exert greater control over the speed, skill and dexterity of the worker so that the value of the commodity might be increased and/or the cost of its production reduced. Thompson (1989: 41) writes: To ensure profitability, it is vital that in the work of transforming the product into a commodity for the market, no more time is consumed than is necessary under the given social conditions. As the old saying goes time is money, and labour time is the key question. Prior to industrialisation, a product was created by independent cottage industries, which was the property of the labourer. In the industrialised era the product was to become the property of the employer and so, From this point the goal of the capital became the subordination of labour on its own terms (Thompson 1989: 41). Under the control of capital, work might be altered to increase productivity and thereby value. With technological development and the relocation of work to within the factory setting, the labour power of workers could be controlled and directed more easily by the owners who were then able to intensify the work of employees. Thompson (1989: 43) writes that, the new situation in the modern factory allowed employers to develop much more effective and sophisticated methods of increasing the intensity of labour, rather than its mere duration. Independent crafts people could exercise a level of control over the hours and pace of work. In the factories, the employer could establish direct authority over these aspects of work, using the discipline and supervision of the workshop to reduce costs (Thompson 1989: 44). The possibility of severe fines that could be imposed on workers who started late, left early or who produced faulty goods coerced employees into behaving properly. With the establishment of the workshop, owners needed to extend control over and cheapen costs. To this end, employers focused their attention on the division of labour and the gradual elimination of craft. An economist of the time argued that Manufactures, accordingly, prosper most where the mind is least consulted and where the workshop... may be considered as an engine, the parts of which are men another added that it was necessary to make machines of men as cannot err (quoted in Thompson 1989: 45). Charles Babbage, a famous engineer and mathematician responsible for the first calculating engine, commented in terms similar to the later scientific management, that dividing tasks between and within manual labour; each part of the process, having been separated, was then cheaper (Thompson 1989: 46). The result was a small number of workers responsible for the design of the machinery and a multitude of unskilled workers to operate them. Not requiring craft workers with a high degree of skill meant that owners no longer had to pay a wage premium for skills and could easily replace employees. A crude summary is then that the labour process

would inevitably and ultimately deskill employees and intensify the work experience to meet the demands of capital. The Labour Process Theory of HRM Drawing on labour process theory, Harvie Ramsay and his colleagues offer an alternative to the theories of HRM that propose mutual gains. Ramsay et al. (2000), present what they refer to as a neo-Fordist labour process model of high performance work systems. The authors aver that the firm must continuously search for new ways to make employees work harder and for longer (i.e., to intensify work). They suggest that Taylorist principles of work design lead to conflict which is counterproductive. Instead they revisit the traditional view that HRM leads to mutual gains, i.e., benefits for employer and employee alike. As we have seen in previous weeks, this view runs that HRM improves the work experience of the employee by increasing the ability and motivation of employees to do the job and creating opportunities for employees to demonstrate these abilities. This process increases employee satisfaction with their work and commitment to the organisation, which in theory leads to greater effort towards achieving the goals of the firm. In contrast to the enrichment view of HRM, Ramsay et al. (2000) agree that the implementation of HRM practices improves the performance of the firm because the employee gains discretion and autonomy as a result of HRM. However, they take issue with the claim that such a system leads to more satisfying work. They argue that such a system of work merely increases the pressure on, and stress of, employees who are now completely responsible for the task. The result is that the benefits gained in terms of discretion are offset by the intensified work. Workers subject to these practices would experience higher stress levels and also insecurity because the autonomy they are given leads to anxiety and the belief that they may be sacked if they fail to perform the job sufficiently well. The method they identify is a means of maximising the contribution of workers to production which overcomes the limitation of Taylorist deskilling and direct control. Limitations of Intensified Work There are limits to the effectiveness and indeed the extent to which work might be deskilled and intensified. For instance, other strategies, i.e., job enrichment or employee development, may be more effective. It is argued that deskilling leads to an absence of job satisfaction and identification with work. Deskilling destroys the intrinsic facet of work and makes the job banal. A consequence of this might be a lack of motivation (certainly, according to Herzberg) and a disregard for the quality of the work. In this sense, deskilling and the intensification of work may be counterproductive. Moreover, many jobs require innovation and creativity, both of which are built on skill and knowledge. To deskill the workforce would be to undermine innovation and creativity in the workplace. Bravermans deskilling thesis also overestimates the potential of new technology and underestimates the requirement for skilled labour. For example, new technology is not flawless. Employees are required to have the skills and abilities to address problems are they arise. Therefore, tacit skill because more, not less, important within the workplace. To deskill is to render the workforce impotent to deal with changes and demands of new technology. Also, the rate of technological change has increased markedly

in recent years. Just consider the developments in ICT even in the last decade. Given this rapid change in technology, deskilling simply seems inappropriate. It must be noted that this approach to work may be suitable for mass production, or firms with a cost leadership strategy, but it is patently unsuitable for firms with a differentiation strategy, or indeed firms operating in the knowledge economy. A strategy of differentiation requires employee input beyond measurable output. Where quality of product or, more importantly perhaps, service is key to firm strategy, the level of commitment to the firm and willingness to go the extra mile to achieve an objective is critical. The knowledge economy, on the other hand, is based on the knowledge, skills and abilities of workers. Think about appropriate a strategy of deskilling and intensification would be for a firm like Google. Also, it would be wrong to assume that HRM is simply an extension of Taylorism. Policies commonly associated with HRM, such as employee development, and the developmental humanistic approach, and employee involvement contradict the Principles of Scientific Management. The foundation of deskilling is the separation of mental and physical labour, so that management decides how the job is done and the employee carries out the task accordingly. Employee involvement incorporates practices such as downward communication, which is in line with Taylorist principles, but also other forms of participation such as upward involvement and co-determination. Finally, it should be noted that Ramsay and his colleagues find no conclusive evidence to support their intensification thesis of HRM and that this is one of the three perspectives of HRM they propose. Complementary reading Huczynski, A., and Buchanan, D., (2007) Organisational Behaviour, Harlow: Pearson. Chapter 13. Ramsay, H., Scholarios, D. And Harley, B. (2000) Employees and High Performance Work Systems: Testing Inside the Black Box, British Journal of Industrial Relations, 38(4), pages 501-531. Thompson, P. (1989) The Nature of Work (2nd ed), London: Macmillan (not in library but plenty on labour process theory in digital library) Warner, M. (1994) Japanese Culture, Western Management: Taylorism and Human Resources in Japan, Organization Studies, 15(4), pages 509-533. Wood, S. (1987) The Deskilling Debate, New Technology and Work Organisation, Acta Sociologica, 30(1), pages 3-24.

Substituting Unions: HRM and Union Substitution Introduction In this document I will be discussing HRM as a substitute for trade unions. At the heart of this proposition is the belief that trade unions are fundamentally bad for business and that their eradication necessarily enhances firm performance. Be aware that there is by no means consensus about the cost/benefit of trade union involvement. I will use the employee voice debate in order to frame the relationship between trade union and HRM. There is widespread agreement that employee voice is good for the firm as management benefit from employee knowledge and input. As it is commonly believed to increase job satisfaction and organisational commitment among employees, it also proves beneficial to the firm if these positive work attitudes translate into increased work effort. Trade unions are the traditional means by which employees can effectively express their voice, but there is a persistent belief that trade unions increase labour costs and restrict managerial prerogative. HRM is associated with non-union forms of employee voice and alternative policies that undermine the role of trade unions in the workplace. Consequently, critics have argued convincingly that HRM is a union substitution or union avoidance strategy. This document will introduce the union substitution theory of HRM and consider the potential benefits of trade union involvement, thereby diminishing the value of a strategy of union substitution. Trade Unions and Employee Voice Employee voice is thought to contribute to improved levels of worker satisfaction and commitment and, subsequently, organizational performance (Marchington and Cox 2007: 177). If nothing else, voice provides the firm with some level of social legitimacy. As we live in a democratic society, it is congruent with this societal system that employees have a voice at work. And so, the justification for employee voice is as an end value in its own right (Boxall and Purcell 2008: 145). The traditional method of employee voice is through trade unions or representative participation. Boxall and Purcell (2008: 145) comment that as a result of the intense industrial unrest in the first half of the Twentieth Century, which threatened social order, the governments of Anglo American countries persuaded employers to engage in formal discussions with trade unions and strongly endorsed this in the way it ran public sector organisations. The involvement of trade unions in the workplace was viewed as a means of assuaging industrial unrest because trade unions represent worker interests and provide an effective representative voice. A trade union has been defined as an association of wage earners for the purpose of maintaining or improving conditions of working life. In essence, a trade union may be conceptually defined as any organisation of employees which, first, has one of its main objectives negotiating with employers in order to regulate the pay and conditions of its members and, second, is independent of the employers

with which it negotiates or seeks to negotiate (Farnham and Pimlott 1994: 105-6). Trade unions are commonly affiliated to the Labour Party and the Trade Union Congress. They have emerged as craft associations, representing specific employees, for example, the British Air Line Pilots Association, which represents pilots and flight engineers. There are also general trade unions that represent an array of occupations, such as the Transport and General Workers Union. It is argued that trade unions give the employee more effective voice as they speak on behalf of all members, which gives them greater authority than say the individual employee who represents only their own views. Freeman and Medoff (1984), authors of the influential text What Do Unions Do?, comprehensively detail the advantages and disadvantages of negotiating with trade unions. They set out the common misconception, as they see it, among management that unions operate like monopolistic firms that are able to raise the price of labour above the market level. The artificially high price of labour together with restrictive work rules and strikes leads to a number of undesirable outcomes: Resource misallocation, Inefficiency in production, and, Lower capital investment and productivity growth.

In essence, the critical view of unions is that they use their power to inflate the income of their members at the expense of the firm and of the community at large. Consequently, one might argue that the firm achieves a competitive advantage if it successfully implements a union avoidance strategy. HRM and Alternative Employee Voice Although representative participation is still common, other forms of voice (participation) have become popular. Many, if not all of these are associated with HRM. Alternative forms of representative participation, such as the joint consultative committees (JCCs), have operated alongside and, in some cases, in place of trade unions. JCCs were used as a sounding board for ideas or providing employees with the opportunity to raise issues in a cooperative environment. They are organised by, and essentially, under the control of management. This policy has been used to undermine trade unions by persuading workers that issues were better dealt with by the JCC than by the trade union. An alternative involvement mechanism is upward problem solving groups, which incorporates a range of voice mechanisms that tap into employee knowledge and ideas, typically through individual suggestion scheme or through ad hoc or semi permanent teams brought together to resolve a specific issue. This form of voice is weak as it refers directly to a specific work related problem rather than to the strategic orientation of the firm or to anything grander than the task at hand. It does not entail employee control over or participation in strategic decision making. There is also task based participation, whereby employees are given greater discretion to participate in work activities. As a result, close managerial supervision is abandoned allowing employees to control their work. This is, once again, a low level initiative that focuses on how to derive performance increments, but does lead to high levels of participation in the firm.

As stated above, HRM is closely aligned with these alternative mechanisms of employee voice and so it might be argued that HRM presents employers with a viable alternative for accessing employee voice to trade unions. HRM the Threat to Trade Unions Traditional conceptions of HRM identify no explicit role for trade unions. Sisson (1994) suggests that much of the literature is silent on the issue of unions or assume a non union environment. He surmises that advocates deem unions unnecessary or to be avoided. Other commentators claim that there is a fundamental contradiction between HRM and unions and that the former necessarily undermines the latter. Kelly (1998), for example, writes of the anti-union logic of HRM. These critical views of HRM are based on the threat that it poses trade unions. The threat has been expressed in several ways. First, HRM individualises the employment relationship. Bacon and Storey (1993) observe that policies and practices such as performance related pay and work reorganisation isolate employees and personalise the employment contract. The role of trade unions is diminished as the connection between unions and pay is severed, or rather the association between increased rewards and union representation is severed. Second, work reorganisation (specifically increased communication with the individual employee) weakens the role of the union as it reduces the perceived need (among employees) for unions as a communication conduit with management. It is argued that policies and practices associated with HRM that improve the work environment for employees reduce the perceived need for union. Fiorito (2000) avers that HRM diminishes the need for unions as they diminish dissatisfaction and cause of unionism. Finally, HRM is associated with increased organisational commitment, which is believed to be inversely related to union commitment, and if so, then HRM diminishes union commitment. It is little surprise then that HRM has been seen as a form of union avoidance. Kochan (1980) has identified two forms of union avoidance: union suppression, which he describes as legal and illegal activities designed to eradicate unions from a workplace; and union substitution, which he defines as the process of generating a work environment equal to or better than those of unionised workplaces thereby assuaging employee desire for union representation. Fiorito (2000) considers the union substitution effects of what he labels positive HR practices, the purpose of which, he argues, is to substitute trade unions by improving the work experience of the employee and thereby reducing the perceived need for trade unions. He finds evidence that positive HR practices do indeed reduce desire for unionisation among employees. Trade Unions a Source of Competitive Advantage? Freeman and Medoff also provide offer a more positive appraisal of unions. They draw on Hirschmans distinction of exit and voice in response to dissatisfaction and assert that an employee who is dissatisfied will either voice their discontent to management or they will simply leave the firm. As the trade union provides the employee with an effective voice, the employee is less likely to take the exit

option and therefore, the firm is less likely to lose the tacit knowledge of an employee and incur the costs of recruitment and training. Employee turnover is costly for a firm. Moreover, if the employee is forced to leave then the cause of employee discontent will not have been resolved, which may lead to future labour turnover and cost. Through effective voice, the employee may be retained and the problem resolved, leading to increased performance. Freeman and Medoff also comment that union involvement leads to other positive outcomes for the firm such as: improving working conditions and consequently the employee ability to do the job; and identifying the need for specific training for its members which again raises the employee ability to do the job. As trade unions have knowledge of payment systems across a range of businesses, they enable the firm to achieve external equity in reward systems so that employees are more likely to remain with the firm than to move elsewhere. Finally, a union avoidance strategy is likely to be less effective where employees desire union representation. By refusing this right, employers are encouraging a negative response from employees and possible industrial conflict. Therefore, trade union involvement, rather than trade union substitution, is of potential value to the firm.

Complementary reading Bacon, N., and Storey, J. (1993) Individualization of the Employment Relationship and the Implications for Trade Unions, Employee Relations, 15(1), pp. 5-17. Bennett, J.T. and Kaufman, B.E. (2004) What Do Unions Do? A Twenty Year Perspective, Journal of Labor Research, 25(3), pages 339-349. Boxall, P. and Purcell, J. (2008) Strategy and Human Resource Management, London: Palgrave. Chapter 6 Farnham, D. And Pimlott, J. (1994) Understanding Industrial Relations, London: Cassell. Chapter 5 Fiorito, J. (2000) Human Resource Management Practices and Worker Desires for Union Representation, Journal of Labor Research, 22(2), pages 335-354. Guest, D.E. (1995) Human resource management, trade unions and industrial relations, in J. Storey, Human Resource Management: A Critical Text, London: Routledge. Kelly, J. (1998) Rethinking Industrial Relations, London: Routledge. Chapter 4. Marchington, M. and Cox, A., (2007) Employee involvement and participation: structures, processes and outcomes in Storey, J. (ed) Human Resource Management: A Critical Text, London: Thomson.