Julie Beardwell, Amanda Thompson - Human Resource Management _ a Contemporary Approach-Pearson Education (2017)

Eighth Edition

HUMAN RESOURCE

MANAGEMENT A CONTEMPORARY APPROACH Julie Beardwell & Amanda Thompson

HUMAN RESOURCE MANAGEMENT

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HUMAN RESOURCE MANAGEMENT A CONTEMPORARY APPROACH Eighth edition

Edited by

Julie Beardwell and Amanda Thompson De Montfort University, Leicester

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PEARSON EDUCATION LIMITED Edinburgh Gate Harlow CM20 2JE United Kingdom Tel: +44 (0)1279 623623 Web: www.pearson.com/uk First published 1994 (print) Second edition published 1997 (print) Third edition published 2001 (print) Fourth edition published 2004 (print) Fifth edition published 2007 (print) Sixth edition published 2010 (print), 2011 (electronic) Seventh edition published 2014 (print and electronic) Eighth edition 2017 (print and electronic) © Longman Group Limited 1994 (print) © Financial Times Professional Limited 1997 (print) © Pearson Education Limited 2001, 2004, 2007, 2010 (print), 2011 (electronic) © Pearson Education Limited 2014, 2017 (print and electronic) The print publication is protected by copyright. Prior to any prohibited reproduction, storage in a retrieval system, distribution or transmission in any form or by any means, electronic, mechanical, recording or otherwise, permission should be obtained from the publisher or, where applicable, a licence permitting restricted copying in the United Kingdom should be obtained from the Copyright Licensing Agency Ltd, Barnard’s Inn, 86 Fetter Lane, London EC4A 1EN. The ePublication is protected by copyright and must not be copied, reproduced, transferred, distributed, leased, licensed or publicly performed or used in any way except as specifically permitted in writing by the publishers, as allowed under the terms and conditions under which it was purchased, or as strictly permitted by applicable copyright law. Any unauthorised distribution or use of this text may be a direct infringement of the authors’ and the publisher’s rights and those responsible may be liable in law accordingly. All trademarks used herein are the property of their respective owners. The use of any trademark in this text does not vest in the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any affiliation with or endorsement of this book by such owners. Contains public sector information licensed under the Open Government Licence (OGL) v3.0. http://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/. Contains Parliamentary information licensed under the Open Parliament Licence (OPL) v3.0. http://www.parliament.uk/ site-information/copyright/open-parliament-licence/ Pearson Education is not responsible for the content of third-party internet sites. The Financial Times. With a worldwide network of highly respected journalists, The Financial Times provides global business news, insightful opinion and expert analysis of business, finance and politics. With over 500 journalists reporting from 50 countries worldwide, our in-depth coverage of international news is objectively reported and analysed from an independent, global perspective. To find out more, visit www.ft.com/pearsonoffer. ISBN:

978-1-292-11956-4 (print) 978-1-292-11959-5 (PDF) 978-1-292-20446-8 (ePub)

British Library Cataloguing-in-Publication Data A catalogue record for the print edition is available from the British Library Library of Congress Cataloging-in-Publication Data Names: Beardwell, Julie, editor. | Thompson, Amanda (Head of the Department of Human Resource Management), editor. Title: Human resource management : a contemporary approach / edited by Julie Beardwell and Amanda Thompson, De Montfort University, Leicester. Description: Eighth edition. | Harlow, United Kingdom : Pearson Education, 2017. Identifiers: LCCN 2017007976 | ISBN 9781292119564 (print) | ISBN 9781292119595 (pdf) | ISBN 9781292204468 (epub) Subjects: LCSH: Personnel management. Classification: LCC HF5549 .H78413 2017 | DDC 658.3–dc23 LC record available at https://lccn.loc.gov/2017007976 10 9 8 7 6 5 4 3 2 1 21 20 19 18 17 Print edition typeset in 9.5/12pt Sabon MT Pro by SPi Global Printed in Slovakia by Neografia NOTE THAT ANY PAGE CROSS REFERENCES REFER TO THE PRINT EDITION

BRIEF CONTENTS Guided tour Preface Plan of the book How to use this book Contributors Acknowledgements

xii xv xvi xvii xix xxii

PART 1 HUMAN RESOURCE MANAGEMENT AND ITS ORGANISATIONAL CONTEXT Introduction to Part 1 1 An introduction to human resource management 2 Strategic human resource management 3 Contextualising HRM

3 30 67

100 101 145 179

PART 3 DEVELOPING THE HUMAN RESOURCE Introduction to Part 3 7 Learning and development 8 Leadership and management development 9 Organisational development

10 The employment relationship and employee rights at work 343 11 Employee engagement 389 12 Performance management 425 13 Employee reward 458 14 Employee voice 508

PART 2 RESOURCING THE ORGANISATION Introduction to Part 2 4 HRM and the labour market 5 Talent management 6 Managing equality and diversity

PART 4 THE EMPLOYMENT RELATIONSHIP

214 215 260 299

PART 5 COMPARATIVE HUMAN RESOURCE MANAGEMENT 15 Comparative HRM in the context of financialisation, financial crisis and Brexit 16 Employment relations in emerging economies: China and India

588

Glossary of terms and abbreviations Index

625 635

545

CONTENTS Guided tour Preface Plan of the book How to use this book Contributors Acknowledgements

xii xv xvi xvii xix xxii

Introduction Understanding the business context Approaches to the strategy-making process The rise of SHRM Exploring the relationship between strategic management and SHRM: The best-fit school of SHRM Limitations of the best-fit models of SHRM The resource-based view of SHRM Best-practice SHRM: high-commitment models HRM and performance SHRM and performance: The critique Measuring the impact of SHRM on performance Concluding comments Summary Case study: High road versus low road in the civil aviation industry References and further reading

PART 1 HUMAN RESOURCE MANAGEMENT AND ITS ORGANISATIONAL CONTEXT Introduction to Part 1

An introduction to human resource management Julie Beardwell

Objectives 3 Case study: Winning HRM practice: simply Business 4 Introduction 4 Definitions of HRM 5 The origins of HRM 7 Models of HRM 8 HRM and organisational performance 12 HRM in practice 17 The impact of HRM on the roles of HR professionals 20 HR competence 23 Concluding comments 24 Summary 25 Case study: The future of work: the journey to 2022 26 References and further reading 27

Strategic human resource management Heather Connolly and Julie Beardwell

Objectives Case study: Taking the ‘low road’ in big business

30 31

32 33 34 38

39 45 47 52 54 57 58 60 60 62 63

Contextualising HRM Audrey Collin with Julie Beardwell

Objectives Case study: Muddled language hides the effect of the gig economy Introduction The immediate context of HRM The wider context of HRM Wider contextual influences on HRM today Ideas and theories in the wider context of HRM Underlying assumptions Alternative ways of thinking Ethical issues in HRM Concluding comments Summary Case study: BHS report lays bare failure and culpability: Parliamentary inquiry lambasts collapsed store chain’s ex-owner, buyer and its ‘directors, advisers and hangers-on’ References and further reading

67 68 69 72 76 79 80 81 82 92 93 94

95 96

viii

CONTENTS

PART 2 RESOURCING THE ORGANISATION Introduction to Part 2

100

HRM and the labour market Amanda Thompson

101

Objectives Case study: More than 100,000 legal roles to become automated Introduction The nature of labour markets The supply of labour Population Workforce Patterns of labour market participation Labour demand Changing patterns of demand Changes in the occupational structure of employment Changing forms of employment Labour market outcomes: The quality of employment Concluding comments Summary Case study: Companies struggle to fill quarter ofskilled jobs vacancies References and further reading

101 102 102 103 105 106 112 115 120 128 130 132 133 140 141 142 143

Managing equality and diversity Mike Noon

179

Objectives Case study: Women in the boardroom Introduction Discrimination and legal protection in the workplace Why is inequality a problem and why should managers be concerned with it? What are the embedded and deep-rooted causes ofthe problems of equality and diversity withinan organisation? Two problems with institutional discrimination Using equality and diversity policies to deal with theproblems Devising equality and diversity policies Sameness and difference Long and short agendas The process of discrimination in an organisation Concluding comments Summary Case study: Employees of conscience? References and further reading

179 180 180 181 186

191 193 194 200 204 205 205 208 208 210 211

PART 3 DEVELOPING THE HUMAN RESOURCE Introduction to Part 3

214

Talent management Julie Beardwell

145

Objectives Case study: Talent management in the Red Arrows Introduction Defining talent management Strategic talent management Attracting talent Defining the talent required Recruitment methods Selecting talent Retaining talent Developing talent Concluding comments Summary Case study: Staff retention and staying power: Nissan builds on loyalty at Sunderland plant References and further reading

145 146 146 147 148 149 152 153 156 164 167 174 175 176 177

Learning and development Mairi Watson and Jim Stewart

215

Objectives Case study: From business strategy to training plan Introduction The strategic importance of learning and development for organisations Individual learning and development Theories of learning Theories of the process of development Learning and development: The organisational context Learning and development: The national perspective Concluding comments Summary Case study: Learning IT systems References and further reading

215 216 216 217 218 224 229 231 249 254 254 255 256

Leadership and management development Mairi Watson and Deborah Price

260

Objectives Case study: Saatchi chief’s comments on ‘unambitious’ women come under fire from ad execs Introduction Defining leadership and management development(LMD) The purposes of LMD Developing an LMD strategy International leadership and management development The design of international leadership and management development programmes LMD in different contexts The future for LMD: The need for new thinking andnew practices? Concluding comments Summary Case study: In the NHS we Trust? References and further reading

260

261 262 262 265 267 284 287 289 292 292 293 294 295

Organisational development Mairi Watson

299

Objectives Case study: World asks just how the Brits do it Introduction Definitions and development of OD A brief history of OD OD today: The last 10 years The theories of OD The techniques and practices of OD OD: Strategy, structure and culture Concluding comments Summary Case study: A whole system event for real-time strategic change; use of African-influenced facilitation through lekgotla References and further reading

299 300 301 303 304 310 312 315 328 335 335

336 336

PART 4 THE EMPLOYMENT RELATIONSHIP Introduction to Part 4

Objectives Case study Introduction Distinguishing contractual and statutory employment rights The importance of the contract of employment Formation and the contract of employment Continuation: Discrimination in employment Termination of the employment contract Enforcement of contractual and statutory employment rights Contractual rights and wrongs? Current issues Conclusion Summary Case study: Age discrimination more widespread than sexism in the City References and further reading

343 344 344 346 348 349 366 367 373 378 379 382 383 385 386

11 Employee engagement Julia Pointon

389

Objectives Case study: Alcoa Power and Propulsion Introduction Definitions from the practitioner literature Definitions from the academic literature Characteristics of engaged employees Employee disengagement Employee engagement and related concepts Employee engagement as an exchange process Employee engagement and psychological well-being Organisational drivers of engagement Organisational benefits of employee engagement Employee engagement and the older worker Measuring employee engagement Organisational strategies for enhancing employee engagement Governmental strategies for enhancing employee engagement Patterns of engagement across the world Summary Case study: Engaging employees at Tasty Catering References and further reading

389 390 391 391 392 393 395 396 399 401 402 403 407 408 411 413 414 417 418 422

12 Performance management 342

10 The employment relationship and employee rights at work Alan J. Ryan

CONTENTS

343

Deborah Price

425

Objectives Case study: Mouldaplas Introduction The history of performance management The performance imperative: Why manage performance?

425 426 427 427 428

CONTENTS

What is performance management? Performance management in practice Approaches to performance appraisal Types of performance appraisal Limitations of performance measurement Performance management or surveillance? Collaborative performance management Green HRM and performance management Concluding comments Summary Case study: Performance improvement at TRW References and further reading

430 432 435 436 439 441 442 448 451 452 453 454

13 Employee reward Amanda Thompson and Alan J. Ryan

458

Objectives Case study: City leaders urge radical reforms of ‘unfair’ executive pay Introduction The historical and theoretical foundations of employee reward The development of reward systems The design of reward systems and persistent debates Employee reward in the contemporary era Components of reward Reward management and the emergence of strategicapproaches to reward Strategic reward in practice Factors influencing organisational approaches to reward practice and pay determination Gender pay reporting The Equality Act 2010 (EqA), ss. 64–80 National Minimum Wage Regulations 1999 Working Time Regulations 1998 Internal/organisational factors and the influence ofsector Pay determination – internal or external focus? Devising pay structures Pay progression Concluding comments Summary Case study: Zizzi cuts staff perks as minimum wage increases References and further reading

458 459 459 460 461 463 467 468 474 476 479 482 483 484 486 487 490 491 497 502 502 504 505

14 Employee voice Peter Butler

508

Objectives 508 Case study: Junior doctors reject call to maintain paediatrics during strike 509 Introduction 509

Definitions Employee involvement Participation The practice of voice in the workplace Downward communication Upward problem-solving and team-working From team-working to high-performance management The impact of HPM on organisational performance Representative participation Trade union representation Voice and the demise of collective bargaining Trade union decline: Rationale Opportunities for renaissance? Trade union voice under New Labour (1997–2010): ‘Fairness, not favours’ Statutory trade union recognition: A critique Trade union voice under the Coalition (2010–15) andConservative (2015–) governments Trade union voice and membership loss: Strategies for renewal Boosting trade union voice: Servicing and organising Enter partnership Non-union systems of employee voice: A unitary approach to collective representation? Works councils and consultation in the European Union The European Works Council Directive The Information and Consultation Directive Concluding comments Summary Case study: ‘Voice’ issues in a retail fashion organisation References and further reading

510 511 512 514 515 516 517 518 518 519 519 521

521 523 523 524 524 525 527 531 531 533 535 536 537 538

PART 5 COMPARATIVE HUMAN RESOURCE MANAGEMENT Introduction to Part 5

544

15 Comparative HRM in the context of financialisation, financial crisis and Brexit Ian Clark

545

Objectives 545 Case study: The varied reaction of multinational car producers to Brexit? 546 Introduction 546

CONTENTS

Comparative and international HRM: The field of scholarship 547 Contemporary contexts for comparative HRM: Financialisation, financial crisis, ‘rule making’ and‘Brexit’ 553 National patterns of employment and HRM: The USA, Japan and Germany 558 Summary 583 Case study: Toyota committed to Japan 584 Case study: Mercedes-Benz in Alabama 584 References and further reading 585

Introduction Comparative capitalism in Asia China: State-led capitalist model India: State-guided capitalist model China and India: A comparative assessment Summary Case study: Organising informal workers in India: Failures and opportunities References and further reading Glossary of terms and abbreviations Index

16 Employment relations in emerging economies: China and India Anita Hammer

588

Objectives Case study: New skills policy, patterns of skill formation and firms’ strategies in India

588 589

Lecturer Resources For password-protected online resources tailored to support the use of this textbook in teaching, please visit www.pearsoned.co.uk/beardwell

ON THE WEBSITE

590 591 593 605 616 620 621 622 625 635

GUIDED TOUR CHAPTER 1 AN INTRODUCTION TO HUMAN RESOURCE MANAGEMENT JULIE BEARDWELL

Objectives ●

To define human resource management (HRM).

●

To explore the origins of HRM.

●

To review and evaluate the main models of HRM.

●

To explore the association between HRM and business performance.

●

To explore HRM in practice and the impact of recession and recovery on HRM practice. To review the impact of HRM on the changing roles of human resources professionals.

Objectives Provide an overview of the topics to be covered in each chapter, giving a clear indication of what you should expect to learn.

MODELS OF HRM

Political forces

Cultural forces

Economic forces Mission and strategy

Firm Organisation structure

Figures Are used to illustrate key points, models, theories and processes.

Human resource management

Figure 1.1 The matching model of HRM. Source: Devanna et al. (1984) in Fombrun et al. (1984: 35); reproduced with permission.

The matching model is closely allied with the ‘hard’ interpretation of HRM, that is, the deployment of human resources to meet business objectives. Two assumptions underpin this model. The first is that the most effective means of managing people will vary from organisation to organisation and is dependent on organisational context. The second assumption is that of unitarism, that is, the assumption that conflict, or at least differing views, cannot exist in the workplace because everyone (managers and employees) is working to achieve the same goal, the success of the organisation. This model has formed the basis of the ‘best fit’ school of HRM, discussed further in Chapter2.

Universalism: More is better A second influential model, illustrated in Figure1.2, was developed by Beer et al. (1984) at Harvard University. ‘The map of HRM territory’, as the authors titled their model, recognises that there are a variety of ‘stakeholders’ in the organisation, which include shareholders, various groups of employees, the government and the community. The model recognises the legitimate interests of diverse stakeholders, and assumes that the creation of HRM strategies will have to reflect their different interests and fuse them as much as possible into the human resource strategy and ultimately the business strategy. This recognition of stakeholders’ interests raises a number of important questions for policymakers in the organisation (Beer et al., 1984: 8): How much responsibility, authority and power should the organisation voluntarily delegate and to whom? If required by government legislation to bargain with the unions or consult with workers’ councils, how should management enter into these institutional arrangements? Will they seek to minimise the power and influence of these legislated mechanisms? Or will they share influence and work to create greater congruence of interests between management and the employee groups represented through these mechanisms?

GUIDED TOUR

xiii

CHAPTER 1 AN INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

Case study Winning HRM practice: simply Business Simply Business, an online insurance company that sells insurance to small businesses, landlords and shops in the UK, is top of the Sunday Times 100 Best Companies to Work For 2016. The company has 315 staff with a head office in London and a contact centre in Northampton. Head office employees work in an open-plan office and hold meetings via Google hangouts. A number of staff live abroad and work remotely full-time. Chief executive Jason Stockwood invites groups of contact centre staff to dinner when he is in Northampton. ‘I want to make sure people feel they can do their best work without going through hierarchies or command-and-control structures,’ he says. ‘I enjoy the company of everyone I work with.’ Stockwood joined Simply Business from Match. com in 2010. He describes the insurance industry as ‘a massive market with a low bar on credibility’ that can serve customers better. In his first year, Stockwood oversaw a reorganisation that affected 53% of staff. ‘We changed the culture,’ he says, and put employees at the

forefront, turning the ‘hackneyed phrase about customers coming first’ on its head. ‘You can’t force people who hate their environment to do a good job,’ he adds. ‘Customers only come first if our employees are happy and doing a good job.’ Simply Business employees are so highly engaged that their responses to the Sunday Times staff survey put it top in 50 of the 70 questions. People say that they would not leave for another job (a 90% positive score) and are inspired by their leader (91%). Perks include a benefits package with private health insurance and life assurance. Salaries have also been improved year on year since Stockwood has been at the helm, despite the recession. Trips, nights out and office beers are part of the company’s fabric, as are charity events. An 89-mile bike ride from Northampton to London and an Arctic biathlon are the main fundraisers.

Case studies Appear at the end of each chapter and provide an opportunity to consider what you have learnt from the chapter in the context of a real World scenario. Discover how you might apply both theory and practice and prepare yourself for life beyond academic study.

Source: http://appointments.thesundaytimes.co.uk/article/best100 companies/.

Introduction The first edition of this book was published in 1994 and the then editors described HRM as a newly emerging phenomenon that added ‘a powerful and influential perspective’ to debates about the nature of the contemporary employment relationship. They noted (Beardwell and Holden, 1994: 5): Any assessment of the emergence of Human Resource Management has, at least, to take account of this changing context of employment and provide some explanations as to the relationships that exist between the contribution HRM has made to some of these changes on the one hand and, on the other hand, the impact that such changes have had on the theory and practice of HRM itself.

Human resource management continues to both influence and be influenced by the changing context of employment, but, while still relatively new, it can no longer be described as an emerging phenomenon. Boxall and Purcell (2011: 2) suggest that HRM is the most widely recognised term in the English-speaking world to refer to management activities in organising work and employing people. However, there is still little universal agreement on what precisely constitutes HRM, and debates around the meaning of the term and the impact of the concept continue. To enable us to identify how ‘understanding HRM’ has changed over time and to consider the impact this change has had on the management of people, this chapter aims to explore the key themes within the debates that surround HRM under the six headings in the list of objectives.

Introductory case study Designed to stimulate interest and provoke thought as you begin your exploration of the chapter and consider how it might relate to the real world.

The resource-based view of shrM

Explore

Explore Features appear throughout the text to reinforce learning through the use of selfreflection, problems and practical exercises, helping you to better understand the links between theory and practice.

reflect on wright and snell’s fit/flexibility model (see figure2.5). how might an hr professional facilitate flexibility?

We have explored the best-fit school of SHRM and its relationship to strategic management through the contingency and configurational approaches. The contingency approach recommends a strong relationship to strategic management, whether it be to an organisation’s life cycle or to competitive forces. This obviously assumes a classical, rational-planning model of strategic management. We have considered this relationship, or vertical integration between an organisation’s business strategy and its HR strategy, in some detail, defining the varying degrees of fit or vertical alignment, and have considered the possibility of providing both fit and flexibility alongside each other. The configurational approach attempts to answer some of the limitations of the contingency approach by identifying ‘ideal type’ categories of both the organisation strategy and the HR strategy. It seeks to derive an internally consistent set of HR practices that maximise horizontal amd vertical integration. The configurational approach is further explored in the ‘bundles’ approach to SHRM, which is considered later in this chapter. The best-fit approach to strategic HRM utilises an ‘outside-in’ (Wright etal., 2004: 37) perspective to explain how the strategic management of human resources can deliver competitive advantage; thus organisations can gain advantage by aligning HR policies and practices with market position and competitive focus. An alternative approach to understanding the relationship between SHRM and competitive advantage is the resource-based view of SHRM, which utilises an ‘inside-out’ perspective (Wright etal., 2004: 37), where it is the internal resources of the business that are viewed as the key to sustainable competitive advantage. Thus an organisation’s skills, knowledge and talent become ‘strategic assets’ and the management of these human resources takes on strategic significance.

Key controversy

Key controversy Features invite you to reflect critically, challenge assumptions and relate scenarios to your own experience, helping to develop skills for use in future employment.

external factors, such as technological developments, can mean that the strategies of established organisations can become irrelevant – think, for example, of the impact on Kodak as a result of being able to take photos on a mobile phone or the impact on the record industry of music streaming and downloads. when asked about the ability of spotify to conquer the music industry, Gustav soderstrom, the chief product officer, said that spotify ‘is a pretty good concept for what the industry could be...but it’s dangerous to build for a future that might not be. it’s dangerous to get stuck in your own bubble’. To what extent is organisational strategy building for a future that might not be? is it better to have no strategy than the wrong strategy? Source: Milne, R. (2014), ‘The Spotify effect’, Financial Times, 25 October.

The resource-based view of SHRM The resource-based view (RBV) of the firm focuses on the internal resources of the organisation rather than analysing performance in terms of the external context. In other words, the RBV perspective analyses strategy from the inside-out, as opposed to the outside-in approach of theories of best fit (Boselie etal., 2014). Advocates of the resource-based view on SHRM help us to understand the conditions under which human resources become a scarce, valuable, organisationspecific, difficult-to-imitate resource, in other words key ‘strategic assets’ (Winter, 1987; Amit

GUIDED TOUR

xiv

128

CHAPTER 4 HRM AND THE LABOUR MARKET

Rubery (1994) argues that the presence of disadvantaged groups in the labour market increases the range of options open to some employers by allowing them to fulfil their requirements for a stable, cooperative workforce without having to offer the positive incentives associated with internalised employment relationships (see Box4.2). This is because, as indicated earlier, disadvantaged groups face barriers to employment, curtailing choice in terms of jobs and careers; in short, they often have to accept what they can get. The absence of better alternatives makes these jobs more attractive than they would otherwise be and therefore more highly valued by workers. This is reflected in the willingness of many disadvantaged workers to remain with their employer and cooperate with management in order to keep their jobs.

Box 4.2 Migrant local-hiring queues According to Scott (2013), employers from sectors such as the UK horticultural and food industry prefer to hire A8 (and A2) migrant workers rather than domestic workers. Scott carried out a survey of 268 horticulturalist farmers and interviewed 37 growers and processors from another 30 English horticultural companies about their experiences of employing EU migrant workers from Poland and other parts of Eastern Europe. The interviews with these employers revealed that they preferred to hire A8 and A2 migrant workers over white British workers because they had a better work ethic and were reliable and flexible. The employers commented that the UK horticultural and food industry success almost depends on the Eastern and Central European migrant labour. Scott concluded that the migrant–local hiring queues are largely therefore due to the ‘added value’ that migrants from the EU periphery bring, over the short term, to the low-wage, ‘no-frills’ workplace, benefiting the firms operating in the sector.

Key controversy Are employers who hire ethnic minority workers and cheap migrant labour capitalising upon the presence of racism in society as a whole?

Boxes Contain a variety of business and organisational examples to demonstrate theory in practice, providing you with the knowledge to succeed in future employment.

Summary Sections at the end of the chapters recap the key topics within each chapter and enable you to review and check your understanding of them. SUMMARY

Changing patterns of demand The period since the 1980s has seen significant changes in the pattern of demand for labour and therefore in the types of job available to workers in the UK. These shifts reflect interlinked changes in the structure of the economy, government policy for the labour market and employers’ labour requirements.

A shift of employment from manufacturing to services The proportion of workers employed in manufacturing has declined in the UK, the USA and all the major European Union economies since the 1960s. This reflects the effects of economic growth and rising incomes on people’s consumption patterns. As people get richer, the proportion of their income that they spend on manufactured goods declines (although people may still spend more money on them in absolute terms) and the proportion spent on services increases. This means that output, and hence employment, grow faster in the service sector than in the manufacturing sector.

386

Summary ●

Labour markets are often seen as arenas of competition in which forces of supply and demand determine wage and employment levels. In reality, however, there are limits to competition in labour markets.

●

Employers have some freedom to make a strategic choice between internalising or externalising the employment relationship. Their choices are influenced, although not entirely determined, by the nature of their labour requirements and by features of the labour market context in which they operate.

●

The aggregate supply of labour – the size of the workforce – is determined by demographic factors such as the size and age structure of the population and by social factors, policy direction and a range of political factors that influence the participation rate of different socioeconomic groups within the population. In the UK, differential participation rates can be observed between men and women of different age groups and different ethnic groups. The interplay of social factors such as age, gender, ethnicity, disability and class affects the employment rates of people in ways that are complex and difficult to unravel.

●

Aggregate labour demand consists of total employment plus unfilled vacancies. The demand for labour is derived from the demand for goods and services. In conditions of low unemployment – tight labour markets – employers have to compete more actively to attract and retain workers. When labour markets are ‘loose’, labour is in plentiful supply and the cost of labour is consequently driven down.

●

The demand for labour comprises jobs of varying quality. Unfair discrimination operating within labour markets often means that women and ethnic minorities are disadvantaged in terms of access to good jobs.

●

There has been a long-term change in labour demand away from manufacturing to services. This has been an important force driving the long-term growth of part-time employment and women’s employment. While this has boosted the employment rates of women, the quality of jobs on offer is invariably poor, offering poor pay and poor prospects for promotion.

●

Since the 1980s, there has been a shift in the occupational structure of labour demand mainly towards highly skilled occupations but also leading to the growth of some low-skilled occupations. There has been a relative decline in intermediate occupations. Some refer to this as the ‘hollowing’ out of the occupational structure to create an hourglass economy.

●

Contrary to what might have been predicted from the overall trend towards more highly skilled work, the quality of jobs has deteriorated in terms of work intensification and worker autonomy, although not (up until recently) in terms of job stability. The demand for better work–life balance is a recent response to growing work pressure and most employers appear now to be recognising the business case for offering work–life balance provisions.

CHAPTER 10 THE EMPLOYMENT RELATIONSHIP AND EMPLOYEE RIGHTS AT WORK

Nearly half of employers would like the default retirement age reinstated, according to a survey of 300 employers by Eversheds, the law firm. It said fewer than 3 per cent of organisations now had a policy of mandatory retirement for their employees, down from 69 per cent two years ago. More than half said repeal of the DRA has led to an increase in the number of employees staying on beyond age 65 or normal pension age. Prof Owen Warnock, Eversheds partner, said the end of the DRA had provided the impetus for change: 72 per cent of respondents said they would still be operating a mandatory retirement age if the law had not been changed. A third felt the abolition had had a negative impact, but another third said the change had resulted in improvements in retaining impor tant skills and knowledge. ‘What’s more, the much-feared increase in age-related retirement claims has not, according to the survey respondents, in fact materialised,’ he said. Source: Adapted from Groom, B. and Business and Employment Editor. Copyright © The Financial Times Limited 2013.

Questions 1

Compensation in age discrimination cases is considerably lower than in other areas of discrimination. Why do you think this is so?

Considering your organisation (or one with which you are familiar), do you think age discrimination is a major issue? What action is the organisation taking to address the issue?

Should the government permit organisations to reintroduce a default retirement age for their workers?

Mark Cameron commented, ‘The City is getting far better at supporting and developing female staff.’ To what extent do you think this is true for organisations in other sectors? Give examples.

Anti-sex-discrimination legislation has been in place since the mid 1970s. Consider why sex discrimination cases such as Bouabdillah v Commerzbank [2013] still arise. Can the law alone eradicate the problem of sexism in the workplace? Similarly, how optimistic are you that the law can successfully eliminate ageism at work?

References and further reading Anderman, S. (2000), Labour Law, Management Decisions and Worker Rights. London: Butterworths. Armstrong, P. and Baron, A. (1995), The Job Evaluation Handbook. London: CIPD. Arthurs, H. (2011), ‘Labour law after labour’, in G. Davidov and B. Langille (eds), The Idea of Labour Law. Oxford: Oxford University Press. Atiyah, P.S. (1979), The Rise and Fall of Freedom of Contract. Oxford: Oxford University Press. Barmes, L. (2007), ‘Common law implied terms and behavioural standards at work’, Industrial Law Journal, 36, 1: 35–47. Barmes, L., Collins, H. and Kilpatrick, C. (2007), ‘Reconstructing employment contracts’, Industrial Law Journal, 36, 1: 1–12. Benhabib, S. (1994), ‘Democracy and difference: Reflections on the metapolitics of Lyotard and Derrida’, Journal of Political Philosophy, 2, 1: 1–23. Bercusson, B. and Estlund, C. (2008), Regulating Labour in the Wake of Globalisation: New Challenges, New Institutions. Oxford: Hart Publishing. BERR (2008), Agency Working in the UK: A Review of the Evidence. BERR. Blackburn, R. and Hart, M. (2002), Small Firms’ Awareness and Knowledge of Individual Employment Rights. DTI Employment Relations Research Series No. 14. Blanpain, R. and Weiss, M. (eds) (2003), Changing Industrial Relations and Modernisation of Labour Law: Liber Amicorum in Honour of Professor Marco Biagi. The Hague: Kluwer Law International.

Braucher, J. et al. (eds) (2013), Revisiting the Contractual Scholarship of Stewart Macaulay. Oxford: Hart Publishing. Brodie, D. (2008), ‘Mutual trust and confidence: Catalysts, constraints and commonality’, Industrial Law Journal, 37, 4: 329–75. Brodie, D. et al. (2016), The Future Regulation of Work. Basingstoke: Palgrave Macmillan. Brown, E. (2008), ‘Protecting agency workers: Implied contract or legislation?’, Industrial Law Journal, 37, 2: 178–96. Bryden, C. and Salter, M. (2009), ‘Overstepping the mark’, New Law Journal, 159: 491. Burke, R. and Cooper, C. (eds) (2008), The Long Work Hours Culture. Bingley: Emerald. Cabrelli, D. (2008), Law Express: Employment Law. London: Pearson Longman. CIPD (2009a), Reward Management: A CIPD Survey. London: CIPD. CIPD (2009b), Pay and Reward: An Overview, Factsheet. London: CIPD. Clark, I. (1996), ‘The state and new industrial relations’, in I. Beardwell (ed.), Contemporary Industrial Relations: A Critical Analysis. Oxford: Oxford University Press, pp. 37–64. Clark, I. (2000), The State, Regulation and Industrial Relations. London: Routledge. Collins, H. (2000), ‘Justifications and techniques of legal regulation of the employment relation’, in H. Collins, P. Davies and R. Rideout (eds), Legal Regulation of the Employment Relation. London: Kluwer Law International, pp. 2–30.

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labour market and are vulnerable to exploitation because of the lack of alternative, better quality job opportunities. To help protect these groups there is a case for stronger ‘active’ state intervention directed at combating unfair discrimination in the labour market.

Questions 1 Explain why gendered occupational segregation, time segregation and vertical segregation persist in the UK in the twenty-first century. 2 Explain why rates of labour market participation vary between ethnic minority groups and within groups.

Questions Can be used for self-testing, class exercises or debates, understanding of them.

References and further reading Are provided at the end of each chapter. Comprehensive details of the leading literature and sources in the subject area are provided and those that are asterisked are especially recommended for further reading, helping you to take the subject further and begin to understand the links across the subject area.

PREFACE The theory and practice of human resource management (HRM) continues to evolve. In its successive editions, this book has provided critical reflection on continuity and new developments as the issues associated with HRM have multiplied considerably. Previous editions have traced the debates over the role of the HRM specialist in organisations, the role and nature of HRM in relation to organisational change initiatives such as total quality management (TQM), and the strategic role of HRM and its effects on organisational performance. They have also reflected on how, in academic circles, the search for a universal HRM paradigm has given way to an emphasis on understanding how HRM operates in diverse situations and what contribution it can make to organisational performance. More recent editions have explored issues raised by globalisation; focusing on the development of HRM in the emerging economies of China and India, and the ways in which multinational companies are influencing HRM ideas and practice across the globe as well as the national and international policy environments in which HRM operates. This edition continues to explore these themes and also reflects significant contemporary events, including the aftermath of the financial crisis and the economic downturn affecting many Western economies. At the time of writing, the UK’s decision to leave the EU has caused much uncertainty in the business world and any predictions of its impact included in this text can only be tentative. All chapters have been updated to reflect developments in thought and practice in the field of HRM but we recognise that the huge and expanding area in and around HRM cannot be contained within a single book and apologise for any omissions. Nevertheless, we are confident that we have covered the broad sweep of the HRM field and some aspects of it in considerable detail. As with HRM, the team of contributors is a continually evolving one. When the first edition of this book was published in 1994, all the contributors were members of the HRM department at De Montfort University (DMU). Since that time, some long-standing contributors have moved to other institutions (Universities of Leicester, London, Nottingham Trent and Northampton) while new members of the department at DMU have joined the team of contributors. We also welcome the contribution from Jim Stewart (University of Liverpool) to this edition. Some previous contributors have chosen not to be involved this time round and we would like to thank Tim Claydon, Phil Almond, Olga Tregaskis and Nicky Golding for their input into earlier editions. It is with great sadness that we report the loss of a key contributor as Professor Audrey Collin passed away on 19 October 2015. Audrey has contributed to every edition of the textbook and her chapter “the Context of HRM” has continued to be an insightful and thought-provoking read. She is sadly missed and, as a tribute to her, we have retained her chapter for this edition with only minor updates and new case studies. As ever, we thank all our contributors for their hard work and willing cooperation in getting this edition to press. We would also like to thank partners, family members and colleagues for their help and support in the arduous process of academic writing. Thanks, too, to Pearson for their commitment to successive editions of this book and for the enthusiastic help and encouragement we have received from the editorial team. Julie Beardwell Amanda Thompson

PLAN OF THE BOOK PART1 HUMAN RESOURCE MANAGEMENT AND ITS ORGANISATIONAL CONTEXT Chapter1 An introduction to human resource management

Chapter2 Strategic human resource management

Chapter3 Contextualising HRM

PART2 RESOURCING THE ORGANISATION Chapter4 HRM and the labour market

Chapter5 Talent management

Chapter6 Managing equality and diversity

PART3 DEVELOPING THE HUMAN RESOURCE Chapter7 Learning and development

Chapter8 Leadership and management development

Chapter9 Organisational development

PART4 THE EMPLOYMENT RELATIONSHIP Chapter10 The employment relationship and employee rights at work

Chapter11 Employee engagement

Chapter12 Performance management

Chapter13 Employee reward

Chapter14 Employee voice

PART5 COMPARATIVE HUMAN RESOURCE MANAGEMENT Chapter15 Comparative HRM and responses to global crises

Chapter16 Employment relations in emerging economies: China and India

HOW TO USE THIS BOOK This text is designed to meet the needs of a range of students who are studying HRM as a core or option subject on undergraduate degrees in Business and Social Science, MBAs, specialised Master’s programmes or the CIPD’s Advanced Level Qualification. All the chapters are designed to take a critically evaluative approach to their subject material. This means that the book is not written in a prescriptive or descriptive style as are some other HRM textbooks, although there will be sections that must necessarily incorporate aspects of that approach. Given this stance, some chapters will be more easily absorbable by the novice student than others. For example, Chapters1 (Introduction to HRM) and 2 (Strategic HRM) are good introductions to the subject, while Chapter3 takes a more unconventional perspective on contextualising HRM and developing critical thinking that will prove rewarding to the more able student. The critically evaluative approach is reflected in the ‘Explore’ and ‘Key controversy’ features in every chapter. We use ‘Explore’ points to encourage readers to examine issues in more depth and to consider how the theories and concepts they have read about in the text apply to organisational settings with which they are familiar. ‘Key controversy’ boxes are designed to highlight the most contentious debates and urge readers to formulate their own considered conclusions. Each chapter begins and ends with a case study to illustrate the practice of HRM in a diverse range of contexts. As in earlier editions, there are also questions at the end of each chapter. These features can be used by lecturers as coursework exercises, and the Lecturer’s Guide that accompanies this edition gives detailed suggested answers. Additional material is also available on the companion website. The outlines that follow are intended to indicate how the material in this book can be used to cover the requirements for a selection of postgraduate programmes. There is no corresponding outline for undergraduates because we recognise the multiplicity of courses at this level. Nevertheless, it is hoped that these suggested ‘routes’ through the book will be helpful guidelines for tutors who have responsibility for some or all of these programmes.

MBA Route Introduction: Chapters1, 2, 3 Core: Chapters4, 5, 7, 10, 12, 13, 14, 15 Options: Chapters6, 8, 9, 11, 16

MA/MSc Route Introduction: Chapters1, 2, 3, 4 Core: Chapters5, 6, 8, 11, 12, 13, 14, 15 Options: Chapters7, 9, 10, 16

‘At a glance’ - quick reference guide for CIPD students This text is designed to be beneicial to a range of student audiences. Several chapters in particular complement the CIPD Advanced level modules. The following table is designed to provide a simple guide to direct CIPD students to those chapters which contain primary and/or secondary sources of information for each of the CIPD Advanced level modules (see p.xviii).

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HOW TO USE THIS BOOK

CIPD Advanced level modules

Primary sources

Secondary sources

Human Resource Management in Context (7HRC)

Ch 1 – An introduction to HRM Ch 2 – Strategic HRM

Ch4 – HRM and the labour market Ch 10 – The employment relationship and employee rights at work

Leading, Managing and Developing People (7LMP)

Ch1 – An introduction to HRM Ch 7 – Learning and development Ch 8 – Leadership and management development

Ch 11 – Employee engagement Ch 9 – Organisational development

Leadership and Management Development (7LMD)

Ch 8 – Leadership and management development

Ch 3 – Contextualising HRM

Organisational Design and Development (7ODD)

Ch 9 – Organisational development

Ch 1 – An introduction to HRM Ch 2 – Strategic HRM

Performance Management (7PFM)

Ch12 – Performance management

Ch 13 – Employee reward

Reward Management (7RWM)

Ch13 – Employee reward

Ch 6 – Managing equality and diversity Ch 12 – Performance management

Resourcing and Talent Management (7RTM)

Ch 5 – Talent management

Ch 6 – Managing equality and diversity

Managing Employment Relations (7MER)

Ch 14 – Employee voice

Ch 4 – HRM and the labour market Ch 10 – The employment relationship and employee rights at work Ch 16 – Employment relations in emerging economies

Employment Law (7ELW)

Ch 10 – The employment relationship and employee rights at work

Ch 6 – Managing equality and diversity

Employee Engagement (7EEG)

Ch 11 – Employee engagement

Ch 5 – Talent/Management

Learning and Talent Development (7LTD)

Ch 7 – Learning and development

Ch 5 – Talent management Ch 8 – Leadership and management development

Designing, Delivering and Evaluating Learning and Development Provision (7DDE)

Ch 7 – Learning and development

Ch 9 – Organisational development

Knowledge Management and Organisational Learning (7KML)

Ch 9 – Organisational development

Understanding and Implementing Coaching and Mentoring (7ICM)

Ch 8 – Leadership and management development

Ch 7 – Learning and development

CONTRIBUTORS Julie Beardwell, BA, MA, PhD, FCIPD, was awarded her PhD for her study into people management in engineering companies and continues to be interested in HRM in small and medium-sized workplaces. Julie left De Montfort University in 2011 and now has irst-hand experience of running a small business as the owner of Wool Zone, a shop and online retail business (www.woolzone.co.uk). Until 2015 she was Honorary Professor of HRM at Glasgow Caledonian University, Chair of the Police Promotions Examinations Board for the College of Policing and Chief Moderator for the CIPD. She continues to be a CIPD Examiner and a Quality Panel Member. Peter Butler, BA, MA, PhD, is Senior Lecturer in Employment Relations in the Department of Human Resource Management, De Montfort University. He teaches Employment Relations at undergraduate and postgraduate level. He has written on the topic of nonunion employee representation and the management of managerial careers in US-owned multinational companies. More recently, along with Dr Linda Glover and Prof. Olga Tregaskis, he has published on the theme of partnership working in British industry. Ian Clark, BA, MA, PGCE, PhD, is Professor of Employment Relations at the University of Leicester and is Deputy Director of the [&~rom~MRC+ESRC|d ash|funded~normal~&] Centre for Sustainable Work and Employment Futures where he leads on research into financialization and employment relations and employment relations in low productivity sectors. Ian has written extensively on industrial relations and economic performance, and the inluence of the US business system on HRM and industrial relations in the UK publishing in the British Journal of Industrial Relations, the Human Resource Management Journal, the Industrial Relations Journal and Economic and Industrial Democracy. In terms of impact and public policy, Ian provided oral and written evidence to the UK Government Treasury Select Committee during its investigation into private equity between 2007 and 2009 and in 2016 produced written

evidence for the Department of Work and Pensions investigation into the collapse of British Home Stores. Ian edits the journal Work, Employment and Society and is an academic fellow at the CIPD. Audrey Collin, BA, DipAn, PhD, was Professor Emeritus of Career Studies, De Montfort University and Fellow of the National Institute for Career Education and Counselling. Her early career was in personnel management, and she is a Chartered Member of the Chartered Institute of Personnel and Development. She researched and published on career and lifespan studies, mentoring and the employment of older people. She co-edited (with Richard A. Young) two books on career which relect her questioning of traditional understandings of career and her commitment to interpretive research approaches, and another with Wendy Patton: Vocational Psychological and Organisational Perspectives on Career: Towards a Multidisciplinary Dialogue. In retirement, she continued her writing on career for the international academic readership, while also addressing the relationship between theory and practice. Heather Connolly, BSc, MA, PhD, AcadMCIPD is Reader in European Employment Relations in the Comparative Employment Research Centre (CERC), De Montfort University. She has previously held positions at the Universities of Manchester and Warwick. Her research interests focus on trade union strategies for renewal, and how trade unions across Europe have shaped and are constrained by their institutional contexts. She teaches courses at postgraduate level in human resource management from a political economy perspective. Anita Hammer, BA (Hons.), MA, MSc, PhD, is a Senior Lecturer in Comparative and International HRM. Anita’s research focuses on the Global South, in particular India , and examines the development trajectories of new industrial regions, changing patterns of work and employment and the role of the informal economy. The research is interdisciplinary and draws on economic geography,

CONTRIBUTORS

sociology of work, and development and contributes to key debates on regional development, industrial and social upgrading and the nature of capitalism. Previously, Anita was a member of the Indian Civil Service and has industry experience as Head of HR of a public sector organisation. Mike Noon, BA, MSc, PhD, is Professor of Human Resource Management at Queen Mary University of London. He has previously researched and taught at Imperial College London, Cardiff Business School, Lancaster University and De Montfort University. Mike’s research explores the efects of contemporary management practices on the work of employees, and his main focus is equality, diversity and discrimination. His most recent publications critically question what might be considered ‘mainstream’ approaches to the challenges of equality, such as the business case, managing diversity and positive action initiatives. In addition to publishing in academic journals, he has co-authored or co-edited the following books: The Realities of Work, co-authored with Paul Blyton and Kevin Morrell, (Palgrave, 2013, fourth edition); Equality, Inequalities and Diversity: Contemporary Challenges and Strategies, co-edited with Geraldine Healy and Gill Kirton (Palgrave, 2011); Equality, Diversity and Disadvantage in Employment, co-edited with Emmanuel Ogbonna (Palgrave, 2001); and A Dictionary of Human Resource Management, co-authored with Ed Heery, the third edition to be published by Oxford University Press in 2017 Julia Pointon, BA, MA, PGCE, D.Ed., CIPD, is Principal Lecturer in Organisational Behaviour and HRM in the Department of Human Resource Management at De Montfort University and a National Teacher Fellow. She teaches principally on postgraduate courses and is Course Director of the Management of Human Resources MA. She has served on the CIPD membership and Education Committee and has also been Chair of the CIPD branch in Leicester. Deborah Price, DMS, DipM, MBA, PhD, is a Principal Lecturer in Human Resource Management at De Montfort University. Following a career in nursing, she has worked as an independent consultant and a senior manager in both Higher Education and the NHS. Her research interests focus on the psycho-social role of identity and identiication in the creation of organisational relationships, on leadership in safety critical contexts and on qualitative research methods. She has co-authored a CIPD research methods textbook, Business Research Methods: A Practical Approach, with Sheila Cameron and has produced an edited textbook, The Principles and Practice of Change.

Alan J. Ryan, BA, LLM, AcadMCIPD was a Principal Lecturer in the Department of HRM at De Montfort University until 2016. His teaching focused on the implications of legal change for the management of people at work and the development of managerial responses to legislative activity. He taught courses at undergraduate and postgraduate level as well as delivering courses and programmes to corporate clients. His research interest lies in the development of soft systems analysis as a way of understanding changes in managerial behaviour following the introduction of legislation. He has undertaken some consultancy work in both the private and the voluntary sector. He has written on reward management, participation regimes in SMEs and the legal implications of lexibility. Jim Stewart, BA, DMS, DipTM, FCIPD is Professor of Human Resource Development at Liverpool Business School. He has previously held similar positions at Nottingham, Leeds and Coventry Business Schools. A leading researcher on HRD, Jim has authored and co-edited 25 books on the subject as well as numerous chapter contributions and articles in academic and professional journals. Jim holds several appointed roles with the CIPD, including Chief Examiner for Learning and Talent Development, Quality Panel Chair and Co-Chair of their Research Ethics Panel. He is also Executive Secretary of the University Forum for HRD and a member of their joint Scientiic Committee with the International Federation of Training and Development Organisations. Amanda Thompson, BA, MA, CertEd, FCIPD, is Head of Undergraduate Programmes at Nottingham Business School, Nottingham Trent University. Alongside her managerial role, she contributes to the delivery of HRM modules within the School. Amanda has previously published work on the nature of the employment relationship in small and medium-sized enterprises and the role of Healthcare Assistants in the NHS. Her current research interests focus on men’s engagement with part-time work and in particular how men construct masculinity when working part-time. Amanda is engaged with the CIPD at a National level as an Examiner for HRM in Context, the Lead External Quality Adviser for CIPD Awarded Centres in the Southern Region and as a Quality Panel Member. Mairi Watson, LLB, LLM, PGCE, MBA, PhD, FCIM, AcadMCIPD, is Dean of the Faculty of Business and Law at the University of Northampton. The Faculty is the largest in the University with UG, PGT and PGR students on site and enrolled with many international partners across the world. The University has a strong social enterprise

CONTRIBUTORS

agenda, relected in their Ashoka U Changemaker status and embedded throughout the curriculum. Previously, she was Deputy Dean (Development) at Northampton Business School (NBS), the University of Northampton and Head of Corporate and Postgraduate Programmes. As Academic Director of Corporate Programmes and Principal Lecturer in Organisational Behaviour and Human Resource Management at De Montfort University

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she contributed to activities in Leicester Business School. She is a Fellow of the Chartered Institute of Management and an Academic Member of the Chartered Institute of Personnel and Development. Her research interests include managerial identity and policy implementation in constrained circumstances. Mairi’s research has been conducted in prisons, as her previous career was as a prison governor.

ACKNOWLEDGEMENTS We are grateful to the following for permission to reproduce copyright material:

Figures Figure 1.1 from Strategic Human Resource Management John Wiley & Sons (Devanna M.A., Fombrun C.J., Tichy, N. M. 1984) p.35, Republished with permission of JOHN WILEY & SONS, INCORPORATED permission conveyed through Copyright Clearance Center, Inc.; Figure1.2 from Managing Human Assets, Free Press (Beer, M., Spector, B., Lawrence, P.R., Quinn Mills, D. and Walton, R.E 1984) p.16, Copyright ©1984 by The Free Press reprinted with permission of The Free Press, a division of Simon & Schuster; Figure 1.4 adapted from Strategy and Human Resource Management (Management, Work and Organisations), 3rd ed., Palgrave Macmillan (Boxall, P. and Purcell, J. 2011) p.5, ©Peter Boxall and John Purcell 2003,2008,2011 reproduced with permission of Palgrave Macmillan; Figure2.1 adapted from Contemporary Strategy Analysis: Concepts, Techniques, Applications, 6th ed., Blackwell (Grant, R.M. 2008) p.7, Copyright ©1991, 1995, 1998, 2002, 2005, 2008 by Robert M. Grant Republished with permission of Blackwell Publishing, permission conveyed through Copyright Clearance Center, Inc; Figure 2.2 from The Strategy Concept 1: Five Ps for Strategy, Figure 1, California Management Review, 30(1), 14 (Mintzberg, H. 1987), Copyright ©1987 by The Regents of the University of California, reprinted by Permission of SAGE Publications, Ltd.; Figure2.3 adapted from What is Strategy and Does It Matter?, 2nd ed., Thomson Learning (Whittington, R. 2001) p.3; Figure2.4 adapted from Human Resource Management, 4th ed., Prentice Hall (Torrington, D. and Hall, L. 1998) p.27, Copyright ©Prentice Hall Europe 1987, 1991, 1995, 1997; Figure 2.5 adapted from Toward a Unifying Framework for Exploring Fit and Flexibility in Strategic Human Resource Management Academy of Management Review, Vol. 23 (4), p. 758 (Wright, P. and Snell, S 1998), Copyright ©1998, Academy of Management, Republished with permission of Academy of Management, permission conveyed through Copyright Clearance Center, Inc.; Figure 2.6 adapted from Understanding the People and Performance Link: Unlocking the Black Box, CIPD (Purcell, J., Kinnie, N., Hutchinson, S., Rayton, B. and Swart, J 2003) with the permission of the publisher, the Chartered Institute of Personnel and Development, London (www.cipd.co.uk); Figure4.1 adapted from The Realities of

Work, 3rd ed, Palgrave Macmillan (Noon,M. and Blyton,P. 2006) p.368, Copyright © Mike Noon and Paul Blyton 1997, 2002, 2007 reproduced with permission of Palgrave Macmillan; Figure 5.1 adapted from Successful Selection Interviewing, Blackwell (Anderson, N. and Shackleton V. 1993) p.30, John Wiley & Sons Ltd Reproduced with permission of Blackwell Scientiic in the format Republish in a book via Copyright Clearance Center and with permission from Professor Neil Anderson; Figure5.2 adapted from Quit stalling, People Management, p.34 (Bevan, S 1997), with permission from Stephen Bevan; Figure6.2 adapted from The Realities of Work, 3rd ed., Palgrave Macmillan (Noon, M. and Blyton, P. 2007) p. 297, Copyright ©Mike Noon and Paul Blyton 1997, 2002, 2007 reproduced with permission of Palgrave Macmillan; Figure7.1 from Design for learning in management training and development: a view, Journal of European Industrial Training, 4(8), p.22 (Binsted, D.S. 1980), Stockholm University with permission from MCB University Press; Figure 7.4 adapted from Learning and Talent Development Survey, London, CIPD (2012) p.8, with the permission of the publisher, the Chartered Institute of Personnel and Development, London (www.cipd.co.uk); Figure7.6 from E-moderating: The Key to Online Teaching and Learning, 3rd ed., Routledge (Salmon, G. 2011) p.32, Republished with permission of Routledge, permission conveyed through Copyright Clearance Center, Inc.; Figure8.1 adapted from UK Highlights: Global Leadership Forecast 2011, London CIPD (2011) p.6, © Copyright Chartered Institute of Personnel and Development 2011 with the permission of the publisher, the Chartered Institute of Personnel and Development, London (www.cipd.co.uk); Figure 8.2 adapted from Leadership development in organisations: multiple discourses and diverse practice, International Journal of Management Reviews, 15(4), pp. 359-80 (Mabey, C 2013), ©2012 The Author. International Journal of Management Reviews ©2012 British Academy of Management and John Wiley & Sons Ltd.; Figure8.3 from Linking development with business, in, Leadership in Organizations: Current Issues and Key Trends Figure11.2, 2nd ed., Routledge (Storey,J. 2010) p. 196, Republished with permission of Routledge, permission conveyed through Copyright Clearance Center, Inc.; Figure8.4 adapted from Strategically aligned leadership development in, Leadership in Organizations: Current Issues and Key Trends, Routledge (Storey, J. (ed.) 2004) p. 287; Figure 8.5 adapted from UK Highlights: Global

ACKNOWLEDGEMENTS

Leadership Forecast 2011, CIPD (2011) pp. 8–9, ©Copyright Chartered Institute of Personnel and Development 2011 with the permission of the publisher, the Chartered Institute of Personnel and Development, London (www.cipd.co.uk); Figure8.6 adapted from Management Learning: Integrating Perspectives in Theory and Practice, Table3.2 (Burgoyne, J. and Jackson B. 1997) p. 63 Copyright ©John Burgoyne and Brad Jackson 1997 Republished with permission of SAGE publications, permission conveyed through Copyright Clearance Center, Inc.; Figure9.1 adapted from Strategic Change and the Management Process, Basil Blackwell Ltd (Johnson, G 1987) p.224 Figure7.2, Republished with permission of B. BLACKWELL, permission conveyed through Copyright Clearance Center, Inc.; Figure9.4 adapted from Organization Development in Schools, National Press Books (Schmuck, R.A. and Miles, M.B 1971) p.5, used with permission of the authors; Figure9.6 from Peter de Jager, http:// www.technobility.com, ©2013 Peter de Jager, reprinted with express permission of the owner, [emailprotected]; Figure9.7 adapted from Models of change agency: a fourfold classiication, British Journal of Management, 14(2), pp. 131-142 (Caldwell, R. 2003), Copyright ©2003, John Wiley and Sons; Figure9.10 from Organisational Culture and Leadership, Jossey Bass (Schein, E.H 2004) p. 26, Reproduced with permission of JOHN WILEY & SONS, INCORPORATED, permission conveyed through Copyright Clearance Center, Inc.; Figure 10.1 from Law Express: Employment Law, Pearson, Longman (Cabrelli, D 2008) p.11, Copyright ©Pearson Education Ltd 2008.; Figure11.1 from The Drivers of Employee Engagement Report 408, Institute for Employment Studies UK (Robinson, D., Perryman, S. and Hayday, S 2004) with permission of Institute for Employment Studies (IES); Figure13.2 adapted from Paying for Contribution: Real Performance-Related Pay Strategies, Kogan Page (Brown, D. and Armstrong, M. 1999) p.81; Figure13.3 from Inequity in social exchange, Advances in Experimental Social Psychology, 2, pp. 267-99 (Stacy Adams J., Berkowitz, L. (ed.) 1965), ©1965 with permission from Elsevier

Tables Table1.1 adapted from Improving Health Through Human Resource Management: A Starting Point for Change, CIPD (Hyde, P., Boaden, R., Cortvriend, P., Harris, P., Marchington, M., Pass, S., Sparrow, P.and Sibald, B. 2006) with the permission of the publisher, the Chartered Institute of Personnel and Development, London (www.cipd.co.uk); Table1.2 adapted from Evolution of HR roles, Role call, People Management, 11, pp.24-28 (Ulrich, D. and Brockbank,W 2005), Chartered Institute of Personnel andDevelopment (CIPD) with permission from D. Ulrich and W. Brockbank; Table2.1 adapted from What is Strategy and Does It Matter?, 2nd ed, Thomson Learning (Whittington, R. 2001) p.39; Table2.2 adapted from Linking competitive strategies with human resource management, Academy of Marketing Executive 1 (3), pp.207-219 (Schuler, R.S. and Jackson, S.E 1987), Republished with permission of Academy of Management, permission conveyed

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through Copyright Clearance Center, Inc.; Table2.3 from Modes of theorizing in strategic human resource management, Academy of Management Journal, Vol. 39 (4), pp. 802-35 (Delery, J.E. and Doty, H. 1996), Copyright ©1996, Academy of Management, republished with permission of Academy of Management, permission conveyed through Copyright Clearance Center, Inc.; Table4.1 from Estimated and projected population of the UK and constituent countries 2010–2035 (igures in 000s) Oice for National Statistics, licensed under the Open Government Licence v.3.0 https://www. nationalarchives.gov.uk/doc/ open-government-licence/version/3/; Table 4.2 adapted from Women in employment by employment type and age of youngest dependent child, UK, 2014 http:// webarchive.nationalarchives.gov.uk/20160105160709/http:// www.ons.gov.uk/ons/dcp171776_388440.pdf, Families in the Labour Market, 2014 ©Crown copyright 2014 Contains public sector information licensed under the Open Government Licence v3.0 https://www. nationalarchives.gov.uk/doc/ open-government-licence/version/3/; Table 4.6 adapted from The 2011 Workplace Employment Relations Study, First Findings, Department for Business, Innovation and Skills (van Wanrooy, B., Bewley,H., Bryson, A., Forth, J., Freeth, S., Stokes, L. and Wood, S 2013) p.9, Contains public sector information licensed under the Open Government Licence v3.0 https://www.nationalarchives.gov.uk/doc/opengovernment-licence/version/3/; Table5.2 from Recruitment and Selection, Advisory booklet No. 6, Advisory, Conciliation and Arbitration Service (ACAS) (1983) © Acas, Euston Tower, 286 Euston Road, London NW1 3JJ ©Crown copyright (2001 - 2009); Table5.3 from Resourcing and Talent Planning Survey report, CIPD (2015) p.24, with the permission of the publisher, the Chartered Institute of Personnel and Development, London (www.cipd.co.uk); Table 8.1 adapted from Management development for the individual and the organisation, Personnel Management, pp. 40-44 (Dr J. G. Burgoyne 1988), with permission from Dr J. G.Burgoyne. ©Copyright Chartered Institute of Personnel and Development 1988; Table9.1 from Organizational discourse and new organization development practices, British Journal of Management, 19 (s1), S7-S19 (Marshak, R. and Grant, D. 2008), ©2008 British Academy of Management; Table9.2 from Planning and Managing Change., Change Management 2 (Pugh, D. and Mayle, D 2009), Open University Business School. Copyright ©Open University; Table10.2 from The Employment Tribunals and Employment Appeals Tribunals Fees Order 2013, http://www.legislation. gov.uk/ukdsi/2013/9780111538654 Contains public sector information licensed under the Open Government Licence v3.0 https://www.nationalarchives.gov.uk/doc/ open-government-licence/version/3/; Table11.2 from Global Employee Engagement Index™, Efectory (2011); Table13.4 adapted from Job Evaluation: Consideration and Risks, London: ACAS (2010) ©Acas, Euston Tower, 286 Euston Road, London NW1 3JJ ©Crown copyright (2001 - 2009); Table14.1 adapted from Managing Employee Involvement and Participation, Sage (Hyman, J. and Mason, B. 1995)

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ACKNOWLEDGEMENTS

p.25, Table2.1, ©Jef Hyman and Bob Mason, republished with permission of SAGE publications, permission conveyed through Copyright Clearance Center, Inc.

Text Case Study on page 31 adapted from Damning report condemns Ashley for ‘appalling’ practices at Sports direct, FT, 22/07/2016 (Vandevelde,M., Parker, G., and Oakley,D.), © The Financial Times Limited. All Rights Reserved; Article on page 47 from The Spotify efect, Financial Times, 24/10/2014 (Milne, R.), © The Financial Times Limited. All Rights Reserved.; Case Study on page 68 adapted from Business life – Sarah O’Connor on employment, FT, 15/06/2016 (O’Connor, S.), ©The Financial Times Limited. All Rights Reserved; Case Study on pages 62–3 adapted from Changing Business Strategies and the Implications for Workers in the European Civil Aviation Industry 01.11.2015 Geraint Harvey and Peter Turnbull, Dr Geraint Harvey, Birmingham Business School, University of Birmingham Professor Peter Turnbull, School of Economics, Finance and Management, University of Bristol, http://www.airneth.nl/ activities/details/article/changing-business-strategies-andthe-implications-for-workers-in-the-european-civil-aviationindustr/; Case Study on page 95 from BHS reports lays bare failure and culpability, Financial Times, 25/07/2016 (Vandevelde, M), ©The Financial Times Limited. All Rights Reserved; Case Study on page 142 from Companies struggle to ill quarter of skilled jobs vacancies, FT, 28/01/2016 (O’Connor,S.), ©The Financial Times Limited. All Rights Reserved; Case Study on page 102 from More than 100,000 legal roles to become automated FT, 15/03/2016 (Croft,J.), ©The Financial Times Limited. All Rights Reserved; Article on page 159 from Goldman Sachs to drop on-campus interviews, FT, 23/06/2016 (Noonan, L), ©The Financial Times Limited. All Rights Reserved; Case Study on page 176 from Nissan builds on loyalty at Sunderland plant, The Financial Times 07/03/2016 (Tighe, C.), © The Financial Times Limited. All Rights Reserved; Case Study on page 180 from Opinion: we need women as chief executives, not just nonexecutives’, Financial Times, 29/04/2015, p.6; Article on pages 192–3 adapted from Brain science ires up the neurons of managers, Financial Times, 13/05/2014, p.12 (Clegg, A.), ©The Financial Times Limited. All Rights Reserved.; Box6.5 adapted from The shackled runner: time to rethink positive discrimination?, Work, Employment and Society, 24 (4), p728–39 (Noon, M 2010), ©2010 by BSA Publications Ltd, reprinted by Permission of SAGE Publications, Ltd.; Case Study on page 261 adapted from Saatchi chief’s comments on ‘unambitious’ women come under ire from ad execs, People Management (Odum,S.M.), ©Copyright Chartered Institute of Personnel and Development 2016 with the permission of the publisher, the Chartered Institute of Personnel

and Development, London (www.cipd.co.uk); Article on page 273 adapted from Taking irst steps in making health clubs it for purpose, The Times, 29/04/2013 (Walsh, D.), http://www.thetimes.co.uk/tto/business/industries/leisure/ article3751258.ece; Box 9.1 adapted from HR and organisation development: separate past, joint future? Podcast 44, with the permission of the publisher, the Chartered Institute of Personnel and Development, London (www.cipd.co.uk).; Box 9.6 from Training materials provided by Frank Jordan, University of Northampton 2013; Article on pages 385–6 adapted from Age discrimination more widespread than sexism in the City, FT (Groom, B), 2013, ©The Financial Times Limited. All Rights Reserved; Case Study on page 390 adapted from http://engageforsuccess.org/case-study-alcoapower-and-propulsion-best-employee-engagement-initiativewinners Case Study: Alcoa Power and Propulsion, Best Employee Engagement Initiative Winners Engage for Success. Michaela Weller, Owner Director, Leading Edge Coaching Ltd. www.leading-edge.co.uk; Case Study on pages 418–21 from Creating and sustaining a highly engaged company culture in a multigenerational workplace, Strategic HR Review, 14 Iss 4, pp.124–130 (Blattner,J., Walter,T.J. 2015), ©Emerald Group Publishing Limited all rights reserved.; Box 11.4 adapted from Evidence Case Study: Rentokil Initial www.engageforsuccess.org/ideas-tools/evidence-case-studyrentokil-initial/, Michaela Weller, Owner Director, Leading Edge Coaching Ltd. www.leading-edge.co.uk; Case Study on pages 453–54 adapted from Creating a company-wide, on-line, performance management system: A case study at TRW Inc., Human Resource Management, 41(4), pp.491–98 (Neary, D.B 2002), Copyright © 2002 Wiley Periodicals, Inc., Reproduced with permission of Blackwell Scientiic in the format Republish in a book via Copyright Clearance Center.; Case Study on page 459 adapted from City leaders urge radical reforms of ‘unfair’ FT, 08/05/2016 (Jenkins,P. and Financial Editor), ©The Financial Times Limited. All Rights Reserved; Case Study on pages 504–5 from Zizzi cuts staf perks as minimum wage increases, FT.com, 25/04/2016 (O’Connor, S. and McClean, P.), © The Financial Times Limited. All Rights Reserved; Article 13.2 adapted from ‘Fat Cat Tuesday 2016’, www.highpaycentre.org The High Pay Centre; Case Study on page 509 from Junior doctors reject call to maintain paediatrics during strike, The Guardian, 15/04/2016 (Campbell,D), https://www.theguardian.com/ society/2016/apr/15/junior-doctors-reject-call-to-maintainpaediatrics-during-strike Copyright Guardian News & Media Ltd 2017; Box 14.5 adapted from Employment Law: An Introduction, 2 ed., Oxford University Press (Taylor, S. and Emir, A. 2009) pp.539–41, ©Stephen Taylor and Astra Emir 2009 with permission of Oxford University Press; Box15.2 from Keidenran’s Okuda lauds Japanese management for revival, The Nikkei Weekly, 16/01/2006

PART 1

HUMAN RESOURCE MANAGEMENT AND ITS ORGANISATIONAL CONTEXT 1 An introduction to human resource management 2 Strategic human resource management 3 Contextualising HRM

Introduction to Part 1 Human resource management (HRM) has become a pervasive and influential approach to the management of employment in a wide range of market economies. The original US prescriptions of the early 1980s have become popularised and absorbed in a wide variety of economic settings: there are very few major economies where the nature of HRM, to include its sources, operation and philosophy, is not actively discussed. As a result, the analysis and evaluation of HRM are major themes in academic, policy and practitioner literatures. These first three chapters are strongly related, in that they consider the nature of HRM from a number of perspectives. The first chapter outlines the different ways in which HRM has been interpreted and introduces two of the early influential models. It then explores the preoccupation in the relationship between HRM and organisational performance and the extent to which research studies are able to demonstrate a link between the two. The chapter then goes on to explore the impact the global financial crisis and subsequent recession had on the adoption of HRM practices. The chapter concludes by considering the impact of HRM on human resources professionals. Chapter2 examines the strategic nature of HRM in more depth: how it is aligned to and configured with organisational strategy and how the debate incorporates multiple perspectives, including the ‘best fit’, the ‘configurational approach’, the ‘resource-based view’ and ‘best practice’. In considering claims for the importance of the strategic nature of HRM, it raises questions as to its efficacy in helping to meet organisational objectives, creating competitive advantage and ‘adding value’ through ‘high-performance’ or ‘high-commitment work practices’. Whether or not the claims for these approaches are supportable, it is becoming clear that no one system or approach can be applied to all organisations, owing to the increasing complexity of organisational forms and organisational contexts. Chapter3 continues this contextual theme by exploring the various strands that are woven together to form the pattern of meanings that constitute HRM. This helps to enrich our understanding of HRM and unravel some of the assumptions and philosophical stances that lie behind it. The purpose of the discussion is to create a critical awareness of the broader context in which HRM operates, not simply as a set of operational matters that describe the functional role of people management, but also as part of a complex and sophisticated process that helps us to understand the nature of organisational life. The chapter concludes with a consideration of ethical issues. The type of questions raised by HRM indicates the extent to which it has disturbed many formerly accepted concepts in the employment relationship. For some, it has become a model for action and application; for others, it is no more than a map that indicates how the management of employees might be worked out in more specific ways than can adequately be dealt with by HRM as a set of general principles.

CHAPTER 1 AN INTRODUCTION TO HUMAN RESOURCE MANAGEMENT JULIE BEARDWELL

Objectives ●

To define human resource management (HRM).

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To explore the origins of HRM.

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To review and evaluate the main models of HRM.

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To explore the association between HRM and business performance.

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To explore HRM in practice and the impact of recession and recovery on HRM practice. To review the impact of HRM on the changing roles of human resources professionals.

CHAPTER 1 AN INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

DEFINITIONS OF HRM

Definitions of HRM Human resource management refers to a collection of policies used to organise work in the employment relationship. It centres on the management of work and the management of people who undertake this work. Therefore, HRM is concerned with recruitment, selection, learning and development, reward, communication and employee involvement, teamwork and performance management. While it is relatively easy to list activities that make up HRM, it is a subject that has stimulated much debate and disagreement. Thus, despite the popularity of the term HRM, there is still no universally agreed definition of its meaning. Watson (2002: 369) suggests that ‘the term HRM is used in a confusing variety of ways’. In its broadest sense, HRM can be used as a generic term to describe any approach to managing people; for example, Boxall and Purcell (2011: 3) use the term to encompass ‘the management of work and the management of people to do the work’. For others, though, HRM encompasses a new approach to managing people that is significantly different from more traditional practices. They claim that HRM offers two advantages over traditional approaches to managing people. First, it is more strategic, in that HRM policies are designed to reinforce each other and support the organisation’s business strategy. This strategic dimension incorporates vertical integration, that is, the alignment of human resources (HR) strategy with business strategies, whereas the operational dimension emphasises horizontal integration, that is, that HR policies and practices must be compatible with each other. Second, appropriately designed and integrated HRM policies create an organisational climate in which workers are more highly motivated and committed to cooperating with management to achieve organisational goals. This approach has been summed up by Storey (2007: 7) as ‘a distinctive approach to employment management which seeks to achieve competitive advantage through the strategic deployment of a highly committed and capable workforce, using an array of cultural, structural and personnel techniques’. However, it begs the question as to whether HRM policies designed to achieve strategic goals, such as competitive costs or the ability to respond rapidly to changes in markets, can also provide a climate of trust and cooperation between workers and managers. Some commentators have argued that HRM is essentially about creating a climate of employee commitment (e.g. Pfeffer, 1998) and cooperation, while others have maintained that the term HRM can relate to policies for managing people that are designed to further the strategic goals of the organisation (e.g. Legge, 2005; Huczynski and Buchanan, 2007). Consequently, there is some ambiguity in the meaning of HRM, which has led to it becoming a contested concept.

Explore

● ●

What does the term HRM mean to you? To what extent is it possible to have policies and practices that meet the needs and objectives of organisations and individuals?

This ambiguity has led to various attempts to clarify the meaning or, indeed, the meanings of HRM. Some of the earliest contributions drew a distinction between ‘soft’ and ‘hard’ variants of HRM (Guest, 1987; Storey, 1992), with ‘soft HRM’ used to describe approaches aimed at enhancing the commitment, quality and flexibility of employees, while ‘hard HRM’ was used to describe the emphasis on strategy where human resources are deployed to achieve business goals in the same way as any other resource. ‘Hard HRM’ can also have a harsher interpretation associated with strategies of cost reduction (e.g. subcontracting, outsourcing, lower wages, minimal training, tighter monitoring and performance management) and lean production methods (downsizing and work intensification) associated with these strategies. However, this

CHAPTER 1 AN INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

attempt at clarification is also problematic. For example, if hard HRM is used to describe a strategic approach to people management, then soft and hard HRM are ‘not necessarily incompatible’ (Legge, 2005). Hard variants can contain elements of soft practice, while soft variants can deliver hard outcomes in terms of tightness of fit with business strategy. However, if hard HRM is used to describe a cost minimisation approach, then soft and hard HRM may be ‘diametrically opposed’ (Truss et al., 1997: 54). As the debate on HRM has continued, further terms have been introduced, for example, ‘high-commitment management’ (HCM) and ‘high-involvement management’ have eclipsed soft HRM, whereas ‘strategic HRM’ appears to have replaced hard HRM. Nonetheless, the underlying tensions within HRM that were captured in the ‘hard’ versus ‘soft’ dichotomy remain. In addition, the preoccupation with the relationship between HR practices and improved business performance has been reflected in the use of ‘high-performance work practices’ (HPWPs) as a term to describe ‘a set of complementary work practices covering three broad categories: high employee involvement practices, human resource practices, and reward and commitment practices’ (Sung and Ashton, 2005: 5). There are subtle variations in the meanings of these labels, but there is also considerable overlap and some authors (e.g. Pfeffer, 1998) use the terms interchangeably. Both the high-commitment and high-involvement models reflect ‘a system of human resources practices thought to enhance employees’ levels of skill, motivation, information and empowerment’ (Guthrie, 2001: 180).

High commitment versus control An element that all HRM models have in common is that they are seen as a contrast to a Taylorist, control type of management (Wood, 1999). This contrast can be misleading, as high-commitment and control-based approaches to people management can both be seen as means of achieving organisational control, that is, ‘the regulation of organisational activities so that some targeted element of performance remains within acceptable limits’ (Barney and Griffin, 1992: 329). What varies between them is the type of control exercised and the desired employee behaviours. Stewart (1991) identifies three distinct control strategies: manager-directed control, bureaucratic control and employee-centred control. Rollinson and Dundon (2011: 344) plot these strategies on a continuum of the type of employee behaviour desired which has an emphasis on employee predictability at one end and an emphasis on employee flexibility, creativity and innovation at the other. At the predictability end of the continuum, manager-directed control reflects Taylorist assumptions about worker competence and management authority. Control is exercised through supervisors giving direct instruction and closely monitoring work. The middle ground, bureaucratic control, relies less on close monitoring and seeks to limit employee discretion through fixed job definitions, reliance on rules and procedures, differentiated status, equitable pay and a restricted flow of information. Guest (1991) labels this the ‘compliance’ model. Employee-centred control, at the other end of the continuum, equates with the high-commitment model. This form of control emphasises employee discretion and managers seek to influence the ways that employees think about their own actions and behave in ways that are congruent with organisational objectives (Rollinson and Dundon, 2011).

Explore

Revisit Case Study 1.1. What management control strategies are applied at Simply Business? Compare their approach to that adopted by Sports Direct (the opening case study in Chapter 2). What are the implications of these different approaches for employees and the organisations?

The high-commitment/high-performance paradigm has come to be promoted as ‘best practice’ for both employers and employees, and many of the HR practices associated with this type of approach are included in the measures used to compile the Sunday Times ‘Best Companies to

THE ORIGINS OF HRM

Work For’ list, as illustrated in Case Study 1.1. Employers are seen to benefit on the grounds that the practices associated with it yield performance levels above those associated with more traditional workplace practices (Godard, 2004: 349). Employees are seen to benefit from the ability to exercise discretion and experience high levels of trust. Guest and Conway (1999) found that employees in workplaces with a high number of HRM practices reported higher levels of job satisfaction and a more positive management–worker relationship than employees who did not. However, there is a danger that the terms used to define HRM imply positive outcomes that may not necessarily be warranted. For example, greater demands on employee commitment and tighter systems for performance management are likely to further the interests of theorganisation, its owners and investors at the expense of employees. Enhancements in employee discretion, associated with ‘high-commitment/involvement’ practices, may be achieved at the ‘expense of stress, work intensification and job strain’ (Ramsay et al., 2000: 505). Similarly, Wall and Wood (2005: 432) challenged the assumption of an established link between HRM practices and organisational performance, implied in the ‘high performance’ label – this is discussed more fully later in the chapter.

The origins of HRM There is rather more consensus that the origins of HRM lie within employment practices associated with welfare capitalist employers in the USA during the 1930s. Both Jacoby (2005) and Foulkes (1980) argue that this type of employer exhibited an ideological opposition to unionisation and collective employment relations. As an alternative, welfare capitalists believed that the organisation, rather than third-party institutions such as the state or the trade unions, should provide for the security and welfare of workers. To deter any propensity to unionise, especially once President Roosevelt’s New Deal programme began after 1933, welfare capitalists often paid efficiency wages, introduced healthcare coverage, pension plans and provided layoff pay. Equally, they conducted regular surveys of employee opinion and sought to secure employee commitment via the promotion of strong, centralised corporate cultures and long-term permanent employment. Welfare capitalists pioneered individual performance-related pay, profit-sharing schemes and team-working. This model of employment regulation had a pioneering role in the development of HRM, but rested on structural features such as stable product markets and the absence of marked business cycles. While the presence of HRM was well established in the US business system before the 1980s, it was only after that period that HRM gained external recognition by academics and practitioners. There are a number of reasons for its emergence since then, among the most important of which are the major pressures experienced in product markets during the recession of 1980–82, combined with a growing recognition in the USA that trade union influence was waning. By the 1980s, the US economy was also being challenged by overseas competitors, most notably Japan. This led to discussions that focused on two issues: ‘the productivity of the American worker’, particularly compared with the Japanese worker, ‘and the declining rate of innovation in American industries’ (Devanna et al., 1984: 33). From this sprang a desire to create a work situation free from conflict, in which both employers and employees worked in unity towards the same goal – the success of the organisation (Fombrun, 1984: 17). In the UK, the business climate also began to favour changes in the employment relationship in the 1980s. As in the USA, this was partly driven by economic pressure in the form of increased product market competition, the recession in the early 1980s and the introduction of new technology. However, a very significant factor in the UK, generally absent from the USA, was the desire of the government to reform and reshape the conventional model of industrial relations. This provided support for the development of more employer-oriented employment policies on the part of management (Beardwell, 1992, 1996). The restructuring of the economy saw a

CHAPTER 1 AN INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

rapid decline in the old industries and a relative rise in the service sector and in new industries based on ‘high-tech’ products and services, many of which were comparatively free from the established patterns of what was sometimes termed the ‘old’ industrial relations. These changes were overseen by a muscular entrepreneurialism promoted by the Conservative government led by Margaret Thatcher in the form of privatisation and anti-union legislation, ‘which encouraged firms to introduce new labour practices and to re-order their collective bargaining arrangements’ (Hendry and Pettigrew, 1990: 19). At the same time, the influence of the US ‘excellence’ literature (e.g. Peters and Waterman, 1982; Kanter, 1984) associated the success of ‘leading edge’ companies with the motivation of employees by involved management styles that also responded to market changes. Consequently, the concepts of employee commitment and ‘empowerment’ became another strand in the ongoing debate about management practice and HRM. A review of these issues suggests that any discussion of HRM has to come to terms with at least three fundamental problems: ●

that HRM is derived from a range of antecedents, the ultimate mix of which is wholly dependent upon the stance of the analyst, and which may be drawn from an eclectic range of sources;

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that HRM is itself a contributory factor in the analysis of the employment relationship, and sets part of the context in which that debate takes place;

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that it is difficult to distinguish where the significance of HRM lies – whether it is in its supposed transformation of styles of employee management in a specific sense, or whether in a broader sense it is in its capacity to sponsor a wholly redefined relationship between management and employees that overcomes the traditional issues of control and consent at work.

Models of HRM Following on from our earlier discussion of the different definitions and meanings of HRM, two broad models have proved particularly influential, at least in academic circles, in the interpretation of HRM. On the one hand, contingency-based approaches have developed into strategic HRM to suggest that HRM must match with business strategy. On the other hand, what might be termed an absolute position – more is better – has developed around ideas of mutuality and stakeholding at the organisation level.

Contingency: The matching model The ‘matching’ model, developed by academics at the Michigan Business School, introduced the concept of strategic HRM, in which HRM policies are inextricably linked to the ‘formulation and implementation of strategic corporate and/or business objectives’ (Devanna et al., 1984: 34). The model is illustrated in Figure1.1. The authors emphasise the necessity of a ‘tight fit’ between HR strategy and business strategy and the use of a set of HR policies and practices that are integrated with each other and with the goals of the organisation. Price (2004: 45–6) outlines the following key areas for the development of appropriate HR policies and systems: ●

selection of the most suitable people to meet business needs;

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performance in the pursuit of business objectives;

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appraisal, monitoring performance and providing feedback to the organisation and its employees;

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rewards for appropriate performance;

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development of the skills and knowledge required to meet business objectives.

MODELS OF HRM

Political forces

Cultural forces

Economic forces Mission and strategy

Firm Organisation structure

Human resource management

Figure 1.1 The matching model of HRM. Source: Devanna et al. (1984) in Fombrun et al. (1984: 35); reproduced with permission.

CHAPTER 1 AN INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

Stakeholder interests Shareholders Management Employee groups Government Community Unions

Situational factors Workforce characteristics Business strategy and conditions Management philosophy Labour market Unions Task technology Laws and societal values

HRM policy choices Employee inﬂuence Human resource ﬂow Reward systems Work systems

HR outcomes Commitment Competence Congruence Cost-effectiveness

Long-term consequences Individual well-being Organisational effectiveness Societal well-being

The recognition that employees and their representatives are important stakeholders who at least need to be included in the equation initially led to greater acceptance of this model by academics and commentators in the UK, although some still criticised it as being too unitarist (Hendry and Pettigrew, 1990). However, the main influence of this model is based less on considerations of stakeholder interests and situational factors and more on the benefits to employers of adopting a ‘soft’ approach to HRM that seeks to enhance the quality and commitment of the workforce. Building on this model, Guest (1989: 42) developed a set of propositions that combine to create more effective organisations: ●

Strategic integration is defined as ‘the ability of organisations to integrate HRM issues into their strategic plans to ensure that the various aspects of HRM cohere and for line managers to incorporate an HRM perspective into their decision making’.

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High commitment is defined as being ‘concerned with both behavioural commitment to pursue agreed goals and attitudinal commitment reflected in a strong identification with the enterprise’.

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High quality ‘refers to all aspects of managerial behaviour, including management of employees and investment in high-quality employees, which in turn will bear directly on the quality of the goods and services provided’.

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Flexibility is seen as being ‘primarily concerned with what is sometimes called functional flexibility, but also with an adaptable organisational structure with the capacity to manage innovation’.

MODELS OF HRM

This reflects an assumption that it is possible to balance the strategic integration associated with the matching model and the high-commitment elements of the universal model. The assumption of universalism that underlies the ‘best practice’ school of HRM is that a set of practices aimed at high commitment or high performance will benefit any organisation regardless of context (public sector, private sector or voluntary sector). The elements of best practices identified by Pfeffer (1998) almost 30 years ago are still widely recognised, if not universally accepted: ●

employment security

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sophisticated selection

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team-working and decentralisation

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high wages linked to organisational performance

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extensive training

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narrow status differentials

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communication and involvement.

There is no widely accepted theoretical rationale for favouring any particular set of practices as being essential to HRM (Boselie et al., 2005), and reviews of the field (e.g. Boselie et al., 2005; Wall and Wood, 2005; Hyde et al., 2006; Boxall and Mackie, 2009) show considerable variety in the number and type of practices included in lists within different studies. However, these studies have also identified some areas of common ground. For example, Wall and Wood’s (2005: 435) review of 25 studies found that ‘they typically cover a substantial range of the following: sophisticated selection, appraisal, training, teamwork, communication, job design, empowerment, participation, performance-related pay, harmonisation and employment security’. More specifically, Boselie et al.’s (2005: 73) review of 104 articles identified the top four practices, in order, as ‘training and development, contingent pay and reward schemes, performance management (including appraisal) and careful recruitment and selection’. Guest (2001) notes a broad consensus around the territory to be covered: There is a plausible list of practices that includes selection, training, communication, job design and reward systems. There are also practices on the margin such as family-friendly and equal opportunity practices as well as some that cannot apply across all sectors, such as profit-related pay and employee-share ownership schemes. (Guest, 2001: 1096)

Best-practice HRM is discussed more fully in Chapter2 and will be revisited later in this chapter in relation to HRM and organisational performance. However, it is worth noting here that there have been challenges to the universal applicability of best-practice HRM. For example, Marchington and Zagelmeyer (2005: 4) suggest that a high-commitment approach to HRM is dependent on the ability of employers to take a long-term perspective and on the prospect of future market growth. They also suggest that it is easier to engage in highcommitment HRM when labour costs form a low proportion of total costs. Boxall and Purcell (2011) agree that any list of best practices is unlikely to have universal application because of the influence of organisational context. However, they differentiate between the surface layer of policy and practice that is likely to be contingent on a range of internal and external factors and the underpinning layer that reflects ‘certain desirable principles which, if applied, will bring about more effective management of people’ (Boxall and Purcell, 2011: 95–6; see Figure1.3).

CHAPTER 1 AN INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

Surface layer: HR policies and practices – heavily influenced by context (societal, sectoral, organisational) Underpinning layer: generic HR processes and general principles of labour management.

Figure 1.3 The ‘best fit’ versus ‘best practice’ debate: two levels of analysis. Source: Boxall and Purcell (2011: 95).

HRM and organisational performance Since the early 1990s, there have been many studies investigating the links between HRM and organisational performance. These have mainly focused on the extent to which high-commitment practices led to improvements in employee outcomes and organisational performance (Marchington et al., 2016: 365). The view that HRM improves the performance of organisations is widespread, yet which aspects of performance are important and how they might be measured are not clearly defined. HRM may contribute to sustaining competitive advantage, but this does not necessarily have to rely on high-commitment HRM. A key issue relates to the type of sector and product market in which a firm competes. Broadly these fall into two categories: cost advantage, which is crucial to competitiveness in contexts where the imperative is cost control if not cost reduction, for example, mass service or mass production sectors; and labour differentiation, where quality and services are at a premium and the focus of HR strategies is to attract and retain good-quality recruits and the use of superior organisational processes to promote both vertical and horizontal fit. Guest (2011: 4) identified six overlapping phases in research into the links between HRM and performance. These are briefly outlined here and then discussed in more detail as the chapter progresses: ●

Phase 1: Development of HRM frameworks

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Phase 2: Survey-based studies

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Phase 3: Backlash against claims linking HRM to improved organisational performance

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Phase 4: Conceptual refinement about HRM practices, outcomes and the link between them

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Phase 5: Focus on HR processes and the importance of workers’ perceptions

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Phase 6: Growing sophistication and complexity of data collection methods and statistical analysis.

The first phase, which occurred in the 1980s, ‘presented the promise of HRM in the form of semi-prescriptive analytical frameworks alongside somewhat anecdotal cases that appeared to confirm the promise of an association between HRM and performance’ (Guest, 2011: 4); two such frameworks have been introduced in the chapter. The second phase emerged in the 1990s when survey-based studies emerged (primarily from the USA) which showed that the adoption of more HR practices was associated with higher organisational performance. The starting point for this empirical approach came from the USA, in particular the work of Arthur (1992, 1994), McDuffie (1995) and Huselid (1995). The unifying theme of these studies is that particular combinations of HRM practices, especially where they are refined and modified to fit with particular organisational contexts, can give quantifiable improvements in organisational performance. Arthur’s work studied 54 mini-mills (new technology steel mills using smaller workforces and new working practices) and demonstrated that firms using a ‘commitment’ model of HRM saw higher productivity, lower labour turnover

HRM AND ORGANISATIONAL PERFORMANCE

and lower rates of rejected production. McDuffie’s work examined 70 plants in the world car industry and the use of HR techniques that were regarded as innovative. His analysis argued that superior performance is achieved when practices are used together, rather than in isolation. An important part of this analysis is the extent to which employees gave ‘extra’ in the form of discretionary effort that would otherwise not have been forthcoming without the cumulative effect of the chosen practices. Three factors were noted in particular: buffers (the extent to which plants adopted flexibility); work system (the work arrangements that complemented flexibility); and HRM policies (the HRM practices that complemented flexibility). The marked effect on performance was in the combined impact of all three factors working together. Huselid’s study examined the relationships between the HR system (the groups of practices rather than individual practices), outcome measures (such as financial performance as well as HR data on turnover and absence) and the fit between HR and competitive strategy in 986 US-owned firms employing more than 100 employees. Huselid’s results indicated a lowering of labour turnover, higher sales performance, improved profitability and higher share valuations for those firms that performed well on his indices. The benefits of adopting HRM were also evident in the study undertaken by Ichniowski et al. (1997). The authors identified four different types of HR system on the basis of innovative practices in relation to selection, reward, communication, work organisation, training and employment security. The HR systems were numbered from one to four, ranging from system 1 (innovative HR practices in all areas) to system 4 (no innovative HR practices). Systems 2 and 3 lay between the two extremes and included innovative practices in some areas but not others. The findings showed a positive association between innovative HRM practices and both productivity and product quality. Furthermore, the authors claimed that a move from system 4 to system 2, if maintained for 10 years, would increase operating profits by over $10 million simply as a result of the HRM changes (Ichniowski et al., 1997). A US study conducted by Chadwick and Cappelli (1998) identified two approaches to managing people: an ‘investment HR system’ (including extensive training, employee involvement, team-working) and a ‘contractual HR system’ (average pay, use of atypical workers, importance of industry credentials for selection). The findings suggested not only that investment systems were more likely to improve performance than contractual systems, but also that contractual systems could have a detrimental effect on performance. Similar findings emerged from the UK at the same time. Thompson’s (1998) study of the aerospace industry found that innovative HRM practices were positively associated with higher added value per employee. A longitudinal study of single-site, single-product manufacturing firms (Patterson et al., 1997) concluded that HRM practices accounted for 19 per cent of variation in profitability and 18 per cent of variation in productivity. More recently, a cross-sector study (Tamkin et al., 2008) reported that increased investment in people, using measures associated with HRM, resulted in increased profits and sales growth. Positive results were not limited to manufacturing. In 2002, a study of HR practices in NHS acute hospital trusts found that certain HR practices (the sophistication and extensiveness of appraisal and training for hospital employees and the percentage of staff working in teams) were significantly associated with measures of patient mortality (West et al., 2002). The results of these studies seemed to provide convincing evidence of the positive impact of HRM on organisational performance. The third phase, identified by Guest (2011: 4), is the backlash that emerged once it became recognised that ‘the rush to empiricism had occurred at the expense of sufficient consideration of some key conceptual issues’. The first criticism related to a lack of consensus about which HR practices should be included. For example, a literature review of empirical studies that examined the link between HRM and performance (Hyde etal., 2006) found little consistency in results. Training, pay, employee involvement and ‘bundles’ of HR practices were more likely to be positively associated with performance, but these same elements also had the highest number of non-significant associations with performance. Pay and employee involvement also had the highest number of negative associations with performance. Table1.1 provides an overview of the results.

CHAPTER 1 AN INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

Table 1.1 Numbers of empirical papers showing types of association between elements of HRM and performance Main association between this element and performance

Type of association Element of HRM

Positive

Negative

Non-significant

Training/development

Positive

Pay/incentives

Positive

Involvement/voiceb

Non-significant

Selection/recruitment

Non-significant

Team-working

Positive or non-significant

Performance appraisal

Non-significant

Positive

Security

Non-significant

Job design (including work–life balance)

Non-significant

Equal opportunities

Non-significant

Career development (inc. mentoring)

Non-significant

HR index/bundle

Total number of papers exploring this association

2 21

Including ‘pay for performance’. Including ‘information sharing/communication’.

Source: Adapted from Improving Health Through Human Resource Management: A Starting Point for Change, CIPD (Hyde, P., Boaden, R., Cortvriend, P., Harris, P., Marchington, M., Pass, S., Sparrow, P. and Sibald, B. 2006) with the permission of the publisher, the Chartered Institute of Personnel and Development, London (www.cipd.co.uk).

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What factors might account for the diversity of these results?

The second criticism was related to how HRM practices and organisational performance are measured. The review of 97 academic papers undertaken by Hyde et al. (2006) found over 30 different performance measures used in the papers, with no single measure used in all the papers. A further criticism was that a concentration on the association between HRM and organisational performance could ignore other measures of managerial effectiveness and thus overstate the impact of HRM (Richardson and Thompson, 1999). There is also the issue of causality: does the introduction of HRM practices lead to enhanced organisational performance, or is it that betterperforming organisations can afford to invest in the more sophisticated practices associated with HRM? Paauwe and Richardson (1997) investigated the association between HRM activities and HRM outcomes and business performance, and their findings indicated the possibility of twoway causation, that is, that firm performance itself can give rise to changes in HRM practices. Issues about the direction of causality were revealed in a study exploring the relationship between HRM and performance in 366 UK companies in the manufacturing and service sectors (Guest et al., 2003). The study covered nine main areas of HRM: recruitment and selection; training and development; appraisal; financial flexibility; job design; two-way communication; employment security and the internal labour market; single status and harmonisation; and quality. Measures of performance included employment relations items (e.g. labour turnover, absence

HRM AND ORGANISATIONAL PERFORMANCE

and industrial conflict); labour productivity and financial performance compared with the average for the industry; and performance data such as value of sales and profit per employee. Thefindings show a positive association between HRM and profitability, but appear to ‘lend stronger support to the view that profitability creates scope for more HRM rather than vice versa’ (p.309). Overall, the results are described as ‘very mixed and on balance predominantly negative’ (Guest et al., 2003: 307): The tests of association show a positive relationship between the use of more HR practices and lower labour turnover and higher profitability, but show no association between HR and productivity. The test of whether the presence of more HR practices results in a change in performance shows no significant results.

As Guest and his colleagues argue, the focus of research on HRM and performance over the previous decade was slightly schizophrenic: on the one hand, it appeared to establish that HRM has a positive effect on organisational performance, but, on the other, a number of commentators argue that such claims are premature. Wall and Wood (2005) demonstrate that the methodological limitations of most studies on HRM and performance undermine claims of any positive performance effect. In particular, Wall and Wood (2005: 450) claim that not all measures of improved performance, especially financial measures, are concurrent, that is, they do not cover the same period of analysis. Thus, it is often the case that the data collected necessarily reflect prior performance and it follows from this that studies of HRM and performance may need to build a time lag into their analysis. Alternatively, studies could be underestimating the strength of the relationship between HRM and performance because of inadequate measurement of HR practices. The fourth phase, identified by Guest (2011: 5), centres on conceptual refinement of HRM practices and outcomes and the link between them. At least part of the explanation for the continuing ambiguity about HRM and its impact on organisational performance can be attributed to an absence of ‘a coherent theoretical basis for classifying HRM policy and practice’ (Guest, 1997: 266). Three theoretical frameworks have had a major impact on the study of HRM: AMO theory (Appelbaum et al., 2000), contingent theory and resource-based theory (Barney, 1991). AMO theory, which states that individual performance is a function of employee ability, motivation and opportunity, underpins many of the assumptions regarding which practices to include in a high-commitment/high-performance model (see Figure1.4; Boxall and Purcell, 2011: 5). These aspects of performance are seen to contribute to organisational commitment, motivation and job satisfaction (e.g. Purcell et al., 2003) and to enhance discretionary behaviour, a key factor in the link between individual and organisational performance (Appelbaum et al., 2000).

HRM: work and employment policies and practices

Related management investment and policy choices

Figure 1.4 The AMO framework Source: Boxall and Purcell (2011: 5).

Individual: Ability Motivation Opportunity to perform

Individual performance outcomes

CHAPTER 1 AN INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

AMO theory underpins both ‘best practice’ and ‘best fit’ schools of thought, although they differ with respect to the precise nature of the HR practices required to enhance organisational performance. According to proponents of the best-practice, or universal, approach (e.g. Pfeffer, 1998), the adoption of a ‘synergistic set of practices’ (Wood, 1999) that fosters employee involvement and commitment will enhance performance regardless of organisational context. By contrast, proponents of the best-fit approach combine AMO theory with contingency theory and argue that there is no single best way; rather, people management practices need to be tailored to an organisation’s specific circumstances. Thus different combinations of HRM practices may be effective and practices may change in response to specific external or internal influences. Well-known ‘best fit’ models are based on a variety of contextual factors, including life cycle (e.g. Kochan and Barocci, 1985), competitive advantage (e.g. Schuler, 1989; Sisson and Storey, 2000) and strategic configurations (e.g. Delery and Doty, 1996), and are discussed more fully in Chapter2. Resource-based theory, also discussed more fully in Chapter2, states that a firm’s human resources can be a source of sustained competitive advantage, particularly if they are ‘inimitable’ and ‘non-substitutable’ (Barney, 1991). The resource-based view also reflects elements of AMO and contingent theories, but here the set of HRM practices, which could be easily imitated (Wright et al., 1994), is less important than the human and social capital held by the workforce. HR practices contribute to this through ‘building the human capital pool and stimulating the kinds of human behaviour that actually constitute an advantage’ (Boxall and Steeneveld, 1999: 445). Much of the research into HRM and performance has focused on HR practices, but the fifth and overlapping phase identified by Guest (2011: 5) turns its attention to HR processes and, in particular, to ‘the key role of workers and the importance of workers’ perceptions and behaviour in understanding the relationship between HRM and performance’. An example of research in this phase is work undertaken by Purcell et al. (2003), which explored the links between people management and performance. They concluded that a critical link is the extent to which HR practices influence employee attitudes and improve worker performance in ways that are beneficial to the organisation, and identified that front-line managers play a key role in this. Phase 6 of research into HRM and performance, identified by Guest (2011: 5–6), can be defined in terms of growing sophistication and complexity, which include the use of multiple sources of information and the application of more sophisticated statistical techniques. This is partly in response to the criticisms identified in Phase 3. A further criticism concerns the accuracy of data gathered from a single source. The vast majority of studies to date have relied on a single respondent for all the information, but one person is unlikely to have sufficient knowledge to answer questions across the board. HR specialists may lack detailed knowledge of their organisation’s competitive strategies and the financial outcomes resulting from these strategies, while CEOs may have little detailed knowledge of HR practices in their organisation (Marchington et al., 2016: 378). Multiple sources of information can also shed light on the presence of HRM practices, as research evidence suggests that managers generally report a higher incidence of HR practices than are reported by workers in the same organisation (Guest, 2011). Asking for views of workers can also provide insights into the effectiveness of HR practices: a study undertaken by Nishii et al. (2008) found that the way in which workers interpret the intention of HR practices can influence how they respond to them. This section has outlined the key phases in research into the links between HRM and organisational performance. There is still some debate about the degree of association and the direction of causality, but the extensive body of research has increased our knowledge and understanding of the field. In addition, as Guest (2011) identifies, the significant number of studies has helped to refine the core research question, which started out as: ‘What impact does HRM have on performance?’ and has now been extended in two directions. The first is the contingency question: ‘Under what circumstances does HRM have an impact on performance?’ The second concerns process and asks: ‘What is the process whereby HRM can have an impact on performance?’ (Guest, 2011: 7).

HRM IN PRACTICE

HRM in practice The studies discussed in the previous section provide some support for the argument that the systematic deployment of HRM will enhance organisational performance and productivity. Findings of studies undertaken by the Chartered Institute of Personnel and Development (CIPD, 2006) and the Economic and Social Research Council (ESRC, 2004), and other research such as that by the Conference Board (2005), make an important contribution to the wider debate about HRM and performance. These studies indicate that effective people management in conjunction with contemporary systems of work organisation can make a demonstrative difference to organisational performance and productivity. However, if, as the cited studies demonstrate, effective people management does make a difference in terms of performance and productivity, a key question for both academics and practitioners is why so few firms deploy these practices. The UK and the USA are frequently cited as liberal market economies where short-termism and shareholder capitalism predominate over longer-term stakeholder approaches to management. The established research on HRM in the USA does suggest that high-performance, high-commitment approaches to HRM do not have a widespread presence, but their presence is greater than in the UK. So, while there is a strong case to be made that HRM has a positive effect on performance, we are left with the question of why, in the UK, short-termism appears to have generated strong barriers to the wider diffusion of HRM practices. Twenty years ago, the Sheffield study (Patterson et al., 1997) concluded that the finding of a positive association between HRM and organisational performance was ‘ironic, given that our research has also demonstrated that emphasis on HRM practices is one of the most neglected areas of managerial practice within organisations’ (p. 21). Since then, empirical data (e.g. Guest et al., 2000; Kersley et al., 2006) continue to show that, although the use of individual practices is extensive, workplaces that adopt full-blown HRM, that is, a high number of HRM practices, remain in the minority. UK studies such as the Workplace Employee Relations Surveys (WERS; Cully et al., 1999; Kersley et al., 2006; Van Wanrooy et al., 2013) and the Future of Work Study (Guest et al., 2000) consistently report that only a minority of organisations are making extensive use of HRM practices (Guest et al., 2000: ix): Concentrating on a list of 18 typical practices, only 1 per cent of companies have more than three-quarters in place and applying to most workers, and only 26 per cent apply more than half of them. At the other extreme, 20 per cent of organisations make extensive use of less than a quarter of these practices.

Sung and Ashton (2005) investigated the adoption of 35 ‘high-performance work practices’. The findings show that the more of these practices an organisation uses, the more effective it is in delivering adequate training provision, motivating staff, managing change and providing career opportunities. However, the findings also show that about 60 per cent of the sample uses fewer than 20 practices.

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If there is a link between HRM and organisational performance, why is there not a more extensive use of HRM practices?

Sisson (2001: 80–81) first proposed two explanations for the limited adoption of an integrated set of HRM practices some time ago, but they continue to be relevant today. The first is that the time resources and costs associated with change may tempt managers to adopt an incremental approach, that is, to ‘try one or two elements and assess their impact before going further, even though this means forgoing the benefits of the integration associated with “bundles” of

CHAPTER 1 AN INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

complementary practices’. The low take-up of HRM is also attributed to system inertia, particularly in established organisations. There are three possible causes of this inertia (CIPD/EEF, 2005): firms get locked into their initial choice of people management practices and face resistance to change; they experiment with change but abandon it when it does not appear to work; and change in people management practices may also require new production or distribution technologies and therefore will incur additional costs. Another, and in Sisson’s words ‘less comfortable’, explanation is that ‘competitive success based on the quality and upskilling that HRM implies is only one of a number of strategies available to organisations’ and other strategies such as cost-cutting, new forms of Taylorism, mergers and joint ventures may be applied instead. Legge (1989: 30) suggests the potential incompatibility between business strategies and best-practice HRM: ‘if the business strategy should dictate the choice of HRM policies, will some strategies dictate policies that...fail to emphasise commitment, flexibility and quality?’

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What factors might influence the take-up of practices associated with high-commitment HRM?

While many of the supporters of HRM (e.g. Huselid, 1995; Pfeffer, 1998) argue for its universal applicability, others suggest that the attractiveness of HRM to employers can depend on HR requirements. For example, McDuffie (1995: 199) suggests three conditions that enable HRM to contribute to improved economic performance: ●

Employees possess knowledge and skills that managers lack.

●

Employees are motivated to apply this skill and knowledge through discretionary effort.

●

The organisation’s business strategy can be achieved only if employees contribute such discretionary effort.

In a similar vein, Marchington et al. (2016: 76–8) suggest that best-practice HRM is more likely when: ●

employers are able to take a long-term perspective;

●

the cost of labour is low compared with other costs;

●

knowledge workers are expected to use their discretion;

●

organisations and workers are in a strong market position.

In the absence of these conditions, the business case for investing in high-commitment/bestpractice HRM may be weak. Indeed, organisations may perceive more benefits, at least in the short term, from adopting an ‘intensification’ or cost reduction approach. Cost considerations are clearly important. Godard (2004: 367) suggests that many of the claims about the positive association between HRM and business performance underestimate the costs involved in adopting HRM practices: ‘These costs can reflect higher wages, more training, possible inefficiencies arising from participatory decision-making processes and various resource requirements needed to maintain high involvement levels’. As a result, Godard suggests that, for most employers, the use of an integrated set of HRM practices often has little or no overall advantage over traditional personnel practices with a few high-performance practices grafted on, and may even have negative effects for some employers. Organisation size can also be a key factor. Small and mediumsized enterprises (SMEs), which account for 94 per cent of all employers in the UK economy, are less likely than larger organisations to use a number of HRM practices, such as sophisticated selection, extensive training, team-working, problem-solving and functional flexibility (Forth etal., 2007).

HRM IN PRACTICE

The legacy of the recession on HRM practice The high-commitment HRM model assumes that employers are able to take a long-term perspective and ‘ride out’ difficult economic circumstances. Marchington et al. (2016: 765) suggest that this might include: hiring during lean times when labour is plentiful, investing in workers’ development when finances are tight and retaining workers during downturns. Theglobal financial crisis and subsequent recession have certainly resulted in difficult conditions for many organisations, so has this context acted as an enabler or an inhibitor of the adoption of HRM practices? Brewster and King (2013) suggest that the impact of the recession on HRM is paradoxical because it increases the importance of managing people in the most cost-effective and efficient way at the same time as making it more difficult to do so. They suggest that many HRM practices ‘are under threat as short-term survivalist thinking begins to dominate longer term success orientations’ (p. 1) and describe a scenario of job cuts, reduced hiring and a greater focus on cost-cutting. An exploration of HRM in recession-hit Ireland (Roche et al., 2011) found evidence of both ‘hard’ and ‘soft’ approaches. The study found two broad patterns of ‘hard’ HRM. About half the firms had implemented ‘general HR retrenchment programmes’, which included pay freezes, curbs on overtime, short-time working, redundancies and more rigorous work regimes. The others had implemented fewer of these measures, focusing mainly on pay freezes, curbs in overtime and greater rigour in the management of work regimes. The study also found that firms often combined these cost-driven measures with ‘softer’ aspects of HRM in an attempt to maintain staff motivation and commitment. These practices included a greater emphasis on communications and employee engagement, as well as involving employees in the development of measures for responding to the recession (Roche et al., 2011: 11). There was also evidence of a greater emphasis on implementing existing HR policies concerned with employee performance, particularly relating to discipline, attendance and time-keeping. Emphasis on performance management and employee communication was revealed in a study undertaken by Ipsos Mori and Talent 2 (2009: 3), which asked organisations to identify their biggest current priorities during these turbulent economic conditions. The top three priorities were performance management, leadership/ management development and employee communication and engagement. A survey undertaken by King’s College, London and employment law specialists Speechly Bircham (Clinton and Woollard, 2010) confirmed the significant effect of the recession, with 83percent of respondents reporting a negative impact on their business. Cost-cutting measures were apparent with many organisations reporting reductions in pay rises, the size of bonus pools and development budgets. The study also found that there was a shift away from the use of compulsory redundancies towards an increase in the use of flexible and part-time working and the use of other methods to downsize. The recession also appears to be taking its toll on the employment experience, with a higher proportion of respondents reporting an increase in levels of stress among employees, an increase in employment relations problems and an increase in employee grievances, mainly concerning bullying and harassment and relations with senior or line managers. The respondents to this survey identified their top three major HR challenges as maintaining employee engagement, succession planning, and managing growth and expansion, implying that an upturn is anticipated. This survey focused on the views of senior HR professionals. A survey of 2,000 UK employees conducted by YouGov (CIPD, 2013) revealed that redundancies, training cuts, pay freezes and recruitment freezes were more common in the public sector than in the private sector, while the private sector was more likely to have cut back on the hours people work. Eighteen per cent of employees working in the private sector reported that their organisation had not been affected by the economic downturn, compared with only 4 per cent in the public sector.

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What key HR challenges have been raised in your organisation as a result of the UK’s decision to leave the EU?

CHAPTER 1 AN INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

The impact of HRM on the roles of HR professionals ‘There have been notable attempts to capture the changing nature of personnel roles in response to major transformations in the workplace and the associated rise of HRM’ (Caldwell, 2003: 983). In many organisations, the personnel department was essentially an administrative support function, which focused on expert knowledge, procedural efficiency and compliance, and was perceived as being remote from business performance issues (Storey, 2007). The emergence of HRM and the emphasis on its contribution to the achievement of business goals have been perceived by many practitioners as presenting an opportunity to ‘raise their game’. In order to overcome the traditional marginalisation and poor reputation of the personnel function, Ulrich (1998) proposed that HR professionals should become more proactive and strategic ‘business partners’ through the adoption of four key roles: 1. Strategic partner – working with senior and line managers in strategy execution. HR should identify the underlying model of the company’s way of doing business, that is, the organisational architecture, and undertake regular audits in order to identify aspects in need of change. 2. Administrative expert – improving administrative processes, often through the application of technology, in order to improve the efficiency of the HR function and the entire organisation. 3. Employee champion – ensuring that employees are ‘engaged’, that is, that they feel committed to the organisation and contribute fully. This is achieved through acting as the voice for employees in management discussion as well as offering them opportunities for personal and professional growth, and providing the resources that help them to meet the demands placed on them. 4. Change agent – building the organisation’s capacity to embrace and capitalise on change by shaping processes and by helping an organisation to identify key success factors and assess its strengths and weaknesses in relation to each factor. The ‘Ulrich model of business partnering’ has been widely espoused in the USA and the UK, partly because of its rhetorical simplicity and its forceful message to change the HR function (Caldwell, 2008). In addition, steeply climbing salaries and an increased perception of status and prestige mean that the business partner term seems to have become the title of choice for ambitious HR practitioners (Francis and Keegan, 2006). However, not all aspects of the role have been embraced with equal enthusiasm. Although Ulrich (1998) suggested that the HR function needs to fulfil all four roles, empirical evidence suggests that HR practitioners are more likely to aspire to the strategic roles of strategic partner and change agent rather than the more operationally focused roles of administrative expert and employee champion. Survey findings in the UK (e.g. CIPD, 2003) show that a higher proportion of HR practitioners regard themselves as strategic partners and change agents than regard themselves as administrative experts and employee champions. Similarly, HR practitioners are also more likely to aspire to the strategic partner and change agent roles than they are to become administrative experts or employee champions.

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Why do you think so few HR professionals want to be employee champions?

There is a danger that the emphasis in the HR literature on the achievement of business-oriented performance outcomes has minimised the contribution of the employee champion role and obscured the importance of employee well-being in its own right (Peccei, 2004; cited in Francis and Keegan, 2006). However, a number of studies (e.g. Guest and King, 2004; Hope-Hailey et al., 2005) have shown that the neglect of people-centred roles can have a negative effect on the sustainability of organisational performance.

THE IMPACT OF HRM ON THE ROLES OF HR PROFESSIONALS

Table 1.2 Evolution of HR roles Mid-1990s

Mid-2000s

Evolution of thinking

Employee champion

Employee advocate

Focuses on the needs of today’s employees

Human capital developer

Focuses on preparing employees to be successful in the future

Administrative expert

Functional expert

HR practices are central to HR value. Some HR practices are delivered through administrative efficiency and others through policies and interventions

Change agent

Strategic partner

Being a strategic partner has multiple dimensions: business expert, change agent, strategic HR planner, knowledge manager and consultant

Strategic partner

As above

Leader

Being an HR leader requires functioning in each of these four roles. However, being an HR leader also has implications for leading the HR function, collaborating with other functions, setting and enhancing the standards for strategic thinking and ensuring corporate governance

Source: Adapted from Evolution of HR roles, Role call, People Management, 11, pp. 24–28 (Ulrich, D. and Brockbank, W 2005), Chartered Institute of Personnel and Development (CIPD) with permission from D. Ulrich and W. Brockbank.

A subsequent variant of this model (Ulrich and Brockbank, 2005a) redefines the employee champion and administrative expert roles, integrates the change agent role into the strategic partner role and introduces the new role of HR leader (see Table1.2). These ‘subtle but important changes’ are described as reflecting the ‘changing roles we are observing in the leading organisations with which we work’ (p. 24), but also serve to correct the imbalances of business partnering roles (Caldwell, 2008). Ulrich and Brockbank (2005b: 201) argue that ‘caring for, listening to, and responding to employees remains the centerpiece of HR work’. So, the employee champion role is enlarged and focuses on building the workforce of the future, as well as addressing employees’ current needs. Functional experts are concerned not only with administrative efficiency, but also with applying their expert knowledge to the design and implementation of HR practices that ‘improve decisions and deliver results’ (Ulrich and Brockbank, 2005a: 26). HR leaders are responsible for leading the HR function in order to enhance its credibility.

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To what extent do you believe that these changes increase the attractiveness of operational HRroles?

While many HR practitioners aspire to a more strategic role, survey data suggest that operational and administrative work is still dominant. The CIPD (2007) survey into the roles and responsibilities of HR practitioners asked respondents to identify the most time-consuming activities and the most important activities in terms of their contribution to the organisation. The most important activities in terms of adding value to the organisation were identified as developing HR strategy, business strategy, change management and providing specialist HR expertise. By contrast, the most time-consuming activities were identified as providing support to line managers, HR administration, implementing HR policies and change management. The fact that these lists overlap only on one element (change management) helps

CHAPTER 1 AN INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

to illustrate the ongoing tensions between competing role demands on the HR function and the difficulties in creating an entirely new role and agenda for the function that ‘focuses not on traditional HR activities such as staffing and compensation, but on outcomes’ (Ulrich, 1998: 124). A recent survey, undertaken on behalf of CIPD, suggests that, in reality, many HR professionals see their main role as transactional rather than strategic. The results, which draw on responses from 1,500 HR practitioners across the UK, show that only a fifth (22 per cent) consider that the purpose of the HR function they work in is to drive sustainable organisation performance and only 43 per cent see this as the purpose of a best practice HR function. By contrast, 43 per cent consider that their main purpose is ‘ensuring the organisation has the best people in the right jobs, doing the right work’ and 29 per cent see their main purpose as providing payroll, pensions, learning and administration (CIPD, 2011: 2). The same study also reports that the majority of respondents (60 per cent) think that ‘HR needs to build its ability to understand business issues’, and only half consider that ‘HR is viewed as adding significant value’ to their organisation (CIPD, 2011: 3). Similar results are evident in a study commissioned by KPMG International (KPMG, 2012: 14), which found that only 17 per cent of respondents felt that HR was able to demonstrate measurably its value to the business.

Key controversy There ‘remains a vast gulf between the perceived importance and the perceived effectiveness of HR today’ (KPMG, 2012: 14). Why do you think this gap exists and how can HR professionals best address it?

The authors of the KPMG International study (KPMG, 2012: 15–17) argue that, in order to improve HR’s contribution and image, executives need to: ●

Make the value of HR more prominent and understood. HR work is frequently undertaken behind the scenes, so others in the organisation may be unaware of HR’s contribution. HR professionals need to understand the business, ensure that they are included in strategic discussions and demonstrate strong leadership.

●

Think, understand and communicate in the language of business. HR professionals need to consider the impact of HR on business outcomes and make a strong business case for any proposals. They also need to take a full perspective on the whole business and create HR strategies to fit; this ‘requires a far deeper grasp of the organisation’s core business model and strategy and the implications this holds for the rest of the business – to date, something that far too few HR practitioners have mastered’ (p. 15).

●

Transfer appropriate responsibilities to line managers. ‘Constrained budgets and improved technology are also leading to a shift in direct responsibility for employees away from HR and back to line managers as the latter become empowered to handle their own transactions’ (p. 16).

●

Move from administration to higher-value activities. Advances in technology can enable HR to focus more on strategic activities rather than transactional administration. However, in order to have the credibility to focus on higher-value activities, the authors argue that HR first needs to prove that it is capable of delivering value to the business.

However, there is a danger that an exclusive focus on short-term financial returns can be to the detriment of the overall contribution of HR to business life. Wright and Snell (2005: 181) argue that HR leaders must ‘distinguish between decisions that are driven by the business and decisions driven for the business. A focus on short term financial returns for fickle investors may be made at the long term cost of organisational viability’. Furthermore, they suggest that ‘HR leaders must

HR COMPETENCE

be guardians of our ethical and moral integrity’. Similarly, Marchington et al. (2015) argue that, over recent years, HR has overemphasised its strategic role and neglected its unique contribution. This has resulted in a fixation on short-term performance goals at the expense of the development of longer-term sustainable contributions based on values and fairness. They suggest that four key factors have led to this problem: ●

HR has placed excessive emphasis on short-term metrics and easy to measure performance criteria and ignored other stakeholders.

●

HR has become obsessed with the strategic elements of the business partner role and has downplayed the responsibilities associated with the employee champion role.

●

HR has focused too narrowly on the creation of top talent and development of charismatic leaders instead of attempting to engage all staff.

●

HR has reinforced the growing divisions between the terms and conditions of core workers directly employed by clients and those working for suppliers.

In 2016, People Management magazine, in association with YouGov, polled 1,150 employees to find out their perceptions of HR. The findings showed that nearly half (48 per cent) had had no direct contact with HR in the previous year and a quarter did not know who carried out the majority of HR work in their organisation. Only a third of respondents felt that HR had a positive effect on them, their colleagues and the organisation as a whole. Professor Paul Sparrow, co-author of Do We Need HR?, argues that ‘currently, HR seems too distant from staff to represent their perspective and not close enough to strategy to seriously change the business logic People Management, January 2016: 37.

HR competence One response to raising the credibility of the HR function is to ensure that the competence and capability of HR professionals reflect the needs of contemporary organisations. Behavioural competence becomes more critical as people develop into senior roles, and research suggests that HR professionals need to develop a broader skill-set if they are to meet the challenges facing business today (CIPD, 2009). The emphasis on critical behaviours, coupled with the rise of the ‘HR business partner’, has led to an enormous growth in HR competency models (see Caldwell, 2008). Ulrich et al. (2012) identified new roles that HR professionals need to adopt to tackle the challenges currently facing organisations, including the economic crisis, globalisation and technological advances. These six roles are as follows: ●

Strategic positioner – Knows the business context and understands how political, economic, social, technological, legal and environmental trends impact on the organisation. – Contributes to the development of relevant business strategies and helps translate strategies into business plans and goals.

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Credible activist – Gets things done and delivers results. – Has strong interpersonal skills and makes sound business decisions based on good-quality data and thoughtful opinions.

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Capability builder – Helps to define and build organisational capabilities, that is, what the organisation is good at and known for. – Helps ensure that capabilities reflect organisational values.

CHAPTER 1 AN INTRODUCTION TO HUMAN RESOURCE MANAGEMENT ●

Change champion – Develops organisational capacity for change and translates this into effective change processes and structures. – Overcomes resistance to change by engaging key stakeholders in decisions and building their commitment. – Ensures that the necessary resources, including time, people, capital and information, are available. – Captures the lessons of success and failure.

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Human resource innovator – Able to innovate and integrate HR practices around critical business issues. – Aligns HR practices, processes, structures and procedures with identified organisational capabilities and desired business results.

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Technology proponent – Applies social networking technology to help people stay connected with each other and with the organisation. – Contributes to the effective management of information.

In the UK, the CIPD has developed a Profession Map, which, it is claimed, determines ‘what the best HR and L&D professionals and organisations are doing, what they know and understand, to really make a difference and drive the performance of the organisation’ (www.cipd.co.uk). The CIPD also suggests that the map is ‘relevant and applicable to HR professionals operating anywhere in the world, in all sectors and in organisations of all shapes and sizes’. The map covers 10 professional areas, 8 behaviours and 4 bands of competence.

Explore

Examine the Profession Map at http://www.cipd.co.uk/cipd-hr-profession/hr-profession-map/. ● ●

To what extent do you agree that these behaviours are important for effective HR professionals? To what extent do you consider that the map is ‘applicable to HR professionals operating anywhere in the world, in all sectors and in organisations of all shapes and sizes’?

Key controversy CIPD (2015: 3) reports that ‘having business, commercial and organisation savvy sits at the core of the CIPD’s Profession Map – our professional standards for what great HR looks like – and are essential capabilities, whatever level of the profession you are operating at’. However, the same report finds that ‘combining commercial and HR expertise to bring value to the organisation and stakeholders’ was seen as an important capability to focus on by only 27 per cent of senior leaders and just 16 per cent of junior HR professionals. What factors might account for this discrepancy and what are the likely long-term results for organisations and the HR profession?

Concluding comments Human resource management has now become the most widely used term in the Englishspeaking world to refer to the activities of management in the employment relationship (Boxall and Purcell, 2011), but debates around the meaning of the term and the impact of the concept

SUMMARY

continue. In order to differentiate the generic use of the term, that is, to cover all activities relating to people management and its more specific meaning as an approach focusing on enhancing the discretionary behaviour of individuals, a number of other terms have been introduced, such as high-commitment management, high-involvement management and high-performance work systems. From its early origins, a key theme in the HRM debate has concerned the relationship between HRM practice and organisational performance. The results are somewhat ambiguous in that, while there appear to be associations between HRM and organisational performance, a question remains about which comes first: does HRM lead to better organisational performance, or are better-performing organisations more able to invest in HRM practices? Either way, it still seems that a majority of organisations have embraced HRM in a partial rather than a complete way. The impact of the global financial crisis and recession on HRM has been paradoxical, as they have increased the importance of managing people in the most cost-effective and efficient way while making it more difficult to do so. Survey data suggest that many organisations have attempted to temper ‘hard’ HR practices, such as redundancies and pay freezes, with ‘softer’ practices, designed to maintain commitment and motivation. The association between HRM and organisational performance appears to have had some impact on the role and status of HR professionals, particularly apparent in the growing recognition of the business partner role. However, while HR models have emphasised the potential for HR professionals to adopt a strategic focus, the operational focus continues to be a reality for many, and questions still exist about the extent to which HR can demonstrate its value to the business without neglecting the needs of the workforce. The different interpretations of HRM can be confusing, but they are also part of the attraction of HRM for academics and practitioners and help to ensure that ‘the domain remains lively, vibrant and contested’ (Storey, 2007: 17). Whatever the perspective taken, it seems that the advent of HRM has raised questions about the nature of people management that have stimulated one of the most intense and active debates on the subject in the last 40 years, and there is every likelihood that this will continue for some considerable time yet.

Summary ●

Defining HRM. There is no universally agreed definition of HRM and definitions can refer to people management activities in the broadest sense, or to the specific meanings of highcommitment management or a strategic approach to people management.

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Models of HRM. By the early 1980s, a number of US analysts were writing about HRM and devising models and explanations for its emergence, which can be traced back to the 1930s. Among the most significant of these are Devanna (fit and the matching model) and Beer (the Harvard model).

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HRM and business performance. Guest (2011) identified six phases in the growing body of research into the association between HRM and organisational performance. Results from empirical studies suggest that there is a link, but the direction of causality is inconclusive, as is the assumption that a set of practices can have universal applicability.

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HRM in practice. Empirical evidence continues to show that, although there is a high use of individual HRM practices, few organisations appear to adopt a full-blown version of highcommitment HRM. The general low level of take-up can be attributed to organisational inertia and cost considerations, but may also suggest that some organisations seek to achieve competitive advantage through a ‘low road’ approach of cost-cutting or new forms of Taylorism rather than the ‘high road’ approach of HRM. The financial crisis and subsequent recession have increased the use of cost-cutting HR practices such as pay freezes, overtime bans and redundancies in order to survive, but many organisations have tried to balance these with softer practices to maintain employee motivation and commitment.

CHAPTER 1 AN INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

●

HRM and HR professionals. The emergence of HRM and the emphasis on its contribution to the achievement of business goals have been perceived by many practitioners as presenting an opportunity to improve the power and status of the HR function. One of the most influential models over years was developed by Ulrich (1998). However, survey findings continue to show that, while many practitioners aspire to adopt a more strategic role, the administrative role is still dominant and HR often struggles to demonstrate that it adds significant value to the business. Critiques of the business partner model suggest that an overemphasis on short-term performance measures can be to the detriment of the employment experience for many. A number of models have been developed identifying the key competencies that HR professionals need in order to demonstrate credibility and meet the challenges of organisations now and in the future.

Questions 1 The ‘matching model’ (Devanna et al., 1984) and the ‘map of the HR territory’ (Beer et al., 1984) were conceived 30 years ago. To what extent are they still relevant to the study of HRM in organisations today? 2 Studies of HRM and performance differ on a number of grounds, including the HR practices considered, methods of data collection and the respondents asked to provide information. How does this lack of consensus affect our understanding of the association between HRM and organisational performance? 3 To what extent can demonstration of the competencies identified by Ulrich et al. (2012) and CIPD’s Profession Map help to raise the perceived added value of HR? 4 What long-term impact might the focus on short-term financial returns have on HR’s ability to demonstrate how it adds value to sustainable organisational performance?

Case study The future of work: the journey to 2022 A team from PwC and the James Martin Institute for Science and Civilisation at the Said Business School in Oxford came together in 2007 to develop a series of scenarios for the future of people management. The result was three ‘worlds of work’, which provide a lens through which to examine how organisations might operate in the future. The forecasts are based on the results of a specially commissioned survey of 10,000 people in China, India, Germany, the UK and the USA and a survey of almost 500 HR professionals across the world. The report predicts that competing social, political, economic and technological forces are likely to result in three future scenarios or ‘worlds of work’. They also suggest that most organisations are likely to be a mix of all three.

The orange world – Small is beautiful In this scenario, specialisation dominates the world economy. Companies begin to break down into collaborative networks of smaller organisations. The emphasis in the orange world is on maximising flexibility while minimising fixed costs. This is likely to take advantage of the rise of the portfolio career, hiring a diverse mix of people on an affordable, ad hoc basis.

The blue world – Corporate is king In this scenario, big company capitalism rules. Organisations continue to grow bigger and individual organisational preferences trump beliefs about social responsibility. Here

REFERENCES AND FURTHER READING

the emphasis is on profit, growth and market leadership. Scale is the crucial differentiator in this world as it allows these mega-corporations to reach out across the globe and compete for talent and resources – constantly innovating and keeping pace with customer demands.

key consideration and the employee value proposition in this scenario is work–life balance in return for loyalty to the organisation. Read the full report at: http://www.pwc.com/gx/en/ issues/talent/future-of-work/journey-to-2022.html and answer the following questions:

The green world – Companies care

What key challenges are likely to be created by the coexistence of these three scenarios?

What are the implications of these different scenarios for the HR function?

What types of HRM practices would you recommend for each scenario?

In this scenario, social responsibility dominates the corporate agenda with concerns about climate change, demographics and sustainability becoming the key drivers of business. The driving goals in these organisations are positive social and environmental impacts. Ethical values are a

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*Boxall, P. and Purcell, J. (2011), Strategy and Human Resource Management, 3rd edn. Basingstoke: Palgrave Macmillan. Boxall, P. and Macky, K. (2009), ‘Research and theory in high performance work systems: Progressing the high involvement stream’, Human Resource Management Journal, 19, 1: 3–23. Boxall, P. and Steeneveld, M. (1999), ‘Human resource strategy and competitive advantage: A longitudinal study of engineering and competitive advantage: A longitudinal study of engineering consultancies’, Journal of Management Studies, 36, 4: 443–63. Brewster, C. and King, Z. (2013), HRM and the recession: Insights from Henley Business School. Online: http://www. henley.ac.uk/testing2/test-henley/hbs-insightsfromhbsbrewster.aspx (accessed 15 May 2013). Caldwell, R. (2003), ‘The changing role of personnel managers: Old ambiguities, new uncertainties’, Journal of Management Studies, 40, 4: 983–1004. Caldwell, R. (2008), ‘HR business partner competency models: Re-contextualising effectiveness’, Human Resource Management Journal, 18, 3: 275–94. Chadwick, C. and Cappelli, P. (1998), ‘Alternatives to generic strategy typologies in strategic human resource management’ in P. Wright, L. Dyer, J. Boudreau and G. Milkovich (eds), Research in Personnel and Human Resource Management. Greenwich, CT: JAI Press. CIPD (2003), Where We Are: Where We’re Heading? Survey Report. London: CIPD. CIPD (2006), People, Productivity and Performance – Work Smart. London: CIPD. CIPD (2007), The Changing HR Function, Survey Report, September. London: CIPD. CIPD (2009), Taking the Temperature on ‘HR Skills for Survival’. Survey Report, April. London: CIPD. CIPD (2011), HR Outlook. Autumn. London: CIPD. CIPD (2013), Employee Outlook. Spring. London: CIPD. CIPD (2015), HR Outlook: Winter 2014–15: Views of Our Profession. February. London: CIPD.

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Guest, D., Michie, J., Conway, N. and Sheehan, M. (2003), ‘Human resource management and corporate performance in the UK’, British Journal of Industrial Relations, 41, 2: 291–314. Guthrie, J. (2001), ‘High-involvement work practices, turnover and productivity: Evidence from New Zealand’, Academy of Management Journal, 44, 1: 180–90. Hendry, C. and Pettigrew, A. (1990), ‘Human resource management: an agenda for the 1990s’, International Journal of Human Resource Management, 1, 1: 17–43. Hope-Hailey, V., Farndale, E. and Truss, C. (2005), ‘The HR department’s role in organisational performance’, Human Resource Management Journal, 15, 3: 49–66. Huczynski, A. and Buchanan, D. (2007), Organizational Behaviour, 6th edn. Harlow: Financial Times Prentice Hall. Huselid, M. (1995), ‘The impact of HRM practices on turnover, productivity and corporate financial performance’, Academy of Management Journal, 38, 3: 635–72. Hyde, P., Boaden, R., Cortvriend, P., Harris, C., Marchington, M., Pass, S., Sparrow, P. and Sibbald, B. (2006), Improving Health through Human Resource Management: A Starting Point for Change. Change agenda. London: CIPD. Ichniowski, C., Shaw, K. and Prennushi, G. (1997), ‘The effects of human resource management practices on productivity: A study of steel finishing lines’, American Economic Review, 87, 291–313. Ipsos Mori and Talent 2 (2009), The Impact of the Economic Recession on HR. Survey Report. Jacoby, S. (2005), The Embedded Corporation: Corporate Governance and Employment Relations in Japan and the United States. Princeton, NJ: Princeton University Press. Kanter, R. (1984), The Change Masters. London: Allen & Unwin. Kersley, B., Alpin, C., Forth, J., Bryson, A., Bewley, H., Dix, G. and Oxenbridge, S. (2006), Inside the Workplace: Findings from the 2004 Workplace Employment Relations Survey. London: Routledge. Kochan, T. and Barocci, T. (1985), Human Resource Management and Industrial Relations. Boston, MA: Little Brown. KPMG International (2012), Rethinking Human Resources in a Changing World. Online: http://www.kpmg.com/ Global/en/IssuesAndInsights/ArticlesPublications/ hr-transformations-survey/Documents/hr-transformationssurvey-full-report.pdf (accessed 29 August 2013). Legge, K. (1989), ‘Human resource management: A critical analysis’, in J. Storey (ed.), New Perspectives on Human Resource Management. London: Routledge, pp. 19–40. Legge, K. (2005), HRM: Rhetorics and Realities. Basingstoke: Macmillan Business. McDuffie, J.P. (1995), ‘Human resource bundles and manufacturing performance’, Industrial and Labour Relations Review, 48, 2: 197–221. Marchington, M. (2015), ‘Human resource management (HRM): Too busy looking up to see where it’s going longer term?’, Human Resource Management Review, 25, 2, 176–87. Marchington, M., Wilkinson, A., Donnelly, R. and Kynighou, A. (2016), Human Resource Management at Work, 6th edn. London: CIPD. Marchington, M. and Zagelmeyer, S. (2005), ‘Foreword: Linking HRM and performance – a never-ending search?’, Human Resource Management Journal, 15, 4: 3–8. Nishii, L., Lepak, D. and Schneider, B. (2008), ‘Employee attributions of the “why” of HR practices: Their effects on employee

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CHAPTER 2 STRATEGIC HUMAN RESOURCE MANAGEMENT HEATHER CONNOLLY AND JULIE BEARDWELL

Objectives ●

To explore the meaning and application of strategic human resource management (SHRM).

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To evaluate the relationship between strategic management and SHRM.

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To examine the different approaches to SHRM, including: – the best-fit approach to SHRM; – the configurational approach to SHRM; – the resource-based view of SHRM; – the best-practice approach to SHRM.

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To evaluate the relationship between SHRM and organisational performance.

CASE STUDY: TAKING THE ‘LOW ROAD’ IN BIG BUSINESS

Case study Taking the ‘low road’ in big business In recent years, there have been a number of high-profile, successful companies exposed for bad working conditions. The list includes the likes of Amazon, Deliveroo, Hermes, Sports Direct and Uber. These companies demonstrate how the shift from ‘managerial’ to ‘financialised’ capitalism can drive firms to adopt ‘low road’ HRM strategies, where strengthened market discipline rather than commitment is a driver for high performance (see Thompson, 2011). In the case of Sports Direct below, think about the logics underlying such a strategy and the key drivers motivating management and owners of the firm.

Sports Direct Sports Direct International is the UK’s biggest sportswear chain. Mike Ashley owns a controlling stake of55.14percent, and he is also executive deputy chairman. He founded the business after leaving school in 1982 and started selling shares when he floated the company on the stock market in2007. The increasing array of financial instruments and ‘creative accounting’ measures has meant that business owners can adopt complex financing structures in order to maximise profit and shareholder return, and often as a way of paying less tax. The Sports Direct owner, Mr Ashley, has a company called Mash Holdings Ltd, which holds the vast majority of his assets. Mash holds Ashley’s shares in Sports Direct. MrAshley reorganised his holding in Sport Direct in early 2016 without explanation. Mash still directly owns 4.43 per cent of Sports Direct, with 50.71 per cent of the company now held by Mash Beta, a newly created vehicle. Mash Beta is 74percent owned by Mash and 26percent owned by another new vehicle, Mash Alpha. Mash Alpha is controlled by Mash, which has provided a guarantee over the company, but at present no shares have been issued for Mash Alpha. A Guardian investigation on the working conditions in Sports Direct published in December 2015 revealed that workers were effectively receiving less than the minimum wage per hour over the total time they were required to spend in the warehouse and after financial penalties. All warehouse workers were kept onsite at the end of each shift in order to undergo a compulsory search by Sports Direct security staff, with the experience of the Guardian reporters suggesting that this typically added another hour and 15 minutes to the working week – which was unpaid.

Source: Adapted from Goodley, S. and Ashby, J. (2015), ‘Revealed: How Sports Direct effectively pays below minimum wage’, The Guardian, 9 December In July 2016, MPs lambasted Mr Ashley over labour abuses at Sports Direct, saying they found it ‘incredible’ that the self-made billionaire had no idea of ‘appalling’ practices in his retail empire. A damning parliamentary report described the retailer as a ‘particularly bad example of a business that exploits its workers in order to maximise its profits’, insisting that Mr Ashley – who has a controlling stake and visits its warehouse once a week – must take responsibility for his company. The business committee report put Mr Ashley in the line of fire of the Prime Minister’s campaign to ‘get tough on irresponsible behaviour in big business’ and to tackle ‘unscrupulous bosses’. The Prime Minister, Mrs May, promised to tackle ‘the irrational, unhealthy and growing gap between what these companies pay their workers and what they pay their bosses’, including laying out a plan to put workers on company boards and publish executive pay data. MPs said their seven-month probe had been hampered by Mr Ashley, who for weeks refused to answer a formal summons. When he finally appeared in June, the billionaire said he was ‘a little shocked’ to learn that workers at the group’s warehouse had been paid less than the minimum wage because they had been forced to queue for security checks on unpaid time. But the committee said it had received ‘damning testimony’ suggesting that shop staff had also been forced to do unpaid work, sometimes for up to three hours after their shifts had ended. ‘In both the warehouse at Shirebrook and the shops across the country,’ they wrote, ‘[Sports Direct is] treating workers as commodities rather than as human beings.’ They said Mr Ashley was responsible either for not knowing about ‘appalling working practices’ at his own company, or for turning a blind eye to them. Investors, too, have become disillusioned with the way the company is run. One top-20 shareholder said MrAshley had failed to realise that ‘Victorian working conditions are not acceptable at a public company or any company for that matter’. Source: Adapted from Vandevelde, M., Parker, G. and Oakley, D. (2016), ‘Damning report condemns Ashley for ‘appalling’ practices at Sports Direct’, Financial Times, 22 July; © The Financial Times Limited 2016; all rights reserved.

CHAPTER 2 STRATEGIC HUMAN RESOURCE MANAGEMENT

Introduction This chapter charts the development of strategic human resource management (SHRM). It assumes a certain familiarity with the evolution of HRM, early HRM models and frameworks and their theoretical underpinning as discussed in other chapters (in particular, see Chapter1). The aim of this chapter is to trace the development of SHRM, so that you will be able to understand the synthesis both within and between SHRM and strategic management in its various forms. Underpinning this chapter is the view that there is often ‘naïve optimism’ with regards to the dominant HR discourse and a neglect of the wider context of financialised capitalism as structuring behaviours in organisations (Thompson, 2003, 2011). It is important to situate analyses of SHRM within a broader political economy approach and develop an understanding of the ‘regime of accumulation’ and how this shapes strategies and their outcomes. Since the emergence of HRM there has been considerable debate concerning its nature and its value to organisations. From the seminal works emerging from the Chicago School and the matching model of HRM (Fombrun etal., 1984), the emphasis has very much concerned its strategic role in the organisation. Indeed, the literature rarely differentiates between HRM and SHRM. When attention was first focused on SHRM, some writers associated HRM with the strategic aspects and concerns of ‘best fit’ in vertically aligning an organisation’s human resources to the organisational strategy (Fombrun etal., 1984) or by creating ‘congruence’ or ‘horizontal alignment’ between various managerial and HRM policies (Beer etal., 1984; Walton, 1985). Others focused on HRM as a means of gaining commitment and linked this to outcomes of enhanced organisational performance and business effectiveness (Beer etal., 1984; Guest, 1987; Wood and De Menezes, 1998; Guest et al., 2000a) through best-practice models (Arthur, 1994; MacDuffie, 1995; Pfeffer, 1994, 1998;) or high-performance work practices (Guest, 1987; Huselid, 1995). Others recognised the ‘harder’ nature of SHRM (Storey, 1992), emphasising its contribution to business efficiency. Interlaced with this debate has been the wider controversy concerning the nature of business strategy itself, from which SHRM takes its theoretical constructs. In addition to this are the transformations in organisational forms, which have had a simultaneous impact on both structures and relationships in organisations. The need for increased flexibility (Atkinson, 1984) or ‘agility’ (Rahrami, 1992: 35) in organisational structures and relationships has led to ‘delayering, team-based networks alliances and partnerships and a new employer–employee covenant’ or psychological contract. These changes in organisational structuring and employer–employee relationships have led to difficulties in finding new organisational forms that both foster creativity and avoid chaos. Thus tensions can arise between ‘innovation and maintaining focus, between rapid response and avoiding duplication, between a focus on future products and meeting time to market criteria, between long-term vision and ensuring performance today’. These tensions became more apparent with the global financial crisis and its aftermath, as organisations grappled with remaining lean and focused through ‘right-sizing’, yet needed to maintain a motivated core base of skill and knowledge capable of creativity and rapid response in the future. Such dilemmas are not new to the SHRM literature: nearly 30 years ago Kanter (1989) noted contradictions between remaining ‘lean, mean and fit’, on the one hand, and being seen as a great company to work for on the other. Developments in SHRM thinking have a profound impact on our understanding of the contribution SHRM can make to organisational performance through increased competitive advantage and added value. Indeed, it becomes clear that whether the focus of SHRM practices is on alignment with the external or the internal context of the firm, the meaning of SHRM can only really be understood in terms of organisational performance, whether that be measured by economic value added and increased shareholder value; customer value added and increased market share; or people value added through increased employee commitment and engagement.

UNDERSTANDING THE BUSINESS CONTEXT

The debate therefore becomes extremely complex in its ramifications for analysing processes, evaluating performance and assessing outcomes. The observer must come to the view, in the best postmodern tradition, that the profusion and confusion of policy make straightforward analysis of SHRM in empirical and analytical terms extremely difficult and contingent on positional stances of the actors and observers involved in the research process. However, some kind of analytical context is useful in beginning our evaluations. In order to understand the development of SHRM, and to recognise that it is more than traditional HRM prefixed with the word ‘strategic’, it is necessary to consider the nature of strategic management. This will provide an understanding of the ‘strategic’ context within which SHRM has developed, and enable us to understand the increasingly complex relationship between strategic management and SHRM.

Understanding the business context The nature of business strategy Boxall (1996: 60) has commented that ‘any credible attempt at model-building in strategic HRM involves taking a position on the difficult questions: what is strategy? (content) and how is strategy formed? (process)’. It is the intention of this section to explore these questions and identify the difficulties and complexities involved in the ‘strategy-making’ process. This section provides an overview of some of the issues and debates, and sets the context for the SHRM debate discussed later in the chapter. The roots of business strategy stretch far back into history (Alexander the Great, 356–323 BC; Julius Caesar, 100–44 BC), and early writers linked the term ‘strategy’ to the ancient Greek word strategos, which means ‘general’ and has connotations of ‘to lead’ and ‘army’. Thus it is not surprising that many dictionary definitions convey a military perspective, such as the following from the Oxford Pocket Dictionary: ‘Strategy. The art of war, especially the planning of movements of troops and ships etc. into favourable positions; plan of action or policy in business or politics etc.’. Early writings on business strategy adopted a military model combined with economics, particularly the notion of rational–economic man (Chandler, 1962; Sloan, 1963; Ansoff, 1965). This is known as the classical or rational-planning approach, and has influenced business thinking for many decades. The meaning of strategy has changed, however, and become more complex, as the literature has moved from emphasising a long-term planning perspective (Chandler, 1962) to a more organic evolutionary process occupying a shorter time frame (Ansoff and McDonnell, 1990; Aktouf 1996). Thus strategic management in the twenty-first century is seen to be as much about vision and direction as about planning, mechanisms and structure: Throughout the first half of our century and even into the early eighties, planning – with its inevitable companion, strategy – has always been a key word, the core, the near ultimate weapon of ‘good’ and ‘true’ management. Yet many firms...have been remarkably successful...with minimal official, rational and systematic planning. ( Aktouf (1996: 91))

Explore

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To what extent is strategy ‘as the art of war’ relevant to contemporary organisations? What other metaphors might you use to define strategy? What metaphor would best describe the ‘strategy-making’ process in your organisation or one with which you are familiar?

CHAPTER 2 STRATEGIC HUMAN RESOURCE MANAGEMENT

Approaches to the strategy-making process This chapter uses the four distinctive approaches to strategy-making identified by Whittington (1993, 2001) as a model of analysis: ●

the classical or rational-planning approach

●

the evolutionary approach

●

the processual approach

●

the systemic approach.

As you will see, an organisation’s approach to its ‘strategy-making’ process has implications for our understanding and application of SHRM.

Classical or rational-planning approach This view suggests that strategy is formed through a formal and rational decision-making process. The key stages of the strategy-making process emphasise a comprehensive analysis of the external and internal environments, which then enables an organisation to evaluate and choose from a range of strategic choices that, in turn, allows for plans to be made to implement the strategy. With this approach, profitability is assumed to be the only goal of business and the rational-planning approach is the means to achieve it. Alfred Chandler (1962), a business historian, Igor Ansoff (1965), a theorist, and Alfred Sloan (1963), president of General Motors, identified these key characteristics of the classical approach in their work and writings. Chandler (1962: 13) defined strategy as ‘the determination of the basic, long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for those goals’. Grant (2016) highlights the classical approach in his four elements of a successful strategy (Figure 2.1), where clear goals, understanding the competitive environment, resource appraisal and effective implementation form the basis of his analysis. Within the classical perspective, strategy can be, and often is, viewed at three levels: first, at the corporate level, which relates to the overall scope of the organisation, its structures, financing and distribution of key resources; second, at a business level, which relates to its competitive positioning in markets/products/services; and third, at an operational level, which relates to the methods used by the various functions of marketing, finance, production and, of course,

Successful strategy

Effective implementation

Long-term, simple and agreed objectives

Profound understanding of the competitive environment

Figure 2.1 Common elements in successful strategies Source: Grant (2010: 7).

Objective appraisal of resources

APPROACHES TO THE STRATEGY-MAKING PROCESS

human resources to meet the objectives of the higher-level strategies. This approach tends to separate out operational practices from higher-level strategic planning. This is not always helpful in reality, as it is often operational practices and effective systems that are ‘strategic’ to success in organisations (Boxall and Purcell, 2016), thus prompting Whittington (2001: 107) to comment that ‘the rigid separation of strategy from operations is no longer valid in a knowledge-based age’. This is not to suggest that external analysis and planning should be ignored, but proposes a recognition that operational practices or ‘tactical excellence’ may provide sustainable competitive advantage by ensuring that an organisation is adaptable and can flex with the environment. This becomes significant in contributing to our understanding of SHRM later in the chapter.

Key controversy ‘Under the classical approach management actions are legitimised by reference to external forces’ (Marchington et al., 2016: 15). Revisit Case Study 2.1 and consider to what extent the approach adopted by Sports Direct can be ‘legitimised by external forces’? Mintzberg (1990) clearly identified the ‘basic premises’ of the classical approach as being the disciplined ‘readiness and capacity of managers to adopt profit-maximising strategies through rational long-term planning’. He questioned the feasibility of adopting this approach as either a model for prescription of best practice or a model of analysis, as he considered it to be an inflexible and oversimplified view of the ‘strategy-making’ process, relying too heavily on military models and their assumed culture of discipline. This can often lead to a disproportionate emphasis on analysis and decision-making about strategic choices at the expense of the key stage of implementation, which, after all, delivers the results. Mintzberg (1987) therefore argued that strategy-making in practice tends to be complex and messy and he preferred to think about strategy as ‘crafting’ rather than ‘planning’. The classical approach is, however, the basis for much strategy discussion and analysis, and, as we will see later, it underpins much strategic HRM thinking, particularly the ‘best fit’ school of thought and the notion of vertical integration. If, however, we accept that devising and implementing strategies in organisations is a complex and organic process, then it highlights the complexity of both defining and applying SHRM.

Evolutionary approach An alternative view of the strategy-making process is the evolutionary approach. This suggests that strategy is made through an informal evolutionary process that relies less upon top managers to plan and act rationally and more upon the markets to secure profit maximisation. Whittington (2001) highlighted the links between the evolutionary approach and the ‘natural law of the jungle’. Henderson (1989: 143) argued that ‘Darwin is probably a better guide to business competition than economists are’, as he recognised that markets are rarely static and indeed likened competition to a process of natural selection, where only the fittest survive. Darwin noted that more individuals of each species are born than can survive, and thus there is a frequently recurring struggle for existence. Evolutionists, therefore, argue that market, not managers, choose the prevailing strategies. Thus, in this approach, the rational-planning models that analyse the external and internal environments in order to select the most appropriate strategic choices and then to identify and plan structural, product and service changes to meet market need become irrelevant. The evolutionary approach suggests that markets are too competitive for ‘expensive strategizing and too unpredictable to outguess’ (Whittington, 2001: 19). From this perspective, sophisticated strategies can only deliver a temporary advantage, and some suggest focusing instead on efficiency and managing the ‘transaction costs’.

CHAPTER 2 STRATEGIC HUMAN RESOURCE MANAGEMENT

Processual approach Quinn (1978) recognised that, in practice, strategy formation tends to be fragmented, evolutionary and largely intuitive. His ‘logical incrementalist’ view, therefore, while acknowledging the value of the rational–analytical approach, identified the need to take account of the psychological, political and behavioural relationships that influence and contribute to strategy. Quinn’s view fits well within Whittington’s (2001) processual approach, which recognises ‘organisations and markets’ as ‘sticky, messy phenomena, from which strategies emerge with much confusion and in small steps’ (p. 21). The foundations of the processual school can be traced back to the work of the American Carnegie School according to Whittington (2001) and the work of Cyert and March (1956) and Simon (1947). They uncovered two key themes: first, the cognitive limits of human action, and second, that human beings are influenced by ‘bounded rationality’ (Simon, 1947). Thus no single human being, whether the chief executive or a production worker, is likely to have all the answers to complex and difficult problems, and we all often have to act without knowing everything we would like to. Thus complexity, uncertainty and the need to take on board a range of interests become facts of life in strategic management and consequently in SHRM (Boxall and Purcell, 2016). It is important for organisations to recognise this, to avoid falling into a fog of complacency or the ‘success trap’ (Barr etal., 1992), and it also highlights the limitations of some of the prescriptions for success advocated in both the strategic management and the SHRM literature. In practice, an organisation’s approach to SHRM has considerable influence here on the strategic management process, as some writers would suggest that to effectively manage the environment better than their competitors the organisation needs to adopt a learning and open systems perspective. Mintzberg (1987) recognised this in his ideas on ‘crafting strategy’, and the fluid and organic nature of the strategy-making process. He compared the skills required of those involved in the process to those of a traditional craftsperson – traditional skill, dedication, perfection, mastery of detail, sense of involvement and intimacy through experience and commitment. Thus he recognised that planned strategies are not always realised strategies, and that strategies can often emerge and evolve (Figure2.2). Thus the classic sequence of plan first, implementation second can become blurred, as ‘strategy is discovered in action’ (March, 1976). Second, the processualists

Int str ende ate d gy

lib

era

str

ate

Unrealised strategy

Realised strategy

Emergent strategy

Figure 2.2 Emergent strategy Source: Mintzberg, H. (1987), The Strategy Concept 1: Five Ps for Strategy, California Management Review, 30(1), pp. 11–24; copyright © 1987 by The Regents of the University of California, reproduced by permission of the publisher, University of California Press.

APPROACHES TO THE STRATEGY-MAKING PROCESS

noted the significance of the micro-politics within organisations, a theme since developed by Pettigrew (1973, 1985) and Wilson (1992). This approach recognises the inherent rivalries and conflicting goals present within organisations and the impact this can have on strategy implementation. As we will see later in the chapter, it is these pluralist tensions that are sometimes ignored in certain branches of the SHRM literature, most notably the ‘best practice’ approach.

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Why might an intended strategy not be realised in practice?

●

Why do strategies sometimes emerge?

Systemic approach This leads us on to the final perspective identified by Whittington (1993, 2001), the systemic approach. This approach suggests that strategy is shaped by the social system within which it operates. Strategic choices, therefore, are shaped by the cultural and institutional interests of a broader society. So, for example, state intervention in France and Germany has shaped HRM in a way that is different from the USA and the UK. A key theme of the systemic approach is that ‘decision makers are not detached, calculating individuals interacting in purely economic transactions’ (Whittington, 2001: 26), but are members of a community ‘rooted in a densely interwoven social system’. Therefore in reality, organisations and their members’ choices are embedded in a network of social relations (Whittington, 1993). Thus, according to this approach, organisations differ according to the social and economic systems in which they are embedded.

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What challenges does the systemic view of strategy pose for multinational organisations?

The four approaches to strategy identified differ considerably in their implications for advice to management. Understanding that strategy formulation does not always occur in a rational, planned manner, due to complexities in both the external and internal environments, is significant for our understanding of SHRM. Whittington (1993) summarised his four generic approaches of classical, evolutionary, systemic and processual approaches in the model in Figure2.3. By plotting his model on two continua of outcomes (profit maximisation – pluralistic) and processes (deliberate – emergent), Whittington (1993, 2001) recognises that the strategy process changes depending upon the context and outcomes. In terms of SHRM, therefore, the term ‘strategic’ has broader and more complex connotations than those advocated in the prescriptive ‘classical’ strategy literature. As turbulence in the environment increases, organisations are recognising the importance of HR to their competitive performance, and therefore its role at a strategic level rather than an operational one.

Explore

Revisit Case Study 2.1. Using Whittington’s typology, how would you categorise the strategy adopted in Sports Direct? Explain your answer.

By now you should be familiar with different approaches to understanding the nature of strategy and should have gained an appreciation of the complexities involved in the strategic management process. You may have realised that our understanding and interpretation of SHRM will, to a certain extent, be influenced by our interpretation of the context of strategic management. It is to the definition and the various interpretations of SHRM that we turn next.

CHAPTER 2 STRATEGIC HUMAN RESOURCE MANAGEMENT

Outcomes Profit-maximising

Classical

Evolutionary

Processes Deliberate

Emergent

Systemic

Processual

Pluralistic

Figure 2.3 Whittington’s model Source: Whittington (2001: 3).

The rise of SHRM The contribution that HR may make to an organisation’s performance and effectiveness has been the subject of scrutiny for some time. This interest has been linked to changes in the business environment, with the impact of globalisation leading to the need for increased competitiveness, flexibility, responsiveness, quality and the need for all functions of the business to demonstrate their contribution to the bottom line. As we have already recognised, it is against this backdrop that the traditional separation between strategy and operational activities, such as HRM, has become blurred, particularly within a knowledge-based age. There is confusion over the differentiation between HRM and SHRM. Part of the reason for this confusion will be familiar to you, as it arises from the varying stances of the literature, those of prescription, description or critical evaluation. Some writers see the two terms as synonymous (Mabey etal., 1998), while others consider there are differences. A wealth of literature has appeared to prescribe, describe and critically evaluate the way organisations manage their human resources. It has evolved from being highly critical of the personnel function’s contribution to the organisation, as being weak, non-strategic and lacking a theoretical base (e.g. Drucker, 1968; Watson, 1977; Legge, 1978; Purcell, 1985), through the development of HRM models and frameworks (e.g. Beer etal., 1984; Fombrun etal., 1984; Guest, 1987; Schuler and Jackson, 1987), criticism of the HRM concept, questioning the empirical, ethical, theoretical and practical base of the subject (Keenoy, 1990; Blyton and Turnbull, 1992; Keenoy and Anthony, 1992; Clarke and Newman, 1997; Legge, 2005), and on to a wave of SHRM literature focusing on the link (or vertical integration) between HR practices and an organisation’s business strategy, in order to enhance performance (Schuler and Jackson, 1987; Kochan and Barocci, 1985; Miles and Snow, 1984), and also on the relationship between best-practice or high-commitment HR practices and organisational performance (Pfeffer, 1994, 1998; Huselid, 1995; MacDuffie, 1995; Guest, 2001). Confusion arises because embedded in much of the HRM literature is the notion of strategic integration (Beer etal., 1984; Fombrun etal., 1984; Guest, 1987), but critics have been quick to note the difference between the rhetoric of policy statements and the reality of action (Legge, 2005); the somewhat piecemeal adoption of HRM practices (Storey, 1992, 2007); and the ingrained ambiguity of a number of these models (Keenoy, 1990; Blyton and Turnbull, 1992).

EXPLORING THE RELATIONSHIP BETWEEN STRATEGIC MANAGEMENT AND SHRM: THE BEST-FIT SCHOOL OF SHRM

Thus, while the early HRM literature appeared to emphasise a strategic theme, there was much critical evaluation that demonstrated its lack of strategic integration. Thus terms such as ‘old wine in new bottles’ became a familiar explanation for the development from personnel to HRM to SHRM.

Exploring the relationship between strategic management and SHRM: The best-fit school of SHRM The best-fit (or contingency) school of SHRM explores the close link between strategic management and HRM by assessing the extent to which there is vertical integration between an organisation’s business strategy and its HRM policies and practices. This is where an understanding of the strategic management process and context can enhance our understanding of the development of SHRM, both as an academic field of study and in its application in organisations. The notion of a link between business strategy and the performance of every individual in the organisation is central to ‘fit’ or vertical integration. Vertical integration can be explicitly demonstrated through the linking of a business goal to individual objective setting, to the measurement and rewarding of attainment of that business goal. Vertical integration between business strategy or the objectives of the business and individual behaviour and ultimately individual, team and organisational performance is at the core of many models of SHRM. Inherent in most treatments of fit is the premise that organisations are more efficient and/or effective when they achieve fit relative to when there is a lack of fit (Wright and Snell, 1998: 757). This vertical integration or ‘fit’ where ‘leverage’ is gained through procedures, policies and processes is widely acknowledged to be a crucial part of any strategic approach to the management of people (Dyer, 1984; Fombrun etal., 1984; Mahoney and Deckop, 1986; Schuler and Jackson, 1987; Gratton etal., 1999). Vertical integration therefore ensures an explicit link or relationship between internal people processes and policies and the external market or business strategy, and thereby ensures that competencies are created that have a potential to be a key source of competitive advantage (Wright etal., 1994). Tyson (1997) saw the move towards greater vertical integration (between HRM and business strategy) and horizontal integration (between HR policies themselves and with line managers) as a sign of ‘HRM’s coming of age’. In recognising certain shifts in the HRM paradigm, Tyson identified ‘vertical integration’ as the essential ingredient that enables the HR paradigm to become strategic. In practice, this requires not only a statement of strategic intent, but also planning to ensure that an integrated HR system can support the policies and processes in line with the business strategy. It is worthwhile considering the earlier discussions on the nature of strategic management here, as a number of critics, notably Legge (2005), have questioned the applicability of the classical–rational models on the grounds that there is a dearth of empirical evidence to support their credibility. Legge (2005: 135) tends to prefer the processual framework (Whittington, 1993), which is grounded in empirical work and which recognises that ‘integrating HRM and business strategy is a highly complex and iterative process, much dependent on the interplay and resources of different stakeholders’.

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In what way does Whittington’s (1993, 2001) typology of strategy impact on your understanding of ‘vertical integration’? You may find it useful to use Table2.1 to guide your thinking.

There have been a number of SHRM models that have attempted to explore the link between business strategy and HR policies and practices, and to develop categories of integration or ‘fit’. These include the lifecycle models (Kochan and Barocci, 1985; Lengnick Hall and Lengnick Hall, 1988; Sisson and Storey, 2000) and the competitive advantage models of Miles and Snow (1978) and Schuler and Jackson (1987), based on the influential work of Porter (1985).

CHAPTER 2 STRATEGIC HUMAN RESOURCE MANAGEMENT

Table 2.1 Typology of Strategy Classic

Processual

Evolutionary

Systemic

Strategy

Formal and planned

Crafted and emergent

Efficient

Embedded

Rationale

Profit maximisation

Vague

Survival of the fittest

Local

Focus

Fitting internal plans to external contexts

Internal (politics)

External (markets)

External (societies)

Processes

Analytical

Bargaining/learning

Darwinian

Social/cultural

Key influences

Economics/military

Psychology

Economics/biology

Sociology

Emergence

1960s

1970s

1980s

1990s

Source: Adapted from Whittington (2001: 39).

Lifecycle models A number of researchers have attempted to apply business and product life cycle thinking or ‘models’ to the selection and management of appropriate HR policies and practices that fit the relevant stage of an organisation’s development or life cycle (Kochan and Barocci, 1985; Baird and Meshoulam, 1988). So, for example, according to this approach, during the start-up phase of the business there is an emphasis on ‘flexibility’ in HR to enable the business to grow and foster entrepreneurialism, whereas in the growth stage, once a business grows beyond a certain size, the emphasis would move to the development of more formal HR policies and procedures. In the maturity stage, as markets mature and margins decrease, and the performance of certain products or the organisation plateaus, the focus of the HR strategy may move to cost control. Finally, in the decline stage of a product or business, the emphasis shifts to rationalisation, with downsizing and redundancy implications for the HR function (Kochan and Barocci, 1985). The key questions for HR strategists here are: first, how can HR strategy secure and retain the type of human resources that are necessary for the organisation’s continued viability, as industries and sectors develop; and second, which HR policies and practices are more likely to contribute to sustainable competitive advantage as organisations go through their life cycle (Boxall and Purcell, 2016)? Retaining viability and sustaining competitive advantage in the ‘mature’ stage of an organisation’s development are at the heart of much SHRM literature. Baden-Fuller (1995) noted that there are two kinds of mature organisation that manage to survive industry development: ‘[O]ne is the firm that succeeds in dominating the direction of industry change...The other is the firm that manages to adapt to the direction of change’ (Boxall and Purcell, 2016: 44). Abell (1993), Boxall (1996) and Dyer and Shafer (1999) argue that the route to achieving human resource advantage as organisations develop and renew lies in the preparation for retaining viability and competitive advantage in the mature phase. The need for organisations to pursue ‘dual’ HR strategies, which enable them to master the present while preparing for and pre-empting the future, and to avoid becoming trapped in a single strategy, is identified by Abell (1993), while Dyer and Shafer (1999) developed an approach that demonstrates how an organisation’s HR strategy could contribute to what they termed ‘organisational agility’. This implies an in-built capacity to flex and adapt to changes in the external context, which enables the business to change as a matter of course. Interestingly, this work appears to draw on the resource-based view and best-practice view of SHRM discussed later in the chapter, as well as the best-fit approach, reflecting the difficulty of viewing the various approaches to SHRM as distinct entities.

Competitive advantage models Competitive advantage models tend to apply Porter’s (1985) ideas on strategic choice. Porter identified three key bases of competitive advantage: cost leadership, differentiation through

EXPLORING THE RELATIONSHIP BETWEEN STRATEGIC MANAGEMENT AND SHRM: THE BEST-FIT SCHOOL OF SHRM

quality and service and focus on ‘niche’ markets. Schuler and Jackson (1987) used these as a basis for their model of SHRM, where they defined the appropriate HR policies and practices to ‘fit’ the generic strategies of cost reduction, quality enhancement and innovation. They argued that business performance will improve when HR practices mutually reinforce the organisation’s choice of competitive strategy. Thus, in Schuler and Jackson’s model (see Table2.2), the organisation’s mission and values are expressed through their desired competitive strategy. This, in turn, leads to a set of required employee behaviours, which would be reinforced by an appropriate set of HR practices. The outcome of this would be desired employee behaviours that are aligned with the corporate goals, thus demonstrating the achievement of vertical integration. As you can see, the ‘cost reduction’-led HR strategy is likely to focus on the delivery of efficiency through mainly ‘hard’ HR techniques, whereas the ‘quality enhancement’ and ‘innovation’-led HR strategies focus on the delivery of added value through ‘softer’ HR techniques and policies. Thus, all three of these strategies can be deemed ‘strategic’ in linking HR policies and practices to the goals of the business and the external context of the firm, and in therefore contributing in different ways to ‘bottom-line’ performance. Another commonly cited competitive advantage framework is that of Miles and Snow (1978), who defined generic types of business strategy as defenders, prospectors and analysers and matched the generic strategies to appropriate HR strategies, policies and practices – the rationale being that if appropriate alignment is achieved between the organisation’s business strategy and its HR policies and practices, a higher level of organisational performance will result.

Explore

Think of examples of organisations that have adopted innovation, quality enhancement and cost reduction strategies? How successful have they been at pursuing their chosen strategy?

Configurational models One criticism often levelled at the contingency or best-fit school is that its proponents tend to oversimplify organisational reality. In attempting to relate one dominant variable external to the organisation (e.g. compete on innovation, quality or cost) to another internal variable (e.g.HRM), they tend to assume a linear, non-problematic relationship. It is unlikely, however, that an organisation will pursue only a single focus strategy, as organisations have to compete in an everchanging external environment where new strategies are constantly evolving and emerging. Thus organisations tend to develop hybrid strategies where a quality-focused strategy, for example, will often be combined with elements of cost reduction and even innovation. How often in organisational change programmes have organisations issued new mission and value statements, proclaiming new organisational values of employee commitment, and so on, on the one hand, with announcements of compulsory redundancies on the other? Thus cost-reduction reality and high-commitment rhetoric often go hand in hand, particularly in a short-termist economy. Delery and Doty (1996) noted the limitation of the contingency school, and proposed the notion of the configurational perspective. This approach focuses on how unique patterns or configurations of multiple independent variables are related to the dependent variable, by aiming to identify ‘ideal type’ categories not only of the organisation strategy but also of the HR strategy. The significant difference here between the contingency approach and the configurational approach is that these configurations represent ‘non-linear synergistic effects and higher-order interactions’ that can result in maximum performance (Delery and Doty, 1996: 808). As Marchington etal. (2016: 92) note, the key point about the configurational perspective is that it ‘identifies an internally consistent set of HR practices that maximise horizontal integration (internal fit) and then links these to alternative strategic configurations in order to maximise vertical integration (external fit)’. Thus, put simply, SHRM, according to configurational theorists, requires an organisation to develop an HR system that achieves both horizontal and vertical integration, or a form of

CHAPTER 2 STRATEGIC HUMAN RESOURCE MANAGEMENT

Table 2.2 Business strategies and associated HR policies Strategy

Employee role behaviour

HRM policies

Innovation

A high degree of creative behaviour

Jobs that require close interaction and coordination among groups of individuals

Longer-term focus

Performance appraisals that are more likely to reflect long-term and group-based achievement

A relatively high level of cooperative interdependent behaviour

Jobs that allow employees to develop skills that can be used in other positions in the firm

A moderate degree of concern for quality

Pay rates that tend to be low, but allow employees to be stockholders and have more freedom to choose the mix of components that make up their pay package

A moderate concern for quantity; an equal degree of concern for process and results

Broad career paths to reinforce the development of a broad range of skills

A greater degree of risk-taking; a higher tolerance of ambiguity and unpredictability Quality enhancement

Relatively repetitive/predictable behaviours

Relatively fixed and explicit job descriptions

A more long-term or immediate focus

High levels of employee participation in decisions relevant to immediate work conditions and the job itself

A moderate amount of cooperative interdependent behaviour

A mix of individual and group criteria for performance appraisal that is mostly short-term and results-oriented

A high concern for quality

Relatively egalitarian treatment of employees and some guarantees of job security

A modest concern for quantity of output

Extensive and continuous training and development of employees

High concern for process; low risk-taking activity; commitment to the goals of the organisation Cost reduction

Relatively repetitive and predictable behaviour

Relatively fixed and explicit job descriptions that allow little room for ambiguity

A rather short-term focus

Narrowly designed jobs and narrowly defined career paths that encourage specialisation expertise and efficiency

Primarily autonomous or individual activity

Short-term results-oriented performance appraisals

Moderate concern for quality

Close monitoring of market pay levels for use in making compensation decisions

High concern for quantity of output

Minimal levels of employee training and development

EXPLORING THE RELATIONSHIP BETWEEN STRATEGIC MANAGEMENT AND SHRM: THE BEST-FIT SCHOOL OF SHRM

Table 2.3 Gaining maximum vertical and horizontal fit through strategic configurations HR practices

Internal career opportunities

Training and development

Performance management

Employment security

Participation

Role of HR

Sophisticated recruitment and selection systems Build talent and skills Career development opportunities Retention of key skills valued

Focus is on longer-term development for the future and emphasis on learning

Appraisals are developmentoriented Clear grading structure and transparency valued Employee share schemes

Job security highly valued

Employee voice valued, through established systems of employee involvement, grievance and trade unions where recognised Commitment to the organisation emphasised

Potential for strategic role Wellestablished department, with established HR systems

Buy in talent and skills Limited internal career paths

Focus is on shortterm skill needs Onus is on individual to take responsibility for personal learning and development

Appraisals are results-oriented Reward is shortterm incentive-based Performancerelated pay based on bottom-line measures

Employability valued

Participation and employee voice limited

Administrative role Support role

Defenders Low-risk strategies Secure markets Concentration on narrow segments Focus on efficiency of systems

Prospectors Innovative, high-risk strategies Change and uncertainty Focus on entering new markets

‘idealised fit’. Delery and Doty use Miles and Snow’s (1978) categories of ‘defender’ and ‘prospector’ to theoretically derive ‘internal systems’ or configurations of HR practices that maximise horizontal fit, and then link these to strategic configurations of, for example, ‘defender’ or ‘prospector’ to maximise vertical fit (Table2.3). The configurational approach provides an interesting variation on the contingency approach, and contributes to the SHRM debate in recognising the need for organisations to achieve both vertical and horizontal fit through their HR practices, so as to contribute to an organisation’s competitive advantage and therefore be deemed strategic. While Table2.3 only provides for the two polar opposites of ‘defender’ and ‘prospector’ type strategies, the approach does allow for deviation from these ideal-type strategies and recognises the need for proportionate deviation from the ideal-type HR systems.

Explore

What do you see as the key similarities and differences between the contingency and configurational approaches?

In analysing the level of vertical integration evident in organisational practice, it soon becomes clear that organisations pursue and interpret vertical integration in different ways. Some organisations adopt a top-down approach to HR ‘strategy-making’, with senior management cascading defined strategic objectives to functional departments, who in turn cascade and roll out policies

CHAPTER 2 STRATEGIC HUMAN RESOURCE MANAGEMENT

Organisation strategy

Separation

Organisation strategy

Fit

HR strategy

Dialogue Organisation strategy

Organisation strategy

HR strategy

Holistic HR strategy

HR driven Organisation strategy

HR strategy

Figure 2.4 Torrington et al.’s five levels of ‘vertical integration’ Source: Adapted from Human Resource Management, 4th ed., Prentice Hall (Torrington, D. and Hall, L. 1998) p. 27, Copyright © Prentice Hall Europe 1987, 1991, 1995, 1997.

to employees, while others might recognise HRM as a key business partner and involve HR in the strategic process. Torrington etal. (2011) have explored the varying interpretations of ‘fit’ or ‘integration’ by attempting to qualify the degree or levels of integration between an organisation’s business strategy and its HR strategy. They identified five different relationships or levels of ‘vertical integration’ (see Figure2.4). In the separation model, there is clearly no vertical integration or relationship between those responsible for business strategy and those responsible for HR, and thus there is unlikely to be any formal responsibility for human resources in the organisation. The ‘fit’ model according to Torrington etal. recognises that employees are key to achieving the business strategy, and therefore the HR strategy is designed to fit the requirements of the organisation’s business strategy. This ‘top-down’ version of fit can be seen in the matching model (Fombrun etal., 1984) and in the best-fit models of Schuler and Jackson (1987) and Kochan and Barocci (1985). As you have probably already identified, these models adopt a classical approach to strategy, assuming that business objectives are cascaded down from senior management through departments to individuals. The ‘dialogue’ model recognises the need for a two-way relationship between those responsible for making business strategy decisions and those responsible for making HR decisions. In reality, however, in this model the HR role may be limited to passing on essential information to the board to enable them to make strategic decisions. The ‘holistic’ model, on the other hand, recognises employees as a key source of competitive advantage rather than just a mechanism for implementing an organisation’s strategy. HR strategy in this model becomes critical, as people competencies become key business competencies. This is the underpinning assumption behind the resourcebased view of the firm (Barney, 1991; Barney and Wright, 1998), discussed later in this chapter. The final degree of integration identified by Torrington etal. is the HR-driven model, which places HR as a key strategic partner. The HR-driven model ‘sits well with theincreasing attention being given to the notion of “human capital” where it is the collective nature and quality of the people which provide the potential for future competitive advantage’ (Torrington etal., 2011: 63).

LIMITATIONS OF THE BEST-FIT MODELS OF SHRM

Limitations of the best-fit models of SHRM Criticisms of the best-fit approach have identified a number of problems, both in its underlying theoretical assumptions and in its application to organisations. One of these key themes is the reliance on the classical rational-planning approach to strategy-making, its reliance on determinism and the resulting lack of sophistication in its description of generic competitive strategies (Miller, 1992; Ritson, 1999; Boxall and Purcell, 2016), together with its rejection of societal and national cultural influences on HR strategy. As Boxall and Purcell (2016: 61) note, the firm can never be the complete author of its own HRM. This criticism is partly answered by the configurational school, which recognises the prevalence of hybrid strategies and the need for HR to respond accordingly (Delery and Doty, 1996). A further criticism is that best-fit models tend to ignore employee interests in the pursuit of enhanced economic performance. Thus, in reality, alignment tends to focus on ‘fit’ as defined by Torrington etal. (2011), and relies on assumptions of unitarism rather than the alignment of mutual interests. It has been argued that ‘multiple fits’ are needed to take account of pluralist interests and conventions within an organisation, by ensuring that an organisation’s HR strategy meets the mutual interests of both shareholders and employees. A third criticism could be levelled at the lack of emphasis on the internal context of individual businesses within the same sector and the unique characteristics and practices that might provide its main source of sustainable competitive advantage. Marchington et al. (2016: 96) ask, for example, why does Sainsbury’s prefer to minimise union involvement, while Tesco chooses to work closely with the trade union USDAW? A number of these criticisms imply a lack of flexibility in the best-fit school of SHRM as, while a ‘tight’ fit between an organisation’s HR strategy and its business strategy may provide a key source of competitive advantage in a stable business environment, in a dynamic changing environment it may prove to be a source of competitive disadvantage as the organisation cannot flex as quickly as its rivals. For some time, writers have argued that fit is sometimes not desirable and can be counter-productive in an environment of change (Lengnick Hall and Lengnick Hall, 1988). Wright and Snell (1998), drawing on the work of Milliman etal. (1991), argue that this reflects an ‘orthogonal perspective’, suggesting that fit and flexibility are at opposite ends of a continuum, and therefore cannot co-exist. They support the ‘complementary perspective’ (Milliman etal., 1991) and propose that fit and flexibility can co-exist, and are both essential for organisational effectiveness. They argue that the strategic management challenge is to cope with change by continually adapting to achieve fit between the firm and its external environment (Wright and Snell, 1998: 757). Thus SHRM must promote organisational flexibility in order for the firm to achieve dynamic fit. Wright and Snell (1998: 759), drawing on the work of Schuler and Jackson (1987), Capelli and Singh (1992), Wright and McMahan (1992) and Truss and Gratton (1994), therefore propose a model of SHRM (Figure2.5) that accounts for both fit and flexibility. The model assumes a classical stance towards the strategic management process, as it demonstrates how the implementation of an organisation’s HR strategy needs to ‘fit’ the strategic choice made by the business in providing a process where the firm’s strategy identifies the required or anticipated skills and behaviours, which then drive the intended HR practices, which in turn are operationalised in ‘actual’ HR practices, which influence the ‘actual’ skills and behaviours developed. When aligned, these then contribute to organisational performance. This alignment may endure and be effective in a stable and predictable environment because it supports the competitive needs of the organisation. Thus, fit may exist without any need for flexibility being built into the system. However, when the environment becomes unpredictable, it may become more difficult for managers to obtain the information they need and align the HR systems with the strategic process. Wright and Snell (2005) suggest that in such environments, achieving fit over time may be dependent upon the extent to which flexibility exists in the system, thus requiring a flexible HR system. Flexibility is demonstrated in their model by developing HR systems that can be adapted quickly, by developing a human capital pool with a broad range of

Internal strengths weaknesses

Mission

Strategyfocused intended HR practices

Actual strategyfocused HR practices

Actual strategyfocused skills

Fit

Strategic choice

Goals

External opportunity threats

Actual strategyfocused employee behaviours

Firm performance

Flexibility

Desired ﬂexibilityfocused employee skills and behaviours

Intended ﬂexibilityfocused practices

Actual ﬂexibilityfocused practices

Actual ﬂexibility employee skills

Actual ﬂexible employee behaviours

CHAPTER 2 STRATEGIC HUMAN RESOURCE MANAGEMENT

Figure 2.5 A fit/flexible model

skills and by promoting behavioural flexibility among employees. Thus, employees develop a repertoire of skills and behaviour that reflects their capability to react to and flex with strategic changes.

Strategyfocused anticipated employee skills and behaviour

THE RESOURCE-BASED VIEW OF SHRM

Explore

Reflect on Wright and Snell’s fit/flexibility model (see Figure2.5). How might an HR professional facilitate flexibility?

Key controversy External factors, such as technological developments, can mean that the strategies of established organisations can become irrelevant – think, for example, of the impact on Kodak as a result of being able to take photos on a mobile phone or the impact on the record industry of music streaming and downloads. When asked about the ability of Spotify to conquer the music industry, Gustav Soderstrom, the chief product officer, said that Spotify ‘is a pretty good concept for what the industry could be...but it’s dangerous to build for a future that might not be. It’s dangerous to get stuck in your own bubble’. To what extent is organisational strategy building for a future that might not be? Is it better to have no strategy than the wrong strategy? Source: Milne, R. (2014), ‘The Spotify effect’, Financial Times, 25 October.

CHAPTER 2 STRATEGIC HUMAN RESOURCE MANAGEMENT

view of the firm (Penrose, 1959; Wernerfelt, 1984; Amit and Shoemaker, 1993) argue that it is the range and manipulation of resources, including human resources, that give an organisation its ‘uniqueness’ and source of sustainable competitive advantage. Barney (1991) and Barney and Wright (1998) contribute to the debate on SHRM in two important ways. First, they provide an economic foundation for examining the role of HRM in gaining sustainable competitive advantage. Second, in providing a tool of analysis in the VRIO framework (see the following section), and by considering the implications for operationalising HR strategy, they emphasise the role of the HR function as a strategic partner in developing and sustaining an organisation’s competitive advantage.

The VRIO framework The resource-based view of SHRM explores the ways in which an organisation’s human resources can provide sustainable competitive advantage. This is best explained by the VRIO framework: ●

value

●

rarity

●

inimitability

●

organisation.

Value Organisations need to consider how the HR function can create value. It is quite common in organisations to reduce costs through HR, such as the reduction in headcount and the introduction of flexible working practices, but it is also important to consider how they might increase revenue. Reicheld (1996) has identified human resources’ contribution to the business as efficiency, but also as customer selection, customer retention and customer referral, thus highlighting the impact of HR’s contribution through enhanced customer service and customer added value. This view is reflected by Thompson (2001) in recognising the paradigm shift from traditional added value through economy and efficiency to ensuring that the potential value of outputs is maximised by making sure that they fully meet the needs of the customers for whom the product or service is intended. The suggestion of the RBV is that if the HR function wishes to be a ‘strategic partner’, it needs to be understood which human resources contribute the most to sustainable competitive advantage in the business, as some human resources may provide greater leverage for competitive advantage than others. Hamel and Prahalad (1993) therefore identify that productivity and performance can be improved by gaining the same output from fewer resources (right-sizing) and by achieving more output from given resources (leveraging). In order to achieve this, the HR function must ask themselves the following questions: ●

On what basis is the firm seeking to distinguish itself from its competitors? Production efficiency? Innovation? Customer service? Where in the value chain is the greatest leverage for achieving differentiation? Which employees provide the greatest potential to differentiate a firm from its competitors?

Explore

Answer the above questions with regard to your organisation or one with which you are familiar.

The value of an organisation’s resources is not sufficient on its own, however, for sustainable competitive advantage, because if other organisations possess the same value, then it will provide only competitive parity. Therefore an organisation needs to consider the next stage of the framework: rarity.

THE RESOURCE-BASED VIEW OF SHRM

Rarity The HR manager needs to consider how to develop and exploit rare characteristics of a firm’s human resources to gain competitive advantage. For example, US fashion store Nordstrom operates in the highly competitive retail industry where you would usually expect a lower level of skill and subsequently high labour turnover. Nordstrom, however, focused on individual salespeople as a key source of its competitive advantage, investing in attracting and retaining young, collegeeducated people who were looking for a career in retailing. To ensure horizontal integration, it also provided a highly incentive-based compensation system (up to twice the industry average) and it encouraged employees to make a ‘heroic effort’ to attend to customers’ needs. Thus, by investing in its human resources and ensuring an integrated approach to development and reward, Nordstrom has taken a ‘relatively homogeneous labour pool and exploited the rare characteristics to gain a competitive advantage’ (Barney and Wright, 1998: 34).

Inimitability If an organisation’s human resources add value and are rare, they can provide competitive advantage in the short term, but if other firms can imitate these characteristics, then over time competitive advantage may be lost and replaced with competitive parity. The third element of the VRIO framework requires the HR function to develop and nurture characteristics that cannot be easily imitated by the organisation’s competitors. Barney and Wright (1998) recognise the significance of ‘socially complex phenomena’ here, such as an organisation’s unique history and culture, which can be used to identify unique practices and behaviours that enable organisations to ‘leapfrog’ their competitors. Alchian and Demsetz (1972) also identified the contribution of social complexity in providing competitive advantage in their work on the potential synergy that results from effective teamwork. They found that this ensured a rare and difficult-to-copy commodity for two reasons: first, it provided competitive advantage through its causal ambiguity, as the specific source of the competitive advantage was difficult to identify; and second, a synergy resulted from its social complexity as team members were involved in socially complex relationships that are not transferable across organisations. So characteristics such as trust and good relationships become firm-specific assets that provide value, are rare and are difficult for competitors to copy.

Organisation Finally, to ensure that the HR function can provide sustainable competitive advantage, the VRIO framework suggests that organisations need to ensure that they are organised, so that they can capitalise on adding value, rarity and imitability. This implies a focus on horizontal integration, or integrated, coherent systems of HR practices rather than individual practices, which enables employees to reach their potential (Guest, 1987; Wright and Snell, 1991; Wright etal., 1996; Gratton etal., 1999). This requires organisations to ensure that their policies and practices in the HR functional areas are coordinated and coherent, and not contradictory. Mueller (1998), in advocating the RBV, argues that ‘the existing theorising in strategic HRM needs to be complemented by an evolutionary perspective on the creation of human resource competencies’. He echoes Mintzberg’s (1987) concerns that an overly rationalistic approach to strategy-making tends to focus too much attention on past successes and failures, when what is really needed is a level of strategic thinking that is radically different from the past. He identifies a lack of theoretical and empirical evidence to justify the emphasis on rational, codified policies of HRM, and reflects Bamberger and Phillips (1991) in describing HR strategy as an ‘emergent pattern in a stream of human-resource-related decisions occurring over time’. Mueller (1998) is wary of the claimed relationship between SHRM and the overall financial performance of an organisation. He argues that enlightened best-practice HR activities do not automatically translate into competitive superiority, but rather require more complex and subtle conditions for human resources to become ‘strategic assets’. He defines these as ‘the social architecture’ or ‘social patterns’ within an organisation that build up incrementally over time and are therefore

CHAPTER 2 STRATEGIC HUMAN RESOURCE MANAGEMENT

difficult to copy. The focus on ‘social architecture’ rather than culture is deliberate, as it provides an emphasis on developing and changing behaviours rather than values, which are notoriously difficult to change (Ogbonna, 1992). Mueller identifies an organisation’s ‘social architecture’ as a key element in the resource-based view of SHRM, together with an embedded ‘persistent strategic intent’ on the part of senior management and embedded learning in daily work routines, which enable the development of ‘hidden reservoirs’ of skills and knowledge, which in turn can be exploited by the organisation as ‘strategic assets’. The role of HR is then to channel these behaviours and skills so that the organisation can tap into these hidden reservoirs. This thinking is reflected in the work of Hamel and Prahalad (1993, 1994), discussed in the following section. The HR architecture approach (e.g. Lepak and Snell, 2007) further develops these ideas by suggesting that organisations adopt differing approaches to different categories of employees, depending on their perceived strategic value to the organisation and the unique nature of their skills. Four categories of worker can be identified (Marchington etal., 2016: 101):

Explore

●

Workers with high strategic value and unique skills. These workers are seen as core to the organisation and receive quality enhancement HRM.

●

Workers of high strategic value but with skills that are readily available in the external labour market. These workers are directly employed but are treated less well.

●

Workers with low strategic value and with skills readily available in the labour market. These workers may be employed on short-term contracts or the work may be outsourced to other firms.

●

Workers with high skills that are not considered central to organisational goals. These workers may be directly employed or provided on a consultancy basis.

What are the key advantages and disadvantages of adopting different HR practices for different groups of workers?

Applying the resource-based view of SHRM In adopting a focus on the internal context of the business, HR issues and practices are core to providing sustainable competitive advantage, as they focus on how organisations can define and build core competencies or capabilities that are superior to those of their competitors. One key framework here is the work of Hamel and Prahalad (1993, 1994) and their notion of ‘core competencies’ in their ‘new strategy paradigm’. Hamel and Prahalad (1994) argue that in most companies, the emphasis is on competing in the present, which means that too much management energy is devoted to preserving the past and not enough to creating the future. Thus it is organisations that focus on identifying and developing their core competencies that are more likely to be able to stay ahead of their competitors. The key point here is not to anticipate the future but to create it, not only by focusing on organisational transformation and competing for market share, but also by regenerating strategies and competing for opportunity share. In creating the future, strategy is seen not only as learning, positioning and planning but also as forgetting, foresight and strategic architecture, where strategy goes beyond achieving ‘fit’ and resource allocation to achieving ‘stretch’ and resource ‘leverage’. The level of both tacit and explicit knowledge within the firm, coupled with the ability of employees to learn, becomes crucial. Indeed, Boxall and Purcell (2016) argue that there is little point in making a distinction between the resource-based view and the knowledge-based view of the firm, as both approaches advocate that it is a firm’s ability to learn faster than its competitors that leads to sustainable competitive advantage.

THE RESOURCE-BASED VIEW OF SHRM

When organisations grow through mergers or acquisitions, it has been argued that the resource-based view takes on further significance. When mergers and acquisitions fail, it is often not at the planning stage but at the implementation stage (Hunt etal., 1987), and people and employee issues have been noted as the cause of one-third of such failures in one survey (Marks and Mirvis, 1982). Thus ‘human factors’ have been identified as crucial to successful mergers and acquisitions. The role of human resources shifts to a ‘strategic’ focus on ‘managing capability’ and ‘know-how’, and ensuring that organisations retain both tacit and explicit knowledge (Nonaka and Takeuchi, 1995) in order to become more innovative, as organisations move to knowledge-based strategies as opposed to product-based ones. The RBV has recognised that both human capital and organisational processes can add value to an organisation, but they are likely to be more powerful when they mutually reinforce and support one another. The role of the HR function in ensuring that exceptional value is achieved and in assisting organisations to build competitive advantage lies in its ability to implement an integrated and mutually reinforcing HR system that ensures that appropriate talent is identified, developed, rewarded and managed in order to reach its full potential. This theme of horizontal integration or achieving congruence between HR policies and practices is developed further in the next section on the best-practice approach to SHRM.

Key controversy The resource-based view focuses on the internal resources (including people) that can provide competitive advantage to organisations, but has been criticised for paying insufficient attention to the external environment. To what extent do you agree with this view?

Limitations of the resource-based view The RBV is not without its critics, particularly in relation to the strong focus on the internal context of the business. Some writers have suggested that the effectiveness of the RBV is inextricably linked to the external context of the firm (Porter, 1991; Miller and Shamsie, 1996). They have recognised that the RBV provides more added value when the external environment is less predictable. Other writers have noted the tendency for advocates of the RBV to focus on differences between firms in the same sector as sources of sustainable competitive advantage. This sometimes ignores the value and significance of common ‘baseline’ or ‘table stake’ (Hamel and Prahalad, 1994) characteristics across industries, which account for their legitimacy in that particular industry. Thus in the retail sector, there are strong similarities in how the industry employs a mix of core and peripheral labour, with the periphery tending to be made up of relatively low-skilled employees who traditionally demonstrate higher rates of employee turnover. Thus, in reality, economic performance and efficiency tend to be delivered through right-sizing, by gaining the same output from fewer and cheaper resources, rather than through leverage by achieving more output from given resources. The example of B&Q in the UK, employing more mature people as both their core and particularly their peripheral workforce, shows how an organisation can partially differentiate itself from its competitors by focusing on adding value through the knowledge and skills of its human resources. Thus leverage is gained as the knowledge of B&Q’s human resources adds value to the level of customer service provided, which theoretically in turn will enhance customer retention and therefore shareholder value. An exploration of the empirical evidence to support this relationship between SHRM and organisational performance is discussed in more detail in the next section: the best-practice approach to SHRM.

CHAPTER 2 STRATEGIC HUMAN RESOURCE MANAGEMENT

Best-practice SHRM: high-commitment models The notion of best-practice or ‘high-commitment’ HRM was introduced in the previous chapter (see Chapter1) and can be identified as a key theme in the development of the SHRM debate. These models argue that all organisations will benefit and see improvements in organisational performance if they identify, gain commitment to and implement a set of best HRM practices. Since the early work of Beer etal. (1984) and Guest (1987), there has been much work done on defining sets of HR practices that enhance organisational performance. These models of best practice can take many forms. While some have advocated a universal set of HR practices that would enhance the performance of all organisations they were applied to (Pfeffer, 1994, 1998), others have focused on high-commitment models (Walton, 1985; Wood and de Menezes, 1998; Guest, 2001) or ‘human capital-enhancing’ practices (Youndt etal., 1996) and high-involvement practices (Wood, 1999; Guthrie, 2001) which reflect an underlying assumption that a strong commitment to the organisational goals and values will provide competitive advantage. Others have focused on ‘high-performance work systems/practices’ (Berg, 1999; Applebaum etal., 2000). There is now an extensive body of research exploring the relationship between these ‘sets of HR practices’ and organisational performance, but it is still difficult to reach generalised conclusions from these studies (Guest, 2011). This is mainly as a result of conflicting views about what constitutes an ideal set of HR best practices, whether they should be horizontally integrated into ‘bundles’ that fit the organisational context or not, and the contribution these sets of HR practices can make to organisational performance (see Kaufman, 2015).

Universalism and high-commitment bundles One of the best-practice models most commonly cited is Pfeffer’s (1998) list of seven key practices of effective HRM: 1. Employment security 2. Rigorous selection processes 3. Team-working 4. High pay linked to organisational performance 5. Training and development 6. Reduced status differentials 7. Information sharing The relevance of this list in a European context has been questioned owing to Pfeffer’s lack of commitment to independent worker representation and joint regulation (Boxall and Purcell, 2016). Marchington etal. (2016: 57) have adapted Pfeffer’s list and drawn on additional sources to add ‘employee involvement and participation, worker voice’, ‘performance review, appraisal and career development’ and ‘work–life balance’ to the key components of high-commitment HRM. With the universalist approach or ‘ideal set of practices’ (Guest, 1997), the concern is how close organisations can get to the ideal set of practices, the hypothesis being that the closer an organisation gets, the better it will perform in terms of higher productivity, service levels and profitability. The role of HR therefore becomes one of identifying and gaining senior management commitment to a set of HR best practices and ensuring that they are implemented and

BEST-PRACTICE SHRM: HIGH-COMMITMENT MODELS

that reward is distributed accordingly. The key to Pfeffer’s universal approach is the provision of employment security, as this underpins the effectiveness of the other practices. Pfeffer recognises that employees are unlikely to commit to the organisation and share their knowledge and ideas without some mutual recognition of employment security. Critics of Pfeffer have questioned the feasibility of providing employment security, particularly in a weak economic climate, as ‘downsizing’ or ‘right-sizing’ is often viewed as the favoured HR option when faced with an economic downturn. However, there have been examples of organisations, such as Toyota, in which management and worker representatives negotiated a reduction in pay and hours rather than cutting jobs in order to maintain employment security and employee commitment (Millward, 2009). As discussed previously (see Chapter1), one of the difficulties with the best-practice approach is the variation in what constitutes best practice. Lists of best practices vary in their constitution and in their relationship to organisational performance. A sample of these variations is provided in Table2.4. Such discrepancies in lists of best practices result in confusion about which particular HR practices constitute high commitment and in a lack of empirical evidence and ‘theoretical

Table 2.4 Variations among lists of best practice Pfeffer (1998)

MacDuffie (1995)

Huselid (1995)

Arthur (1994)

Delery and Doty (1996)

Luthans and Sommer (2005)

Stavrou and Brewster (2005)

Employment security

Self-directed work teams

Contingent pay

Self-directed work teams

Informationsharing

Training

Selective hiring

Job rotation

Hours per year of training

Problemsolving groups

Internal career opportunities

Job design programmes

Evaluation of HR

Informationsharing

Contingent pay

Job analysis methods

Group bonus

TQM

Job analysis

Suggestions forum

Selective hiring

Hours per year of training

Extensive training Sharing information Self-managed teams High pay contingent on company performance Reduction of status differentials

Problemsolving groups

Contingent pay Hiring criteria, current job versus learning Induction and initial training provision Hours per year of training

Attitude surveys Employment tests

Conflict resolution Job design

Grievance procedure

Percentage of skilled workers

Formal performance appraisal

Supervisor span of control

Promotion criteria

Social events

Selection ratio

Average total labour costs

Benefits/total labour costs

Source: Adapted from Becker and Gerhart (1996: 785) and Stavrou and Brewster (2005).

Training Resultsoriented appraisals Profit-sharing Employment security Participation Job descriptions

Participation programmes Incentive-based compensation bundle Benefits Training Grievance Selection and staffing Performance appraisal

Share options Profit-sharing Merit pay Joint HR– management bundle Communication on strategy Communication on finance Communication on change Communication on organisation of work Career Wider jobs Communication to management

CHAPTER 2 STRATEGIC HUMAN RESOURCE MANAGEMENT

rigour’ (Guest, 1987: 508) to support claims of universal application. Capelli and Crocker-Hefter (1996: 7) argue that ‘a single set of best practices may, indeed, be overstated.... We argue that [it is] distinctive human resource practices that help to create unique competencies that differentiate products and, in turn, drive competitiveness.’ A key theme that emerges in relation to best-practice HRM is that individual practices cannot be implemented effectively in isolation (Storey, 1992); combining them into integrated and complementary bundles is therefore crucial (MacDuffie, 1995). MacDuffie believes that a ‘bundle’ creates the multiple, reinforcing conditions that support employee motivation, given that employees have the necessary knowledge and skills to perform their jobs effectively (Stavrou and Brewster, 2005). Thus the notion of achieving horizontal integration within and between HR practices gains significance in the best-practice debate. Horizontal alignment with other functional areas has also been highlighted by some writers as a key element in enhancing the effectiveness of other organisational practices and therefore organisational performance. Lawler etal. (1995) identified the link between HRM and total quality management (TQM), and similarly MacDuffie (1995) identified HR practices as integral to the effectiveness of lean production. The need for horizontal integration in the application of SHRM principles is one element that is found in the configurational school of thought, in the resource-based view approach and in certain best-practice models. It emphasises the coordination and congruence between HR practices through ‘a pattern of planned action’ (Wright and McMahan, 1999). In the configurational school, cohesion is thought likely to create synergistic benefits, which in turn enable the organisation’s strategic goals to be met. Roche (1999: 669), in his study on Irish organisations, noted that ‘organisations with a relatively high degree of integration of human resource strategy into business strategy are much more likely to adopt commitment-oriented bundles of HRM practices’. Where some of the best-practice models differ is in those that advocate the ‘universal’ application of SHRM, notably Pfeffer (1994, 1998). Pfeffer’s argument is that best practice may be used in any organisation, irrespective of product life cycle, market situation or workforce characteristics, and improved performance will ensue. This approach ignores potentially significant differences in organisations, industries, sectors and countries. The work of Delery and Doty (1996) has highlighted the complex relationship between the management of human resources and organisational performance, and their research supports the contingency approach (Schuler and Jackson, 1987) in indicating that there are some key HR practices, specifically internal career opportunities, results-oriented appraisals and participation/voice, that must be aligned with the business strategy (in other words, that are context-specific). The best-practice ‘bundles’ approach, however, is additive, and accepts that as long as there is a core of integrated high-commitment practices, other practices can be added or ignored and still produce enhanced performance. Within many high-commitment-based models, there is an underlying assumption of unitarism, which ignores the inherent pluralist values and tensions present in many organisations. Coupled with further criticisms of context avoidance and assumed rationality between implementation and performance, the best-practice advocates, particularly the universalists, are not without theircritics.

HRM and performance In recognising HRM systems as ‘strategic assets’ and in identifying the strategic value of a skilled, motivated and adaptable workforce, the relationship between SHRM and organisational performance moves to centre stage. The traditional HR function, when viewed as a cost centre, focuses on transactions, practices and compliance. When this is replaced by an SHRM system, it is viewed as an investment and focuses on developing and maintaining a firm’s strategic infrastructure (Becker etal., 1997). The strategic role of HRM then might be characterised as ‘organisational systems designed to achieve competitive advantage through people’ (Snell etal., 1996: 62).

HRM AND PERFORMANCE

In turn, competitive advantage may be defined as a set of capabilities or resources giving an organisation an advantage that leads to superior performance relative to that of its competitors (Wiggins and Ruefli, 2002: 84). Thus the relationship between HRM and organisational performance becomes significant, both in terms of defining appropriate HR systems and in terms of identifying methods to evaluate and measure the contribution of HR systems. It is not surprising, therefore, that there is an extensive body of work that focuses on the contribution of such HR systems to organisational performance (MacDuffie, 1995; Stroh and Caligiuri, 1998; Perry-Smith and Blum, 2000; Stavrou and Brewster, 2005). This systems approach and concentration on ‘bundles’ of integrated HR practices is at the centre of thinking on highperformance work practices. The seminal work of Huselid (1995) and Huselid and Becker (1996) identified integrated systems of high-performance work practices – those activities that improve employees’ knowledge, skills and abilities and enhance employee motivation – as significant economic assets for organisations, concluding that ‘the magnitude of the return on investment in high performance work practices is substantial’ (Huselid, 1995: 667). Zigarelli (1996: 63) identified that Huselid’s study went beyond merely justifying the existence of the HR manager. In an increasingly competitive business environment where sources of competitive advantage are scarce, Huselid’s work identified that SHRM can provide such an edge, as a high-quality, highly motivated workforce is a difficult advantage for competitors to replicate. This differs from the universal approach, and is indicative of a configurational approach (Delery and Doty, 1996) in that high-performance work practices are recognised as being highly idiosyncratic and in need of being tailored to meet an individual organisation’s specific context in order to provide maximum performance. These high-performance work practices will only have a strategic impact, therefore, if they are aligned and integrated with each other and if the total HRM system supports key business priorities. Instead of focusing on the effects of individual HR policies and practices on individual outcomes, then, it becomes necessary to explore the impact-specific configurations, or systems of HRM on organisational-level outcomes (Luthans and Sommer, 2005: 328). This requires a ‘systems’ thinking approach on the part of HR managers, which enables them to avoid ‘deadly combinations’ (Delery, 1998) of HR practices that work against each other (e.g. team-based culture and individual performance-related pay) and seek out ‘powerful connections’ or synergies between practices (e.g. building up new employees’ expectations through sophisticated selection and meeting them through appropriate induction, personal development plans and reward strategies). The impact of HRM practices on organisational performance has been recognised as a key element of differentiation between HRM and SHRM. Much research interest has been generated in exploring the influence of high-performance work practices on shareholder value (Huselid, 1995) and on human capital management (Ulrich etal., 1995; Ulrich, 1997). For example, Youndt etal. (1996) demonstrated that productivity rates were higher in manufacturing plants where the HR strategy focused on enhancing human capital, and Huselid etal. (1997) found that increased HRM effectiveness corresponded to a 5.2percent estimated increase in sales per employee, a 16.3percent increase in cash flow and an estimated 6percent increase in market value. Studies in the UK have demonstrated similar findings. A survey by Patterson etal. (1997), published for the CIPD, cited evidence for HRM as a key contributor to improved performance. Patterson etal. argued that 17percent of the variation in company profitability could be explained by HRM practices and job design, as opposed to just 8percent from research and development, 2percent from strategy and 1percent from both quality and technology. Other studies have reviewed the links between high-commitment HRM and performance, and two studies by Guest etal. (2000a, 2000b) have argued the economic and business case for recognising people as a key source of competitive advantage in organisations and therefore as key contributors to enhanced organisational performance. Further, Gelade and Ivery (2003) noted significant correlations among work climate, HR practices and business performance in the UK banking industry. Stavrou and Brewster (2005) have noted, however, that while the connection between HRM and performance has been extensively researched in the USA, there is a need for further studies to explore HRM approaches that are indigenous to the European Union.

CHAPTER 2 STRATEGIC HUMAN RESOURCE MANAGEMENT

Becker and Gerhart (1996: 793) argued that future work on the strategic perspective of HRM ‘must elaborate on the black box between a firm’s HR systems and the firm’s bottom line’. They recognised that there was a need to understand how and why HR policies influence performance which goes beyond a basic input–output model. It could be argued that the AMO theory of Applebaum etal. (2000) (see Chapter1) sets out to do this, where organisational performance is viewed as the sum of employees’ abilities, motivations and opportunities to participate, which when managed appropriately will encourage employees to demonstrate discretionary behaviour. An employee’s willingness to demonstrate discretionary behaviour was found to have clear links to organisational performance. Purcell etal. (2003) developed the AMO concept in their Bath People and Performance model, which identified 11 HR practices that contributed to organisational performance, through supporting the development of employee ability, motivation and providing opportunities to demonstrate discretionary behaviour (Figure2.6). They reflected that the critical link in the HRM black box is how HR practices influence employee attitudes and improve worker performance in ways that are beneficial to the employing organisation (Purcell and Hutchinson, 2007). This led to recognition of the key role of the front-line manager in the SHRM/organisational performance equation. Front-line managers were seen as key to enacting HR policy and practice and engaging in leadership behaviour that translates strategic HR choices to effective implementation, thereby influencing employee attitude and behaviour. Thus, while much HR literature has focused on exploring the relationship with organisational performance in terms of HR strategic choices in relation to identifying appropriate HR roles (Ulrich and Brockbank, 2005), or in selecting appropriate HR practices that either fit the Training and development

Recruitment/ selection

Pay satisfaction

Performance appraisal

Career opportunities

Job security

Ability and skill

Motivation and incentive

Front-line management Implementing Enacting Leading Controlling

Work–life balance Opportunity to participate

Organisation commitment

Motivation

Discretionary behaviour

Job satisfaction

Discretionary behaviour

Job challenge/ job autonomy

Teamworking

Involvement

Communication

Figure 2.6 The Bath People and Performance model Source: Adapted from Understanding the People and Performance Link: Unlocking the Black Box, Chartere (Purcell, J., Kinnie, N., Hutchinson, S., Rayton, B. and Swart, J 2003) with the permission of the publisher, the Chartered Institute of Personnel and Development, London (www.cipd.co.uk).

SHRM AND PERFORMANCE: THE CRITIQUE

business strategy (Schuler and Jackson, 1987) or generate high commitment (Huselid, 1995; MacDuffie, 1995; Pfeffer, 1998), there has not been much attention paid to the key influencers in the effective implementation of HR strategy, the role of the front-line manager (Purcell and Hutchinson, 2007).

SHRM and performance: The critique While research studies devoted to demonstrating the link between SHRM and performance have increased (Wright and Haggerty, 2005), they are still the subject of much criticism. Criticisms aimed at advocates of the high-commitment/performance link are mainly centred on the validity of the research methods employed (Wall and Wood, 2005), the lack of theoretical underpinning (Dyer and Reeves, 1995; Becker and Gerhart, 1996; Wright etal., 2003), problems associated with inconsistencies in the best-practice models used (Becker and Gerhart, 1996; Wright and Gardner, 2003; Marchington etal., 2016) and the lack of emphasis on the examination of the level of either vertical or horizontal alignment (Wall and Wood, 2005). This has led some researchers to be more circumspect in their analysis of the relationship between SHRM and performance (Marchington and Grugulis, 2000). In their 2003 study, Wright and Gardner (2003: 312) suggest that HR practices are only ‘weakly’ related to firm performance, and Godard (2004: 355) suggests that in liberal market economies the generalisability is likely to be low. In terms of research methodology, Wall and Wood (2005) identified that the least satisfactory survey method is to use single source respondents as it is unlikely that one individual will have complete understanding of business strategy, business performance and HR practices. In their review of 25 research studies, including many key studies on SHRM and performance, Wall and Wood identified that 21 of the studies had used single respondents as the sole source of data. They therefore argue that future progress in justifying the relationship between SHRM and organisational performance depends on using large-scale, long-term research or ‘big science’ in partnership among research, practitioner and government communities (Wall and Wood, 2005: 429). In terms of evidence, it is difficult to pinpoint whether it is the HR practices that in turn led to enhanced organisational performance or whether financial success has enabled the implementation of appropriate HR practices. It is difficult to see how organisations operating in highly competitive markets, with tight financial control and margins, would be able to invest in some of the HR practices advocated in the best-practice models. This is not to say that HR could not make a contribution in this type of business environment, but rather that the contribution would not be that espoused by the best-practice models. Here, the enhanced performance could be delivered through the efficiency and tight cost control more associated with ‘hard’ HR practices (Storey, 2007) and the contingency school. A further difficulty is the underlying theme of ‘unitarism’ pervading many of the best-practice approaches. As Boxall and Purcell (2016) note, many advocates of bestpractice, high-commitment models tend to ‘fudge’ the question of pluralist goals and interests. If the introduction of best-practice HR could meet the goals of all stakeholders within the business equally, the implementation of such practices would not be problematic. However, it is unlikely that this would be the case, particularly within an economy driven by short-term thinking, where the majority of organisations are looking primarily to increase return on shareholder value (see Thompson, 2011). Thus, if this return can best be met through cost-reduction strategies or increasing leverage in a way that does not fit employees’ goals or interests, how can these practices engender high commitment and therefore be labelled ‘best practice’? It is not surprising, therefore, that ethical differences between the rhetoric of human resource best practice and the reality of human resource real practices are highlighted (Legge, 1998). High-commitment models, therefore, which at first appear to satisfy ethical principles in treating employees with respect and as ends in their own right, rather than as means to other ends (Legge, 1998), in reality can assume a utilitarian perspective, where it is deemed ethical to use employees as a means to an end, if it is for the greater good of the organisation. This might justify downsizing and right-sizing strategies.

CHAPTER 2 STRATEGIC HUMAN RESOURCE MANAGEMENT

Key controversy If ‘best practice’ HRM is applied to meet the strategic goals of the organisation, to what extent are these practices also in the best interests of key stakeholders, particularly employees, in the organisation? One of the key components of Pfeffer’s list of HRM practices is pay contingent on organisational performance, that is, when an organisation is performing well, employees will be rewarded accordingly. However, there have been many recent cases where senior managers of poorly performing organisations havebeenrewarded with large payoffs. To what extent do such practices undermine the principles of ‘best practice’ HRM?

Measuring the impact of SHRM on performance We have so far considered the complexity of the SHRM debate and recognised that our understanding and application of SHRM principles are contingent upon the particular body of literature in which we cite our analysis. It is now appropriate to consider in more detail how strategic management processes in firms can be improved to deal more effectively with key HR issues and take advantage of HR opportunities. A study by Ernst & Young in 1997 (cited in Armstrong and Baron, 2002) found that more than a third of the data used to justify business analysts’ decisions were non-financial, and that when non-financial factors, notably ‘human resources’, were taken into account, better investment decisions were made. This presents an opportunity for HR professionals to develop business capability and demonstrate the contribution of SHRM to organisational performance. One method that is worthy of further consideration is the balanced scorecard (Kaplan and Norton, 1996, 2001). This is also concerned with relating critical non-financial factors to financial outcomes by assisting firms to map the key cause–effect linkages in their desired strategies. Interestingly, Kaplan and Norton challenge the short-termism found in many Western traditional budgeting processes and, as with the Ernst & Young study, they imply a central role for HRM in the strategic management of the firm and importantly suggest practical ways for bringing it about (Boxall and Purcell, 2016). Kaplan and Norton identify the significance of executed strategy and the implementation stage of the strategic management process as key drivers in enhancing organisational performance. They recognise, along with Mintzberg (1987), that ‘business failure is seen to stem mostly from failing to implement and not from failing to have wonderful visions’ (Kaplan and Norton, 2001: 1). Therefore, as with the resource-based view, implementation is identified as a key process that is often poorly executed. Kaplan and Norton adopt a stakeholder perspective, based on the premise that for an organisation to be considered successful it must satisfy the requirements of key stakeholders, namely investors, customers and employees. They suggest identifying objectives, measures, targets and initiatives on four key perspectives of business performance: 1. Financial: ‘To succeed financially, how should we appear to our shareholders’? 2. Customer: ‘To achieve our vision, how should we appear to our customers’?

MEASURING THE IMPACT OF SHRM ON PERFORMANCE

3. Internal business processes: ‘To satisfy our shareholders and customers, what business processes must we excel at’? 4. Learning and growth: ‘To achieve our vision, how will we sustain our ability to change and improve’? They recognise that investors require financial performance, measured through profitability, market value and cash flow or economic value added (EVA). Customers require quality products and services, which can be measured by market share, customer service, customer retention and loyalty or customer value added (CVA). Employees require a healthy place to work that recognises opportunities for personal development and growth. These can be measured by attitude surveys, skill audits, performance appraisal criteria, which recognise not only what they do, but what they know and how they feel, or people value added (PVA). They can be delivered through appropriate and integrated systems, including HR systems. The balanced scorecard approach therefore provides an integrated framework for balancing shareholder and strategic goals, and extending those balanced performance measures down through the organisation, from corporate to divisional to functional departments and then on to individuals (Grant, 2010). By balancing a set of strategic and financial goals, the scorecard can be used to reward current practice and also offer incentives to invest in long-term effectiveness, by integrating financial measures of current performance with measures of ‘future performance’. Thus it provides a template that can be adapted to provide the information that organisations require now and in the future for the creation of shareholder value. The balanced scorecard at Sears, for example, (Yeung and Berman, 1997: 324; Rucci etal., 1998), focused on the creation of a vision that the company was ‘a compelling place to invest’, ‘a compelling place to shop’ and ‘a compelling place to work’, whereas the balanced scorecard at Mobil North American Marketing and Refining (Kaplan and Norton, 2001) focused on cascading down financial performance goals into specific operating goals, through which performance-related pay bonuses were determined. Kaplan and Norton (2001) recognise the impact that key HR activities can have on business performance in the learning and growth element of the balanced scorecard. Employee skills, knowledge and satisfaction are identified as improving internal processes, and therefore contributing to CVA and EVA. Thus the scorecard provides a mechanism for integrating key HRperformance drivers into the strategic management process. Boxall and Purcell (2016) highlight the similarities between Kaplan and Norton’s (2001: 93) learning and growth categories of strategic competencies (skills and knowledge required by employees to support the strategy), strategic technologies (information support systems required to support the strategy) and climate for action (the cultural shifts needed to motivate, empower and align the workforce behind the strategy) and the AMO theory of performance, where performance is seen as a function of employee ability, motivation and opportunity. Thus the balanced scorecard contributes to the development of SHRM, not only in establishing goals and measures to demonstrate cause–effect linkages, but also in encouraging a process that stimulates debate and shared understanding between the different areas of the business. However, the balanced scorecard approach does not escape criticism, particularly in relation to the measurement of some HR activities that are not directly linked to productivity, thus requiring an acknowledgement of the multidimensional nature of organisational performance and a recognition of multiple ‘bottom lines’ in SHRM. Boxall and Purcell (2016) suggest the use of two others besides labour productivity: organisational flexibility and social legitimacy. So, although the balanced scorecard has taken account of the impact and influence of an organisation’s human resources in achieving competitive advantage, there is still room for the process to become more HR-driven.

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Concluding comments Given the increasing profile of SHRM in creating organisational competitive advantage and the subsequent complexity in interpreting and applying SHRM principles, there appears to be agreement on the need for more theoretical development in the field, particularly regarding the relationship between strategic management and HRM and the relationship between SHRM and performance (Wright and McMahan, 1992; Guest, 1997; Wright and McMahan, 1999; Boxall and Purcell, 2016). This chapter has reviewed key developments and alternative frameworks in the field of SHRM in an attempt to clarify its meaning so that the reader is able to make an informed judgement as to the meaning and intended outcomes of SHRM. Thus SHRM is differentiated from HRM in a number of ways, particularly in its movement away from a micro perspective on individual HR functional areas to the adoption of a macro perspective (Butleretal., 1991; Wright and McMahan, 1992), with its emphasis on vertical integration (Schuler and Jackson, 1987; Guest, 1989; Tyson, 1997) and horizontal integration (Baird and Meshoulam, 1988; MacDuffie, 1995). It therefore becomes apparent that the meaning of SHRM tends to lie in the context of organisational performance, although organisational performance can be interpreted and measured in a variety of ways. These may range from delivering efficiency and flexibility through cost-reduction-driven strategies through the implementation of what may be termed ‘hard HR techniques’ (Schuler and Jackson, 1987), to delivering employee commitment to organisational goals through ‘universal sets’ of HR practices (Pfeffer, 1994, 1998) or ‘bundles’ of integrated HR practices (Huselid, 1995; Delery and Doty, 1996), to viewing human resources as a source of human capital and sustainable competitive advantage (Barney, 1991; Barney andWright, 1998) as well as a core business competence and a key strategic asset (Hamel and Prahalad, 1993, 1994). As mentioned in the introductory section, what is often missing from prescriptive and even critical analyses of SHRM is the way in which the ‘regime of accumulation’ and the drive towards financialisation shapes and structures behaviours and outcomes within business. As you can see, there are conflicting views as to the meaning of SHRM and the contribution SHRM can make to an organisation.

Summary ●

This chapter has charted the development of SHRM, exploring the links between the strategic management literature and SHRM. It has examined the different approaches to SHRM identified in the literature, including the best-fit approach, the best-practice approach, the configurational approach and the resource-based view, in order to understand what makes HRM strategic.

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A key claim of much SHRM literature is a significant contribution to a firm’s competitive advantage, whether it is through cost-reduction methods or more often added value through best-practice HR policies and practices. An understanding of the business context and particularly of the ‘strategy-making’ process is therefore considered central to developing an understanding of SHRM.

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Whittington’s (1993, 2001) typology was used to analyse the different approaches to ‘strategymaking’ experienced by organisations and to consider the impact this would have on our understanding of the development of SHRM. The influence of the classical, rational-planning approach on the strategic management literature and therefore SHRM literature was noted, with its inherent assumption that strategy-making is a rational, planned activity. This ignores some of the complexities and ‘messiness’ of the strategy-making process identified by

SUMMARY

Mintzberg and others. Other approaches that recognised the constituents of this ‘messiness’, namely the processual approach, the evolutionary approach and the systemic approach, were identified. These took account of changes and competing interests in both the external and internal business environments. Significantly for HRM, there is a recognition that it is not always appropriate to separate operational policies from higher-level strategic planning, as it is often operational policies and systems that provide the source of ‘tactical excellence’, and thus the traditional distinction between strategy and operations can become blurred. ●

The best-fit approach to SHRM explored the close relationship between strategic management and HRM by considering the influence and nature of vertical integration. Vertical integration, where leverage is gained through the close link of HR policies and practices to the business objectives and therefore the external context of the firm, is considered to be a key theme of SHRM. Best fit was therefore explored in relation to life cycle models and competitive advantage models, and the associated difficulties of matching generic business-type strategies to generic HRM strategies were considered, particularly in their inherent assumptions of a classical approach to the strategy-making process. The inflexibility of ‘tight’ fit models in a dynamic, changing environment was evaluated, and consideration was given to achieving both fit and flexibility through complementary SHRM systems.

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The configurational approach identifies the value of having a set of HR practices that are both vertically integrated to the business strategy and horizontally integrated with each other, in order to gain maximum performance or synergistic benefits. This approach recognises the complexities of hybrid business strategies and the need for HRM to respond accordingly. In advocating unique patterns or configurations of multiple independent variables, they provide an answer to the linear, deterministic relationship advocated by the best-fit approach.

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The resource-based view represents a paradigm shift in SHRM thinking by focusing on the internal resources of the firm as a key source of sustainable competitive advantage, rather than focusing on the relationship between the firm and the external business context. Human resources, as scarce, valuable, organisation-specific and difficult-to-imitate resources, therefore become key strategic assets.

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The best-practice approach highlights the relationship between ‘sets’ of good HR practices and organisational performance, mostly defined in terms of employee commitment and satisfaction. These sets of best practice can take many forms. Some have advocated a universal set of practices that would enhance the performance of all organisations to which they were applied (Pfeffer, 1994, 1998), while others have focused on integrating the practices to the specific business context (high-performance work practices). A key element of best practice is horizontal integration and congruence between policies. Difficulties arise here, as bestpractice models vary significantly in their constitution and in their relationship to organisational performance, which makes generalisations from research and empirical data difficult.

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In endeavouring to gain an understanding of the meaning of SHRM, it soon becomes apparent that a common theme of all approaches is enhanced organisational performance and viability, whether this be in a ‘hard’ sense, through cost-reduction and efficiency-driven practices, or through high-commitment and involvement-driven value added. This relationship is considered significant to understanding the context and meaning of SHRM. The need to conduct further empirical research, particularly in Europe, is identified (Stavrou and Brewster, 2005) and the lack of methodological rigour and the extensive use of single source respondents in current research studies evaluating the SHRM/performance link are noted (Wall and Wood, 2005).

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It is also importance to note that there is a broader, political economy that shapes the behaviours structures and outcomes of business which is driven by increasing financialisation within the capitalist system (Thompson, 2011).

CHAPTER 2 STRATEGIC HUMAN RESOURCE MANAGEMENT

Questions 1 In what ways is your understanding of SHRM enhanced by models of the four distinct approaches to strategy-making? 2 Compare and contrast life cycle, competitive advantage and configurational models of SHRM. 3 To what extent can organisations apply both ‘outside-in’ and ‘inside-out’ approaches to SHRM? 4 To what extent is it possible to measure the relationship between SHRM and organisational performance?’ 5 To what extent has increasing financialisation challenged best-practice SHRM?

Case study High road versus low road in the civil aviation industry Since 2010, there have been significant developments in the European civil aviation sector in the business strategies of both low fares and legacy airlines as they restructure to meet the twin pressures of competition and austerity. In most cases, these developments reflect an accelerated ‘race to the bottom’ and an increase in ‘social dumping’, specifically the downgrading of working conditions, training, health and safety and wages. In general, aviation firms cite unfair competition organised by another company to justify tougher working conditions and impose more flexibility, wage cuts or a weakening of the welfare of its workers, such as the use of unsafe working practices, which increase the risks of industrial accidents. Two comprehensive studies of employment relations in the European civil aviation industry have recently been conducted with the financial support of the European Commission and on behalf of the European Transport Workers’ Federation (ETF). The more recent of these, published in 2014 and based on a survey of more than 2,700 European aviation workers as well as case studies of both low fares airlines (LFAs) and legacy airlines, demonstrates that many airlines now resort to more precarious forms of employment through the use of agency, temporary and what are widely recognised as ‘bogus’ or ‘false’ selfemployed workers. They also demand new forms of flexibility that benefit the company rather than the worker and rarely involve employees in any meaningful way in

decisions that (adversely) affect their daily working lives and future careers. Faced with ever more intense competition from LFAs, several legacy airlines have increasingly outsourced mainline operations to the low cost version of the brand to fly short haul routes. For example, in 2012, Lufthansa transferred all of its short haul operations outside of its Munich and Frankfurt hubs to its low cost subsidiary, Germanwings. A similar approach has been taken by Iberia (Iberia Express) and Air France-KLM (transavia). An alternative approach is to grow a low cost workforce within main line operations. British Airways has introduced a Mixed Fleet whose employees’ terms and conditions of employment are in many respects inferior to those of counterparts at LFAs. As for the LFAs, these airlines are now targeting major airports and higher value (business) passengers, which puts them in more direct competition with the legacy airlines. Ryanair, for example, has declared its intention to targetall but three of Europe’s major airports (London Heathrow, Paris Charles de Gaulle and Frankfurt). All too often, the result is a further assault on the terms and conditions of legacy airline staff as the long-established airlines struggle to compete. The self-styled ‘ultra-low cost carriers’ such as Ryanair and Wizz Air will no doubt continue to bear down relentlessly on labour costs and staff will find themselves working right up to the maximum flight and duty time during the

REFERENCES AND FURTHER READING

busy summer schedule with enforced lay-offs (furlough) during the winter when aircraft are grounded. It is the ultra-low cost carriers that rely most heavily on precarious forms of employment, and it is the ultra-low cost airlines that have developed the most aggressive anti-union strategies. Source: Adapted from: Harvey, G. and Turnbull, P. (2015), ‘Changing business strategies and the implications for workers in the European civil aviation industry’, Airneth, 1 November. Online: http://www. airneth .nl/activities/details/article/changing-business-strategies-andthe-implications-for-workers-in-the-european-civil-aviationindustr/.

Questions 1

Using Whittington’s model, identify the dominant strategic approach within low fares airlines.

What are the common external pressures facing both low fares airlines and legacy airlines?

What are the short-term and long-term risks for companies adopting low road employment practices?

What advice would you give to low fares airlines for avoiding the short-term and long-term risks you identified in the previous question?

References and further reading Those texts marked with an asterisk are recommended for further reading. Abell, D.F. (1993), Managing with Dual Strategies: Mastering the Present, Pre-empting the Future. New York: The Free Press. Ahmed, K. (2013), ‘Stephen Hester lays out RBS departure plan’, The Telegraph, 15 June. Aktouf, O. (1996), Traditional Management and Beyond: A Matter of Renewal. Montreal: Gaetan Morin. Alchian, A. and Demsetz, H. (1972), ‘Production information costs and economic organisation’, American Economic Review, 62: 777–95. Amit, R. and Shoemaker, P. (1993), ‘Strategic assets and organisational rent’, Strategic Management Journal, 14: 33–46. Ansoff, H.I. (1965), Corporate Strategy. Harmondsworth: Penguin. Ansoff, H.I. and McDonnell, E. (1990), Implanting Strategic Management, 2nd edn. Hemel Hempstead: Prentice Hall. Applebaum, E., Bailey, T., Berg, P. and Kalleberg, A. (2000), Manufacturing Competitive Advantage: Why High-Performance Systems Pay Off. Ithaca, NY: ILR Press. Armstrong, M. and Baron, A. (2002), Strategic Human Resource Management: The Key to Improved Business Performance. London: CIPD. Arthur, J. (1994), ‘Effects of human resource systems on manufacturing performance and turnover’, Academy of Management Journal, 37, 3: 670–87. Atkinson, J. (1984), ‘Manpower strategies for the flexible organisation’, Personnel Management, August: 28–31. Baden-Fuller, C. (1995), ‘Strategic innovation, corporate entrepreneurship and matching outside-in to inside-out approaches to strategy research’, British Journal of Management, 6 (Special Issue): 3–16. Baird, L. and Meshoulam, I. (1988), ‘Managing two fits of strategic human resource management’, Academy of Management Review, 13, 1: 116–28. Bamberger, P. and Phillips, B. (1991), ‘Organisational environment and business strategy: Parallel versus conflicting influences on human resource strategy in the pharmaceutical industry’, Human Resource Management, 30, 2: 153–82. Barney, J.B. (1991), ‘Firm resources and sustained competitive advantage’, Journal of Management, 17, 1: 99–120.

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CHAPTER 3 CONTEXTUALISING HRM AUDREY COLLIN WITH JULIE BEARDWELL

Objectives ●

●

To identify the challenge of conceptualising and representing context. To contextualise human resource management (HRM) and enrich understanding of it by examining its background, uncovering some of the strands in its thinking and their underpinning assumptions and highlighting some of the tensions it addresses. And thereby to develop readers’ capacity for critical thinking and recognition of ethical issues in relation to HRM.

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Case study Muddled language hides the effect of the gig economy If there is one phrase that makes me wince more than the ‘sharing economy’ it is the ‘collaborative economy’. Last week, we were confronted with both: Morgan Stanley published a report on the former and the Centre for European Policy Studies (at the request of the European Commission) wrote one on the latter. The reports are on broadly the same topic: the growth of companies such as Uber, TaskRabbit and Upwork and how they might change the economy. It is an interesting question and one I think about a lot. But these are very different companies that do not sit comfortably under one label. And if they did, it would not be either of these. Most ‘sharing’ or ‘collaborative economy’ companies use the internet to facilitate transactions between buyers and sellers for a fee. Some facilitate the renting of assets (such as Airbnb), some the sale of labour (such as TaskRabbit and Upwork) and some a bit of both (such as Uber). What exactly is being shared here? Who is collaborating with whom? Freelancers on Upwork are no more sharing their skills with the world than I am sharing mine with the Financial Times. Airbnb hosts are not collaborating with their guests any more than Marriott International is collaborating with its customers. These labels made sense when they first appeared about six years ago. Then they applied to start-ups, such as SnapGoods and Share Some Sugar, that aimed to help neighbours lend things such as electric drills to each other. Some of today’s platforms still fit the sharing label but many of the household names do not. You could argue it does not really matter. These monikers may not be a perfect fit for the phenomenon they now describe but they are entrenched and everyone knows what they mean. But there are two reasons not to give in and go with theflow. First, lumping these companies together leads to fuzzy thinking about their scope and scale as well as their pros and cons. We can debate whether Airbnb is unfairly undercutting regulated hotels and bed-and-breakfast businesses, but let’s not mix it up with analyses of the impact of companies such as Uber on the labour market. JPMorgan’s recent study of 260,000 users of online platforms found stark differences between people using capital

platforms such as Airbnb and eBay and people selling their labour. The latter were poorer, more often from western states in the USA and more likely to rely on the platforms to cushion dips in their incomes. There is also a difference between physical work and online work. The report from the CEPS (which is very good, apart from its title) finds that earnings for physical taskers in countries such as the USA tend to be much higher because they are competing locally with people who face the same cost of living. The virtual ‘human cloud’ platforms, in contrast, create a global marketplace where a worker in Dallas competes with one in Sofia and another in Manila. Average earnings per hour on Mechanical Turk are below the minimum wage in the USA, but 14 times the minimum wage in India. National regulators and tax officials worried about the Ubers of this world will find it even harder to get to grips with the borderless ‘human cloud’. The second reason to reject the ‘sharing’ and ‘collaborative’ labels is that they give the wrong impression of what these companies do. They are not exploitative masters of ‘digital serfs’ (as some would have it), but neither are they hands-off intermediaries between ordinary people who want to exchange goods and services. They actively shape the markets they create. Upwork, for example, recently changed the fees it charges freelancers from a flat 10 per cent to a sliding scale: freelancers will pay 20 per cent on the first $500 they bill to a client and 5 per cent on billings over $10,000. David Francis, a research associate at Staffing Industry Analysis, says the company wants to encourage users to treat the site like a full-time job, which would make the business model more profitable. That may be no bad thing – but it is a sign of the power these platforms have to shape the behaviour of their users. They neither promote nor facilitate sharing and collaboration: they are a handful of companies trying to make money by creating and controlling markets for our labour or our stuff. Something tells me that catchy definition won’t take off. Source: O’Connor, S. (2016), ‘Business life – Sarah O’Connor on employment’, 15 June; [emailprotected] Twitter: @sarahoconnor_; © 2016 The Financial Times Limited.

INTRODUCTION

Introduction The significance and nature of context An event seen from one point-of-view gives one impression. Seen from another point-of-view it gives quite a different impression. But it’s only when you get the whole picture you fully understand what’s going on. (Reproduced in memory of John Webster, 1934–2006)

The need to be aware of the context of human affairs was demonstrated dramatically in this quote from a prize-winning advertisement for The Guardian newspaper that is still remembered today. We can easily misinterpret facts, events and people when we examine them out of context, for it is their context that provides us with the clues necessary to understand them. Context locates them in space and time and gives them a past and a future, as well as the present that we see. It gives us the language to understand them, the codes to decode them, and the keys to their meaning. From the various models of human resource management (HRM) discussed earlier in the book (see Chapter1), you will recognise that it is shaped by its context, and that its context is complex, diverse and dynamic. This chapter will therefore carry forward your thinking about the issues raised in that chapter, by exploring the various strands within the context of HRM that are woven together to form the pattern of meanings that constitute it. As explained previously, and as will be amplified by the rest of the book, HRM is far more than a portfolio of policies, practices, procedures and prescriptions concerned with the management of the employment relationship. It is this, but more. And because it is more, it is loosely defined and difficult to pin down precisely, being a basket of overlapping and shifting meanings, which users of the term do not always specify. Its ‘brilliant ambiguity’ (Keenoy, 1990) derives from the context in which it is embedded, a context within which there are multiple and often competing perspectives upon the employment relationship, some ideological, others theoretical, and yet others conceptual. HRM is inevitably a contested terrain, and the various definitions of it reflect this. The context of HRM is multi-layered. The organisation constitutes the immediate context of the employment relationship, and it is here that the debate about how that relationship can be managed begins. The nature of organisation and the tensions between the stakeholders in it give rise to issues that have to be addressed by managers, for example, choices about how to orchestrate the activities of organisational members and whose interests to serve. Beyond the organisation itself lie the economic, social, political and cultural layers, and beyond them again the historical, national and global layers of context. Considerable change is taking place within those layers, making the whole field dynamic. It is not the purpose of this chapter to register all of these changes. You will become aware of some of them as you read the remainder of this book; others you will experience in your own lives. However, we need to note here that the events and changes in the wider context have repercussions for organisations and HRM, and present further issues to be managed and choices to be made. Indeed, Mayo and Nohria (2005) argue that successful managers have what they have coined ‘contextual intelligence’, which enables them to be deeply sensitive to their organisation’s context. The several layers of HRM’s context, however, are not like the skins of an onion. They exist in more than one conceptual plane: some have a concrete nature, like a local pool of labour, and others are abstract, like the values and stereotypes that influence an employer’s views of a particular class of person in the labour market. The abstract world of ideas and values overlies and intersects with the other layers of the context of HRM: theories of organisation and management; the ways of organising society, acquiring and using power, and distributing resources; the ways of relating to, understanding and valuing human beings and their activities; the ways of studying and understanding reality and of acquiring knowledge; and the stocks of accumulated knowledge in theories and concepts.

CHAPTER 3 CONTEXTUALISING HRM

To understand the context of HRM, then, we need to recognise it as more than the environment or the surrounding circumstances that exert ‘external influences’ on a given topic: context gives it a third dimension. By contextualising HRM, you will come to recognise the breadth of its field, uncover its foundations and give it a backstory, and this will enrich your understanding of it.

The challenge of conceptualising and representing context How can we begin to understand anything that is embedded in a complex context? We seem to have awareness at an intuitive level, perceiving and acting upon the clues that context gives to arrive at ‘tacit knowledge’ (see Chapter7). However, context challenges our formal thinking. First, we cannot stand back to take in the complete picture, which has traditionally been one way to gain objective knowledge of a situation. Because we are ourselves a part of our context, it is not possible for us to obtain a detached perspective upon it. In that respect, we are like the fish in water that ‘can have no understanding of the concept of “wetness” since it has no idea of what it means to be dry’ (Southgate and Randall, 1981: 54). However, humans are very different from the ‘fish in water’. We can be reflexive, recognising what our perspective is and what its implications are; open, seeking out and recognising other people’s perspectives; and critical, entering into a dialogue with others’ views and interrogating our own in the light of theirs, and vice versa. We shall see later that this is also the approach needed to recognise and make an appropriate response to ethical issues in organisations. Second, we need the conceptual means to grasp the wholeness (and dynamic nature) of the picture. To understand a social phenomenon such as HRM, we cannot just wrench it from its context and examine it microscopically in isolation. To do this is to be like the child who digs up a newly planted and now germinating seed to see ‘whether it is growing’. In the same way, if we analyse context into its various elements and layers, then we are already distorting our understanding of it, because it is an indivisible whole. Rather, we have to find ways to examine HRM’s interconnectedness and interdependence with other phenomena in its context. Here the very representation of our thinking in written language is not helpful, for it is linear, which undermines our ability to communicate a dynamic, interrelated complexity clearly and succinctly. Nevertheless, as we shall discuss later, there are ways that enable us to conceptualise and express the many loops and circularities of these complex interrelationships in an often dynamic context. We could also perhaps think in terms of ‘rich pictures’ or ‘mind maps’ (Senge, 1990; Cameron, 1997), but meanwhile we shall use metaphor to conceptualise context, that is, to envisage it in terms of something concrete that we already understand. We have already mentioned that the metaphor of the many-skinned onion, although depicting multiple layers, is insufficient to convey the interconnectedness and texture of context. We could, instead, think of it as a tapestry. This is a ‘thick hand-woven textile fabric in which design is formed by weft stitches across parts of warp’ (Concise OED, 1982). The warp threads run the length of the tapestry and the weft are the lateral threads that weave through them to give colour, pattern and texture. In this chapter, we propose that the warp is constituted from the basic structures of society, such as the social and economic systems, demography, and so on, that are the foundation upon which employing organisations are built. The weft threads are the ways of thinking about those structures – the various ways of defining reality. Events, people and ephemeral issues are the stitches sewn into the surface of the tapestry to elaborate its pattern. This metaphor helps us to visualise how interwoven and interrelated are the various elements of the context of HRM; and how the pattern of HRM itself is woven into them, as in Figure3.1. It reminds us again that an analytical approach to the study of context, which would take it apart to examine it closely, would be like taking a tapestry to bits: we would be left with threads. The tapestry itself inheres in the whole, not its parts. This tapestry that is the context of HRM is being woven continuously from threads of different colours and textures. At times one colour predominates, but then peters out. In parts of the tapestry, patterns may be intentionally fashioned, while observers (such as the authors of this book) believe that they can discern a recognisable pattern in other parts. Of course, it will not

INTRODUCTION

Figure 3.1 The metaphor of tapestry to convey HRM in context. be feasible here, or indeed necessary, to attempt to portray the whole tapestry that is HRM’s context. This chapter can examine only part of it, so we will pick out a number of the threads for you to identify and follow through the remainder of the book. You should observe the interconnections and interrelationships between them, and how their interweaving gives us changes in the pattern and colour of the tapestry, some distinct and others subtle. It will be a challenge to find new ways of thinking in order to seek the whole picture rather than take the customary formal, detached and analytical approach. However, as well as giving you a greater understanding of the context of HRM and its effects, this will develop and exercise your capacity for critical thinking, as it will allow you to recognise some significant perspectives that often remain unnoticed or ignored. It will also highlight some of the ethical issues in HRM that can otherwise be obscured. This will be of value both to those studying HRM and to reflective practitioners. It has been predicted that HR will see a major transformation, with its core becoming more analytical and critical (Czerny, 2005) and turned ‘from a department and a transaction into a philosophy leading the organisation’ (Pickard, 2005: 15). And from 2005 the concept of the ‘thinking performer’, ‘who applies a critically thoughtful approach to their job’ (Whittaker and Johns, 2004: 32), has underpinned the professional standards of the Chartered Institute of Personnel and Development (CIPD). Before beginning to read about the context of HRM, you will find it helpful to make the following exploration.

Explore

Reflect upon this way of understanding context. ●

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How different is it from the way in which you would have defined the context of HRM-based, for example, on the various models presented in Chapter1? Does this challenge the way you generally think and, if so, in what way?

The concepts and language needed to understand issues raised by the context of HRM By examining context, this chapter suggests, you can develop your critical thinking, in the sense of questioning and uncovering the basic issues, not of arguing against something. The concepts and language needed for this may be largely unfamiliar to you, but you will probably find that you already understand much of their meaning. You are already likely to have experience of thinking about and responding to issues in the natural, physical environment, which is another aspect of context that incorporates both the concrete world and abstract ideas. Such issues as

CHAPTER 3 CONTEXTUALISING HRM

climate change, genetically modified food and threats to the survival of many species will also have promoted critical thinking and raised ethical issues, and they will have given you the basic concepts that we shall be using here and so provide a useful set of ‘hooks’ upon which to hang the ideas that this chapter will introduce to you. You will probably find that from your present knowledge of the environment you already recognise that: ●

Context is multi-layered, multi-dimensional and interwoven. In it, concrete events and abstract ideas intertwine to create issues; thinking, feeling, interpreting and behaving are all involved. It is like the tapestry described earlier.

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Our interpretation of our context depends upon our perspective.

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It also depends upon our ideology.

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Different groups in society have their own interpretations of events, stemming from their ideology. There are therefore competing or contested interpretations of events.

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These groups use rhetoric to express their own, and to account for competing, interpretations, thus distorting, or even suppressing, the authentic expression of competing views.

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Powerful others often try to impose their interpretations of events, their versions of reality, upon the less powerful majority: this is hegemony.

The immediate context of HRM Human resource management concerns the management of the employment relationship. The nature of the organisation and the way it is managed therefore form the immediate context within which HRM is embedded, and this is overlaid by the interpretations made by theorists, which will be examined shortly.

The nature of organisations and the role of management At its simplest, an organisation comes into existence when the efforts of two or more people are pooled to achieve an objective that one would be unable to complete alone. The achievement of this objective calls for the completion of a number of tasks. Depending upon their complexity and degree of interdependence, the availability of appropriate technology and the skills of the people involved, these tasks may be subdivided into a number of sub-tasks and more people employed to help carry them out. This division of labour constitutes the lateral dimension of the structure of the organisation. Its vertical dimension is constructed from the generally hierarchical relationships of power and authority between the owner or owners, the staff employed to complete these tasks, and the managers employed to coordinate and control the staff and their work. Working on behalf of the organisation’s owners or shareholders, and with the authority derived from them, managers draw upon a number of resources to enable them to carry out their task: raw materials, finance, technology, people, information, and legitimacy, support and goodwill from the organisation’s environment. They manage the organisation by ensuring that there are sufficient people with appropriate skills; that they work to the same ends and timetable; that they have the resources and authority needed to complete their tasks; and that their tasks dovetail and are performed to the required standard and at the required pace. The very nature of work organisations in a capitalist society therefore generates a number of significant tensions: between people with different stakes in the organisation, and therefore different perspectives upon and interests in it; between what owners and other members of the organisation might desire and what they can feasibly achieve; and between the needs, capabilities and potentials of organisational members and what the operation of the organisation demands of and permits them. Management (see Watson, 2000) is the process that keeps the organisation

THE IMMEDIATE CONTEXT OF HRM

from flying apart because of these tensions, that makes it work, and that secures its survival and, according to the type of organisation, its profitability or effectiveness. Inevitably, however, managerial control is a significant and often contentious issue. (Until recently, that had been seen in terms of managers controlling employees. What has recently been learnt about the banking industry and other large corporations, however, now raises the issue of how senior managers are themselves controlled.) Moreover, the nature of people and their relationships and the way they constitute an organisation make management complex. Although the organisation of tasks packages people into organisational roles, individuals are larger and more organic than those roles have traditionally been. The organisation, writes Barnard (1938, in Schein, 1978: 17), ‘pays people only for certain of their activities...but it is whole persons who come to work’. Unlike other resources, people interact with those who manage them and among themselves; they have needs for autonomy and agency; they think and are creative; they have feelings; and they need consideration for their emotional and their physical needs, security and protection. This greatly complicates the tasks of managers, who can work only with and through people to ensure that the organisation survives and thrives in the face of increasing pressures from its environment. The management of people is therefore not only a more diffuse and complex activity than the management of other resources, but also an essentially moral one (again, see Watson, 2000). As organisations become larger and more complex, the division of managerial labour often leads to a specialist ‘people’ function to advise and support line managers in the complex and demanding tasks of managing their staff. This was originally personnel management (which has since changed in name and nature to become HRM). It developed a professional expertise in aspects of managing people, such as selection, training and industrial relations, which it offered in an advisory capacity to line managers, who nevertheless remain the prime managers of people. However, this division of managerial labour has fragmented the management of people: the development of HRM to subsume personnel management can be seen as a strategy to reintegrate the management of people into the management of the organisation as a whole.

Explore

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In your own experience of being employed, however limited that might be so far, have you been aware of some of these tensions?

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What were their effects upon you and your colleagues at work?

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How did the management of the organisation respond to these tensions?

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How has this affected how you look at management and HRM?

Managers’ strategies to resolve the tensions in organisations Those tensions have to be resolved through the process of managing, or rather continuously resolved, for they are inherent in organisations. Hence Weick (1979: 44) writes that organising is a continuous process of meaning-making: ‘organisations keep falling apart... and so require chronic rebuilding’. A continuing issue, therefore, is that of managerial control: how to orchestrate organisational activities in a way that meets the needs of the various stakeholders. The owners of organisations, or those who manage them on their behalf, have explored many ways to resolve these tensions. The strategies they have adopted are embodied in their employment policies and practices and the organisational systems they put in place. They are also manifested in the psychological contract between organisation and employees that embroiders the legal employment contract (CIPD, 2012). The notion of the psychological contract now in current use goes back to a much earlier literature (e.g. Schein, 1970) and it is some of the earlier terminology that is used below. Managers have adopted various strategies to deal with these tensions, but we can note only a few here. In practice they might be less easy to distinguish, and some managers adopt a hybrid

CHAPTER 3 CONTEXTUALISING HRM

version appropriate to their particular organisation. They will always be seeking new approaches to deal more effectively with those tensions, or to deal with variations in them as circumstances change. You can elaborate upon the material here by reading further in an organisational behaviour or management theory textbook, such as Huczynski and Buchanan (2013) or Clark et al. (1994). An early twentieth-century strategy was scientific management (or the classical school of management theory). This addressed the tensions in the organisation by striving to control how people worked and to keep down their costs. It emphasised the need for rationality, clear objectives, the managerial prerogative – the right of managers to manage – and adopted work study and similar methods. It led to the reduction of tasks to their basic elements and the grouping of similar elements together to produce low-skilled, low-paid jobs, epitomised by assembly-line working. Workers were treated relatively impersonally and collectively (‘management and labour’), and rather like machine components themselves. The nature of the psychological contract with them was calculative (Schein, 1970), with a focus on extrinsic rewards and incentives. Such a strategy encouraged a collective response from workers, and hence the development of trade unions. This approach to management evolved in the USA and provided a firm foundation for modern bureaucracies (Clegg, 1990). In Britain, they overlaid the norms of a complex, though changing, social class system that framed the relationships between managers and other employees (Child, 1969; Mant, 1979). The legacy of this early strategy continued well on into the century in many management practices, such as organisation and method study, job analysis and description, selection methods, an overriding concern for efficiency and the ‘bottom line’, appraisal and performance management. This has not been completely abandoned (see Clegg, 1990; Ritzer, 1996 on ‘McDonaldization’; and debates about employment in call centres, e.g. Hatchett, 2000; Callaghan and Thompson, 2002; Holman and Wood, 2002; Taylor et al., 2002). A second approach to the tensions in organisations, the human relations strategy, emerged during the middle years of the twentieth century, and developed in parallel with an increasingly prosperous society in which there were strong trade unions and (later) a growing acceptance of the right of individuals to self-fulfilment. Child (1969) identifies its emergence in British management thinking as a response to growing labour tensions. It tempered scientific management by its recognition that people differed from other resources, that if they were treated as clock numbers rather than as human beings they would not be fully effective at work and could even fight back to the point of subverting management intentions. It also recognised the significance of social relationships at work – the informal organisation (Argyris, 1960). Managers therefore had to pay attention to the nature of supervision and the working of groups and teams, and to find ways of involving employees through job design, motivation, and a democratic, consultative or participative style of management. The nature of the psychological contract was cooperative (Schein, 1970). Human resource management is another strategy adopted by managers to address the tensions within the organisation. It developed much later in the century as major changes and threats were experienced in the context of organisations (recession, international competition and globalisation). It was a response to the need to achieve flexibility in the organisation and workforce, and improved performance, by devolved decision-making and empowerment. As noted later in the book (see Chapter7), employees have had to become multi-skilled and to work across traditional boundaries. Unlike the two strategies above, HRM approaches the organisation holistically and often with greater attention to its culture, leadership and ‘vision’, the ‘soft’ Ss of McKinsey’s ‘Seven S’ framework (Pascale and Athos, 1982: 202–6). It attempts to integrate the needs of employees with those of the organisation in an explicit manner: the psychological contract embodies mutuality (Schein, 1970). It recognises that people should be invested in as assets so that they achieve their potential for the benefit of the organisation. It also pays greater attention to the individual rather than the collective, so that these notions of developing the individual’s potential have been accompanied by individual contracts of employment, performance appraisal and performance-related pay. However, the very title of human resource management suggests that this is also an instrumental strategy. Although it differs greatly from the approaches that see

THE IMMEDIATE CONTEXT OF HRM

labour as a ‘cost’, to be reduced or kept in check, it nevertheless construes the human being as a resource for the organisation to use. Another, more humanistic approach aimed to construct the organisation as an appropriate environment for autonomous individuals to work together collaboratively for their common good. This is the approach of many cooperatives (and, to some extent, of mutuals such as the John Lewis Partnership). It informed the early philosophy of organisation development (see Huse, 1980), although the practice of that is now largely instrumental. It also underpins the notion of the learning organisation (see Senge, 1990 and Chapter8).

Explore

Some of you will have worked in a call centre. Working on your own or in a group, examine your experiences of working there. ●

Could you identify one or more of these managerial strategies in your workplace?

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What might have been your experiences had the management adopted a different strategy?

Since the global financial crisis hit in 2007, managers have had to grapple with many new tensions. To ensure organisational survival, they are having to balance, inter alia, the need to reduce the size of the workforce with ways of maintaining motivation and retaining essential skills for the future. In addition, Case Study 3.1 highlights how technological advances have enabled the rise of the ‘gig economy’ in which organisations contract with independent workers for shortterm engagements.

Key controversy Working on your own or in a group, identify some of the new tensions that are arising from the growth of the ‘gig economy’. ●

How would you describe the basis of the working relationship between workers and organisations?

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Do these working arrangements raise new ethical issues?

Ideas and theories in the immediate context of HRM Here we shall note some of the abstract ideas that we suggested overlie and intersect with what happens in the immediate context of HRM, and find not only that have they varied over time, but also that several strongly competing interpretations co-exist. Managers themselves are to some extent influenced by such concepts and language, if not their arguments. Again, this chapter can only skim over this material, but you can pursue the issues by reading, for example, Child (1969), who traces the development of management thought in Britain, or Morgan (2006), who sets out eight different metaphors for organisations through which he examines in a very accessible way the various ways in which theorists and others have construed organisations. Reed and Hughes (1992: 10–11) identified the changing focus of organisation theory over the previous 30 or so years, from a concern with organisational stability, order and disorder, and then with organisational power and politics, to a concern with the construction of organisational reality. The reification of the organisation by managers and others, and the general acceptance of the need for it to have rational goals to drive it forward in an effective manner, have long been challenged (see Case Study 3.1). Simon (see Pugh et al., 1983) recognised that rationality is ‘bounded’ – that managers make decisions on the basis of limited and imperfect knowledge. Cyert and March

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adopted a similar viewpoint: the many stakeholders in an organisation make it a ‘shifting multigoal coalition’ (see Pugh et al., 1983: 108) that has to be managed in a pragmatic manner. Others (see Pfeffer, 1981; Morgan, 1997) recognised the essentially conflictual and political nature of organisations: goals, structures and processes are defined, manipulated and managed in the interests of those holding the power in the organisation. A range of different understandings of organisations has developed over time: the systems approach (Checkland, 1981), the learning organisation (Senge, 1990), transformational leadership and ‘excellence’ (Peters and Waterman, 1982; Kanter, 1983), knowledge management (see Chapter7) and the significance of rhetoric (see later, and Eccles and Nohria, 1992). This range is widening to include even more holistic approaches, with recent interest in the roles in the workplace of emotional intelligence (Pickard, 1999; Cherniss and Goleman, 2001; Higgs and Dulewicz, 2002), spirituality and love (Welch, 1998; Zohar and Marshall, 2001). The influence of many of these new ideas can be seen in the concern for work–life balance (e.g. CIPD, 2013a). The established views of managers are subject to further interpretations. Weick (1979) argued the need to focus upon the process of organising rather than upon the organisation, which is its reified outcome. As we noted earlier, he regards organising as a continuous process of meaningmaking: ‘[p]rocesses continually need to be re-accomplished’ (p. 44). Cooper and Fox (1990) and Hosking and Fineman (1990) adopted a similar interpretation in their discussion of the ‘texture of organising’. Brunsson (1989) shone a different light on the nature and goals of organising, based on his research in Scandinavian municipal administrations. He suggested that the outputs of these kinds of organisations are ‘talk, decisions and physical products’. He proposed two ‘ideal types’ of organisation: the action organisation, which depends on action for its legitimacy (and hence essential resources) in the eyes of its environment; and the political organisation, which depends on its reflection of environmental inconsistencies for its legitimacy. Talk and decisions in the action organisation (or an organisation in its action phase) lead to actions, whereas the outputs of the political organisation (or the organisation in its political phase) are talk and decisions that may or may not lead to action: [H]ypocrisy is a fundamental type of behaviour in the political organisation: to talk in a way that satisfies one demand, to decide in a way that satisfies another, and to supply products in a way that satisfies a third. (Brunsson (1989: 27))

There are similarly competing views upon organisational culture, as we see in Aldrich (1992) and Frost et al. (1991). The established view interprets it as a subsystem of the organisation that managers need to create and maintain through the promulgation and manipulation of values, norms, rites and symbols. The alternative view argues that culture is not something that an organisation has, but that it is. These competing ideas challenge us to recognise that, underlying the management of people in organisations, are some fundamental assumptions about the nature of organisations and of reality itself and how we can understand it. Those assumptions inform the practices and policies of management, and hence define the organisational and conceptual space that HRM fills, and generate the multiple meanings of which HRM is constructed. In terms of the tapestry metaphor we used earlier, they constitute some of the weft threads in the tapestry/context of HRM. They also highlight ethical issues in its practice. We shall return to these issues later in the chapter.

The wider context of HRM The definition of the wider context of HRM could embrace innumerable topics (from e.g. demography to globalisation) and a long-time perspective (from the organisation of labour in prehistory, as at Stonehenge, to today). Such a vast range, however, could only be covered in such

THE WIDER CONTEXT OF HRM

a perfunctory manner here that it rendered the exercise valueless. It is more appropriate to give examples of some of the influential elements and how they have affected HRM, and to encourage you to identify others for yourself.

Explore

Go back to the models of HRM presented earlier (see Chapter 1) and, working either individually or in a group, start to elaborate upon the various wider contextual elements that they include. Look, for example, at the external forces of the ‘matching model’ illustrated in Figure 1.2. ●

What in detail constituted the elements of the economic, political and cultural forces at the time Devanna et al. (1984) were writing? What would they be now?

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What other elements would you add to those, both then and now?

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What are the relationships between them, both then and now?

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And what, in your view, has been their influence upon HRM, both then and now?

Echoes from the wider context Here the focus will be on distant events from the socio-political sphere that have nevertheless influenced the management of the employment relationship and still do so indirectly. Although what follows is not a complete analysis of these influences, it illustrates how the field of HRM resonates with events and ideas from its wider context.

The world wars The two world wars, though distant in time and removed from the area of activity of HRM, have nevertheless influenced it in clearly identifiable and very important ways, some direct and some indirect. These effects can be classified in terms of changed attitudes of managers to labour, changed labour management practices, the development of personnel techniques, and the development of the personnel profession. We shall now examine these, and then note how some outcomes of the Second World War continue, indirectly, to influence HRM. Changed attitudes of managers to labour According to Child (1969: 44), the impact of the First World War upon industry hastened changes in attitudes to the control of the workplace that had begun before 1914. The development of the shop stewards’ movement during the war increased demand for workers’ control; there was growing ‘censure of older and harsher methods of managing labour’. The recognition of the need for improved working conditions in munitions factories was continued in the postwar reconstruction debates: Child (1969: 49) quotes a Ministry of Reconstruction pamphlet that advised that ‘the good employer profits by his “goodness”’. The outcome of these various changes was a greater democratisation of the workplace (in works councils) and, for ‘a number of prominent employers’, a willingness ‘to renounce autocratic methods of managing employees’ and ‘to treat labour on the basis of human rather than commodity market criteria’ (pp. 45–6). These new values became incorporated in what was emerging as a distinctive body of management thought, practice and ideology, upon which later theory and practice are founded. Changed labour management practices The need to employ and deploy labour effectively led to increased attention to working conditions and practices during both wars. The changes that were introduced then continued and interacted with other social changes that ensued after the wars (Child, 1969). For example, the Health of Munitions Workers Committee, which encouraged the systematic study of human factors in stress and fatigue in the munitions factories during the First World War, was succeeded in 1918 by the Industrial Fatigue Research Board [Department of Scientific and Industrial

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Research (DSIR), 1961; Child, 1969; Rose, 1978]. During the postwar reconstruction period, progressive employers advocated minimum wage levels, shorter working hours and improved security of tenure (Child, 1969). ‘The proper use of manpower whether in mobilising the nation or sustaining the war economy once reserves of strength were fully deployed’ was national policy during the Second World War (Moxon, 1951). As examples of this policy, Moxon cites the part-time employment of married women, the growth of factory medical services, canteens, day nurseries and special leave of absence. The development of personnel techniques Both wars encouraged the application of psychological techniques to selection and training, and stimulated the development of new approaches. Rose (1978: 92) suggests that, in 1917, the American army tested two million men to identify ‘subnormals and officer material’. Seymour (1959: 7–8) writes of the Second World War: [T]he need to train millions of men and women for the fighting services led to a more detailed study of the skills required for handling modern weapons, and our understanding of human skill benefited greatly.... Likewise, the shortage of labour in industry led...to experiments aimed at training munition workers to higher levels of output more quickly.

The wars further influenced the development of the ergonomic design of equipment, and encouraged the collaboration of engineers, psychologists and other social scientists (DSIR, 1961). Moreover, the exigencies of war ensured that attention and resources were focused upon activities that are of great significance to the field of employment, while the scale of operations made large numbers of candidates available for testing, ensuring robust statistics. The development of the personnel profession Very significantly, the Second World War had a major influence on the development of the personnel profession. According to Moxon (1951: 7), the aims of national wartime policy were: (i) to see that the maximum use was made of each citizen, (ii) to see that working and living conditions were as satisfactory as possible, (iii) to see that individual rights were reasonably safeguarded and the democratic spirit preserved. The growth of personnel management was the direct result of the translation of this national policy by each industry and by each factory within an industry.

Child (1969: 11) reports on how government concern in 1940 about appropriate working practices and conditions ‘led to direct governmental action enforcing the appointment of personnel officers in all but small factories and the compulsory provision of minimum welfare amenities’. Moxon (1951) comments on the ‘four-fold increase in the number of practising personnel managers’ at this time (p. 7). Child (1969) records the membership of what was to become the Institute of Personnel Management as 760 in 1939, and 2,993 in 1960 (p. 113). He also notes a similar increase in other management bodies. (The Institute has now become the Chartered Institute of Personnel and Development, with an individual membership of 135,000 in 2013.) The postwar reconstruction of Japan The chapter has so far noted some of the direct influences that the two world wars had upon the field of HRM. It now points to an indirect and long-continuing influence. The foundation of thephilosophy and practice of total quality management (TQM), which has been of considerable recent significance in HRM, was laid during the Second World War. Edward Deming and Joseph Juran were consultants to the US Defense Department and during the Second World War ran courses on their new approaches to quality control for firms supplying army ordnance (Pickard, 1992). Hodgson (1987: 40) reports that ‘vast quantities of innovative and effective armaments were produced by a labour force starved of skill or manufacturing experience in the depression’.

WIDER CONTEXTUAL INFLUENCES ON HRM TODAY

However, after the war, America ‘could sell everything it could produce’ and, because it was believed that ‘improving quality adds to costs’, the work of Deming and Juran was then ignored in the West. However, Deming became an adviser to the Allied Powers Supreme Command and a member of the team advising the Japanese on postwar reconstruction (Hodgson, 1987: 40–41). He told them that ‘their war-ravaged country would become a major force in international trade’ if they followed his approach to quality. They did. Western organisations have since come to emulate the philosophy and practices of quality that proved so successful in Japan and that have led on to, for example, the ‘high-performance working of today’ (Armitage and Keeble-Allen, 2007).

Wider contextual influences on HRM today Once again, there are innumerable topics that could be mentioned. The two world wars are, for us, history: interpretations of them have by now become established and, to a large degree, generally accepted, though always open to question. However, those of our own time are not yet fully formed or understood, and may have the potential to unsettle and possibly disrupt established thinking, and hence practice.

Recession and recovery The immediate aftermath of the collapse of financial markets, following disastrous investments in the American sub-prime mortgage market, was significant change in the world of work. Major firms shrank or disappeared altogether, small businesses were lost, unemployment rose alarmingly, and some taken-for-granted capitalist values were challenged. The impact on HRM, its practices, policies and strategies, was potentially considerable. In 2009, the Centre for HR Excellence at Henley carried out research into how HR was reacting to the recession and in 2010 into what HR had learnt and how it was applying this to the economic recovery (Parkinson, 2010). The findings of the first report were that many organisations were responding to the recession by reviewing costs, efficiency and value and in some cases this had led to restructuring and redundancies. Key issues for HR at this time were improving performance management, talent retention, workforce planning and employment engagement (Parkinson, 2010: 4). The 2010 findings identify four key roles for HR during the economic recovery (p. 2): ●

maintenance – maintaining the focus on cost and productivity across the business;

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underpinning – providing support and challenge to the business;

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restoration – rebuilding trust and engagement after the tough times;

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building new – refocusing on the future and building a growth-oriented capability.

The impact of social media in organisations The development of social media has had a major impact on communication and the spread of ideas and attitudes generally, for example, in politics. In organisations, these media make connections between employees, respond to people’s interests and needs and create and share information outside the formal relationships and communication channels. They have considerable potential to influence HRM (see CIPD, 2013b).

Explore

What other distant socio-political events or developments have influenced or are influencingHRM?

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Ideas and theories in the wider context of HRM Just as we noted some of the ideas and theories that overlie and intersect with what happens in the immediate context of HRM, so here we note a few of the very many that are influential in the wider context of HRM. We shall pay them and others greater attention later when we examine their underlying assumptions and alternatives to them.

Belief in science This is the generally accepted view inculcated in the majority of members of our society through the processes of socialisation and education, and sustained through sanctions against deviation. For example, most people have traditionally trusted in rationality and ‘orthodox medicine’ and have had doubts about the paranormal and ‘alternative medicine’. We do not generally question our orthodox beliefs: they ‘stand to reason’; they work; everyone else seems to think in the same way. By definition, therefore, we do not pay much attention to them; we do not consider how they frame the interpretations we make of our world, or what other alternatives there could be.

The concept of the individual A key building block in Western thinking is the concept of the individual (Collin, 1996: 9). Its emphasis on individuality, the need for autonomy and fulfilment has underpinned the philosophy and practices of HRM, and is the moral basis for employment conditions and contracts.

Gender differences Sexual equality and feminist ideas have long been accepted in our society, yet gender differences have continued to be issues. Equal pay, the glass ceiling and the appropriateness of positive discrimination remain live issues in many organisations.

Modernism and postmodernism These are included as examples of ideas that have been both imported from other disciplines and adopted in the attempt to understand HRM better. They achieved some degree of currency for a while but now appear to have lost it. These ideas from art and architecture spread through the fields of culture (Harvey, 1990) and the social sciences, and were adopted by some to express a critical perspective in organisation studies (e.g. Gergen, 1992; Hassard and Parker, 1993; Hatch, 1997; Morgan, 1997) and in the HRM field (Townley, 1993; Legge, 1995). Connock (1992) included postmodern thinking among the contemporary ‘big ideas’ of significance to HR managers, while Fox (1990) interpreted strategic HRM as a self-reflective cultural intervention responding to postmodern conditions. Attempts were made to classify issues of post-industrialism, post-Fordism and the present stage of capitalism in modernist and postmodernist terms (see Reed and Hughes, 1992; Legge, 1995). Some saw the differences between them in terms of historical period (‘post-modern’), others of epistemological position (‘postmodern’). For example, Clegg (1990: 180–81) suggested that the modernist organisations with which we had been familiar until the last decade or so of the twentieth century were rigid, addressed mass markets and were premised on technological determinism; their jobs were ‘highly differentiated, demarcated and de-skilled’. ‘Post-modern’ organisations, however, were flexible, addressed niche markets, and were premised on technological choices; their jobs were ‘highly de-differentiated, de-demarcated and multi-skilled’. Since Clegg’s analysis, hierarchical modern organisations have often been contrasted with ‘post-modern’ networking. As for their epistemological position (discussed later in this chapter), while ‘modernism’ was based on the belief that there existed a universal objective truth, which we could come to

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know by means of rational, scientific approaches (though often only with the help of experts), ‘postmodernism’ denied that. It assumed that truth was local and socially constructed (discussed later in this chapter) from a particular perspective. Instead it recognised the claims of diverse and competing interpretations, and accepted that everything is open to question, that there are always alternative interpretations. Nevertheless, Legge (1995: 324–5) considered HRM to be both ‘post-modern’ and ‘postmodern’. ‘From a managerialist view’ it was ‘post-modern’ in terms of epoch and its basic assumptions (p. 324), whereas ‘from a critical perspective’ it was a ‘postmodernist discourse’ (p. 312). HRM, with its ambiguous, or contested, nature, emerged alongside the spread of ‘post-modern’ organisations and ‘postmodern epistemology’. The recognition of multiple, co-existing yet competing realities and interpretations, the constant reinterpretation, the eclecticism, the concern for presentation and re-presentation, the significance of theory lying not in its ‘truth’ but in its usefulness for practice, could be interpreted as a ‘postmodern’ rendering of the debate about the nature of the employment relationship. However, its relativity proved to be challenging and unsettling for those socialised into a ‘modern’ understanding of the world. By the second edition of her book, Legge (2004: 3) considered that there was ‘a retreat from postmodern approaches to HRM’ and that discussion of HRM as a post-modern/postmodern phenomenon had ‘a slightly passé feel’. It could also be suggested that ‘postmodernism’ in the social sciences was a forerunner of social constructionism (see later), which has very similar views but which did not become established as a possible alternative to traditional views until somewhat later.

Underlying assumptions When we examine these examples of the influence of ideas upon the immediate and wider contexts of HRM, we can recognise that they are underpinned by assumptions that differ significantly.

Defining reality However, we need first to recognise that submerged even more deeply beneath those are the fundamental ways we define reality, which shape the very way we think. Some are so deeply ingrained that they are difficult to identify and express, but they are nevertheless embodied in the way we approach life.

Perception Human beings cannot approach reality directly, or in a completely detached and clinical manner. The barriers between ourselves and the world outside us operate at very basic levels: ‘Despite the impression that we are in direct and immediate contact with the world, our perception is, in fact, separated from reality by a long chain of processing’ (Medcof and Roth, 1979: 4). This processing includes the selection of stimuli to which to respond and the organisation and interpretation of them according to patterns we already recognise. (You can read more about this in Huczynski and Buchanan, 2013.) In other words, we develop a set of filters through which we make sense of our world. Kelly (1955) calls them our ‘personal constructs’, and they channel the ways we conceptualise and anticipate events (see Bannister and Fransella, 1971).

Defence mechanisms Our approach to reality, however, is not just through cognitive processes. There is too much at stake for us, for our definition of reality has implications for our definitions of ourselves and for how we would wish others to see us. We therefore defend our sense of self – from what we interpret as threats from our environment or from our own inner urges – by means of what Freud called

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our ‘ego defence mechanisms’. In his study of how such behaviour changes over time, Vaillant (1977: 7) wrote: ‘Often such mechanisms are analogous to the means by which an oyster, confronted with a grain of sand, creates a pearl. Humans, too, when confronted with conflict, engage in unconscious but often creative behaviour.’ Freudians and non-Freudians (see Peck and Whitlow, 1975: 39–40) have identified many forms of such unconscious adaptive behaviour, some regarded as healthy, while others are considered unhealthy and distorting. We may not go to the lengths of the ‘neurotic’ defences that Vaillant (1977: 384–5) describes, but a very common approach to the threats of the complexity of intimacy or the responsibility for others is to separate our feelings from our thinking, to treat people and indeed parts of ourselves as objects rather than subjects. The scene is set for a detached, objective and scientific approach to reality in general, to organisations in particular, and to the possibility of treating human beings as ‘resources’ to be managed.

Assumptions about organisations Managers make assumptions about the nature of the organisation, many interpreting it as having an objective reality that exists separately from themselves and other organisational members – they reify it (see Glossary). They make assumptions about the nature of their own and the organisation’s goals, which many interpret as rational and objective. However, as Case Study 3.2 illustrates, these may not be straightforward. Managers make assumptions about the appropriate distribution of limited power throughout the organisation, and how people in the organisation should be regarded and treated. However, many managers do not identify or question their own assumptions. They leave them unstated, unaddressed and so rarely challenged; thus their actions appear, both to themselves and to others, to be based upon reason and organisational necessity. In the same way, many theorists leave unstated the fact that the organisations about which they write exist within a particular economic system that has to meet the needs of capital. They ignore the material and status needs of owners and managers, and their emotional (Fineman, 1993) and moral selves (Watson, 2000). Many might assert the need for equal opportunities for jobs, training and promotion, but do not necessarily challenge the process of managing itself despite its often gender-blind nature (Hearn et al., 1989; Hopfl and Hornby Atkinson, 2000). Moreover, many other members of the organisation appear to accept those premises on which they are managed, even though those might conflict with their own experiences, or virtually disempower or disenfranchise them. This is also the case with many of the ideas current in the wider context of HRM. They are clearly not espoused by all, but alternatives to them are frequently not made explicit. They tend to be identified and discussed only by those writers who wish to persuade their readers to accept a different interpretation (e.g. Braverman, 1974; Hearn et al., 1989; Calas and Smircich, 1992).

Alternative ways of thinking The examination we have made of the context of HRM has alerted us to questions about the assumptions that managers and theorists are making. These prompt the recognition that different assumptions might generate different ways of thinking (see Pirsig, 1976). These might include the way we conceptualise, theorise about and manage the employment relationship, and so have important implications for our interpretation of HRM. We shall now examine some of these.

Differing epistemological positions Positivism The commonly accepted epistemological position (theory of the grounds of knowledge) in Western thinking is based on positivism. This forms the basis of scientific method, and applies the

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rational and ordered principles of the natural sciences to human affairs generally. It manifests itself (see Heather, 1976; Rose, 1978: 26) in a concern for objectivity, in the construction of testable hypotheses, in the collection of empirical data, in the search for causal relationships and in quantification. It is therefore uneasy with subjective experience and in research attempts to maintain distance between the researcher and those studied (called ‘subjects’, though regarded more as objects). Scientific method has informed much social science research, which in turn has reproduced traditional Western interpretations through the kind of new knowledge generated, and hence it ‘reigns’ in much HRM research (Legge, 1995: 308). It will be clear from the discussion of the immediate context of HRM that many managers and theorists of management espouse it, and it underpins many HRM activities such as psychometric testing for selection and human resource planning models. We shall pay greater attention here to some of the alternatives to commonly accepted ways of thinking, not only because they are generally less well known than positivism but also because the contrast they make with positivism emphasises its nature. You could read more about them in Denzin and Lincoln (2005). The approaches here have different origins and, to some extent, values and constituencies. They differ from positivism, being concerned not with objective reality, but with our lived, subjective experience and interpretations of it. They pose a challenge to conventional thinking which could be perceived as threatening: A scientist...depends upon his [sic] facts to furnish the ultimate proof of his propositions...these shining nuggets of truth.... To suggest [as Kelly (1955) does]...that further human reconstruction can completely alter the appearance of the precious fragments he has accumulated, as well as the direction of their arguments, is to threaten his scientific conclusions, his philosophical position, and even his moral security.... [O]ur assumption that all facts are subject...to alternative constructions looms up as culpably subjective and dangerously subversive to the scientific establishment. (Bannister and Fransella (1971: 17–18))

Phenomenology This is concerned with understanding the individual’s conscious experience. Rather than analysing this into fragments, it deals with it as a whole, that is, holistically. It acknowledges the significance of subjectivity, which positivism subordinates to objectivity. Phenomenological researchers try to make explicit the conscious phenomena of experience of those they study, seeking access to them empathically, through shared meanings and inter-subjectivity. This is not a commonplace approach in the field of HRM and management (Sanders, 1982), although it is sometimes discussed in qualitative research studies.

Constructivism and social constructionism Constructivism and social constructionism are also concerned with individual experience. The differences between them are often not clearly stated but, for our purpose, constructivism emphasises the individual’s cognitive processes. It does not deny the existence of an external reality, but holds that we cannot know it, only the models of it that we construct ourselves: ‘[E]ach individual mentally constructs the world of experience.... [T]he mind is not a mirror of the world as it is, but functions to create the world as we know it’ (Gergen, 1999: 236). (Note that some constructivists appear to retain something of the positivist approach.) We deal with social constructionism in more detail because it is a greater challenge to conventional thinking. It does not assume that a reality independent of the observer exists. Reality is only what we construct ourselves, and that not through our own cognitive processes, as with constructivism, but through the social processes of language, discourse and social interaction (see Raskin and Bridges, 2002). As Checkland (1981: 277) stated: ‘Human beings in the social process are constantly creating the social world in interaction with others. They are negotiating their interpretations of reality, those multiple interpretations at the same time constituting the reality itself.’

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To make sense of our experiences, we have to interpret and negotiate meaning with others. There can be no single objective meaning, only, as Hoffman (1990: 3) suggests: an evolving set of meanings that emerge unendingly from the interactions between people. These meanings are not skull-bound and may not exist inside what we think of as an individual ‘mind’. They are part of a general flow of constantly changing narratives.

Hence social contructionism has considerable significance for HRM. It recognises that multiple and competing views of organisations and HRM are legitimate; that the significance of theory lies not in its ‘truth’ but in its usefulness for practice. Social constructionism throws into question (Kvale, 1992; Hassard and Parker, 1993) the traditional (Western) understanding of the individual as a ‘natural entity’, independent of society, with ‘attributes’ that can be studied empirically, a natural object, bounded, reified, highly individualised and autonomous, having rather than being a self (Collin, 1996: 9). That orthodox interpretation has provided the foundation for HRM thinking and practices, such as psychometric testing, competencies and assessment, but social constructionism challenges that (Brittain and Ryder, 1999). This epistemological position also recognises that knowledge is constructed and a social phenomenon (Hoffman, 1990). Far from being objective and universal as in scientific thinking, it is constructed through the interplay of relationships, the workings of power, and often the dominance of the most powerful. Hence social constructionism uncovers how traditional ways of thinking are reproduced through ideologies and hegemony (see the section on ‘hegemony’ later in this chapter). It asks ‘What truth?’, ‘Whose truth?’ and ‘Who says so?’ Hence it challenges the authority of the established view, for example, of the ‘meta-narratives’ of ‘progress’, ‘the value of science’ or ‘Marxism versus capitalism’ that had become the accepted framework of twentiethcentury understanding. It makes a critical interpretation of established bodies of thought such as psychology (Kvale, 1992), which could be seen as a Western cultural product (Stead and Watson, 1999). It also encourages self-reflexivity and, therefore, a critical suspicion towards one’s own interpretations, and an ironic and playful treatment of one’s subject. Traditional thinking assumes that language is neutral, ‘the vehicle for communicating independent “facts”’ (Legge, 1995: 306). The constructionist argument, however, is that this is not the case (see Reed and Hughes, 1992; Hassard and Parker, 1993). Rather than depicting objective reality, language constructs meaning. Weick (1979: 1) quotes a baseball story that illustrates this nicely: Three umpires disagreed about the task of calling balls and strikes. The first one said, ‘I calls them as they is.’ The second one said, ‘I calls them as I sees them.’ The third and cleverest umpire said, ‘They ain’t nothin’ till I calls them.’

Language ‘itself constitutes or produces the “real”’ (Legge, 1995: 306). Moreover, it is ‘ideological’ (Gowler and Legge, 1989: 438), both the means through which ideologies are expressed and the embodiment of ideology, and can work through rhetoric (discussed later in this chapter). This can be seen in sexist and racist language, and in ‘management-speak’. Social constructionism highlights the significance of discourse. ‘Why do we find it so congenial to speak of organisations as structures but not as clouds, systems but not songs, weak or strong but not tender or passionate?’ (Gergen, 1992: 207). The reason, Gergen goes on to say, is that we achieve understanding within a ‘discursive context’, and the organisational context understands structure. A discourse is a ‘set of meanings, metaphors, representations, images, stories, statements and so on that in some way together produce a particular version of events’ (Burr, 1995: 48), a version belonging to a particular group of people. It provides the language and meanings whereby members of that group can interpret and construct reality, and gives them an identifiable position to adopt upon a given subject, thereby constituting their own identity, behaviour and reality (Gavey, 1989). By interpreting competing positions in its own terms, the group’s discourse shuts down all other possible interpretations but its own. For example, in order to engage in academic discourse, academics have to learn (Parker and Shotter, 1990: 9): a vocabulary and a set of analytic procedures for ‘seeing’ what is going on...in the appropriate professional terms. For we must see only the partially ordered affairs of

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everyday life, which are open to many interpretations...as if they are events of a certain well-defined kind.

Using the contrast between ‘everyday talk’ and academic writing, Parker and Shotter (1990: 2–3) explain how academic text standardises its interpretations: The strange and special thing about an academic text...is that by the use of certain strategies and devices, as well as already predetermined meanings, one is able to construct a text which can be understood (by those who are a party to such ‘moves’) in a way divorced from any reference to any local or immediate contexts. Textual communication can be (relatively) decontextualised. Everyday talk, on the other hand, is marked by its vagueness and openness, by the fact that only those taking part in it can understand its drift; the meanings concerned are not wholly predetermined, they are negotiated by those involved, on the spot, in relation to the circumstances in which they are involved.... Everyday talk is situated or contextualised, and relies upon its situation (its circumstances) for its sense.

There are many discourses identifiable in the field of organisation and management studies – managerial, humanist, critical, industrial relations – that offer their own explanations and rhetoric. You can explore them further in, for example, the chapters that follow, and in Clark et al. (1994), but you should remain aware that academic discourse itself enables writers to exercise power over the production of knowledge and to influence their readers. Awareness of discourse is also important for the understanding of organisations (Baxter, 1999: 49): [O]rganisational life is made up of many ‘discourses’ – that is, flows of beliefs, experiences, meanings and actions. Each of these discourses shapes the behaviour of the organisation and of teams and individuals within it. These discourses are in turn created and reworked by individuals’ actions and their expressed beliefs. This may not sound much, but it shifts the management of change, for example, from a simplistic view of changing culture, processes and structures to one of altering these aspects of organisational life by building on and reshaping the various discourses flowing around a company.

As also suggested by Pepper’s (1942) contextualism, discussed later in this chapter, this view of the social construction of meaning implies that we cannot separate ourselves from our created reality: ‘man [sic] is an animal suspended in webs of significance he himself has spun’ (Geertz, 1973: 5). This approach emphasises the significance of perspective, the position from which an interpretation is made (remember The Guardian advertisement at the start of this chapter?). While the social construction of meaning appears a very abstract notion, it is apparent in everyday life in the stories we tell: narrative is how we make meaning (Polkinghorne, 1988). ‘We dream in narrative, daydream in narrative, remember, anticipate, hope, despair, believe, doubt, plan, revise, criticise, construct, gossip, learn, hate, and love by narrative’ (Hardy, 1968: 5). Listening to narratives is an approach increasingly favoured by those trying to understand organisations (Gabriel, 2000).

The reproduction of traditional thinking In the face of so many possible alternatives, how has traditional thinking come about? Social constructionism uncovers some of the mechanisms whereby it is reproduced.

Ideology Gowler and Legge (1989) define ideology as ‘sets of ideas involved in the framing of our experience, of making sense of the world, expressed through language’ (p. 438). It has a narrower focus than the traditional ways of thinking we have been discussing in previous sections, and can be seen as a localised orthodoxy, a reasonably coherent set of ideas and beliefs that often goes unchallenged. According to Sloan (1992: 174): ‘Ideology operates as a reifying, congealing mechanism that imposes pseudoresolutions and compromises in the space where fluid, contradictory, and multivalent subjectivity could gain ground’.

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Ideology purports to explain reality objectively, but within a pluralist society it actually represents and legitimates the interests of members of a subgroup. It is a ‘subtle combination of facts and values’ (Child, 1969: 224), and achieves its ends through language and rhetoric. What we hear and what we read are conveying someone else’s interpretations. The way those are expressed may obscure the ideology and vested interest in those interpretations. For example, in contrast to the generally accepted view of culture, Jermier argues that culture is ‘the objectified product of the labour of human subjects.... [T]here is a profound forgetting of the fact that the world is socially constructed and can be remade.... Exploitative practices are mystified and concealed’ (Frost et al., 1991: 231). As you will recognise from this chapter, the organisation is an arena in which ideologies of many kinds are in contest: capitalism and Marxism, humanism and scientific approaches to the individual, feminism and a gender-biased view. Child (1969) discusses the ideology embodied in the development of management thinking, identifying how the human relations approach chose to ignore the difference of interests between managers and employees and how this dismissal of potential conflict influenced theory and practice. Commentators such as Braverman (1974), Frost et al. (1991) and Rose (1978), and many of the readings in Clark et al. (1994), will help you to recognise some of the ideologies at work in this field.

Hegemony Hegemony is the exertion of a group’s authority over subordinate groups by imposing its definition of reality over other possible definitions, with the result that less powerful people are disempowered, overlooked, remain silent and are left without a ‘voice’ (Mishler, 1986; Bhavnani, 1990). This does not have to be achieved through direct coercion, but by ‘winning the consent of the dominated majority so that the power of the dominant classes appears both legitimate and natural’. In this way, subordinate groups are ‘contained within an ideological space which does not seem at all “ideological”: which appears instead to be permanent and “natural”, to lie outside history, to be beyond particular interests’ (Hebdige, 1979: 15–6). It is argued that gender issues are generally completely submerged in organisations and theories of them (Hearn et al., 1989; Calas and Smircich, 1992; Hopfl and Hornby Atkinson, 2000) so that male-defined realities of organisations appear natural, and feminist views unnatural and shrill. You could use the readings in Clark et al. (1994) to identify instances of hegemony and the outcomes of power relations, such as the ‘management prerogative’. Watson (2000) throws light on the manager’s experience of these.

Rhetoric Rhetoric is ‘the art of using language to persuade, influence or manipulate’ (Gowler and Legge, 1989: 438). ‘[I]ts high symbolic content allows it to reveal and conceal but above all develop and transform meaning’ (Gowler and Legge, 1989: 439, their italics). It ‘heightens and transforms meaning by processes of association, involving both evocation and juxtaposition’. In other words, its artfulness lies in playing with meanings, and it can be used for various effects. It is something with which we are familiar, whether as political ‘spin’ or as the terminology used in effecting organisational change (Atkinson and Butcher, 1999). In the ‘eco-climate’ of an organisation, where meanings are shared and negotiated, power and knowledge relations are expressed rhetorically. For example, changes to structure and jobs might be described as ‘flexibility’ rather than as the casualisation of work, and increased pressures upon employees as ‘empowerment’. Legge (1995: xiv) proposes that one way of interpreting HRM is to recognise it as ‘a rhetoric about how employees should be managed to achieve competitive advantage’ that both ‘celebrates’ the values of its stakeholders while ‘at the same time mediating the contradictions of capitalism’. In other words, it allows those stakeholders to ‘have their cake and eat it’. Nevertheless, Eccles and Nohria (1992: 10) regard rhetoric as something that can be used and abused, but it cannot be avoided [original italics]. Rather, it constantly serves to frame the way we see the world. In our view, rhetoric is used well when

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it mobilises actions of people in a way that contributes both to the individuals as people and to the performance of organisations as a whole. It is effective when it is flexible enough ‘to incorporate the different meanings, emphases, and interpretations that different people will inevitably give it’. (p. 35)

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Revisit Case Study 3.1. How does the language used to describe the gig economy influence our understanding of it?

Differing ‘world hypotheses’ Writing about Kelly’s (1955) personal construct theory, Bannister and Fransella (1971: 18) argue: ‘[W]e cannot contact an interpretation-free reality directly. We can only make assumptions about what reality is and then proceed to find out how useful or useless those assumptions are.’ However, we have developed our assumptions from birth, and they have been refined and reinforced by socialisation and experience so that, generally, we are not even aware of them. We do not, therefore, generally concern ourselves with the theory of knowledge, or epistemology, and often find the discussion of philosophical issues difficult to follow. Nevertheless, we are undoubtedly making significant assumptions about ‘what it is possible to know, how may we be certain that we know something’ (Heather, 1976: 12–3). These assumptions underpin thinking and contribute to the filters of perception: they therefore frame any understanding of the world, including the ways in which researchers, theorists and practitioners construe HRM. To understand something of HRM, we need at least to recognise some of the implications of these epistemological and philosophical issues. Pepper’s (1942) ‘world hypotheses’ help us distinguish some of the fundamentally different assumptions that can be made about the world. He classifies them as two pairs of polarised assumptions. The first pair is about the universe. At one pole is the assumption that there is an ordered and systematic universe, ‘where facts occur in a determinate order, and where, if enough were known, they could be predicted, or at least described’ (Pepper, 1942: 143). At the other pole, the universe is understood as a ‘flowing and unbroken wholeness’ (Morgan, 1997: 251), with ‘real indeterminateness in the world’ (Harré, 1981: 3), in which there are ‘multitudes of facts rather loosely scattered and not necessarily determining one another to any considerable degree’ (Pepper, 1942: 142–3). Pepper’s second polarity is about how we approach the universe: through analysis, fragmenting a whole into its parts in order to examine it more closely, or through synthesis, examining it as a whole within its context. Western thinking stands at the first pole in both pairs of assumptions: it takes an analytical approach to what is assumed to be an ordered universe. Hence ‘we are taught to break apart problems, to fragment the world’ (Senge, 1990: 3); we examine the parts separately from their context and from one another, ‘wrenching units of behaviour, action or experience from one another’ (Parker, 1990: 100). These approaches, which underpin the scientific approach and positivism outlined earlier, lead us in our research to examine a world that we interpret as ‘abstract, fragmented, precategorized, standardised, divorced from personal and local contexts or relevance, and with its meanings defined and controlled by researchers’ (Mishler, 1986: 120). By contrast, and of particular relevance to this chapter, there is ‘contextualism’. This is Pepper’s world hypothesis that espouses the assumptions at the second pole of both pairs above. This regards events and actions as processes that are woven into their wider context, and so have to be understood in terms of the multiplicity of interconnections and interrelationships within that context. This is what our tapestry metaphor has attempted to convey. We can use further metaphors to glimpse just how different this view is from our orthodox understanding of the

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world: from the user’s perspective, the latter is like using a library, while the former is more like using the internet (Collin, 1997). The information in a library is structured and classified by experts in a hierarchical system according to agreed conventions; users have to follow that system, translating their needs for information into a form recognised by that system. The internet, however, is an open-ended network of providers of information, non-linear, constantly changing and expanding. It presents users with a multitude of potential connections to be followed at will and, moreover, the opportunity to participate through dialogue with existing websites or through establishing their own web page or blog. Differences as basic as those between Pepper’s world hypotheses inevitably lead to very different ways of seeing and thinking about reality and, indeed, of understanding our own role in the universe. However, we are rarely aware of or have reason to question our deepest assumptions. Not only does our generally accepted approach itself impede our recognition of these epistemological issues, but the processes of socialisation and education in any given society nudge its members in a particular direction [although some may wander off the highway into the byways or, like the author of Zen and the Art of Motorcycle Maintenance (Pirsig, 1976), into what are assumed to be badlands]. It can be easier to discern these issues in the contrast offered by the epistemological positions adopted in other societies. We can, for example, recognise more of our own deeply embedded assumptions when we encounter a very different world view such as revealed in an anthropologist’s account of his apprenticeship to a Yaqui sorcerer (Castaneda, 1970). Of this, Goldschmidt (1970: 9–10) writes: Anthropology has taught us that the world is differently defined in different places. It is not only that people have different customs; it is not only that people believe in different gods and expect different post-mortem fates. It is, rather, that the worlds of different peoples have different shapes. The very metaphysical presuppositions differ: space does not conform to Euclidean geometry, time does not form a continuous unidirectional flow, causation does not conform to Aristotelian logic, man [sic] is not differentiated from non-man or life from death, as in our world.... The central importance of entering worlds other than our own – and hence of anthropology itself – lies in the fact that the experience leads us to understand that our own world is also a cultural construct. By experiencing other worlds, then, we see our own for what it is.

Most of the epistemological threads in the tapestry examined in this chapter reflect Western orthodoxy [note how this has exerted hegemony (discussed earlier; also see Glossary) over nonWestern thinking (Stead and Watson, 1999)]. However, this orthodoxy itself might be gradually changing; some commentators have argued that it has reached a ‘turning point’ (Capra, 1983), that they can detect signs of a ‘paradigm shift’ (see Glossary). Indeed, over the last decade or so there have emerged new developments in the natural sciences (see below), and elsewhere (e.g. feminist thinking; see the following section) that challenge accepted thinking.

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How could you use Pepper’s ideas to explain the challenges to conventional thinking made by social constructionism?

Feminist thinking Recognition of the differences between the world-views of women and men challenges what is increasingly regarded as the male world-view of the positivist approach (Gilligan, 1982; Spender, 1985). Gilligan’s (1982) landmark study concluded that women value relationship and connection, whereas men value independence, autonomy and control. Bakan (1966) made a distinction between ‘agency’ and ‘communion’, associating the former with maleness and the latter with femaleness. Agency is ‘an expression of independence through self-protection, self-assertion and control of the environment’ (Marshall, 1989: 279), whereas the basis of communion is integration

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with others: ‘The agentic strategy reduces tension by changing the world about it; communion seeks union and cooperation as its way of coming to terms with uncertainty. While agency manifests itself in focus, closedness and separation, communion is characterised by contact, openness and fusion’ (Marshall, 1989: 289). Therefore, Marshall (1989) argues, feminist thinking ‘represents a fundamental critique of knowledge as it is traditionally constructed...largely...by and about men’ and either ignores or devalues the experience of women: [with] its preoccupation with seeking universal, immutable truth, failing to accept diversity and change; its categorisation of the world into opposites, valuing one pole and devaluing the other; its claims of detachment and objectivity; and the predominance of linear cause-andeffect thinking. These forms reflect male, agentic experiences and strategies for coping with uncertainty. By shaping academic theorising and research activities, they build male power and domination into the structures of knowledge. (p. 281)

Calas and Smircich (1992: 227) discuss how gender has been ‘mis- or under-represented’ in organisation theory, and explore the effects of rewriting it in. Those would include the correction or completion of the organisational record from which women have been absent or excluded; the assessment of gender bias in current knowledge; and the making of a new, more diverse organisation theory that covers topics of concern to women. Hopfl and Hornby Atkinson (2000) point to the gendered assumptions made in organisations, while Hearn et al. (1989) identify similar shortcomings in organisation theory in their discussion of the sexuality of organisations. However, it is important to note that it is only the non-positivist forms of feminist thinking that are cited here: in other words, there are also positivist versions.

Systems and ecological thinking Systems thinking takes a different perspective from that of traditional Western thinking, and has much in common with ecological thinking. It allows us to see the whole rather than just its parts and to recognise that we are a part of that whole: we argued at the start of the chapter that this was needed for the understanding of context. It registers patterns of change, relationships rather than just individual elements, a web of interrelationships and reciprocal flows of influence rather than linear chains of cause and effect. As with feminist thinking, there are both positivist and alternative views of systems, but here we are concerned with the latter. For example, in his ‘soft systems methodology’, Checkland (1981) employs systems not as ‘descriptions of actual realworld activity’ (p. 314), but as ‘tools of an epistemological kind which can be used in a process of exploration within social reality’ (p. 249). The concept of system denotes a whole, complex entity, comprising a hierarchy of subsystems, where the whole is greater than the sum of its parts. Much of what has been written about systems draws upon General Systems Theory, a meta-theory that offered a way to conceptualise phenomena in any disciplinary area. Very importantly, the systems approach does not argue that social phenomena are systems, but rather that they can be modelled (conceptualised, thought about) as though they had systemic properties. The concept of system used in the social sciences is therefore a very abstract kind of metaphor. However, we can give only a brief outline of systems concepts here: you will find further detail in Checkland (1981), Checkland and Scholes (1990), Senge (1990) and Morgan (1997). Systems may be ‘open’ (like biological or social systems) or ‘closed’ to their environment (like many physical and mechanical systems). As shown in Figure3.2, the open system imports from, and exchanges with, its environment what it needs to meet its goals and to survive. It converts or transforms these inputs into a form that sustains its existence and generates outputs that are returned to the environment either in exchange for further inputs or as waste products. The environment itself comprises other systems that are also drawing in inputs and discharging outputs. Changes in remote parts of any given system’s environment can therefore ripple through that environment to affect it eventually. There are feedback loops that enable the system to make

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Environment composed of other systems

System composed of subsystems Outputs into environment

Inputs from environment Conversion process Feedback

Feedback

Figure 3.2 Model of an open system. appropriate modifications to its subsystems in the light of its changing environment. Thus the system constantly adjusts to achieve equilibrium internally and with its environment. Reflecting upon the management approaches identified earlier, we can now recognise that the scientific management, human relations and perhaps also the humanistic approaches treated the organisation as a closed system, whereas the human resource approach recognises it as open to its environment. Brunsson’s (1989) identification of the ‘action’ and ‘political’ organisations could also be seen as an open systems approach. The significance of systems thinking, then, lies in its ability to conceptualise complex, dynamic realities – the system and its internal and external relationships – and model them in a simple, coherent way that is capable of further elaboration when necessary. This means that we can use it to hold in our minds such complex ideas as those discussed in this book, without diminishing our awareness of their complexity and interrelationships. According to Senge (1990: 12–3), systems thinking is essential for the development of the effective organisation – the learning organisation: At the heart of a learning organisation is a shift of mind – from seeing ourselves as separate from the world to connected to the world, from seeing problems as caused by someone or something ‘out there’ to seeing how our own actions create the problems we experience. A learning organisation is a place where people are continually discovering how they create their reality. And how they can change it.

Systems thinking therefore enables us to contextualise organisations and HRM. It conceptualises an organisation in an increasingly complex and dynamic relationship with its complex and dynamic global environment. Changes in one part of the environment – climate change, collapse of the banks, failed harvests and wars – can change the nature of the inputs – raw materials, money and other resources – into an organisation. This can lead to the need for adjustments in and between the subsystems – new marketing strategies, technologies and working practices – either to ensure the same output or to modify the output. The environment consists of other organisations, the outputs of which – whether intentionally or as by-products – constitute the inputs of others. A change in output, such as a new or improved product or service, however, will

ALTERNATIVE WAYS OF THINKING

constitute a change in another organisation’s input, leading to a further ripple of adjustments. Consider, for example, how flexible working practices and call centres have been developed. Sherwood (2002) illustrates how to apply systems thinking to practical HRM issues.

Explore

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How would you represent an organisation in a changing world in terms of the open systems model? Working individually or in groups, identify its inputs (where they come from, and how they could be changing), how it converts these, and what its (changing?) outputs might be. What are its feedback mechanisms?

Developments in scientific thinking We shall now turn briefly to another possible source of influence upon the HRM field. Developments in the natural sciences challenge some of the key assumptions of Newton’s mechanistic notion of the universe. Traditionally, science has been ‘reductionist’ in its analysis into parts and search for ‘the basic building blocks of matter’ (Wheatley, 1992: 32). It had assumed that ‘certainty, linearity, and predictability’ (Elliott and Kiel, 1997: 1) were essential elements of the universe. However, new discoveries have questioned those assumptions, generating the theories of complexity and chaos. Complexity refers to a system’s ‘interrelatedness and interdependence of components as well as their freedom to interact, align, and organise into related configurations’ (Lee, 1997: 20). Chaos refers to the way small differences in initial conditions can lead to widely different outcomes (the ‘butterfly effect’). As Morgan (1997: 262) wrote: Because of this internal complexity, random disturbances can produce unpredictable events and relationships that reverberate throughout a system, creating novel patterns of change.... [H]owever,...despite all the unpredictability, coherent order always [emphasis in original] emerges out of the randomness and surface chaos.

To understand complexity, new approaches that recognise the whole rather than just its parts – a holistic approach – and attention to relationships between the parts are needed, and these are being developed. Although theories of complexity and chaos are sometimes referred to as a ‘postmodern science’, this is a ‘common misconception’, for ‘while recognising the need for a modification of the reductionist classical model of science, [these theories] remain grounded within the “scientific” tradition’ (Price, 1997: 3). They are, nevertheless, recognised as relevant to the understanding of complex social systems. For example, ‘chaos theory appears to provide a means for understanding and examining many of the uncertainties, nonlinearities, and unpredictable aspects of social systems behaviour’ (Elliott and Kiel, 1997: 1). The literature on the application of these theories to social phenomena tends to be very demanding (e.g. Eve et al., 1997; Kiel and Elliott, 1997). However, Morgan’s (1997) and Wheatley’s (1992) applications to organisations are more accessible. There has been some application in the HRM field. For example, Cooksey and Gates (1995) use non-linear dynamics and chaos theory as a way of conceptualising how common HRM practices translate into observable outcomes. Brittain and Ryder (1999: 51) draw on complexity theory in their attempt to improve the assessment of competencies, and conclude that ‘HR professionals and psychologists need to challenge widely held beliefs about assessment processes, move away from simplistic assumptions about cause and effect and take a more complex view of the world’.

CHAPTER 3 CONTEXTUALISING HRM

Explore

What similarities do you see between systems thinking and these developments in science?

Ethical issues in HRM Ethics is the branch of philosophy that concerns the values of right and wrong in human conduct, and such considerations are inherent in managing people in organisations. Indeed, the professional practice of HRM has ethical standards on a wide range of topics, such as health and safety and the need for equity and fairness in employment, compensation and appraisal. You can read about some of the debates on these issues in Greenwood (2002) and Winstanley and Woodall (1996, 2000). Ethics are also an issue at the corporate and strategic level, their significance highlighted by the growing reputation of stakeholder theory (Freeman, 1984). The CIPD (2013c) is concerned that the needs and interests of stakeholders be recognised, that relationships be based on confidence, trust and respect, and that practices provide opportunity, diversity, inclusion and dignity. And there is now considerable interest in the development of the ‘third generation’ of quality management (Foster and Jonker, 2007) in which emphasis is placed on the social network of stakeholders and on relational and not just instrumental values. Our examination of the context of HRM has drawn attention to issues that raise ethical questions. We have noted that managers have to respond to the tensions in their organisations generated by: ●

the existence of several stakeholders in the employment relationship;

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their differing aims, interests and needs;

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their differing perspectives upon and interpretations of events, experiences and relationships;

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the interplay between formal organisation and individual potential and needs.

The strategy they choose to adopt will affect employees differently and so it has an ethical dimension. Similarly, there are ethical issues raised in Case Study 3.1. These are clearly visible, but are they openly discussed? What we have noted of the workings of ideology and hegemony suggests that the basis of many management decisions will not only be obscured but will also benefit a powerful minority, not the majority of employees. The chapter has also emphasised that there are alternative, and very different, ways of thinking that are based on interpretations of reality and underlying assumptions. However, many of those assumptions are obscured or submerged and so are not open to interrogation or debate. Indeed, the managers themselves might not be fully aware of them, and so might be unable to take them into account when making their decisions. Equally, they might be unaware of the interpretations and underlying assumptions of their colleagues, superiors or subordinates, and hence would not be fully aware of all of the factors they would need to know in order to act ethically (and effectively). So attention to context promotes recognition of the need for managers to be aware of epistemological and other underlying assumptions on which their decisions are made. In order to act ethically and responsibly, they need to be willing to question themselves and to reflect on the implications of their views; to be transparent and discuss their assumptions; to listen and give due weight and representation to others’ thinking; and to have policies to deal with issues of conscience.

CONCLUDING COMMENTS

Concluding comments This chapter has responded to the challenge of representing context by using the metaphor of a tapestry. We have pulled out for examination various strands of meaning that managers and academics are drawing upon to construct – that is, both to create and to make sense of – HRM. The basic foundations of society are the warp threads that run the length of the tapestry, while alternative ways of thinking are the weft. Woven together, they produce the context that has HRM interwoven into it. The nature of the threads is generally not visible on the surface, but they are more apparent when the tapestry is turned over. Issues and events such as multiculturalism, NEETs (young people who are not in education, employment, or training), workfare, European directives and the Eurozone constitute the surface stitching that is drawn through the warp and weft and elaborates the pattern that is HRM. Multiple meanings are continuously being woven into the organisational and conceptual pattern that is HRM, and awareness of this allows us to recognise that yet further meanings, and hence potentials for the management of the employment relationship, remain to be constructed. By pointing to the need to recognise the significance of the context of HRM, this chapter is also acknowledging that you will find herein more interpretations than this book of ‘academic text’ (Parker and Shotter, 1990), shaped by its writers’ own agendas and values and the practicalities of commercial publication, can offer you. The process both of writing and of publication is that of decontextualisation, fragmentation, standardisation and presentation of knowledge as ‘entertaining education’, in bite-sized chunks of knowledge or sound bites. But by urging you to become aware of the context of HRM, this chapter is at the same time inviting you to look beyond what this book has to say, to recognise the nature of its discourse or, rather, discourses, to challenge its assumptions (and, indeed, your own) and to use your own critical judgements informed by your wider reading and personal experience. This chapter had a further aim (and this betrays this writer’s agenda and values), which is to orientate your thinking generally towards an awareness of context, to think contextually, for ultimately awareness of context is empowering. One of the outcomes could well be greater knowledge but less certainty, the recognition that there could be competing interpretations of the topic you are considering, that the several perspectives on the area could all yield different conclusions. Attention to context, therefore, encourages us not to be taken in by our initial interpretations, or to accept unquestioningly the definitions of reality that others would have us adopt (hegemony). There are, however, no easy answers, and we have to make the choice between alternatives. Reality is much messier and more tentative than theory and, like ‘everyday talk’, it is ‘marked by its vagueness and openness’, its meaning open to interpretation through negotiation with others. The acceptance of this, however, is one of the marks of the mature learner: the ability to recognise alternative viewpoints but, nevertheless, to take responsibility for committing oneself to one of them. By definition, one chapter cannot begin to portray the details of the context of HRM. Those, after all, are constantly changing with time. It will have achieved its purpose if it causes you to recognise the significance of context and the need to adopt ways of thinking that enable you to conceptualise it. It can point you in some directions, and you will find many others in the chapters that follow, but there are no logical starting points, because context is indivisible – and you will never reach the end of the story because, from the perspective of context, the story is never-ending.

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Summary ●

The chapter argues that the keys to the understanding of human affairs, such as HRM, lie within their context. Although context is difficult to conceptualise and represent, readers can draw on their existing understanding of environmental issues to help them comprehend it. Awareness and comprehension of context are ultimately empowering because they sharpen critical thinking by identifying and challenging our own and others’ assumptions.

●

Multiple interests, conflict and stressful and moral issues are inherent in the immediate context of HRM, which comprises the organisation (the nature of which generates a number of tensions) and management (defined as the continuous process of resolving those tensions). Over time, managers have adopted a range of approaches to their task, including scientific management, the human relations school, humanistic organisation development and HRM. Examination of this immediate context uncovers the existence of some significant assumptions that inform managers’ differing practices and the competing interpretations that theorists make of them. It also highlights ethical issues.

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The wider social, economic, political and cultural context of HRM is diverse, complex and dynamic, but some very different and unconnected strands of it are pulled out for examination, such as the legacies of the two world wars in relation to the management of the employment relationship. Other threads are the alternative ways of thinking that locate HRM within a contemporary framework of ideas that challenge assumptions about the management of the employment relationships.

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The chapter, however, finds it insufficient to conceptualise context as layered, like an onion. Rather, HRM is embedded in its context. The metaphor of a tapestry is therefore used to express the way in which its meaning is constructed from the interweaving and mutual influences of the basic structures of society, with alternative ways of thinking derived from perceptual, epistemological, philosophical and ideological positions. These include positivism, phenomenology, constructivism, social constructionism, feminist thinking, systems thinking and new developments in science, which make their impact through ideology, hegemony and rhetoric. People, events and issues are the surface stitching.

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The nature of this tapestry, with its multiple and often competing perspectives, ensures that HRM, as a concept, theory and practice, is a contested terrain. However, the chapter leaves readers to identify the implications of this through their critical reading of the book.

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This examination of context challenges readers to develop their critical thinking and highlights ethical issues.

Questions 1 In what ways does the conceptualisation of context adopted by this chapter differ from more commonly used approaches (e.g. in the models of HRM in Chapter1)? Does it add to the understanding they give of HRM and, if so, in what way? 2 What assumptions and ‘world hypotheses’ appear to underpin the tapestry metaphor of this chapter, and what are the implications for your use of it? 3 Identify some recent events that are likely to play a significant part in the context of HRM. 4 This chapter has been written from a British perspective. If you were working from a different perspective – South African, perhaps, or Scandinavian – what elements of the context of HRM would you include?

CASE STUDY: BHS REPORT LAYS BARE FAILURE AND CULPABILITY

Case study BHS report lays bare failure and culpability: Parliamentary inquiry lambasts collapsed store chain’s ex-owner, buyer and its ‘directors, advisers and hangers-on’ Dominic Chappell, who bought UK retailer BHS for £1 and presided over its collapse barely a year later, had credibility problems that would have frightened many sellers away. Not only was he a former bankrupt who had been introduced to the sale of BHS by a convicted fraudster, but his own investment bankers had walked out after discovering that they had been misled about the terms of the deal. Yet so determined was Sir Philip Green, who acquired BHS in 2000, to proceed with the rushed sale that, instead of giving proper scrutiny to Mr Chappell’s obvious shortcomings as a buyer, the retail entrepreneur either overlooked them or fixed them by inserting himself on the other side of the deal. These are the findings of a parliamentary inquiry, published today, into Britain’s most contentious corporate failure in years. They follow weeks of hearings that MPs say ‘resembled a circular firing squad’ of witnesses who believed that by implicating others they could escape blame. The report directs bracing criticism at Sir Philip, whose family received large dividends in the years after he took control of BHS, but later presided over a streak of losses and falling sales as the stores became a byword for high street decay. ‘We found little evidence to support the reputation for retail business acumen for which he received his knighthood’, MPs said. Goldman Sachs, the bank to which Sir Philip has entrusted some of his fortune, is criticised for allowing its ‘prestigious name to be cited as that of “gatekeeper” to the transaction’, burnishing Mr Chappell’s credentials when he tried to recruit directors to the board of his Retail Acquisitions vehicle. Mr Chappell, too, is excoriated for being ‘over-optimistic to the point of arrogance’ and having enriched himself through a lavish salary and management fees, which led MPs to say he ‘had his hands in the till’. Retail Acquisitions was entitled to receive a fee of 2per cent of any loan it arranged for the retailer, according to documents released by the inquiry. BHS took out loans with an aggregate value of about £100m in the 13 months that followed the sale, in a desperate race to fund widening losses while management tried to turn the business round. Some of the report’s most withering passages are reserved for the ‘directors, advisers and hangers-on’ who surround the two men. They ‘are all culpable’, the MPs say. Among the advisers to Mr Chappell were Olswang, the law

firm, and Grant Thornton, the accountancy firm. Executives working for Sir Philip’s Arcadia Group have said they took comfort from the involvement of such prestigious names. Both firms received ‘success fees’ that were dependent on the transaction going ahead. MPs added that ‘advisers were doubly dependent on a successful transaction because [Retail Acquisitions] did not have the resources to pay them otherwise,’ describing the firms as ‘preoccupied with how their fees would be paid’. MPs criticised both firms for adopting a ‘very wide interpretation of confidentiality’ that prevented them even from saying how much money they earned from the work. SirPhilip has put the figure at £8m. They also described as ‘disingenuous’ Sir Philip’s claim that the advisory firms’ involvement was evidence of Mr Chappell’s credibility. ‘Expert advisers are...there to advise, not to provide an expensive badge of legitimacy to people who would otherwise be bereft of credibility’, the MPs said. The committee took issue with the Arcadia executives’ claim to have been reassured when Mr Chappell placed £35m in a bank account at short notice. MPs have heard that the £35m turned out to be a downpayment on the sale of a property which Sir Philip had intended to sell to Mr Chappell’s Retail Acquisitions for less than its market value. The money did not belong to MrChappell’s group, and was never destined to be injected into BHS. ‘At best it demonstrated [Mr Chappell’s] capability as a would-be estate agent’, MPs wrote. MPs urged Sir Philip to make a ‘large financial contribution’ to shore up the chain’s stricken pension funds, which have unfunded liabilities of £571m. Sir Philip and his Arcadia group have begun talking to the Pensions Regulator about a deal that would see the ‘king of the high street’ hand over a chunk of his personal fortune. Arcadia described the talks as a work in progress. Although the inquiry did not comment on whether Sir Philip should keep his knighthood, the billionaire could face referral to the forfeiture committee if he is deemed to have brought the honours system into disrepute. MPs said they believed Sir Philip had ‘some affection’ for BHS. ‘To an extent it created him,’ they wrote. ‘Now it could also bring him down’. Source: Vandevelde, M. (2016), ‘BHS reports lays bare failure and culpability’, Financial Times, 25 July; © 2016 The Financial Times Limited.

CHAPTER 3 CONTEXTUALISING HRM

Questions

You can tackle these questions on your own or in a small group.

What tensions might be created by different stakeholder interests and to what extent can they be addressed?

What ethical issues are raised by the BHS case? How might they be avoided in future?

Identify the many and varied stakeholders affected by the collapse of BHS and the key interests of these different groups.

References and further reading Aldrich, H.E. (1992), ‘Incommensurable paradigms? Vital signs from three perspectives’, in M. Reed and M. Hughes (eds), Rethinking Organization: New Directions in Organization Theory and Analysis. London: Sage, pp. 17–45. Argyris, C. (1960), Understanding Organisational Behaviour. London: Tavistock Dorsey. Armitage, A. and Keeble-Allen, D. (2007), Using the Past to Improve our Future: Can High Performance Working Learn from TQM? CIPD: Professional Standards Conference, Keele University. Atkinson, S. and Butcher, D. (1999), ‘The power of Babel: Lingua franker’, People Management, 5, 20: 50–52. Bakan, D. (1966), The Duality of Human Existence. Boston, MA: Beacon. Bannister, D. and Fransella, F. (1971), Inquiring Man: The Theory of Personal Constructs. Harmondsworth: Penguin. Baxter, B. (1999), ‘What do postmodernism and complexity science mean?’, People Management, 5, 23, 25 November: 49. Bhavnani, K.-K. (1990), ‘What’s power got to do with it? Empowerment and social research’, in I. Parker and J. Shotter (eds), Deconstructing Social Psychology. London: Routledge, pp.141–52. Braverman, H. (1974), Labor and Monopoly Capital: The Degradation of Work in the Twentieth Century. New York: Monthly Review Press. Brittain, S. and Ryder, P. (1999), ‘Get complex’, People Management, 5, 23, 25 November: 48–51. Brunsson, N. (1989), The Organization of Hypocrisy: Talk, Decisions and Actions in Organizations. Chichester: John Wiley. Burr, V. (1995), An Introduction to Social Constructionism. London: Routledge. Calas, M.B. and Smircich, L. (1992), ‘Re-writing gender into organizational theorising: Directions from feminist perspectives’, in M. Reed and M. Hughes (eds), Rethinking Organization: New Directions in Organization Theory and Analysis. London: Sage, pp. 227–53. Callaghan, G. and Thompson, P. (2002), ‘We recruit attitude: The selection and shaping of routine call centre labour’, Journal of Management Studies, 39, 2: 233–54. Cameron, S. (1997), The MBA Handbook: Study Skills for Managers, 3rd edn. London: Pitman. Capra, F. (1983), The Turning Point: Science, Society and the Rising Cultures. London: Fontana.

Castaneda, C. (1970), The Teachings of Don Juan: A Yaqui Way of Knowledge. Harmondsworth: Penguin. Checkland, P. (1981), Systems Thinking, Systems Practice. Chichester: John Wiley. Checkland, P. and Scholes, J. (1990), Soft Systems Methodology in Action. Chichester: John Wiley. Cherniss, C. and Goleman, D. (eds) (2001), The Emotionally Intelligent Workplace: How to Select for, Measure, and Improve Emotional Intelligence in Individuals, Groups, and Organizations. San Francisco, CA: Jossey-Bass. Child, J. (1969), British Management Thought: A Critical Analysis. London: George Allen & Unwin. CIPD (2012), The Psychological Contract. Factsheet. London: CIPD (www.cipd.co.uk/hr-resources/factsheets). CIPD (2013a), Health and Well-being at Work. Factsheet. London: CIPD (www.cipd.co.uk/hr-resources/factsheets). CIPD (2013b), Social Media and Employee Voice: The Current Landscape. Research Report, March. London: CIPD. CIPD (2013c), Corporate Responsibility. Factsheet. London: CIPD. Clark, H., Chandler, J. and Barry, J. (1994), Organization and Identities: Text and Readings in Organisational Behaviour. London: Chapman & Hall. Clegg, S.R. (1990), Modern Organizations: Organization Studies in the Postmodern World. London: Sage. Collin, A. (1996), ‘Organizations and the end of the individual?’, Journal of Managerial Psychology, 11, 7: 9–17. Collin, A. (1997), ‘Career in context’, British Journal of Guidance and Counselling, 25, 4: 435–46. Concise Oxford English Dictionary (1982), 7th edn. Oxford: Clarendon Press. Connock, S. (1992), ‘The importance of “big ideas” to HR managers’, Personnel Management, June: 24–7. Cooksey, R.W. and Gates, G.R. (1995), ‘HRM: A management science in need of discipline’, Asia Pacific Journal of Human Resources, 33, 3: 15–38. Cooper, R. and Fox, S. (1990), ‘The “texture” of organizing’, Journal of Management Studies, 27, 6: 575–82. Czerny, A. (2005), ‘Lean future looms for HR functions’, People Management, 11, 11, 2 June: 9. Denzin, N.K. and Lincoln, Y.S. (eds) (2005), The SAGE Handbook of Qualitative Research, 3rd edn. Thousand Oaks, CA: Sage.

REFERENCES AND FURTHER READING

Department of Scientific and Industrial Research (DSIR) (1961), Human Sciences: Aid to Industry. London: HMSO. Devanna, M.A., Fombrun, C.J. and Tichy, N.M. (1984), ‘A framework for strategic human resource management’, in C.J. Fombrun, M.M. Tichy and M.A. Devanna (eds), Strategic Human Resource Management. New York: John Wiley, pp.33–56. Eccles, R.G. and Nohria, N. (1992), Beyond the Hype: Rediscovering the Essence of Management. Boston, MA: Harvard Business School Press. Elliott, E. and Kiel, L.D. (1997), ‘Introduction’, in L.D. Kiel and E. Elliott (eds), Chaos Theory in the Social Sciences: Foundations and Applications. Ann Arbor, MI: University of Michigan Press, pp. 1–15. Eve, R.A., Horsfall, S. and Lee, M.E. (eds) (1997), Chaos, Complexity, and Sociology: Myths, Models, and Theories. Thousand Oaks, CA: Sage. Fineman, S. (ed.) (1993), Emotion in Organizations. London: Sage. Foster, D. and Jonker, J. (2007), ‘Towards a third generation of quality management: Searching for a theoretical re-conceptualisation of contemporary organisations based on the notions of stakeholders and transactivity’, International Journal of Quality & Reliability Management, 24, 7: 683–703. Fox, S. (1990), ‘Strategic HRM: Postmodern conditioning for the corporate culture’, in S. Fox and G. Moult (eds), Postmodern Culture and Management Development. Special edition: Management Education and Development, 21, 3: 192–206. Freeman, R.E. (1984), Strategic Management: A Stakeholder Approach. Boston, MA: Pitman. Frost, P.J., Moore, L.F., Louis, M.R., Lundberg, C.C. and Martin, J. (1991), Reframing Organizational Culture. Newbury Park, CA: Sage. Gabriel, Y. (2000), Storytelling in Organizations: Facts, Fictions, and Fantasies. Oxford: Oxford University Press. Gavey, N. (1989), ‘Feminist poststructuralism and discourse analysis: Contributions to feminist psychology’, Psychology of Women Quarterly, 13: 459–75. Geertz, C. (1973), The Interpretation of Cultures. New York: Basic Books. Gergen, K.J. (1992), ‘Organization theory in the postmodern era’, in M. Reed and M. Hughes (eds), Rethinking Organization: New Directions in Organization Theory and Analysis. London: Sage, pp. 207–26. Gergen, K.J. (1999), An Invitation to Social Construction. London: Sage. Gilligan, C. (1982), In a Different Voice: Psychological Theory and Women’s Development. Cambridge, MA: Harvard University Press. Goldschmidt, W. (1970), ‘Foreword’, in C. Castaneda, The Teachings of Don Juan: A Yaqui Way of Knowledge. Harmondsworth: Penguin, pp. 9–10. Gowler, D. and Legge, K. (1989), ‘Rhetoric in bureaucratic careers: Managing the meaning of management success’, in M.B. Arthur, D.T. Hall and B.S. Lawrence (eds), Handbook of Career Theory. Cambridge: Cambridge University Press, pp. 437–53. Greenwood, M. (2002), ‘Can HRM be ethical?’ Journal of Business Ethics, 36: 261–78. Hardy, B. (1968), ‘Towards a poetics of fiction: An approach through narrative’, Novel, 2: 5–14. Harré, R. (1981), ‘The positivist-empiricist approach and its alternative’, in P. Reason and J. Rowan (eds), Human Inquiry:

A Sourcebook of New Paradigm Research. Chichester: John Wiley, pp. 3–17. Harvey, D. (1990), The Condition of Postmodernity. Oxford: Blackwell. Hassard, J. and Parker, M. (eds) (1993), Postmodernism and Organizations. London: Sage. Hatch, M.J. (1997), Organization Theory: Modern, Symbolic and Postmodern Perspectives. Oxford: Oxford University Press. Hatchett, A. (2000), ‘Call collective: Ringing true’, People Management, 6, 2, January: 40–42. Hearn, J., Sheppard, D.L., Tancred-Sheriff, P. and Burrell, G. (1989), The Sexuality of Organization. London: Sage. Heather, N. (1976), Radical Perspectives in Psychology. London: Methuen. Hebdige, D. (1979), Subculture: The Meaning of Style. London: Methuen. Higgs, M. and Dulewicz, V. (2002), Making Sense of Emotional Intelligence, 2nd edn. London: Previson. Hodgson, A. (1987), ‘Deming’s never-ending road to quality’, Personnel Management, July: 40–44. Hoffman, L. (1990), ‘Constructing realities: An art of lenses’, Family Process, 29, 1: 1–12. Holman, D. and Wood, S. (2002), Human Resource Management in Call Centres. Sheffield: Institute of Work Psychology. Hopfl, H. and Hornby Atkinson, P. (2000), ‘The future of women’s career’, in A. Collin and R.A. Young (eds), The Future of Career. Cambridge: Cambridge University Press, pp. 130–43. Hosking, D. and Fineman, S. (1990), ‘Organizing processes’, Journal of Management Studies, 27, 6: 583–604. Huczynski, A. and Buchanan, D. (2013), Organizational Behaviour: An Introductory Text, 8th edn. Harlow: Financial Times Prentice Hall. Huse, E.F. (1980), Organization Development and Change, 2nd edn. St Paul, MN: West Publishing. Kanter, R.M. (1983), The Change Masters. New York: Simon & Schuster. Keenoy, T. (1990), ‘Human resource management: Rhetoric, reality and contradiction’, International Journal of Human Resource Management, 1, 3: 363–84. Kelly, G.A. (1955), The Psychology of Personal Constructs, vols1 and 2. New York: W.W. Norton. Kiel, L.D. and Elliott, E. (eds) (1997), Chaos Theory in the Social Sciences: Foundations and Applications. Ann Arbor, MI: University of Michigan Press. Kvale, S. (ed.) (1992), Psychology and Postmodernism. London: Sage. Lee, M.E. (1997), ‘From enlightenment to chaos: Towards nonmodern social theory’, in R.A. Eve, S. Horsfall and M.E. Lee (eds), Chaos, Complexity, and Sociology: Myths, Models, and Theories. Thousand Oaks, CA: Sage, pp. 15–29. Legge, K. (1995), Human Resource Management: Rhetorics and Realities. Basingstoke: Macmillan Business. Legge, K. (2004), Human Resource Management: Rhetorics and Realities, 2nd edn. Basingstoke: Palgrave Macmillan. Mant, A. (1979), The Rise and Fall of the British Manager. London: Pan. Marshall, J. (1989), ‘Re-visioning career concepts: A feminist invitation’, in M.B. Arthur, D.T. Hall and B.S. Lawrence (eds), Handbook of Career Theory. Cambridge: Cambridge University Press, pp. 275–91.

CHAPTER 3 CONTEXTUALISING HRM

Mayo, A.J. and Nohria, N. (2005), In Their Time: The Greatest Business Leaders of the 20th Century. Boston, MA: Harvard Business School Press. Medcof, J. and Roth, J. (eds) (1979), Approaches to Psychology. Milton Keynes: Open University Press. Mishler, E.G. (1986), Research Interviewing: Context and Narrative. Cambridge, MA: Harvard University Press. Morgan, G. (2006), Images of Organization. Thousand Oaks, CA: Sage. Moxon, G.R. (1951), Functions of a Personnel Department. London: Institute of Personnel Management. Parker, I. (1990), ‘The abstraction and representation of social psychology’, in I. Parker and J. Shotter (eds), Deconstructing Social Psychology. London: Routledge, pp. 91–102. Parker, I. and Shotter, J. (eds) (1990), ‘Introduction’, in Deconstructing Social Psychology. London: Routledge, pp. 1–14. Parkinson, A. (2010), HR after the Recession Research. White Paper. Henley Business School. Pascale, R.T. and Athos, A.G. (1982), The Art of Japanese Management. Harmondsworth: Penguin. Peck, D. and Whitlow, D. (1975), Approaches to Personality Theory. London: Methuen. Pepper, S.C. (1942), World Hypotheses. Berkeley, CA: University of California Press. Peters, T.J. and Waterman, R.H., Jr (1982), In Search of Excellence: Lessons from America’s Best Run Companies. New York: Harper & Row. Pfeffer, J. (1981), Power in Organizations. London: Pitman. Pickard, J. (1992), ‘Profile: W. Edward Deming’, Personnel Management, June: 23. Pickard, J. (1999), ‘Emote possibilities: Sense and sensitivity’, People Management, 5, 21, 28 October: 48–56. Pickard, J. (2005), ‘HR will be a philosophy rather than a department’, People Management, 11, 22, 10 November: 15. Pirsig, R.M. (1976), Zen and the Art of Motorcycle Maintenance. London: Corgi. Polkinghorne, D.E. (1988), Narrative Knowing and the Human Sciences. Albany, NY: State University of New York Press. Price, B. (1997), ‘The myth of postmodern science’, in R.A. Eve, S. Horsfall and M.E. Lee (eds), Chaos, Complexity, and Sociology: Myths, Models, and Theories. Thousand Oaks, CA: Sage, pp. 3–14. Pugh, D.S., Hickson, D.J. and Hinings, C.R. (1983), Writers on Organizations, 3rd edn. Harmondsworth: Penguin. Raskin, J.D. and Bridges, S.K. (eds) (2002), Studies in Meaning: Exploring Constructivist Psychology. New York: Pace University Press. Reed, M. and Hughes, M. (eds) (1992), Rethinking Organization: New Directions in Organization Theory and Analysis. London: Sage. Ritzer, G. (1996), The McDonaldization of Society: An Investigation into the Changing Character of Contemporary Social Life. Thousand Oaks, CA: Pine Forge Press. Rose, M. (1978), Industrial Behaviour: Theoretical Development since Taylor. Harmondsworth: Penguin.

Sanders, P. (1982), ‘Phenomenology: A new way of viewing organizational research’, Academy of Management Review, 7, 3: 353–60. Schein, E.H. (1970), Organizational Psychology, 2nd edn. Englewood Cliffs, NJ: Prentice-Hall. Schein, E.H. (1978), Career Dynamics: Matching Individual and Organizational Needs. Reading, MA: Addison-Wesley. Senge, P. (1990), The Fifth Discipline: The Art and Practice of the Learning Organization. London: Century. Seymour, W.D. (1959), Operator Training in Industry. London: Institute of Personnel Management. Sherwood, D. (2002), Seeing the Forest for the Trees: A Manager’s Guide to Applying Systems Thinking. London: Nicholas Brealey. Sloan, T. (1992), ‘Career decisions: A critical psychology’, in R.A. Young and A. Collin (eds), Interpreting Career: Hermeneutical Studies of Lives in Context. Westport, CT: Praeger, pp. 168–76. Southgate, J. and Randall, R. (1981), ‘The troubled fish: Barriers to dialogue’, in P. Reason and J. Rowan (eds), Human Inquiry: A Sourcebook of New Paradigm Research. Chichester: John Wiley, pp. 53–61. Spender, D. (1985), For the Record: The Making and Meaning of Feminist Knowledge. London: Women’s Press. Stead, G.B. and Watson, M.B. (1999), ‘Indigenisation of psychology in South Africa’, in G.B. Stead and M.B. Watson (eds), Career Psychology in the South African Context. Pretoria, South Africa: Van Schaik, pp. 214–25. Taylor, P., Mulvey, G., Hyman, J. and Bain, P. (2002), ‘Work organisation, control and the experience of work in call centres’, Work, Employment and Society, 16, 1: 133–50. Townley, B. (1993), ‘Foucault power/knowledge, and its relevance for human resource management’, Academy of Management Review, 18, 3: 518–45. Vaillant, G.E. (1977), Adaptation to Life: How the Brightest and Best Came of Age. Boston, MA: Little Brown. Watson, T.J. (2000), In Search of Management: Culture, Chaos and Control in Managerial Work. London: Thomson Learning. Weick, K.E. (1979), The Social Psychology of Organizing. NewYork: Random House. Welch, J. (1998), ‘The new seekers: Creed is good’, People Management, 4, 25, 24 December: 28–33. Wheatley, M.J. (1992), Leadership and the New Science: Learning about Organization from an Orderly Universe. San Francisco, CA: Berrett-Koehler. Whittaker, J. and Johns, T. (2004), ‘Standards deliver’, People Management, 10, 13, 30 June: 32–4. Winstanley, D. and Woodall, J. (1996), ‘Business ethics and HRM’, Personnel Review, 25, 6: 5–12. Winstanley, D. and Woodall, J. (eds) (2000). Ethical Issues in Contemporary HRM. Basingstoke: Macmillan. Zohar, D. and Marshall, I. (2001), Spiritual Intelligence: The Ultimate Intelligence. London: Bloomsbury.

PART 2

RESOURCING THE ORGANISATION 4 HRM and the labour market 5 Talent management 6 Managing equality and diversity

Introduction to Part 2 This part of the textbook deals with how organisations define and meet their needs for labour and how they are influenced by factors internal and external to the organisation. For students and practitioners of management, a key theme in recent times has been one of global economic uncertainty and resulting volatility in product and labour markets. This trend has been heightened as a consequence of the outcome of the UK European Union referendum in June 2016 in which the public voted for the UK to leave the European Union. Intense competition in domestic and overseas markets for market share, growth and survival is an enduring feature of the operating environment and one that almost all organisations must contend with and respond to. In employment terms, a common reaction, to enable firms to maximise profits and so satisfy short-term shareholder returns, is to reduce the size of the workforce, suppress pay and other terms and conditions and/or look for ways to achieve cost-effective approaches to resourcing, greater labour flexibility and performance improvements, paradoxically while attempting to encourage employees to show commitment to the organisation’s vision, mission and goals and be engaged workers. In some organisations, however, sophisticated forms of recruitment and selection designed to seek out the most talented hires, attractive reward packages, development opportunities and a focus on employee well-being are recognised as sources of sustainable competitive advantage. Chapter4 explains the labour market context within which employee resourcing strategies are determined and resourcing decisions are taken. It starts by explaining the concept of the labour market and considering the nature and composition of the labour force in the UK as shaped by a number of key demographic factors, namely gender, age and ethnicity. Next it examines patterns of labour market participation set against a discussion of the changing nature of demand for labour in the UK. Here we examine how developments in the nature of work and employment have influenced organisational requirements for labour and affected the type and quality of employment opportunities available to different labour market groups. In so doing, the chapter highlights stubborn, and in some cases growing, inequalities in the labour market outcomes for different sections of society with consequent impacts on the quality of life people can expect to experience. The chapter concludes with a critical assessment of workers’ fractured experiences of employment in contemporary Britain. Chapter5 takes up the theme of changing organisational requirements for labour by focusing on the process of talent management. The need to attract, retain, motivate and develop individuals is crucial as organisations seek to extract maximum value from their investment in people resources while eliciting high levels of commitment, performance and organisational loyalty. This chapter explores the techniques organisations deploy in a quest to create and sustain a suitable talent pool capable of meeting present and future requirements. The chapter also considers the relative merits of ‘growing’ internal talent or ‘buying in’ talent from external labour markets and discusses whether talent management opportunities should apply to the total workforce or be reserved for an elite cadre of staff identified as highflyers or high potential. Chapter6 picks up the themes of advantage and disadvantage in employment scoped more broadly in Chapter 4, by examining the nature and effects of unfair discrimination in employment, the incentives for managers to take action to promote fairness at work and the different, sometimes conflicting, ideas about how they should do so. The discussion highlights the complex nature of the issues raised by attempts to tackle disadvantage owing to unfair discrimination. For example, should managers treat all employees the same regardless of ethnicity or gender, or should they take these differences into account when framing their employment policies and practices? Should policies for combating disadvantage aim at equality of opportunity or equality of outcome? The significance of shifting narratives away from the traditional idea of ‘equal opportunities’ to the concept of ‘managing diversity’ is also considered.

CHAPTER 4

HRM AND THE LABOUR MARKET AMANDA THOMPSON

Objectives ●

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To present an overview of labour markets and to explain how they operate. To discuss the nature and composition of the UK labour force, in particular to identify the major social factors that shape and influence the nature and extent of people’s engagement with paid employment. To highlight developments in the nature of work and employment in the late twentieth and early twenty-first centuries and to show how these trends have influenced demand for labour. To present a critical assessment of workers’ experiences of employment in contemporary Britain.

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Case study More than 100,000 legal roles to become automated Around 114,000 jobs in the legal sector are likely to become automated in the next 20 years as technology transforms the profession, a new study has found. Automation, changes in the demands from clients and the rise of millennials in the workplace will alter the types of skill sought after by law firms, according to the new study by Deloitte, which predicts a tipping point for law firms by 2020. Technology has already contributed to a reduction of around 31,000 jobs in the sector including roles such as legal secretaries, the report said, as it predicted that another 39 per cent of jobs are at ‘high risk’ of being made redundant by machines in the next two decades. The sector is currently growing; there has been an overall increase of approximately 80,000 jobs – most of which are higher skilled and better paid, such as barristers and solicitors. The study also predicts a healthier future for highly skilled lawyers. It points to projections by the Warwick Institute for Employment Research, which estimates that 25,000 extra workers will be needed in the legal activities sector between 2015 and 2020. Peter Saunders, lead partner for professional practices at Deloitte, said that new technology means that more traditional, routine tasks can be automated by smart and selflearning algorithms capable of searching for documents, for example. ‘Some firms are already making use of virtual assistants or e-discovery tools. However, there is more that the legal sector can do to use automation and technologies,’ he said. ‘Our report shows that firms have already identified a mismatch between the skills that are being developed through education and those currently required in the workplace. Employers will need to look for lawyers who are not just technically competent, but who have a broader skill set,’ he added.

Critics have pointed out that the profession has been slow to adapt to technological change. Justice Secretary Michael Gove last year complained at the ‘antiquated ways of working, grotesque inefficiencies and snowdrifts of paper’ he had seen in the law courts. And in his book, The Future of the Professions, Richard Susskind, IT adviser to the Lord Chief Justice, predicted radical change in the sector, pointing out that intelligent search systems can now outperform junior lawyers and paralegals in reviewing large sets of documents and selecting the most relevant. The Deloitte report predicts law firms will also make greater use of robotics and Artificial Intelligence and expects that there will be a new mix of skills among elite lawyers with those who can adapt to change progressing faster than the traditional lawyer. The study also found that law firms will continue to expand globally. In recent years firms have expanded in Asia, notably China and Africa. Around 45–65 per cent of lawyers in the largest UK-headquartered law firm are based outside the UK. It suggests that law firms will have to review how they nurture loyalty among millennials – the generation born between 1980 and 2000. It suggests millennials seek a greater purpose in their work other than money – with alignment to social values seen as important. Millennials are also more likely to leave their employer within five years and an estimated 70 per cent of millennials find out about job opportunities from friends. Future law firms will be looking for non-traditional employees such as project managers, data and technology experts as well as fee earning lawyers, the study predicted. Source: Jane Croft and Law Courts Correspondent, 15 March 2016. FT.com; © The Financial Times Limited 2016.

Introduction This chapter is concerned principally with the size, composition and condition of the UK labour market and, more specifically, with how the labour market shapes employers’ choices and decisions concerning people management and utilisation. An appreciation of labour markets and how they operate is especially relevant for students of human resource management (HRM) as human resources (HR) policies and practices are introduced, amended and in some cases discarded in response to prevailing labour market characteristics and key labour market forecasts. Sophisticated forms of recruitment and selection, for example, become more paramount when

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labour is in short supply (described as a shortage labour market or ‘tight’ labour market) as organisations seek to optimise their skills to secure the quantity and quality of resources required. Conversely, loose labour markets (a ‘surplus’ labour market), where unemployment is running high and labour supply exceeds demand, call for a more targeted approach to recruitment and selection in order to identify appropriate resources quickly and efficiently. Equally, policies and practices concerning investment in training and development will fluctuate according to organisational assessment of the health of the labour market and product market conditions. Understanding the nature and composition of labour markets and having an appreciation of the full range of external and internal factors currently impacting or likely to impact organisational objectives are necessary stages in a strategic approach to HRM (for a full assessment of the processes and activities of strategic HRM, see Chapter2). A strategic, planned and tactical approach to HRM as opposed to an opportunistic and reactionary one would appear prudent as it persuades organisations of the value of actively choosing an appropriate employment system and a set of HR practices aimed at delivering competitive advantage. The chapter is divided into four main sections to focus in turn upon a range of contemporary labour market issues and consider the significance of each for the practice of HRM. In the first, we discuss the nature of labour markets and the considerations that influence the employment strategies of firms. In the second, we explore recent political and social developments and the implications of these for the supply of labour. The third section explores the changing nature of work and employment and is designed to focus on emergent themes in employers’ demand for labour. The final section of the chapter considers key dimensions of job quality and discusses these in relation to workers’ experiences of employment in contemporary Britain. Necessarily, the chapter deals with a number of controversial issues, some of which are touched on briefly in Case Study. Here we see predictions that law firms will be seeking different types of skill in the future as automation and advances in robotics and artificial intelligence impact the profession. The article also detects changes in the way young people entering the labour market are likely to navigate their careers and the relationship they have to work in the broader context of their lives.

The nature of labour markets The most general definition of the labour market is that it consists of workers who are looking for paid employment and employers who are seeking to fill vacancies. The amount of labour that is available to firms – labour supply – is determined by the number of people of working age who are in employment or seeking employment and the number of hours that they are willing to work. This number will be determined by the size and age structure of the population and by the decisions made by individuals and households about the relative costs and benefits of taking paid employment. These decisions are influenced by various factors, one of which is the level of wages on offer. Generally speaking, a higher wage will attract more people into the labour market, whereas a lower wage will attract fewer people, as long as other factors, such as the level of welfare benefits and people’s attitudes towards work, remain constant. The number of jobs on offer to workers – labour demand – is the sum of people in employment plus the number of vacancies waiting to be filled. The demand for labour is determined by the level of demand for the goods and services produced by firms in the market. When sales and production are rising, firms’ demand for labour rises. When sales stagnate or fall and production is cut back and/or predicted trade dips, firms’ demand for labour declines and redundancies among the existing workforce are likely to ensue. This is aptly illustrated by job losses at the well-known retailer British Home Stores (BHS). Once a profitable presence on the high street, BHS faced competition from highly successful rivals such as Primark and affordable internet clothing retailers such as ASOS, Boohoo and Very, which lured customers and revenue. This trend, coupled with mismanagement and disreputable ownership dealings, resulted in the

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collapse of the organisation and the loss of thousands of jobs in towns and cities across the country. Job losses similarly took effect as Austin Reed went into receivership, with little warning, in 2016. In other organisations, across a range of sectors, employees’ job security is highly contingent on successful contract tendering. When bids are unsuccessful or firms need to achieve cost savings to compete, job casualties invariably ensue. Contemporary examples include Bombardier, the Derby-based train manufacturer, Virgin Media, Lloyds Banking Group, Credit Suisse and British Gas owner Centrica, all of whom have announced job loss programmes in recent times (Kollowe, 2016). The simplest view of the labour market is that it is an arena of competition. Workers enter the arena in search of jobs and employers enter it in search of workers. Competition between employers for workers and between workers for jobs results in a ‘market wage’ that adjusts to relative changes in labour demand and supply. Thus, when labour demand rises relative to labour supply, the market wage rises as firms try to outbid each other for scarce labour. When labour demand falls relative to labour supply, the market wage falls as workers compete with each other for the smaller number of available jobs. Competition means that no individual firm can set a wage that is out of line with the competitive market wage. Neither can workers demand such a wage. Should a firm try to offer a wage that is below the market rate, it will be unable to hire workers. Should a firm set a wage above the market rate, it will go out of business because its costs of production will be above those of its competitors. For the same reason, workers who demand a wage higher than the market rate will price themselves out of jobs. No firm will hire them because to do so would increase their costs of production relative to those of their competitors, besides there is no need to do so when labour is available at a lower rate. In this context, it is understandable that the introduction of the National Living Wage for employees over the age of 25, set some 50 pence per hour above the National Minimum Wage, caused consternation in some quarters upon its introduction on 1 April 2016, as firms most impacted by the regulatory change grappled with the challenge of remaining competitive while absorbing the higher costs of wages (see Chapter13 for a more detailed analysis of the introduction of the National Living Wage). While it is undeniable that competitive forces operate in the labour market to a degree, few would seriously pretend that this is a wholly accurate description of the real world. There are limits to competition between firms and among workers. Wages do not respond instantaneously to changes in labour demand. Nor is there a uniform wage in the labour market. Empirical research has shown that rates of pay vary between firms, even in the same industry and operating in the same local labour market (Nolan and Brown, 1983). Other employment policies also vary among firms. For example, some firms employ labour on a hire-and-fire basis and make heavy use of casualised forms of employment such as temporary work and zero-hours contracts, while others offer long-term employment security and career development. The policies that employers adopt are influenced to a great extent by the characteristics they seek in their workforce, including: ●

The need for a stable workforce. A stable workforce is advantageous to employers because it reduces the costs of labour turnover, that is, disruption of production owing to the unplanned reductions in the workforce that result from workers leaving; the costs of recruitment and selection, such as the financial costs of advertising for recruits and the cost in terms of management time spent in recruiting and selecting replacements; and the cost of training new recruits. These costs may be particularly high where skilled labour is scarce and replacements are hard to find, or where employers have invested considerable amounts in training workers. In these situations, employers have a strong interest in limiting the extent of labour turnover.

●

The need for worker cooperation in production. A central issue in managing people at work is how to manage their performance. One way of trying to ensure that workers supply the required level of effort is by subjecting them to direct controls (Friedman, 1977). Traditionally, this took the form of direct personal supervision by a superior and externally imposed

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discipline. Today, direct supervision is supplemented in many instances with electronic surveillance, ‘mystery customers’ and customer questionnaire surveys in a managerial effort to make workers’ effort levels increasingly visible. However, there are limits to the extent that employers can rely on direct controls. This is because the nature of the product or the production process often makes it difficult to define what the appropriate effort levels are for each worker and to measure how hard they are actually working. Therefore, employers have to rely on sufficiently motivated workers using their initiative to ensure efficiency and quality in the production of goods and the delivery of services. This makes it difficult for managers to impose effort levels without the workers’ agreement. Heavy reliance on supervision and surveillance may also be counterproductive because of the resistance that it can generate among workers. The alternative is to encourage workers to exercise responsible autonomy at work (Friedman, 1977). In other words, it may be more cost-effective for managers to offer positive incentives to ensure that workers cooperate voluntarily with management and trust employees to use their job knowledge and their initiative to maintain and improve efficiency and quality.

Explore

Think about a range of industries and sectors, for example, the care sector, hospitality, construction, retail, engineering and IT. ●

What types of workforce will have low turnover costs and why?

●

What types of workforce will have high turnover costs?

The greater the employer’s need for a stable, highly cooperative workforce, the more likely the firm is to introduce policies to retain workers and create a basis for mutual trust and cooperation. These policies, which are associated with the ‘best-practice HRM’ principle of treating employees as valued assets rather than disposable commodities (see Chapter2), internalise employment by fostering long-term employment relationships and giving workers a degree of protection from external labour market pressures. They include guarantees of long-term employment security, opportunities for training and internal promotion, fringe benefits and pay that is higher than the market rate. However, these policies are themselves costly. Therefore, the extent to which employers seek to internalise employment depends on the cost of labour turnover and the extent of the limits to direct control. Where these are low, employers are more likely to treat labour as a disposable commodity, in other words externalising the employment relationship. It is evident that employers make strategic choices concerning the extent to which they internalise or externalise employment, but these choices are influenced by the specific labour market contexts in which individual firms operate. Two key elements of this context are the overall state of the labour market and the way in which the labour market is segmented, giving rise to advantaged and disadvantaged labour market groups. To be able to understand how these influences operate, we first need to examine the two sides of the labour market: labour supply and demand.

The supply of labour As Marx suggested (Marx, 1932), the worker is a commodity, his existence is bought under the same condition as the existence of every other commodity and he is lucky if he can find a buyer. Given that the labour market is a competitive arena, it follows that firms in competition with one another for workers will be interested in the current and future ‘stock’ of this good and seek to plan accordingly to be sure to secure the amount they require at any given time. Conventionally, the process of human resource planning involves forecasting the supply and demand for labour

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so that suitable plans can be put in place to address situations of labour shortage or surplus (see Chapter5). The number of people seeking work in the labour market is influenced by factors relating to the size and composition of the population; thus, practitioners of HRM and others involved in human resource planning are advised to keep abreast of shifting populace trends. Within this section of the chapter, we consider the main demographic factors affecting total labour supply, namely population and population change, the age structure of the population, gender and ethnicity.

Population National population trends The supply side of the labour market derives from the country’s population, specifically, for statistical counting purposes, people aged between 16 and 64 years of age. Clearly, therefore, information on the total size of the current population and predictions of future patterns of population growth and decline are important for estimating the current and future supply of labour. Population is affected by birth and death rates. When live births exceed the number of deaths, a net natural population increase arises, and when mortality rates exceed birth rates, a net natural decline in population occurs. Population change is also influenced by net migration, that is, the amount of people coming into the country every year minus the amount of people leaving. In the 1950s and 1960s, population growth was largely attributable to net natural change. Within this period, a relatively stable death rate coupled with the baby boom that followed the Second World War caused net natural growth. In the 1980s, the net inflow of migrants began to increase, tilting the key trigger for population growth from net natural change to net migration. Certainly in the years following the early 1990s, migration became a big contributory factor to population growth, continuing through to the mid-2000s when the A8 accession countries joined the European Union (Vargas-Silva, 2013a). Latest census data [Office for National Statistics (ONS), 2012a] shows that from the period of the last census in March 2001 to the date of the most recent census in March 2011, there were 6.6 million births and 5.0 million deaths in England and Wales, leading to a net natural increase in the population of 1.6 million. At this level, natural change accounts for around 44 per cent of the total increase (3.7 million) in the population size in England and Wales across the period March 2001 to March 2011, with the remainder being owing to the effects of migration. Considering the UK as a whole, census 2011 data (ONS, 2013a) shows that on the day of the census in March 2011, the population of the UK stood at 63.2 million, the largest it has ever been. Indeed, over the last 100 years the population of the UK (as currently constituted) has increased by 21.1 million, representing an increase of 50 per cent (ONS, 2012b). Looking forward, projections indicate that the UK population is set to increase by a further 4.9million to 67.2 million in the 10-year period 2010–20, equivalent to an average annual rate of growth of 0.8 per cent (ONS, 2011), and the population will rise further still, exceeding 70million in 2028 and reaching 73.2 million by 2035 (Rutherford, 2012; see also Table4.1). The latest UK population mid-year estimate for 2015, released on 23 June 2016, calculates the UK population to have reached 65.1 million (ONS, 2016a), steadily increasing as predicted. Population increases remain, of course, jointly attributable to net natural increase and migration, with fluctuations year on year in the birth rate and in net migration. Natural change has remained positive throughout the last two decades and has also continually increased from 2001 onwards, in particular owing to a rise in the number of births. However, overall, between mid1991 and mid-2014 net migration resulted in an addition of 3.8 million people to the UK population, accounting for just over half (53 per cent) of total population growth (The Migration Observatory, 2016).

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Table 4.1 Estimated and projected population of the UK and constituent countries 2010–35 (figures in 000s) 2010

2015

2020

2025

2030

2035

United Kingdom

62,261

64,775

67,173

69,404

71,393

73,207

England

52,234

54,468

56,607

58,607

60,410

62,078

3,006

3,083

3,170

3,250

3,315

3,369

Wales Scotland

5,222

5,365

5,486

5,596

5,686

5,755

Northern Ireland

1,799

1,859

1,910

1,951

1,982

2,005

Source: Rutherford (2012), ONS 2010-based population projections.

Net migration has become a sensitive and highly politicised issue in the UK. It is the key – some would say the only – campaigning issue of UKIP (the UK Independence Party) and was a major contributory factor of the Brexit outcome in the UK’s EU referendum of June 2016. Despite David Cameron’s infamous pledge made in 2010 to reduce net migration to below 100,000 – ‘no ifs, no buts’, net migration has in fact risen. The Conservative Liberal Democrat Coalition did successfully reduce net migration from a peak of 263,000 in June 2011 to just 154,000 in September 2012 by implementing a series of measures designed to deter migrants such as putting a block on access to housing benefit for EU jobseekers, restricting marriage visas, and closing down bogus colleges. However, more recent figures show a resurgence: net migration for the year ending September 2014 stood at 292,000 and estimates for year ending September 2015 (ONS, 2016b) suggest a further rise to 323,000, higher ironically than when Cameron made his migration pledge. Total immigration (EU nationals and non-EU) is estimated to be 617,000 in the year ending September 2015 (up 2,000 from year ending September 2014) while emigration is estimated to be 294,000, down 29,000 on the year ending September 2014. These figures show marginal change in immigration coupled with a more marked decrease in emigration. It is not altogether surprising that David Cameron was unable to keep his pledge. Immigration from inside the EU is rising faster than immigration from outside it. It now makes up a larger proportion of the whole and this is precisely the form of immigration that the Home Office is unable (currently) to control. EU free movement rules allow any EU citizen to enter the UK freely and so it is evident that until negotiations for exiting the EU have been successfully concluded, the UK is bound to continue to accept the inflow of EU citizens wishing to come to the UK. Indeed, at this point in time, it is unclear what precisely the terms of the exit will be and whether post-‘Brexit’ there will be a complete block on free movement of EU citizens to the UK, tighter controls on entry, or whether free movement will continue as part of the UK’s new relationship with its European neighbours. The way in which the country’s population expands, whether as a result of natural change or migration patterns, affects the gender composition, age profile and ethnic diversity of the labour market. At a local level, patterns of regional population density resulting from a combination of natural causes, international migration and internal migration (the movement of people between regions within the UK) lead to variations in the amount of labour available in different parts of the country. While labour tends to move to parts of the country where work is more plentiful, those organisations relying on local labour in areas of the country with low population density and/or net population loss are confronted with a different set of labour market circumstances from those operating in areas of higher population density. The ONS (2013a) illustrates that the population density of the UK ranges from 13,871 people per square kilometre in the London Borough of Islington to just 9 people per square kilometre in Highland and Eilean Siar, two Scottish local authorities. At the time of the Census outside of London, the most densely populated local authority was Portsmouth with 5,074 people per square kilometre. The age profile, ethnicity and skills mix of workers in local labour markets can also vary considerably, affecting the type of labour available. These factors combine to pose different employment challenges and opportunities for firms operating in different regions of the country.

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Explore

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Consider how HRM practices aimed at attracting and retaining suitable labour would need to vary according to population density and population composition in different regions of the UK. Contrast the case below (Box4.1), reported by the BBC, and the methods that are likely to be used to source a teacher for the new school year in the London Borough of Islington.

Box 4.1 Parents seek teacher for remote Hebridean island of Muck Beautiful beaches, extraordinary scenery and a school where the class has just a handful of pupils. But the tiny Hebridean island of Muck is having trouble recruiting a teacher for the start of the new term. Parents have launched their own online search for someone with a love of the outdoors who can cope with the unique lifestyle this Scottish island has to offer. Source: www.bbc.co.uk, 2 August 2016.

Regional population trends Regional populations form an interesting focal point for study, with important implications for the supply of labour. The ONS (2012b) shows that in the period between the two most recent censuses (March 2001 to March 2011), the largest population increases were witnessed in London, the South East, the East Midlands and East England and Northern Ireland. The three local authorities with the largest percentage population increases over the period were Tower Hamlets and Newham in London, with rises of 26.4 per cent and 23.5 per cent, respectively. Outside of London, Dungannon in Northern Ireland saw a 20.9 per cent increase. Meanwhile, local authorities experiencing population decline are concentrated in the West of Scotland and in the North East and North West areas of England. Regional populations reflect births and deaths and the effects of international and internal (within the UK) migration. Some interesting patterns are evident in terms of internal migration. Consistently, those most likely to move regions are young adults; ONS data (2016b) depict a peak in internal migration at age 19, which can be largely attributed to young people moving within the UK for higher education. There is another smaller peak at age 22; this is likely to reflect graduates moving for employment, further study, returning to their home address or moving in with a partner. Of the English regions, London has the highest rate of internal migration net outflow (9.1 per 1,000 residents as at mid-2014). The region with the highest rate of internal migration net inflow was the South West (5.5 per 1,000 residents as at mid-2014). The effects of international migration can, of course, counter the net losses of within-UK (internal) migration, so, while the number of people moving out of London to other parts of England and Wales regularly exceeds those moving to London from other regions in England and Wales, London’s population continues to rise as a consequence of the inflow of international migrants.

Age structure of the population The age structure of the population is a key determinant of labour supply as firms draw employees from people of working age. Age structure is closely associated with the trends in migration referred to in the previous section. These trends can also be used to explain regional differences in the population’s age profile as migrants inhabit certain areas of the country. White ethnic groups, particularly the white Irish population, have an older age structure than other ethnic groups as a consequence of past fertility and immigration patterns. Among non-white ethnic groups, younger

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age profiles are exhibited within groups migrating to the UK relatively recently while, as might be expected, those groups with an earlier history of large-scale migration to the UK have now begun to contain larger proportions of people within older age brackets. As well as past trends in migration, the age structures of the total population and of regional populations are affected by trends in births and deaths. Records show a fairly erratic pattern in the number of live births occurring in the UK at different phases throughout the twentieth century. Notable decreases in the number of births occurred during the two world wars (1914–18 and 1939–45) and, after a sharp increase immediately after the First World War, births fell again and remained relatively low for most of the inter-war period. A further baby boom occurred after the Second World War, causing another, more modest upsurge in the late 1980s and early 1990s as members of the baby boomer generation produced their own children. The smaller cohorts of women born in the 1970s (reaching their reproductive peak in the 1990s), coupled with lower fertility rates (fewer children born per woman), led to a decline in births by 2000. ONS (2008) data show that births reached their lowest point since 1977 in 2001 (at around 670,000) but rose again subsequently. In fact, the number of live births increased by 22 per cent in the period 2001–11 and during this period fertility rates rose from an average of 1.63 children per woman in England and Wales to 1.93. The ONS (2016c) reports that the number of live births decreased by 4.3 per cent between 2012 and 2013, the largest percentage annual decrease since 1975, and has fluctuated since. Latest data show a slight rise in live births in 2015 compared with 2014 (+ 0.4 per cent), but the total fertility rate (TFR) decreased to 1.82 children per woman in 2015, from 1.83 in 2014. There are two main contributory factors responsible for the climb in live births and the total fertility rate in the decade to 2011; first, women born in the 1960s and 1970s who postponed childbearing in their 20s then began catching up in their 30s and 40s, having children later in life once they had established their careers; and second, the effects of increases in the number of foreign-born women in the population who present above-average fertility rates. To illustrate the latter point, over a quarter (27.5 per cent) of live births in England and Wales in 2015 were to mothers born outside the UK, the highest level on record (ONS, 2016b). This figure stood at 16.5per cent in 2001 and just 11.6 per cent in 1990. Poland is now the top nationality for creating second-generation immigrants to the UK; in 2001 fewer than 2,000 babies were born in Britain to Polish mothers, but by 2011 this figure had risen at least 11 times to 23,000 (Mason, 2012). Women from Pakistan, India, Bangladesh, Nigeria, Somalia, Germany, South Africa, Lithuania and China have the next highest number of babies. Compared with the last four decades, the number of births and the total fertility rate (TFR) in 2015 remain relatively high, despite year to year fluctuations. Together with birth rates, the age structure of the population is influenced by the death rate (number of deaths as a percentage of the population). The ONS (2008) reports that every year since 1901, with the exception of 1976, there have been fewer deaths than births in the UK; this trend holds. The ONS (2012c) reports that there were 6,236 deaths per million in the population for males and 4,458 deaths per million population for females in England and Wales in 2011, giving rise to a situation where the age-standardised mortality rate (ASMR) for both males and females in 2011 was the lowest ever recorded. In a change to the general decrease in rates in recent years, age-standardised mortality rates (ASMRs) increased in 2015 by 5.1 per cent for females and 3.1 per cent for males (ONS, 2016d). There were 529,655 registered deaths in England and Wales in 2015, an increase of 5.6 per cent compared with 2014. This is the largest annual percentage increase since the rise of 6.3 per cent recorded between 1967 and 1968. Part of this relatively sharp rise is thought to be attributed to a virulent outbreak of flu in early 2015. The number of deaths has, however, increased each year since 2011, with the exception of a 1.1 per cent fall in 2014. The number of deaths is affected by the size and age structure of the population. As people are tending to live longer, leading to the population increasing in both size and age over time, we may also expect the number of deaths to increase. Living longer is attributed to general improvements in living standards, changing occupational structure from hard physical labour to office/white collar work and advancements in health and

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medicine. The ONS (2013b) records that life expectancy at birth in England and Wales for babies born in the period 2010–12 is 82.8 years for girls and 79 years for boys, assuming mortality rates remain at 2010–12 levels. Over the last 30 years, life expectancy at birth for boys and girls has increased by 4.6 hours per day for females and 6.3 hours per day for males. Whereas life expectancy used to be much higher for women than men, figures show growing convergence; for example, for babies born in 1980–82 a girl’s life expectancy was predicted to be 6 years longer than that of a boy, whereas by 2010–12 the gap had narrowed to 3.8 years. Life expectancy at older ages also continues to climb steadily; for example, the ONS (2013b) shows that life expectancies for men at age 65 and at age 85 in England and Wales reached 18.3 years and 5.8 years respectively in 2010–12 and that women aged 65 in England and Wales had a life expectancy of 20.9 years and could expect to live a further 6.8 years at the age of 85 in 2010–12. The number of centenarians is also at unprecedented levels, having risen fivefold in the period 1980–2010. While more women live to 100 and beyond, the proportion of men doing so is rising more rapidly, once more showing convergence of life expectancy between the sexes. We have seen in this section that the age structure of the population is affected by migration, births and deaths. While some non-white ethnic groups display relatively young age profiles, the overall picture in the UK is of an ageing population. The number of children under the age of 16 is predicted to increase to 13.0 million by 2020 (a 6.2 per cent increase on 2010), stabilise and then start a modest decline post-2025 (Rutherford, 2012). The number of people aged 65 and over, however, is set to rise to 12.7 million in 2018 (from 10.3 million in 2010), a percentage increase of 22 per cent over the period. Growth in this age group is expected to persist for the foreseeable future, with the over-65 population reaching 16.9 million by 2035. At this point, there are projected to be 4 million more people aged over 65 than under 16 (Rutherford, 2012). In terms of HRM, the implications of changes in the age structure of the population are numerous. The following points indicate some of the challenges presented by an ageing population: ●

facing the prospect of a shrinking pool of people of working age as the ‘baby boomers’ born in the 1950s and 1960s move into retirement;

●

managing intensified competition for school leavers/young workers as there become fewer younger people of working age;

●

identifying employment strategies to attract and retain older workers;

●

meeting the needs and aspirations of older workers in work;

●

optimising career management and development;

●

managing sickness absence;

●

growing elder care responsibilities for those in employment as the number of elderly dependants rises;

●

facing concerns over the adequacy of pension arrangements.

In addition, employers are obliged to comply with the anti-age discrimination provisions of the Equality Act 2010, which make it unlawful for employers to discriminate on the grounds of age in recruitment and selection, promotion, provision of training, dismissal, and so on. This imperative, coupled with the removal of the default retirement age in October 2011, compels organisations to embrace older workers and erase stubbornly held stereotypical views where these prevail.

Explore

●

Thinking about the organisation you work for, or one with which you are familiar, does elder care pose a challenge to managers and employees? What measures, if any, do you think employers should consider introducing to assist employees with elder care responsibilities?

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The gender composition of the population The ONS (2008) reports that, although more boys than girls have been born every year in the UK since 1922, the number of women in the population closes in on the number of men with the passage of time, resulting in more women in the population as a whole. At the time of the last census in 2011, there were 31 million men and 32.2 million women residing in the UK (ONS, 2012b). Latest figures from the ONS (2016a) show that by mid-2015, the population of the UK comprised 32.1 million males (49.3 per cent of the total population) and 33.0 million females (50.7 per cent). The numbers of men and women in the population converge most closely at the age of 23 where there is only a marginal difference in favour of young women. This reversal over time of the gender pattern recorded at birth is commonly attributed to a higher mortality rate among young adult males in the 16–24 age group, although a report by Townsend and Westcott (2012) for the BBC suggests that part of the ‘disappearance of men’ could be that they are not good form fillers and so their details do not always register in formal statistics-gathering exercises such as the census. They argue that men are also more likely than women to spend time working abroad or travelling and so potentially do not feature in the census for this reason. In the older age groups (over 65) the gap between the number of men and women in the population broadens; however, as noted in the previous section, male life expectancy is slowly converging with women’s and so is contributing to a gradual expansion of the male population at older ages. We see this trend reflected in latest ONS data (2016a) which show that the ratio of females to males has decreased slightly over the 10-year period from mid-2005, as the male population has grown at a faster rate than the female population. There are now 103 women for every 100 men compared to 105 women per 100 men in mid-2005. The female population is bolstered by more women migrating to, than emigrating from, the UK, whereas for men the reverse is in evidence (more male emigrants than immigrants). The net in-migration figure for females is thus higher, despite the fact that the proportion of male migrants coming to the UK has been greater than the proportion of women in almost every year since 1993 (Vargas-Silva, 2013b). Later in the chapter we consider the ways in which gender shapes people’s experiences of work. In particular, we explore the interplay of gender and age and look at gendered roles within the family to understand differences in the patterns of male and female participation in the labour market.

Ethnicity and the population In previous sections, we have referred to migration and demonstrated that in the postwar period the UK has granted residency to people from a variety of different countries, including Pakistan, India, Bangladesh, China, parts of Africa and the Caribbean, and more recently from countries within Eastern Europe. As a consequence, a number of distinct minority ethnic groups have joined the nation’s historically white British heritage to form a more multicultural and diverse (ethnically and religiously) Britain. The census collects ethnicity data by asking people which group they see themselves belonging to. When the census was last conducted in March 2011, it showed that the majority of the usual resident population of England and Wales reported their ethnic group as white (86 per cent); of these, white British formed the largest group (80.5 per cent) while the category ‘any other white’ attracted 4.4 per cent of the response (ONS, 2012d). Indian was the second largest ethnic group (2.5 per cent) followed by Pakistani (2.0 per cent). The remaining ethnic groups each accounted for up to 2 per cent of the population in 2011. In terms of religious denomination, the 2011 census records 59.3 per cent of the residents of England and Wales as Christians and 4.8 per cent as Muslims. Around a quarter of people reported no religion in 2011 (ONS, 2012e). The data depict a changing landscape, with a decline in the broad white ethnic group over the last two decades and a rise in minority ethnic groups since the 1991 census (ONS, 2012c). While in general terms it is accurate to say that the total population of England and Wales is becoming

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more ethnically diverse, certain regions and certain local authority districts contain high concentrations of (non-white) ethnic minority groups and others remain strongly white/white British. Across the regions London was the most ethnically diverse area, with the highest proportion of minority ethnic groups and the lowest proportion of the white ethnic group; the second most diverse area was the West Midlands, incorporating Birmingham. Conversely Wales, the South West and the North East are the least diverse areas, all showing populations that are in excess of 95 per cent white. In terms of local authorities, the lowest proportions of white British are to be found in the London boroughs of Newham, Brent, Ealing and Tower Hamlets, for example, and outside London in Slough (Berkshire) where 34.5 per cent of the population described themselves as white British. Other local authorities are notable; for example, Leicester has the highest proportion of those reporting to be Indian in England and Wales (28.3 per cent), while Boston in Lincolnshire had the highest increase of ‘any other white’ between 2001 and 2011 (an 11.4 per cent increase) as a consequence of EU citizens from the A8 accession countries locating to the authority for work purposes, primarily gaining employment on farms and in the food processing and production industry within the region.

Explore

The uneven geographical spread of ethnic minority groups means that some local labour markets remain practically unaffected by the arrival of migrants from within and beyond the EU, while others have experienced a marked change in the ethnic composition of the population and makeup of the labour market. How might high levels of ethnic diversity impact upon labour markets and the firms operating within them? Try to highlight both gains/opportunities and challenges.

Workforce The workforce has conventionally been drawn from the segment of the population between the ages of 16 and state retirement age. Since October 2011, however, the notion of a state retirement age (formerly set at 65) has been removed, and individuals are at liberty to continue working for as long as they wish, unless the organisation they work for is able to demonstrate an employerjustified retirement age (EJRA). However, for the purpose of compiling labour market statistics, the ONS starts from the premise that the working population will be drawn from those aged 16–64; of course, not everyone of working age will be in employment at any one time. A proportion of those over the age of 16 will not be in work or seeking work; this portion of the workforce is classified as economically inactive. There are a number of reasons why people might be economically inactive. This group typically includes those with caring responsibilities for children or other dependants, those who have retired from work, students, people who are incapacitated through ill-health or disability and those choosing not to work or seek work. People within this group may voluntarily decide to enter (or re-enter) the labour market once their circumstances alter. Others may need to be enticed back to work through incentives and/or government-orchestrated benefit reforms. The Conservative–Liberal Democrat Coalition government in power 2010 to May 2015 held the view that the system of social welfare in the UK was too complex and provided insufficient incentives to encourage people on benefits to start paid work or increase their hours (supply greater amounts of labour to the labour market); a view shared by the current Conservative government, which has continued with policy reform in this area. A system of universal credits was piloted from spring 2013 in some areas of the country to bring together a range of working-age benefits into a single payment. The credits received translate into a single monthly payment that merges together some of the benefits and tax credits people were accustomed to. It is designed to replace income-based Jobseeker’s Allowance and incomerelated Employment and Support Allowance. The idea behind the system is that people will be

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able to make smoother transitions into and out of work but will always be better off in work. In a departure from the system that pre-dated it, universal credits are applicable to those in work and on a low income as well as those out of work to ensure that support is provided to ‘strivers’, in other words those who are trying hard, working in low-paid work or working several jobs in order to support themselves and their families. In parallel, the government also imposed a cap on the total amount of benefits working age people can receive so that households on workingage benefits can no longer receive more in benefits than the average working wage for working families. The rationale of this step is to dissuade people from ‘choosing’ a life of benefit dependency and to reinforce the ideology of work. The current cap is set at £26,000 per year for a couple with or without children living with them and for single adults with children living with them and £18,200 per year for single people without children and who do not have children living with them. From the autumn of 2016, the caps are set to be revised with a different cap applied to those living inside Greater London from that applied to those living outside of the Greater London region. Notably cap rates have been revised down so that the maximum that can be received in benefits is £23,000 a year. The universal credit system has been besieged with management and IT problems. As Butler and Walker (2016) note, the scheme has once again slipped behind schedule and will now not be completed until 2022, five years behind its original projected finish date. In addition to implementation issues, the programme of welfare reform has also been criticised for deepening the squeeze on living standards facing low- and middle-income families and failing to adequately protect the vulnerable in society. As is aptly illustrated by the above section, government policy can play a key role in encouraging (or deterring) people of working age to make themselves available for paid work and so can help or hinder firms’ ability to hire workers. The amount of labour available to firms at any one time is determined by the number of people of working age who are in employment or seeking employment; in other words, those classified as economically active. The ONS (2016e) shows that in the three months to May 2016 there were 31.70 million people in work, 176,000 more than for the three months to February 2016 and 624,000 more than a year earlier. In the same period, 8.87 million people aged from 16 to 64 were economically inactive (not working and not seeking or available to work), 46,000 fewer than for the three months to February 2016 and 181,000 fewer than a year earlier. The employed segment of the workforce contains those in paid work, which incorporates those working full-time or part-time, temporarily or permanently as employees (under a contract of service), workers (under a contract for services) or those working on a self-employed basis. A number of factors affect individuals’ propensity to take work, including the availability and proximity of suitable employment opportunities, travel links, the levels of pay and benefits offered, the type of contract offered, the cost and availability of quality childcare and so forth. These factors also influence people’s decisions to move between jobs within the labour market. The employment rate (the proportion of the UK’s working-age population in employment) is subject to fluctuations associated with the economic cycle and shows variations both within and between different regions of the country. There are also different trends for men and women, some differences according to educational attainment and differences at different age brackets. ONS data (2016e) show that the employment rate for those aged 16–64 in the period March to May 2016 was 74.4 per cent, the highest since comparable records began in 1971. The employment rate for men in the period March to May 2016 was 79.2 per cent and for women it stood at 69.6 per cent, again the highest rate since comparable records began in 1971. It is noteworthy that at the start of the 1970s there was a 33 percentage point difference between the employment rates of men and women of working age (ONS, 2008). In recent decades we can see that this gap has converged considerably owing to a declining male employment rate and simultaneous increase in the employment rate of women. Recent and ongoing changes to the state pension age for women have also resulted in fewer women retiring between the ages of 60 and 65. In geographical terms there are also notable differences in employment rates; for example, NOMIS Official Labour market statistics (www.nomisweb.co.uk) produced by the ONS show

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that in the period March to May 2016 the economic activity rate in the South East (counties such as Kent, Essex, Sussex and Berkshire) was 81.4 per cent whereas in Wales it was just 76.2 per cent. Other regional variations apply. Those seeking work are typically registered as unemployed, but also include those who have recently left work but are not eligible to claim unemployment benefit, for example, those who have been made redundant. Job seekers might also include recent school leavers and those completing programmes of study in further and higher education. The term unemployed is reserved to describe those people who have been looking for work within the last four weeks and are available to start work within the next two weeks. Unemployed workers must be able to show that they are actively seeking work as a condition for receiving unemployment benefits. The claimant count differs from the unemployment figure and is simply the number of people claiming Job Seeker’s Allowance (JSA). The unemployed group consists of people affected by different types of unemployment: ●

Long-term unemployment or structural unemployment – those unemployed as a result of the demise of whole industries or distinct occupations, for example, mine workers, shipbuilders and textile workers. At the time of writing, the British steel industry is in terminal decline, falling victim to an influx of cheaper foreign imports. Job losses have been experienced in Scunthorpe, the North East and South Wales, displacing thousands of workers.

●

Frictional unemployment – those temporarily out of work because they are between jobs.

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Seasonal unemployment – those made jobless as a result of seasonal fluctuations in the availability of work. Seasonal unemployment is characteristic of land workers, for example, fruit pickers and those whose work is connected with holiday seasons, for example, hotel workers, restaurant and café staff, lifeguards and holiday park reps.

It is also likely that some of those registered unemployed will never work again, as they lack the skills and competencies sought by employers. This group of unemployed workers is sometimes referred to as the residual unemployed. Unemployment rates, as might be expected, are also subject to variation across regions of the UK. Nationally, however, the unemployment rate in the UK stood at 4.9 per cent (1.65 million people) in the period March to May 2016, 54,000 fewer than for the three months to February 2016 and 201,000 fewer than a year earlier (ONS, 2016e). Unemployment has not been lower since July to September 2005.

Comment on youth unemployment Despite much improvement in the unemployment figures, the unemployment rate for 20 to 24-year-olds tracks consistently higher than that for older age groups. An explanatory factor is the increase in the number of young people going into full-time education, which shrinks the size of the economically active population (those in work plus those seeking and available to work) and pushes up the unemployment rate (the proportion of the economically active population who are unemployed). In short, those young people who are economically active face a disproportionate risk of unemployment as firms favour those (older) workers with more experience and greater proven capacity in work. In the UK, in the three months to May 2016, the unemployment rate for 16 to 24-year-olds was 13.5 per cent, 2.2 percentage points lower than at the same time in 2015. Since comparable records began in 1992, the lowest youth unemployment rate reported was 11.6 per cent (March to May 2001) and the highest (22.5 percent) in late 2011 (ONS, 2016e). Youth unemployment remains high across Europe and in some countries is a much more severe problem than it is in the UK. Eurostat data (2016) show that in June 2016 the youth unemployment rate was 18.5 per cent across the 28 countries that comprise the European Union (EU) and 20.8 per cent in the Euro area. While these statistics appear excessive, unemployment in the EU and the Euro zone has decreased since June 2015 when the figures were 20.6 per cent and

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22.5percent respectively. In June 2016, the lowest rates were observed in Malta (6.9 per cent) andGermany (7.2 per cent) and the highest in Greece (47.4 per cent in April 2016) and Spain (45.8 per cent).

Patterns of labour market participation This section of the chapter explores patterns of participation in paid employment by gender, parental/family status, age and ethnicity. The operation of the labour market is influenced by broader societal developments, government ideology and policy, and the behaviour of employees and employers. In social terms, attitudes to marriage and partnership and men’s and women’s respective responsibilities for childcare and domestic duties shape the labour market decisions made by individuals, couples and families. In so far as government policies are concerned, issues such as the school curriculum and funding for post-compulsory education affect the skills set and level of educational attainment with which young people join the labour market and also influence the age at which young people enter employment. As we saw earlier in the section that discussed welfare reforms, the government also acts to stimulate labour supply by implementing policies designed to get the unemployed into work and schemes to encourage the economically inactive to enter into employment. Some people’s ability to find employment is constrained by their inability to understand the labour market and acquire and exploit ‘social capital’. In other words, some people will lack the necessary information and contacts to search for and take advantage of employment opportunities. This is particularly likely to be the case for the unemployed and for new entrants to the labour market. Some people will live in regions where the poor condition of the labour market imposes further constraints on job seekers. However, even those equipped with the right information, skills and qualifications will come up against barriers to full or appropriate labour market participation. One such barrier is discrimination, typically race and sex discrimination, although a range of other forms of labour market discrimination exist. While anti-discrimination legislation is in place to help eradicate unfair discrimination in employment, employers’ policies and practices may still harbour prejudice and unfairness, resulting in patterns of disadvantage in the labour market for certain groups and individuals.

Patterns of male and female participation Over the last 30 years or so, the employment rates of men and women have converged considerably, as noted earlier. A major doorway to the world of work has clearly opened up for women, but, as we shall see here and later in the chapter, the career paths and fortunes of men and women in the labour market are often distinctly gendered. One of the deeper influences attributable to gender that serves to structure women’s participation in paid employment is the amount of unpaid domestic work and caring they undertake in the home. Women continue to perform the bulk of housework and to shoulder the primary responsibility for childcare in the majority of households, and this shapes the amount of paid work they do. Research has pointed to the division of domestic labour becoming more equally divided between men and women, in part through women doing less housework (Cooke and Baxter, 2010) and also because both men and women now spend more time with their children (Craig, 2006). Other research (Crompton and Lyonette, 2009), however, suggests that egalitarian attitudes do not always translate into egalitarian behaviours; 69 per cent of British couples said that household duties should be shared, while only 34 per cent reported that they are shared as opposed to mostly carried out by the male or female partner. Latest data from the National Centre for Social Research (Park et al., 2013) suggest that, just as in the early 1990s, women continue to undertake a disproportionate amount of unpaid labour within the home. Women report spending a combined average of 36 hours a week on housework and caring for family

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Table 4.2 Women in employment by employment type and age of youngest dependent child, UK, 2014 (numbers are in 000s) Womena in employment by employment type and age of youngest dependent childb, UK, 2014c Not seasonally adjusted Women with dependent children

All children

0 to 4d

5 to 10

All Women

11 to 18

Women without dependent childrene

16 to 64 Thousands

5,397

1,975

1,569

1,852

8,574

13,971

Full timef

2,467

836

653

979

5,788

8,220

Part time

2,929

1,140

916

873

2,785

5,751

In employment ofwhom: f

Per cent Percentage working:

Full time

45.7

42.3

41.6

52.9

67.5

58.8

Part time

54.3

57.7

58.4

47.1

32.5

41.2

69.6

60.9

73.3

78.4

67.5

68.3

Employment rate

ONS, Labour Force Survey household datasets Estimates are not seasonally adjusted. Totals may not sum due to rounding. a

Women aged between 16 and 64. Dependent children are those aged under 16 and those aged 16 to 18 who have never married and are in full-time education. c Uses Labour Force Survey April to June 2014 data set. d The Labour Force Survey categories women on maternity leave and on a career break as in employment. b

Includes women with non-dependent children or no children. Adjusted for women with missing employment type. g The employment rate is calculated by dividing the number in employment by the total. Source: Office for National Statistics (2014). f

members; the equivalent figure for men is 19 hours. Starker differences are reported specifically between mothers and fathers: whereas mothers report spending an average of 49 hours per week on housework and caring for family members, the equivalent figure for fathers is 24 hours. The evidence about the participation of women and men in the labour market and the reality of childcare arrangements shows that progress towards a more equal division of caring responsibilities between women and men is still very slow. As Table4.2 depicts in 2014 more than half of women with dependent children in employment worked part-time (54.3 per cent). By comparison, just over two-thirds (67 per cent) of women without dependent children who were in work were employed full-time. The percentage of women with dependent children working full-time was higher for mothers with older children, rising from 42.3 per cent of working mothers with children aged under five to 52.9 per cent of mothers with a youngest dependent child aged between 11 and 18. However, this is still less than the percentage of women in full-time work without dependent children. The findings from the fourth Department for Business Innovation and Skills work–life balance employee survey (Tipping et al., 2012) show a gendered divide in employment patterns

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between women and men with dependent children. The survey found that there are significant associations between women with dependent children and the take-up of part-time working, as the latest data in Table4.2 demonstrate. The take-up of part-time working was common among lone parents of both sexes, compared with coupled parents, presumably because it is easier to single-handedly combine paid work with care when working part-time rather than full-time. Although the UK has seen the employment rate of all women, including women with dependent children, rise exponentially in recent decades and converge with men’s, all of the available evidence would suggest that men’s and women’s participation patterns in paid employment remain remarkably different. In the period March to May 2016 (ONS, 2016e), the vast majority of men in employment worked full-time (86–87 per cent) compared with just over half of all women in employment (56–57 per cent). Significantly more women than men in employment were working part-time (43 per cent versus 13 per cent). The pattern of men’s participation in part-time work has been described as U-shaped (Delson, 1998) with greater numbers of men working part-time in the 15–24 and over 55 age groups and a dip in the numbers of men taking up part-time work in the middle age ranges. In contrast, significant numbers of women work part-time throughout their child-bearing and child-rearing years, in their 20s, 30s and 40s. This ingrained pattern of gendered time-based segregation in employment shows little sign of dissipating despite the existence of legislation designed to provide families with options to share early years care responsibilities and so combine paid work with childcare. Parenthood can also still be seen to continue to affect women’s employment rates disproportionately to men’s, even though most female employees do return to work following maternity leave. Evidence collated by the Women’s Business Council (2013) shows that in 2010–11, 77 per cent of mothers were back at work 12 months after giving birth, and 84percent of these were back with the same employer, compared with 59 per cent of mothers returning to the same employer in 2002. The decision to return to work at all, to work parttime or to work full-time is undoubtedly complex and influenced by a variety of social, familial, financial and structural factors; however, women were less likely to return to work if they had been in their job less than a year prior to going on maternity leave and/or had not qualified for maternity pay. The presence of more generous maternity pay and leave legislation in the UK in recent years is designed to support a greater proportion of mothers to be economically active. We can see from this short insight into the working patterns and economic activity rates of women that they have indeed come a long way in terms of labour market participation. However, as we shall see later in the chapter, there are still gender-based inequalities that segment the labour market experiences of and opportunities for different sorts of women.

Ethnicity and patterns of labour market participation Work carried out by Catney and Sabater (2015) finds that ethnic inequalities in labour market participation, that is to say in employment rate, economic inactivity, unemployment and employee/self-employed status persisted over time in the period between 2001 and 2011. They comment that in terms of unemployment the overriding picture is one of continuing ethnic minority disadvantage compared with the white British majority group. Recent statistics attest to this enduring pattern: the unemployment rate in the UK stood at 5.1 per cent for the three months to February 2016; however, the unemployment rate for white people in this period was 4.3 per cent, compared to 9.6 per cent for people from other ethnic backgrounds (Delebarre, 2016). Both these figures are lower than in the year leading to December 2015; however, the ethnic disparity remains. More generally, unemployment rates have been falling since the high rates experienced by people of all ethnic backgrounds during the recession: rates rose to as high as 8per cent for white people and 14 per cent for people from other ethnic groups in the period 2010–13.

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Unemployment figures mask considerable variation both between and within ethnic groups, with some ethnic minority groups and ethnic minority individuals being more susceptible to unemployment than others. The unemployment rate for young black men and women aged 16–24, for example, was the highest in the year to December 2015 at 27.5 per cent. This compares to rates of 13.1 per cent for young white people and 24.3 per cent for young people from an Asian ethnic background; indeed, black people experienced the highest unemployment rate across all age groups (Delebarre, 2016). The overall unemployment rate for men (5.4 per cent) in the UK in the year to December 2015 was slightly higher than that for women (5.1 per cent); however, these figures similarly conceal some differences across ethnic groups. Among people from an Asian ethnic background, there was a higher unemployment rate for women than for men, whereas among people from a white, black and ‘other’ ethnic background, the unemployment rate was higher for men than for women.

Explore

Give some thought to the data presented in the above section. How might you begin to explain the differences between the unemployment rates of different ethnic groups?

For those in employment, ethnic minority groups are unevenly represented across occupations, with consequent implications for pay and career advancement. This observation holds for both sexes although occupational segregation is often stronger for men than it is for women. Catney and Sabater (2015) find that in all regions of the UK, ethnic minority groups are commonly under-represented in semi-skilled occupations and over-represented in low level occupations. Compared with the population as a whole, employment participation rates per se for ethnic minorities are significantly lower. There are noticeable variations in activity and employment rates, however, between different ethnic minority groups. For example, the employment rate among people of Indian origin is higher than among Bangladeshis and Pakistanis. Activity and employment rates also vary within each ethnic group, being generally higher among British-born members of ethnic minorities than among immigrants (Wadsworth, 2003). There are often gender-based differences too. As a whole, ethnic minority women are less likely to participate in employment than men, but again variations are evident between different ethnic minority groups and within groups themselves. Catney and Sabater’s report (2015) concludes that, although patterns over time reveal what might be described as a success story for the Indian ethnic group, and to a lesser extent for the Chinese group, the pronounced pattern is one of persistent ethnic minority disadvantage compared with the white British majority. The different experiences of individuals from different ethnic minority groups in terms of the extent to which they participate in the labour market, the positions they are able to secure in paid work and their experience when in employment present a complex picture and raise important questions about equality of opportunity. A report by the National Audit Office (2008) attributes the under-achievement of the ethnic minority population in the labour force to three key factors: ●

Human capital – some ethnic minority groups have lower levels of education and skills than the white population.

●

Geography – many ethnic minorities live in deprived areas with high unemployment.

●

Discrimination – unequal treatment by employers on grounds of race or colour represents a further barrier to employment.

There may also be a range of cultural and familial factors that dissuade ethnic minorities from engaging in the labour market or with certain types of work or certain employers, but how robust are these explanations in accounting for the differences in employment outcomes between ethnic minority individuals and the majority white population? Certainly with reference to the human capital assertion, Dustmann et al. (2011) argue that second-generation ethnic minority

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immigrants tend to be better educated than their parents’ generation, and better educated than their white native peers. Indeed, they calculate that the relative enhancement in educational ability and attainment between the parent and descendant generation is far greater for ethnic minorities than it is for white natives. British-born ethnic minorities, despite their initial disadvantage in the British educational system, as measured at the time of entry to primary school, step up the pace continually throughout the compulsory school system, performing astonishingly well in terms of academic achievements and securing a higher per capita share of college education than their British-born white contemporaries. Note, however, that there is considerable heterogeneity between different minority ethnic groups, with some faring much better than others. Despite their educational accomplishments, the employment outcomes for ethnic minorities are lower than those of whites, and for some minority ethnic groups, markedly so.

The ethnic penalty Research by Wadsworth (2003) finds that educational attainment plus age and region explains hardly any of the difference in employment rates between ethnic minorities and British-born whites, calling into question the efficacy of the human capital explanation and the geographical explanation cited above. Consistently, researchers indicate that people from ethnic minority groups pay an ethnic penalty, in other words, even where their qualifications and level of experience plus other factors such as class, gender and age match that of their contemporaries in the white majority, individuals from ethnic minority groups fare less well in terms of employment outcomes. Essentially their chances in employment are hampered as a result of the ethnic group they belong to. Ford (2015), for example, highlights the ethnic penalties experienced by graduates from ethnic minority backgrounds. He explores unemployment rates for people six months after graduation and finds that Black African graduates have the highest rates at about 16 per cent, Black Caribbean graduates face an unemployment rate of 10 per cent and indeed all ethnic minorities are much more likely than white people to be unemployed six months after graduation. While some of these differences in unemployment rates will be attributable to other factors, such as lower overall attainment at university, Ford draws on Rafferty’s work (2012) to illustrate the presence of ethnic penalties in the labour market. In his study, Rafferty seeks to eliminate the effects of a range of background factors such as degree classification, degree subject, gender and socioeconomic background to deduce whether ethnicity itself can explain differing outcomes for those from ethnic minority groups. In matched groups, for example, all male graduates with similar degree classifications in a similar subject, from similar class background (i.e. the only difference between them being their ethnicity), instead of seeing similar outcomes as might be expected, groups of ethnic minority graduates have higher levels of unemployment, a greater proportion are in non-graduate occupations, and they earn lower hourly wage rates than their white counterparts. Rafferty (2012:16) concludes that ‘although past research suggests education for many minority ethnic men and women has provided a route to better employment or higher occupational status the current findings indicate higher level qualifications still do not appear to provide a panacea or facilitate an equalisation of labour market outcomes to those of comparably educated white UK born men and women’. He found graduate level ethnic penalties for several minority ethnic groups across a range of labour market outcomes. While some groups such as Indian and Chinese men and women appear to have comparatively favourable labour market outcomes to other ethnic minority groups, matched contrasts to white UK born male and female graduates revealed hidden labour market penalties subsumed in over-simplified overall comparisons. The extent of wage penalties experienced by black African and black Caribbean men and women was similarly exposed only through matching. Likewise, Heath and Cheung (2006) found ongoing evidence of ‘ethnic penalties’ in the labour market. In particular, they found that a number of ethnic minority groups, notably Pakistani, Bangladeshi, black Caribbean and black African men, continue to experience higher unemployment rates, greater concentration in routine and semi-routine work, and lower hourly earnings than members of the comparison group of British and other whites. Women from these ethnic

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minority groups also experience higher rates of unemployment than the comparison group, but for those in work, average hourly earnings tend to match or exceed those of white women as corroborated by Dustmann et al. (2011). Heath and Cheung (2006) draw particular attention to the levels of disadvantage experienced by Pakistani and Bangladeshi groups, where male unemployment and levels of male economic inactivity are high. In addition, where individuals from these groups are in employment, they are disproportionately represented in semi-routine and routine work. The differentials Heath and Cheung found are not confined to those born and educated outside the UK; indeed, the ethnic penalties they refer to also appear to be experienced by second-generation ethnic minority groups who were born and educated in the UK. Later in the chapter, we extend this discussion of labour market participation according to gender and ethnicity, to look more closely at labour market inequalities experienced by these groups.

Labour demand Aggregate demand for labour The aggregate demand for labour consists of total employment plus unfilled vacancies. As the demand for labour is derived from the demand for goods and services, it follows the economic cycle, rising when there are upturns in the economy and falling in periods of recession. Changes in labour demand are reflected in changes in the unemployment rate. Low levels of unemployment are usually taken as a sign that the economy is growing and is in good shape. For employers, however, the combination of record employment, low unemployment and high numbers of economically inactive people creates a labour market that is referred to as a ‘tight labour market’. Tight labour markets mean that employers find it more difficult to recruit. They have to compete more actively for workers who are in short supply and consequently those workers who are available for work have a wider choice of employment opportunities and can be more discerning. Tight labour markets create a ‘sellers’ market in which employees with highly sought after skills and experience can be enticed to leave one organisation for a better job in another. In response, firms may be forced to increase pay. They may also adopt strategies aimed at retaining employees, as vacancies arising from labour turnover will be hard to fill. Where the risks (or reality) of undesirable labour turnover are felt, there is likely to be more internal promotion and redeployment and this in turn may necessitate increased investment in training. While these responses might be seen as moves towards internalising employment, they are not driven by the technical and skill requirements of production or a long-term employment strategy, but by immediate pressures from the labour market. These pressures may be reinforced by stronger trade union bargaining power as a result of low unemployment and unfilled vacancies. Once established, these employment practices may become embedded, although employers may seek to reverse them should labour demand slacken and unemployment rise. Tight labour markets characterised the period from 2001 until 2008. There was low unemployment, a record number of people in employment and a large number of economically inactive people. All this meant that many employers experienced recruitment difficulties and skill shortages, although these problems were eased by an inflow of immigrant workers, including those from countries such as Latvia, Poland and Slovenia, which joined the EU on 1 May 2004. During 2008, the UK economy was plunged into recession as a result of the ‘credit crunch’ and the ensuing financial crisis. The effects of global recession also impacted on the domestic economy. Recovery has been protracted. During the recession high levels of unemployment became a feature of the economy. Eurostat data (2016) show that unemployment in the UK climbed from 5.1 per cent in January 2008 to 7.7per cent in May 2009, and up to a peak of 8.4 per cent in October 2011. Since this period it

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121

has decreased on a quarterly basis to arrive back at pre-recessionary levels. During the recession the fall in labour demand meant that tight labour market conditions gave way to a ‘slack’ labour market in which there were more people seeking work than there were jobs available. Faced with a gloomy economic outlook, employers tended not to replace workers who left because demand for products and services was at best highly volatile. Where firms did need to fill vacancies, hiring on a temporary basis provided a safer option owing to uncertainties about future demand and the speed of any economic recovery. Whereas tight labour markets improve the bargaining position of workers relative to employers, the reverse is true when labour demand falls. Workers’ and unions’ anxiety about job losses may lead them to accept lower wage increases or even lower absolute wages in order to save jobs. They are also more likely to support changes to production methods in order to improve the chances of company survival, even if this leads to some job losses. As well as examining changes in aggregate demand for labour, we need to consider how the employment experience of different labour market groups varies as the result of structured patterns of inequality of employment opportunity. As we shall see, slack labour markets are likely to have disproportionate effects on those who are already disadvantaged in the labour market, such as those with little education and low skill levels and those who are subject to various forms of discrimination. We also need to explore the changing pattern of demand for labour in the long run and how it affects different labour market groups.

Labour market inequality The quality of jobs on offer in the labour market varies. Some workers are in ‘good jobs’ with high earnings, good working conditions, employment security and opportunities for training and career development. Others are in ‘bad jobs’ with low status and pay, poor working conditions, little access to training and few, if any, opportunities for promotion. How good and bad jobs get created has been a matter of ongoing debate surrounding the theory of labour market segmentation. One classical line of explanation, advanced by two economists, Doeringer and Piore (1971), is based on the analysis of employers’ labour requirements outlined earlier. Some firms face strong pressures to internalise the employment relationship in order to train, develop and retain suitably skilled workers and gain their voluntary cooperation in production. Others do not, and are able to meet their labour requirements by following the commodity labour approach and externalising the employment relationship. Another explanation (Gordon et al., 1982) is that some firms enjoy monopoly power in their product markets and are able to use this power to increase the selling price of the product, thereby increasing profits. Some of these companies are faced by workers who have developed strong trade unions that can use their bargaining power to gain a share of these profits in the form of high wages and other benefits, including job security provisions. At the same time, management seeks to limit union solidarity and bargaining power by dividing the workforce into horizontal segments and offering the prospect of promotion to those who are cooperative and trustworthy. Firms that are unable to use monopoly power to raise their prices do not have surplus profits to share with trade unions, so terms and conditions of employment are less favourable. As it is more likely that large rather than small firms are able to exercise monopoly power, primary sector employment is concentrated in large, rather than small, firms. One of the central predictions of the labour segmentation thesis is that there will be little movement of workers between the primary and secondary sectors of the labour market. Workers in the primary sector are unwilling to move to the secondary sector and the high level of employment security they enjoy means they are unlikely to be forced to through job loss. Workers who make up the disadvantaged segments of the labour market are unable to move up into the primary sector because employers see them as undesirable candidates for jobs. Primary sector employers want disciplined, cooperative workers with good work habits, so when selecting from among applicants for jobs, primary sector employers will tend to reject those with unstable employment histories that involve frequent unemployment and job changes, because they will assume that

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this indicates a poor-quality worker. This will automatically rule out secondary sector workers, regardless of their personal qualities, since by definition secondary workers are in unstable, insecure jobs. It is also the case, however, that because of their experience of poor work, some secondary sector workers will tend to develop negative attitudes and poor patterns of work behaviour that reinforce employers’ prejudices against secondary sector workers as a whole. These explanations for labour market segmentation emphasise the way in which firms’ employment decisions influence the wider labour market by dividing it into advantaged and disadvantaged groups. But despite this analysis, the quality of the jobs that people do is not determined simply by their abilities, educational attainment and skills acquired through training. The chances of someone being in a good or a bad job are also influenced by their membership of particular socio-economic groups. There is clear evidence that the labour market is segmented along lines that reflect ‘broader social forces leading to discrimination within the labour market’ (Rubery, 1994: 53). Discrimination in the labour market means that workers’ chances of gaining access to ‘good’ or ‘bad’ jobs are unfairly influenced by non-work characteristics such as gender, race, class, workunrelated disability and age. Thus two equally skilled workers will likely find themselves in different sectors of the labour market because one is a white male from a middle-class social background and the other is a working-class black woman. This reflects deep-seated patterns of discrimination within society in general as well as in the labour market. Here we build on the earlier segment of the chapter that focused on patterns of male, female and ethnic minority participation in employment to examine more closely how gender and ethnicity influence people’s experiences in the labour market. As we have touched upon already, women and ethnic minority groups occupy a disadvantaged place in the labour market. Women’s employment disadvantage reflects deep-seated societal norms concerning the family and the respective roles of women and men in domestic roles and paid work. The domestic roles played by many women mean that their employment opportunities are restricted geographically and contractually. This is particularly true of women with children as we have seen. In the absence of highly developed systems of state support for childcare, childcare responsibilities mean that many women cannot travel long distances to work or work ‘standard’ hours, therefore they are invariably restricted to part-time work in the immediate locality. This means that they have limited choice of employment and therefore little bargaining power and may have to accept secondary sector terms and conditions of employment as a tradeoff for convenience. Ethnic minority workers, as well as facing racial prejudice and discrimination, may be faced with additional limits to their choice of employment because they live in areas where business activity is low and public transport facilities are poorer. For these reasons it is also likely that women and ethnic minority workers will be disproportionately affected by the rising levels of unemployment that occur in a recession. This is because they are less able to compete for the jobs that are available should they lose their current employment and it is easier for employers to discriminate against women and ethnic minorities when there is an abundant supply of labour competing for a limited number of jobs. Philpott (2011) advises that the recession triggered in 2008 is sometimes referred to as a ‘mancession’ as men were more acutely affected than women, as a result of blue collar job losses in the private sector, notably in construction and manufacturing. Women were more insulated from recessionary effects as a consequence of their representation in the public sector (which actually saw a small rise in employment during the recession) and their presence in part-time work, which held up better than full-time employment. The recession officially ended in the third quarter of 2009 and the economy benefited from a marginal fillip in activity in 2010 before economic growth stagnated once again in 2011. The country fell into another recession in early 2012, referred to widely as a ‘double dip’ recession due to the proximity to the 2008–09 recession. The period of sustained austerity and public sector cuts leading up to and beyond the 2012 recession has arguably been more uncomfortable for women, as mass job losses impacted the public sector where women are disproportionately represented. For those retaining jobs in public services, the public sector pay freeze and pay restraint practices have meant that pay has declined in real terms in

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123

recent years and jobs have arguably become more pressured as staffing levels have been reduced. The slowdown in consumer spending also impacted sectors such as retail, which employs high proportions of female workers. The Conservative government, elected in 2015, initially led by David Cameron and now under the prime ministerial direction of Theresa May continues to support austerity measures as a means of reducing the deficit, safeguarding economic stability and promoting growth.

Gender-based inequalities in employment opportunity The social forces identified in the previous section mean that there are major differences in the types of work that men and women tend to do, and the way in which male and female employment is segregated by time. Patterns of occupational segregation are strongly in evidence in the labour market, creating a division between male and female work. For example, women occupy 77 per cent of administration and secretarial posts but only 6 per cent of engineering and 14percent of architecture, planning and surveying roles; 83 per cent of people employed in personal services are women (EHRC, 2013). As shown in Table4.3, patterns of vertical segregation also loom large, with men continuing to dominate highly rewarded, senior roles in politics, business, media and culture and the public and voluntary sectors (Centre for Women and Democracy, 2013, updated with available data from 2014).

Explore

To what extent are broader patterns of occupational segregation useful for explaining the varying levels of representation of women in senior roles as shown in Table4.3?

Men’s and women’s jobs are also segregated by hours of work, sometimes referred to as gendered time segregation. As we have seen, generally women are more likely than men to work part-time, but particularly so if they have dependent children. Part-time working is invariably low paid and this is reflected in the stubbornly persistent gender pay gap that exists between women working

Table 4.3 Women’s share of a selection of senior ranked roles since 2005 Role

2005

2006

2007–8

2010–11

2012

2014

Members of parliament

19.7

19.5

19.3

22.2

22.3

22.6

Local authority council leaders

16.2

13.8

14.3

13.2

12.3

13.1

Directors in FTSE 100 companies

10.5

10.4

11.0

12.5

16.7

Editors of national newspapers

13.0

17.4

13.6

0.5

0.0

5.0

Directors of major museums and art galleries

21.7

17.4

26.1

28.0

n/a

0.7

13.3

25.0

23.8

n/a

Local authority chief executives

17.5

20.6

19.5

22.8

22.9

24.0

Senior ranks in the armed forces

0.8

0.4

0.0

0.8

n/a

Senior police officers

0.8

12.2

11.9

16.8

17.6

n/a

University vice-chancellors

11.1

13.2

14.4

14.3

14.2

n/a

Health service chief executives

28.1

37.9

36.9

31.4

34.8

n/a

Chief executives of national sports bodies

n/a data unavailable. Source: An extract from Centre for Women and Democracy (2013), Sex and Power; Who Runs Britain?, p. 7, updated with information (where available) from Centre for Women and Democracy (2014), Sex and Power; Who Runs Britain?, p. 6.

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part-time and men working full-time (Longhi and Platt, 2009). Taking full-time and part-time employees together, for all age groups except 16 to 17-year-olds, statistics demonstrate that men are paid more on average than women. Indeed, for all age groups from 22 to 29 upwards, the gap is wider than for full-time employees alone, indicating that in these age groups, more women are working part-time in jobs that tend to be lower paid (www.EqualPayPortal.co.uk). Added to this, the ONS bulletin on low pay (ONS, 2015a) reports that employees in part-time work are more likely than those in full-time work to be paid less than the National Minimum Wage (NMW). Despite the fact that minimum wage legislation exists (and new Living Wage legislation now provides further protection for employees over the age of 25), pay for 1.2 per cent of part-time jobs and 0.6 per cent of full-time jobs fell below the NMW in April 2015. Critically, jobs held by women were more likely to be paid less than the NMW than jobs held by men (0.9 per cent compared with 0.7 per cent). This is consistent with the fact that a greater proportion of women work part-time than men. While some struggle to even obtain NMW rates for their labour, and women in particular are susceptible to low pay, the annual Sunday Times Rich List reveals the names of the richest individuals and families in Britain. Commenting on the latest edition of the list, published in April 2016, John Arlidge writes: ‘[W]omen are winners this year; there are a record 125 on our list’ (2016: 16). While progress should be welcomed in a list that comprises 1,000 entries, this remark denotes the magnitude of men’s domination of wealth in Britain. Arlidge adds that, of the 125women on this list, ‘almost all of them are are involved in ventures with their husbands, or other family members, or have inherited their wealth’ (2016: 16), an observation which further exposes the gendered forces at play among the richest and most powerful in British society.

Female heterogeneity The population, and hence the labour market, comprises different sorts of women, fractured by age, class, ethnicity, qualification level, family circumstances, background and experience. So, while generalisations about the relative positions of men and women in employment and society, as recounted in the section above, serve some purpose, an understanding of the different employment experiences of different sorts of women is useful. While we have seen that women are typically casualties of segregation in employment, some women will be in a more advantageous labour market position than others (and some men). The level of educational qualifications women attain is a key determinant of the extent to which they subsequently participate in paid employment. As Plunkett (2011) demonstrates, the UK has very low employment rates among women with low educational achievements and there is considerable disparity between the employment rates of women with and without postsecondary education. Indeed, the UK employment rate amongst women who left school prior to completing A-level education is 43 per cent, compared with 86 per cent for women who completed degrees and other higher education awards. Some of the more highly educated women in the labour market will be mothers who have been able to return to well-paid jobs following maternity leave, something women without qualifications are less likely to be able to do. The resultant impact on lifetime earnings is demonstrable: women with degrees are estimated to face only a 4 per cent loss in lifetime earnings as a result of motherhood, while mothers with mid-level qualifications face a 25 per cent loss and those with no qualifications a 58percent loss (EHRC, 2013b). The employment rates of women also vary according to ethnicity, reflecting in part different cultural norms and family circumstances. The EHRC (2013b) reports that, despite some growth in their employment rates, only one in four Bangladeshi and Pakistani women work, and many face practical barriers preventing them from doing so. Black Caribbean women are more likely to be in full-time work than any other group of women, including white women. Almost half of Bangladeshi (49 per cent) and Pakistani (44 per cent) women are looking after the family or home full-time, compared to 20 per cent or fewer of other groups.

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Progress? It is the case that some, but not all, women are making significant strides in training and in occupations traditionally dominated by men. For example, in statistics compiled for the House of Commons, Baker and Cracknell (2014) report that, although women remain under-represented in higher education, there have been considerable signs of improvement within the sector. In comparison with 1994–95, they show that the proportion of women had increased across all grades by 2008, but significantly so at professorial level where the proportion of female professors had risen from 7 per cent in the mid-90s to 19 per cent by the late noughties. In 2011–12, women made up 21 per cent of professors in higher education. Women’s representation has increased in the police service too: in 2013, 35,471 police officers (27 per cent) were female, compared to just 15 per cent in 1997. The latest General Medical Council statistics released in August 2016 show that 51.4 per cent of doctors on the general practitioner register are female, compared with 47.9 per cent in April 2013. Only 33.4 per cent, however, of those doctors on the specialist register (the register of doctors who are eligible to work as substantive, fixed term or honorary consultants in the health service in the UK) are female. Management is another key area where women have made some inroads. Headline figures show that 32.8 per cent of managers, directors and senior officials in 2013 were female. However, as with so many occupations (e.g. teaching, policing, healthcare), a closer examination of the gender composition at different levels of management and at management in different sectors reveals distinct patterns of horizontal and vertical segregation within management careers. Bakerand Cracknell (2014), for example, show that women are far more likely to be human resources managers and directors, advertising and public relations directors and health and social services managers than managers and directors in purchasing or finance. Turning to patterns of vertical segregation within management careers, the dominance of men in the most senior management positions is aptly illustrated by the findings of the Cranfield Female FTSE Board Report2016 (Sealy et al., 2016), an annual report examining the representation of women on the boards of the FTSE 100 companies: ●

Diageo, the drinks firm, tops the 2016 female FTSE index with a board comprising four female non-executive directors and one executive director, Kathy Mikells (representing a total female board membership of 45.5 per cent).

●

Women hold 31.4 per cent of non-executive directorships in the FTSE 100 (up from 21.8percent in 2013) but only 9.7 per cent of executive directorships, a marginal increase on 8.6 cent in March 2015.

●

Only 20 companies in the FTSE 100 have female executive directors, 3 percentage points more than in 2012.

●

Of the FTSE 100 companies, 61 per cent have 25 per cent or more women on their boards (the target to be attained by 2015, first set by Lord Davies in 2011).

●

Only 44 per cent of the FTSE 100 companies have at least 27 per cent female directors (the benchmark expected by 2016, to indicate ‘on track’ progress towards the new 33 per cent target to be achieved by 2020* ).

●

Of the FTSE 100 companies, 19 per cent met the new 33 per cent target in 2016.

●

There are now no all-male boards within the FTSE 100 company list, whereas in 2013 there were six companies in this category.

●

Across FTSE 100 boards, the percentage of new appointments going to women over the six months between September 2015 and March 2016 was only 24.7 per cent, the lowest since September 2011.

●

There is only one FTSE 100 company with a woman holding the position of chairman (Alison Carnwath at Land Securities).

*During the closing of the Davies Review in October 2015 a new target of 33 per cent women on FTSE 350 boards by 2020 was announced.

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The ability for women to get so far and then find the very senior positions difficult or impossible to access is metaphorically referred to as the ‘glass ceiling’ phenomenon. Women can see the jobs at the very top but cannot penetrate the invisible barrier that prevents them securing the positions. Sealy et al. (2016) conclude that they are concerned by what they see as a trend of stalled progress in the campaign to improve the representation of women on FTSE company boards. Among a number of recommendations, they call for chairmen and search consultants to make sure that boards are regularly refreshed, that a larger proportion of new appointments to go to women, and that robust, transparent and gender-inclusive board appointment processes and strategies are put in place to ensure that once on boards women can reach the very senior positions such as chairman and senior independent director.

Explore

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Why does the glass ceiling persist in the twenty-first century and what prospect is there for smashing it? Given that Lord Davies’s target was not met by 2015, what chance do you think there is that the revised target of 33 per cent female board membership of the FTSE 350 by 2020 is achievable? What needs to happen to effect change?

It is clear from the extracts of the 2013 and 2014 Sex and Power Reports shown in Table4.3 and other research referred to in this section that some women are making considerable progress in employment. We have also seen that the level of earnings penalty is strongly mediated by levels of education, as women with higher-level qualifications are able to secure better-quality roles within the labour market. Better qualifications therefore afford women greater opportunities within the labour market, but do not entirely safeguard against disadvantage. Patterns of occupational segregation and vertical segregation persist, causing even relatively advantaged women, such as those in the esteemed professions, to find that their roles and opportunities for advancement are limited because of their gender. As Marlow and Carter (2004: 16) claim: ‘Women can stretch the ties that bind but cannot sever them.’

Ethnically based labour market inequality People from ethnic minorities experience disadvantage compared with whites in terms of their access to employment, their level of occupational attainment, and pay. The EHRC (2013b) reports that between 1995 and 1997, and again in the period 2006–2008, prior to the recession, a steady growth in the number of jobs raised the percentage of women and of black people of working age in employment by twice the average, and the percentage of Bangladeshi and Pakistani people of working age in employment by three times the average. However, over the longer term, some groups with low employment rates have not fared well, particularly those pushed to the margins of the labour market. We focus here on ethnicity, but, equally, other social factors such as disability or age can marginalise individuals in the labour market and interplay with ethnicity, resulting in inferior outcomes (lower employment rates, greater likelihood of unemployment, lower pay, poor-quality jobs and so forth). For example, black people and disabled people in their early 20s are twice as likely to be not in employment, education or training (NEET) as white people and non-disabled people (EHRC, 2013b). Ethnic minorities in general are less likely than whites to be employed in professional and managerial occupations and more likely to be in semi-routine and routine occupations (Heath and Cheung, 2006). These disadvantages could theoretically reflect differences in education and skills. We know that unemployment is higher and wages are lower among lower educated, unskilled workers. However, these disadvantages remain even when educational qualifications are taken into account. In other words, as noted earlier, ‘ethnic penalties’ can be demonstrated that impede the occupational success of ethnic minorities during the job search, hiring and promotion

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process. As a result, ethnic minorities suffer from a general inability to convert their high educational attainments into comparable occupational outcomes. A related scenario is ‘over-education’ whereby people hold qualifications over and above those required for their job. Rafferty (2012: 2) advances our understanding of the concept of ethnic penalties to suggest that a disproportionate number of ethnic minority women and men are employed in roles that do not require their levels of educational attainment. Li et al. (2008) concur, noting that, while the acquisition of educational credentials facilitates entry into the labour market and enhances income levels for all groups, education protects only to an extent against lower employment rates and earning levels. Many people from ethnic minority groups experience poorer employment rates and lower incomes than similarly qualified and experienced white people. Evidently, ethnic or racial stereotyping and inhospitable workplace cultures related to both gender and ethnicity can place significant barriers to those seeking to access certain professions and/or advance their careers.

Ethnic heterogeneity Although people from ethnic minorities as a whole are disadvantaged in the labour market, there is noticeable variation in the experience of different ethnic groups and between men and women within ethnic groups. As noted earlier, the employment rates and unemployment rates of different minority ethnic groups vary. Levels of occupational attainment also vary between different ethnic minority groups. Chinese and Indians of both sexes are more likely to be in professional and managerial occupations than whites, as are black African and black Caribbean women; however, they remain significantly under-represented when qualifications are taken into account. With the exception of Indians and Chinese, ethnic minority workers are more likely to be in semi-routine or routine occupations than whites (Heath and Cheung, 2006: 15). There are also variations in average earnings across ethnic minorities, so-called wage gaps. Dustmann (n.d.) suggests that the disadvantage experienced by Pakistani and Bangladeshi minorities in employment is reflected in the pay they receive. In 2009, Pakistani men earned on average 26 per cent less than white people in employment, while Bangladeshi men received wages 35percent below the average earnings of white people in employment. However, while for the Bangladeshi minority wage differentials can be shown to be slowly converging with the average earnings of white people over time (from - 53 per cent in 1993 to - 50 per cent in 2000 and - 35per cent in 2009), for the Pakistani ethnic group wage differentials are relatively stable. Among the other minority ethnic groups black Caribbean men displayed a 27 per cent wage disadvantage in 2009. Indian men and women earned 14 per cent and 18 per cent respectively more than white indigenous workers in 2009. These complex outcomes indicate considerable heterogeneity, with wage disadvantages for some ethnic minority groups and wage advantages for others. In more recent research exploring the existence of wage gaps, Longhi et al. (2012) found that, across all the ethnic and religious minority groups included in their study, individuals from the second generation tended to achieve higher wages than the first generation, but the amount by which wages increased could not always be explained by identifiable characteristics such as the improved educational attainments of second generation workers. They found that there are still remarkable differences in wages between ethnic and religious groups in Britain: Pakistani Muslims have the lowest wages and Indian Hindus the highest; Indian Muslims gain access to better wages than Muslims of Pakistani descent but do not do as well as Indians who follow Hinduism. The most critical finding to come from the study is that wage differences across groups stem from the types of job that people occupy, given their qualifications. The disadvantages observed were often because ethnic minority individuals were clustered in low-paid occupations whether this be through choice/preference for certain jobs or as a result of circumstance (not being able to find work in a different, higher paid occupation). The study demonstrates the way in which individuals from ethnic minority backgrounds can be disadvantaged by poorer personal circumstances (qualifications, access to networks, transport and so forth to improve job prospects), inferior job characteristics (the types of job they occupy) and by labour market discrimination, which makes their chances of securing well-paid work more difficult.

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Key controversy Are employers who hire ethnic minority workers and cheap migrant labour capitalising upon the presence of racism in society as a whole?

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Table 4.4 Changes in the distribution of employment by broad sector, 1994–2024 (percentage share of total employment) 1994

2004

2014

3.1

2.1

2.5

2.3

2.2

14.9

10.6

7.8

7.4

6.7

6.6

6.8

6.3

6.6

6.8

Trade, accommodation and transport

27.3

27.2

25.8

26.2

26.3

Business and other services

24.1

28.4

31.6

32.4

32.9

Non-market services

24.1

24.9

26.1

25.0

25.1

Primary sector and utilities Manufacturing Construction

2019*

2024*

*Projected figures. Source: Wilson et al. (2016: 40).

The decline of manufacturing has been particularly rapid in the UK since 1980. This has reflected additional forces, such as the effects of government monetary and exchange rate policy during the 1980s, which raised the price of British exports in foreign markets and cheapened foreign imports; the long-term inability of UK manufacturing to respond adequately and rapidly enough to foreign competition; and organisational restructuring whereby manufacturing firms have tried to cut costs by hiving off certain ‘non-core’ and specialist activities, such as security, cleaning and catering, to outside suppliers of these services. This has meant that the workers who used to deliver these services are now counted as being in the service sector rather than in manufacturing. The growth of service sector employment has been a major factor in the increase in part-time employment in the UK and has therefore expanded employment opportunities for women with dependent children and also, more recently, young people in full-time education who value the income from part-time employment to assist with the costs of tuition fees and general living expenses. Looking to future sectoral trends, the UKCES report Working Futures 2014–2024 (Wilson etal., 2016) suggests that private services are forecast to be the main force of employment growth, contributing more than 90 per cent of net additional jobs between 2014 and 2024. Business and other services such as professional services and information technology are expected to see the strongest levels of job growth. As can be seen from Table4.4, the share of manufacturing jobs as a proportion of total employment is expected to continue to decline, although it is anticipated that this trend will be coupled with output and productivity growth, implying that jobs in the sector will become more skilled. The construction sector is forecast to rebound to become the strongest performing of the six broad sectors in terms of both output and employment growth. With regard to public sector activities, over the forecast period health and social care are expected to create a large number of additional jobs but growth prospects for education and public administration are expected to be subdued, especially in the first half of the period.

Explore

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Suggest why the growth of the service sector has boosted part-time and female employment. Consider the type and the quality of the jobs that are available as a result of this expansion.

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Changes in the occupational structure of employment The occupational structure refers to how employment is apportioned among different jobs in the economy. Changes in the occupational structure of employment reflect changes in the types of skill demanded by employers. The declining relative importance of manufacturing means that, over time, the share of occupations associated with manufacturing has also declined, while the share of occupations associated with the delivery of business services, retail services, and so on, has increased. Changes in the occupational structure also reflect changes in the demand for skills within industries. These changes are generated by new technologies and by organisational changes that alter the way in which goods are produced and services delivered. For example, the growth in internet sales, ‘click and collect’ and home delivery of a range of goods including food shopping, clothing, books, toys and other household items has impacted demand for workers in retail and distribution calling for more drivers and warehouse personnel and fewer store-based, customer-facing staff. Past changes and projected changes in the occupational structure of employment are aptly illustrated by the data in Table4.5. Sisson (2011) claims that over the longer term the economy is shifting in emphasis away from routine production towards a knowledge base, causing new jobs to be created in large numbers in high-skill, high-wage managerial and professional occupations. However, the last decade or so has also seen growth in lower-wage service occupations, combined with a reduction in middle-wage occupations as advances in technology and the forces of globalisation ‘hollow out’ demand for routine workers, semi-skilled administrative and secretarial workers, and process, plant and machine operatives. Some commentators use the term ‘hourglass economy’ to reflect this changing occupational structure. In short, the routine tasks that can be replaced by technology are neither the managerial roles at the top nor the low-skilled ones at the bottom, such as cleaning, bar work or shelf-stacking. The roles that are vulnerable are in fact those in the middle of the occupational structure, including manual work, and it is these jobs that will thin out over time (CBI, 2011). Concern is expressed that an hourglass-shaped economy will lead to stark polarisation between high-wage ‘lovely’ occupations and low-wage ‘lousy’ occupations (Holmes and Mayhew, 2012). For many in employment, at the lower end of the waged economy, this concern is now a reality. While commentators share misgivings about a growing chasm between good and bad jobs, Wilson et al. (2016: 51) suggest that the long-term trends evident before the worldwide recession of 2008 have been ‘firmly re-established’. The main increases in employment levels are expected

Table 4.5 Changes in the occupational structure (percentage share of total employment), using standard occupational classifications (SOCs), 1994–2024 major groups 1994

2004

2014

2019*

2024*

7.6

8.8

10.1

10.5

10.9

Professional occupations

14.8

17.1

19.9

20.8

21.4

Associate professional and technical

11.9

13.1

14.0

14.5

14.8

Administrative, clerical and secretarial

14.9

12.8

10.7

9.7

9.1

Skilled trades occupations

14.5

12.4

10.9

10.4

10.0

Caring, leisure and other services

6.4

8.0

9.4

9.8

10.1

Sales and customer services

8.1

7.8

7.6

7.4

Process, plant and machine operatives

8.9

7.2

6.2

5.8

5.5

12.9

12.4

11.00

10.9

10.8

Managers, directors and senior officials

Elementary occupations Note * Projected figures. Source: Wilson et al. (2016 : 60).

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to continue to be focused in the private (marketised) segment of the service sector. Business and other services are the area where employment is expected to grow most rapidly. We continue to see rising employment levels and shares for higher-level, white collar groups such as managers, directors and senior officials, professionals and associate professional and technical occupations (‘lovely jobs’) but with some growth in employment for a number of less skilled occupations too. Basic occupations are projected to experience mixed fate with some growth in jobs where tasks are not so easily automated (such as bar work, cleaning and food service – ‘lousy jobs’), but job losses in other areas. Wider job losses are predicted for administrative and secretarial occupations, along with declining employment levels and employment share for most blue collar/manual occupations. In sum, these patterns represent continuing polarisation in the demand for skills in the workforce, with some growth at both high and low skill levels and a carving out in the middle. Accompanying these trends, the number of jobs in occupations typically requiring a degree is expected to continue to grow, although more slowly than over the previous decade. Correspondingly, the supply of people holding higher level qualifications such as degrees is projected to grow steadily to 2024, notwithstanding raised tuition fees and the overall costs of attending university. The portion of the workforce remaining unqualified is expected to represent only a small minority by 2024. Wilson et al. (2016) predict, on the basis of projected patterns of employment by qualification level within industries and occupations, that the supply of people educated to at least degree level will grow at a faster rate than demand for high level qualifications. We can expect to see an intensification of qualification requirements in most occupations and the scope for engaging more people with higher qualifications will arise in new areas rather than the sectors and industries where the workforce is already highly qualified. In other words, there will not necessarily be an over-supply of highly qualified labour as the nature of jobs may be changing to make higher qualifications a necessary requirement for those jobs. We need to be careful in drawing conclusions about what these trends mean in real terms for employment opportunities in the labour market. To assume that there will be an absence of job vacancies in declining and stable occupations ignores the fact that, in addition to headline figures pertaining to net growth or decline in demand for workers within particular occupations, there will be a continuing demand for workers to replace those leaving occupations, mainly for reasons of retirement. ‘Replacement demand’ means that, although total employment in an occupation may be declining or plateaued, there could still be a large number of jobs on offer within it at any one time and the role may still offer good career prospects for some time to come. Wilson et al. (2016: 69) claim that replacement demand can easily offset any negative changes resulting from anticipated decreases in employment. Considering the economy as a whole, replacement demand represents around 2–4 per cent per annum of the employed workforce. At firm level, these rates can fluctuate considerably and will hinge, among other factors, on the age profile of the workforce; where there is an ageing workforce, replacement demand is likely to be higher than in workplaces presenting a much younger profile. Wilson et al. (2016) project that in the decade 2014 to 2024 there will be a net requirement to fill around 15 million new job openings across the economy. Replacement demand is expected to account for the vast majority of these (13.1 million) and so for all occupations, taken together over the period 2014–24, demand created as a result of outflow from existing occupations is expected to be around seven times larger than expansion demand or so-called structural demand (demand caused by the creation of ‘new’ jobs). Given the significance of replacement demand, individuals planning careers and embarking on training ought therefore to consider that even occupations and industries that are not increasing their share of employment may nevertheless provide decent career prospects. A key challenge for employers is that skill shortages may arise, not because there is a dearth of applicants to vacancies but because employers cannot locate the necessary skills to fulfil replacement demand in declining occupations. The CBI brief (2011) suggests that the key to securing increased levels of employment in the economy is the ability to match skills supply with demand in different parts of the economy.

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Changing forms of employment During the 1980s and 1990s, senior managers initiated programmes of organisational change aimed at reducing costs and increasing the speed with which their organisations could respond to changes in market conditions. A central feature of organisational change programmes was workforce ‘restructuring’ or ‘business process re-engineering’, which involved large-scale reductions in headcount, achieved partly through redundancies, early retirement and non-replacement of departing workers and partly by contracting out non-core and specialist services. This was accompanied by the reorganisation of work and, in many cases, the wider use of part-time, fixed-term contract and temporary labour and, in a minority of cases, highly casualised forms of employment such as zero-hours contracts (Cully et al., 1999; Millward et al., 2000). These changes were aimed at increasing managers’ ability to achieve greater numerical labour flexibility, in other words, to be able to adjust the size of the workforce more easily in response to changes in demand. The result was that, although the total number of jobs grew, there was a net reduction in the number of full-time jobs in Britain during the 1990s. All of the growth in employment was accounted for by a growth of part-time jobs, which increased from 22.9 per cent of total employment in 1992 to 24.6 per cent in 1999. The early and mid-1990s also saw an increase in the share of fixed-term and temporary employment from 5.9 per cent in 1992 to 7.6 per cent in 1997. These developments led some to argue that the full-time, permanent job was likely to become the exception rather than the rule (Bayliss, 1998). However, while part-time employment continued to increase its share of total employment after 1997, reaching 25.8 per cent in 2004 before levelling off and dropping slightly to 25.5 per cent at the end of 2008, the trend of temporary and fixedterm employment had (until the recession) been downward, the share falling to 5.5 per cent in 2008 (ONS 2005, 2009). Some light is shed on the effects of the recession by the latest Workplace Employment Relations Study (WERS) (van Wanrooy et al., 2013: 10). The study reports an increase (over the period 2004–2011) in the proportion of workplaces making some use of non-standard working provisions, such as shifts, annualised hours and zero-hours contracts (a contract between an employer and a worker, where the employer is not obliged to provide any minimum working hours, while the worker is not obliged to accept any work offered). In fact, the percentage of workplaces that had some employees on zero-hours contracts doubled between 2004 and 2011, but only from a low base of 4 per cent. Interestingly van Wanrooy et al. (2013) find little change in the use of fixed-term or temporary contracts, the use of agencies or employers contracting services in or out. In response to the recession, some employers in fact reported cutting rather than increasing the number of agency workers. The CBI, on the other hand, suggest in their 2011 report that, as the recession eased, firms took on temporary workers to meet growing staffing needs while remaining watchful of continued economic uncertainty. They claim that the number of temporary workers and their share of the labour force were both now higher than pre-recessionary levels. According to the CBI (2011), the number of part-time workers was 5 per cent higher after the recession. The unease in the economy post-recession is reflected in official statistics, which indicate that temporary and casual forms of employment have increased steadily in the aftermath of the recession. By the three months ending December 2014 more than 1.7 million employees in the UK were employed in some form of temporary work (agency working, fixed term contract, casual work or other form of non-permanent employment), an increase of more than 300,000 since the start of the recession in 2008. The proportion of the overall workforce employed in some form of temporary work also increased from 5.5 per cent in 2008 to 6.5 per cent in 2014 (ONS, 2015b). In work focused on the casualisation of employment, the TUC (2015) expresses concern that while atypical employment still represents a minority of overall employment, the labour market is moving towards one that is characterised by more low-paid, less secure and more exploitative

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133

forms of employment. The growth in precarious work is epitomised by the well-publicised increase in the use of zero-hours contracts. Much media attention has been directed at exploring the ethics of such contracts, and the employment practices at a number of high profile companies such as Sports Direct, Amazon and ASOS have come under close scrutiny. Key debates centre on whether people deliberately and freely choose zero-hours contracts and other atypical forms of employment or whether they are forced to settle for this type of work as it is the only work they can secure. Similarly, it is not clear what proportion of people in part-time jobs are working part-time because they cannot find a full-time job; the phenomenon technically referred to as underemployment.

Labour market outcomes: The quality of employment In this section of the chapter, we examine how changes in the labour market have affected the quality of the employment experience. How should we assess the quality of jobs? What indices should we use? Traditionally, economists have used pay as the measure of job quality. Other social scientists have stressed the level of skill as a key measure on the grounds that skilled work provides workers with not only better pay but also more variety, personal autonomy and involvement, and ultimately more control over their effort. We have seen that there has been an overall trend towards increased skill requirements in jobs, so on the face of things at least it seems plausible that the quality of jobs available in the labour market has, on balance, improved. However, recent research has uncovered unexpected disjunctures between skill and other measures of job quality, such as employment security and the ability to control one’s level of effort and to exercise control over how the job is done. In this section, we review evidence relating to these dimensions of job quality to assess whether recent changes in the demand for labour have improved or negatively impacted the quality of employment experience in the UK.

Job security Job security is generally regarded as an important factor determining job quality. Employment security has also been linked positively to skill level, with skilled workers enjoying greater job security than unskilled workers. Management-led organisational change during the 1980s and 1990s led to a growing concern at what appeared to be an increase in employment insecurity. It was argued widely in the press and by some academics that organisational restructuring and associated changes in patterns of labour demand were creating a new era of insecurity for workers, who were faced with higher risks of job loss and increased costs of job loss, leading to a subjective sense of employment insecurity. The risk of job loss is affected by movements in the labour market, particularly changes in the rate of unemployment. The risk of job loss is greater when unemployment is rising than when it is constant or falling. However, during the 1990s, some observers argued that the risk of job loss was increasing independently of the level of unemployment; in other words, for any given level of unemployment, the risk of job loss was higher than it used to be. Proponents of this argument pointed to redundancy dismissals and the replacement of permanent, full-time jobs with part-time and temporary jobs among previously secure groups such as managerial and professional workers and public-sector workers, and some argued that these developments marked the end of internalised employment relationships that offered ‘jobs for life’ and clear career paths linked to length of service. Supporters of the insecurity thesis also argued that the costs of job loss had risen, because the level of social security payments (benefits floor) had fallen relative to average wages and workers who had lost permanent full-time jobs were less able than previously to find equivalent replacements because of the trend away from full-time, permanent jobs to part-time and temporary jobs. They also argued that these developments generated heightened feelings of insecurity among workers.

CHAPTER 4 HRM AND THE LABOUR MARKET

134

Table 4.6 Perceptions of job security (%). Strongly agree or agree

Neither agree nor disagree

Strongly disagree or disagree

2004

2011

None

4 or more

‘I feel my job is secure in this workplace’

Number of changes as a result of recession

Source: van Wanrooy et al. (2013: 9).

The empirical evidence showed that there was no step increase in employment insecurity during the 1990s. While there was a slight increase in the proportion of workers in jobs lasting less than one year between 1991 and 1998, there was also an increase in the proportion of people employed in long-term jobs, that is, those lasting 10 years or more (Sparrow and Cooper, 2003: 77). Neither was there a long-term increase in people’s feelings of employment insecurity. The ‘employment insecurity debate’ subsided as quickly as it had arisen, figuring less and less in public discussion as we moved into the new millennium. With the dawn of the credit crunch and the ensuing recession in the late 2000s, the state of job security in the labour market fell under the microscope once again. It is inevitable perhaps that, throughout periods of rising unemployment, workers in employment will feel more insecure as the chance of losing their job increases and the likelihood of finding another lessens. WERS 2011 (van Wanrooy et al., 2013: 9) does indeed show that workers were feeling more insecure than at the time of the previous survey in 2004 (see Table4.6). As Table4.6 shows, employees who had experienced change as a result of the recession were less likely to agree that their job was secure. Overell et al. (2010: 5), however, find that, although feelings of job insecurity will be heightened as a result of a recession, there is a paucity of evidence to support the notion that disposable, casual and hence insecure forms of employment are displacing the ‘proper job’ in the long run. They confirm that more than 80 per cent of jobs have permanent contracts, and, while full-time employment might have fallen and part-time employment increased, the overwhelming majority of UK employees continue to be employed on a full-time basis.

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● ●

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Discuss with fellow students your perceptions of your own job security or insecurity generally in the current economic climate. What factors influence your assessment? To what extent do you think the UK’s decision to leave the EU has impacted employees’ perceptions of their job security? Consider whether Brexit will make jobs in the UK more, or less, secure.

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Worker discretion and autonomy Worker discretion and autonomy are usually associated with skill. In fact, the skill content of a job is partly defined in terms of the extent to which workers are required to exercise their own judgement in deciding how the job should be done, the other elements being task complexity and variety. The fewer the prescribed instructions to workers and the greater the number of decisions that workers have to make in the course of the job, the more skilled it is considered to be. We have already seen that changes in the demand for labour have led to an increase in the average skill requirements of jobs. But does this mean that workers are enjoying increasing influence and control over how they work? On the contrary, various studies have cast doubt on how far the upskilling of jobs has been accompanied by increased discretion and control for workers – see Ramsay et al. (1991) for a discussion of the increased supervision of white collar workers in local government, Dent’s (1991) study of bureaucratic controls affecting teachers and academics and Gallie et al. (1998) for an assessment of skilled workers subject to increased supervision when working with new technology. National survey data also show that the overall increase in skill levels has not been accompanied by increased worker discretion; if anything, the reverse has occurred (Green, 2006: 105). Overell et al. (2010: 6) persist, arguing that there has been insufficient recognition of the ‘collapse of autonomy’. Using skills survey data, they find that workers’ level of influence over the order, pace and nature of job tasks is much lower than it was 20 years ago. The proportion of respondents reporting a great deal of influence over how they did a task declined from 56.9 per cent in 1992 to 42.7 per cent in 2006, while the proportion of those with a great deal of personal control over work effort has reduced from 70.7 per cent to 52.5 per cent. This fall in autonomy is reported to affect all occupational groups. So, rather than the shift in favour of more skilled jobs providing workers with greater control over their work, there has been a marked overall decline in discretion for all workers but particularly among professionals, who are among the most highly skilled workers. The reasons for this probably include the effects of new technology, financial pressures in the public sector, the spread of subcontracting and the increased public accountability to which professions have been subjected in the interests of improving public services such as health and education (e.g. the NHS Constitution for England). New technologies allow the implementation of routine processes and the closer monitoring (‘surveillance’) of individual workers. Professional workers are also concentrated in the public sector, where government-imposed austerity measures have encouraged closer managerial control of professional workers. At the same time, political pressure to reform and improve public services has involved criticisms of established standards and practices among professional groups that have led to managerial interventions to limit professional autonomy. The junior doctors’ dispute in 2016 is a prime example of a tussle between the NHS on the one hand, which wishes to improve weekend and out-of-hours care, and junior doctors on the other, who claim that weekend and round-the-clock care is already established practice. The dispute has been acrimonious and, although a deal is now ‘on the table’, at various points in the longrunning dispute a new employer-imposed contract has been a distinct possibility.

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The NHS Constitution for England cited in the segment above is but one intervention that has affected the working lives of public sector professional workers, can you think of others? Carry out some preliminary research on the TEF (Teaching Excellence Framework) and the REF (Research Excellence Framework), initiatives to measure the teaching quality and research outcomes respectively in UK higher education institutions. Consider how these frameworks might impact the working lives of lecturers and researchers in universities.

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Effort and work pressure Since the 1980s, many have argued that work pressure has been increasing on two fronts in the UK. First, managers have been putting workers (and each other) under increasing pressure to work long hours. The prevalence of the ‘long-hours culture’ in the UK is indicated by the fact that average working hours are higher in the UK than elsewhere in the European Union (EU). The British government has been accused of supporting a long-hours culture by seeking to limit the effect of the EU Working Time Directive in the UK. Second, since the mid-1980s, analysts have argued that work is being intensified; in other words, workers are being made to work harder during their working hours. There is a widespread belief that work is encroaching on other aspects of workers’ lives, restricting the time available for non-work activities and consequently subjecting people to increased time pressures. This has fuelled recent discussion of ‘work–life balance’ (see the following section). Statistical evidence, however, shows that there has not been a major upward trend in average hours worked in the UK. On the contrary, ONS data (2015c) show that over the long term the mean average number of hours paid per week for full-time employees has decreased from 40.0 in 1997 to 39.1 in 2015. This decrease is particularly notable for men, while women’s hours have remained stable at around 37.5 per week in full-time work. For men, there was a sharp dip between 2008 and 2009, from 40.7 to 40.1, and hours paid have since remained largely stable, not reverting to the levels seen prior to the recession. Looking at the components of hours paid, there is a long-term decrease in overtime, particularly for men, although this has levelled off in recent years. What have increased, however, are the working hours per household as the proportion of households where all the adults are working has grown. The growing proportion of women with dependent children who are in work has been a major influence here. According to Green (2006), it is the increase in the total hours worked per household rather than an increase in hours worked per worker that has made it more difficult to balance work and non-work activities and put people under pressure of time. The other contributory factor to pressures at work is the intensity of the work itself and the amount of work conducted within the hours worked. While we have established that people are not, on the whole, working longer than they were in previous decades, there is evidence that work is harder, requiring people to apply higher levels of ‘intensive effort’, in other words, more mental or physical effort. Having to work hard can be challenging and stressful, though, for some, it can prove invigorating, pleasurable and financially fulfilling. Felstead et al. (2012) assert that intensified forms of work were a feature of the early 1990s after which work effort requirements appeared to level off. In their latest work, drawing on the Skills and Employment Survey 2012, they report that work intensification has resumed in Britain since 2006. Both the speed of work has increased and the pressure to work to tight deadlines has reached a record high. They argue that women have borne the brunt of work intensification, with women in full-time work experiencing the sharpest rises in work intensity since 2006. Likewise, tougher workloads were reported by 32 per cent of full-time employees and 19 per cent of part-time employees responding to the 2011 WERS (van Wanrooy et al., 2013). In this study, incidences of reported workload intensification were felt by more managerial employees (39 per cent) than non-managerial staff (27 per cent). Further, there was a 6 per cent increase between 2004 and 2011 in the percentage of employees who strongly agreed with the statement ‘My job requires that I work very hard’. Felstead et al. (2012) link work intensification with the effort-biased nature of technological change, which enables management to exercise closer control over workers’ effort. A clear example of this is the automated call distribution technology that is used in call centres. This ensures that call centre operators receive a continuous stream of incoming and outgoing calls, setting the pace of work in a similar way to the assembly line of an automated manufacturing plant. Another factor contributing to work intensification may be change in the labour market environment, particularly the decline of collective bargaining. This has given employers greater freedom to introduce certain HRM practices aimed at stimulating effort either directly, through, for

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example, performance-related pay and other new pay systems, or indirectly, as a side-effect of other HR outcomes such as organisational commitment and employee engagement (Green, 2006). Interestingly, there is also a growing body of evidence that part-time workers and those engaging in other forms of flexible working are experiencing work intensification. Walsh (2007) found that, while employees in her study liked part-time work, there was evidence that fragmented work schedules, mandated overtime and difficulties in taking time off work at times to suit the employee created tensions in both the work and the family sphere. Kelliher and Anderson (2010) also present findings to show that employees who work from home for part of the week and employees working reduced hours experience work intensification. Kelliher and Anderson (2010) report that flexible workers can be exposed to three different forms of intensification: ●

Imposed intensification – for example, when a full-time member of staff elects to reduce his/ her hours, but their workload is not reduced accordingly. Such circumstances could result in increased ‘extensive’ effort, working at times when they are not scheduled to work and/or increased ‘intensive’ effort while working (working harder during hours of work).

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Enabled intensification – where the form of work organisation makes it easier for people to work harder, for example, working from home incurs fewer distractions and negates travel time and so permits more time to work.

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Reciprocal or exchange induced intensification – where the ability to take advantage of flexible working options may engender a reaction in employees, which results in them expending greater discretionary effort.

Despite WERS evidence of employees working harder (van Wanrooy et al., 2013: 40), the proportion of employees who were very satisfied or satisfied with all aspects of their job, except job security, rose between 2004 and 2011. Similarly, few of the respondents in Kelliher and Anderson’s study of work intensification in flexible forms of work objected or cited negative outcomes of intensification.

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Think about your own workplace. ●

What systems and technologies are in place to regulate your effort?

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Have you noticed an increase or decrease in the intensity of your work over time?

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Why do you think employees report job satisfaction despite recognising intensification?

Responses to work pressure: The quest for ‘work–life balance’ Work–life balance is a broad issue concerning how to mediate the conflicting demands of corporate profitability on the one hand and the concerns of workers who are under work pressure and life strain on the other. Work–life balance is not an easily defined term. The word ‘balance’ suggests the search for equilibrium between work and life; a settled point perhaps at which work and the rest of life’s activities can comfortably reside side by side. Noon et al. (2013) suggest that work–life balance is about individuals being able to run their working lives and non-work lives without pressure from one sphere detracting from the other. Part of the problem associated with the notion of striking a balance or equilibrium, however, is that, for many, work and non-work aspects of life are increasingly inextricably entwined and overlapped; propelled by the accessibility of tablets and smart phones, we can work in a number of locations and be available instantly, at least in a virtual sense! Employee efforts to make individual and household adjustments to help bring about a better work–life balance are valuable in combating work–life conflict, but these endeavours are shaped by action at community, organisational and societal levels (see Figure4.1).

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Social/governmental responses (e.g. regulations on maternity/paternity leave, time off for dependents, right to request ﬂexible working) Organisational responses (e.g. childcare assistant, ﬂexible working provisions, career breaks, leave provision) Community responses (e.g. after school care, holiday clubs, day care centres) Individual responses (e.g. part-time working, downshifting, scheduling childbearing more carefully, reduced family size, seeking work nearer home)

Figure 4.1 Levels of response to work–life balance pressures. Source: Noon and Blyton (2013: 35 4).

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Are you content with your work–life balance?

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What could you conceivably do to improve your work–life balance?

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How do governmental/social, organisational and community responses to work–life balance pressures (as detailed in Figure4.1) help or hinder you in your ability to improve your work–life balance?

Organisational responses to work–life balance There are arguably strong business reasons why employers should offer arrangements to employees to help achieve a better integration of work and non-work aspects of their lives. Clutterbuck (2004) suggests that creating an enabling culture in which employees can amend and re-apportion the time and attention they pay to work to meet their particular needs and circumstances can be a source of sustainable competitive advantage. More specifically, Edwards and Wajcman (2005) refer to international survey evidence to show that graduates care more about work–life balance than pay when they are selecting an employer, the implication being that employers who attend to the work–life balance needs of their employees are more likely to be employers of choice in the competitive graduate market. However, finding the right blend of organisational interventions to help individuals is complex; work–life balance is a movable target in the sense that different people have different ideas of what constitutes a satisfactory work–life balance. In practice, employers’ responses to work–life balance have been mixed. According to WERS 2011 (van Wanrooy et al., 2013), most managers (76 per cent) strongly agree or agree that it is up to individual employees to balance their work and family responsibilities. Managers in private-sector organisations are more likely than those in the public sector to take this view. In line with these findings, there was no reported general increase in employers’ provision of flexible working practices to help employees achieve a better work–life balance.

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Think of the organisation you work for now or an organisation you have worked for in the past. What support is provided to help employees achieve a better work–life balance? Why do you think the organisation takes the stance it does on work–life balance?

Trends in the provision and take-up of work–life balance initiatives The Fourth Work–Life Balance Employee Survey (Tipping et al., 2012) follows a series of surveys first embarked upon in 2000, to track trends in work–life balance provision. The survey provides the following summary remarks from the survey conducted in early 2011: ●

The majority of employees were satisfied with their hours and current working arrangements.

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Levels of awareness of the right to request flexible working were high: 75 per cent of all employees, 73 per cent of employees with non-childcare/caring responsibilities and 79 per cent of parents were aware of the right, rising to 82 per cent for parents of young children.

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Flexitime, working from home and part-time working were the forms of flexible working most commonly taken up by employees.

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The views of employees regarding flexible working were generally positive. The vast majority of employees agreed that having more choice in working arrangements improves morale (90 per cent), although over one-third (35 per cent) thought that people who work flexibly create more work for others.

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The availability of flexible working was important for just over two in five employees (41 per cent) when they made their decision to work for their current employer. Those with flexible working arrangements were more likely to work long hours, suggesting that such practices facilitate greater labour market involvement.

The survey is extremely rich in detail and reveals perceptions of the availability of a host of different forms of flexible working by employee and employer characteristics. It is beyond the scope of this chapter to extract and discuss these findings. Suffice to say that gender, age, occupation/ occupational status and qualifications are among the factors influencing the reported provision of forms of flexible working available to employees. The findings from employees would suggest that employers’ propensity to offer flexible working arrangements is driven by a number of factors, including but not limited to sector, mode of production/nature of operations, the gendered composition of the workforce, workplace size and unionisation. The Fourth Work-Life Balance Employer Survey (2013) published by the Department for Business, Innovation and Skills in December 2014 (BIS, 2014) works in concert with the Work-Life Balance Employee Survey to consider work–life balance from an employer perspective. Launched in 2000 with a baseline survey, the second survey (WLB2) followed in 2003 and the third (WLB3) in 2007. The latest survey finds that in the last six years, since WLB3, there have been no great increases in either the availability or the take-up of flexible working practices. The explanation offered is that flexible working is now much more established, with nearly all workplaces (97 per cent) having at least one form of flexible working available. Legislation has also moved in a positive direction by extending the right to request flexible working to all employees with 16 weeks’ continuous service. The findings indicate that, compared with previous surveys, employers are more positive about the impact flexible working can have on the workforce and human resource issues such as retention, employee motivation, ability to recruit and levels of commitment. There continues to be a strong link between positive views of flexible working and the number of flexible working policies offered by the employer. The direction of the causal link is, however, difficult to determine. It is also evident from the survey that the availability of different forms of

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flexible working varies from sector to sector and in different types of workplace. Take-up levels and patterns also differ. It is conjectured that progress in addressing work–life balance issues will continue to be uneven given the trend towards smaller workplaces combined with limited trade union presence in much of the private sector, at least. Moreover, even in those organisations where opportunities for flexible working are offered, barriers to their take-up by employees can prevail: ‘[O]rganisations need not only to have policies for work–life balance in place, but also an underlying culture that supports employees who use flexible working options’ (Noon et al., 2013: 357). Potential obstacles to take-up include the irreducible nature of work tasks in many cases, possible damage to career prospects resulting from taking flexible work options and, for low earners, loss of earnings resulting from some options.

Concluding comments The evidence discussed in this chapter suggests that, despite the widespread rhetoric of high commitment and high involvement and the tendency among advocates and practitioners of HRM to present the employment relationship in terms of mutual consent, it continues to be characterised by conflicts of interest. Currently these centre on hours of work, work intensity, lack of discretion and control over how work is performed, and structured inequalities in the labour market. The main labour market developments from 1997 to just before the recession in 2008 were sustained growth of employment accompanied by increasing inequality in the distribution of pay as a result of the polarised nature of employment growth. This trend appears to have been revitalised in recent years as the economy has come back from recession. While the general economic picture and outlook has improved since the last edition of this textbook was published in 2014, long-standing patterns of inequality and disadvantage remain. Gendered patterns of time segregation, occupational segregation and vertical segregation remain; many women are still concentrated in occupations and industries where rates of pay are low and working conditions are poor. While the overall pay gap between women and men has narrowed, it is the minority of women who are working full-time in higher-paid occupations who have benefited. This group has also benefited most from improvements in statutory maternity leave and pay provisions, which assist them in returning to their jobs after childbirth. The pay gap for the majority of working women, who are in part-time jobs, is still considerable, reflecting the poor quality of employment available on a part-time basis. Established patterns of labour market inequalities also persist between different ethnic minority groups, within ethnic minority groups and between workers from an ethnic minority background and white British workers. These features of the contemporary labour market suggest that there are serious long-term issues to face. First, it is clear that there has been a mismatch between, on the one hand, the way managers are organising work and designing jobs and, on the other, how workers’ job aspirations, qualifications, skills and competences are developing. Widespread job dissatisfaction and disillusionment with future job prospects is a risk that stands to weaken employees’ commitment to their employers and erode the goodwill that is necessary for cooperative relationships to develop and thrive in the workplace. Recent attention to work–life balance issues may go some way to addressing these issues, but underlying issues stemming from the polarisation of the type of work available are likely to lead to an undesirable proportion of people trapped in jobs for which they are likely over-qualified, and in which they consequently find insufficient fulfilment. Second, discrimination against ethnic minorities, women and older workers represents a waste of human resources talent and leads to the under-utilisation of the skills possessed by these groups. However, as we have seen, employers individually may derive some benefits from the presence of disadvantaged groups in the economy; these groups have very little power in the

SUMMARY

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Summary ●

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3 How has the structure of demand for labour changed over the last three decades or so? 4 Why have levels of job intensity increased in recent years? 5 Who have been the main beneficiaries of changes in the labour market since the 1980s and who have been the main losers?

Case study Companies struggle to fill quarter of skilled jobs vacancies Britain’s companies say it has become harder to find skilled workers than at any other time in a decade. About 209,000 job vacancies – or one in every four – are proving hard to fill because of a shortage of candidates with the right skills. This is the highest proportion since 2005, according to a biennial survey of about 90,000 companies. The survey by the UK Commission for Employment and Skills, a government quango, shows the proportion of ‘skill shortage vacancies’ has increased steadily from a low of 15per cent of total vacancies in 2011. Skill shortages have increased as the economy has recovered after the financial crisis and unemployment has dropped. Joblessness is now just 5.1 per cent, the lowest since 2006, which means there is a smaller pool of available workers that employers can tap. The shortage is most acute in the electricity, gas, water, construction, transport and manufacturing sectors. Lesley Giles, deputy director of the UKCES, said the survey showed Britain needed to boost the skill level of its workforce to make meaningful improvements to productivity, which has languished since the crisis. Adam Marshall, policy director at the British Chambers of Commerce, said the shortage of skilled workers was ‘preventing businesses from reaching their full potential and hurting productivity’. The government has criticised employers for not doing enough to train workers. Last year it announced a levy on all large employers to pay for 3m apprenticeships by 2020. However, employers fear the government will prioritise quantity over quality in pursuit of this target. Mr Marshall also seized on the survey to criticise a proposal from the Migration Advisory Committee to charge employers who hire from abroad. ‘Now is not the time to introduce an Immigrant Skills Charge,’ he said. ‘Businesses are currently experiencing acute skills shortages and we shouldn’t further handicap them by increasing the cost of recruiting the talent they need.’ The Bank of England’s Monetary Policy Committee, which sets interest rates, is likely to pay close attention to

the survey. They are looking for signs of inflationary pressure, and skill shortages are usually an early indicator because they prompt employers to compete for scarce workers by offering higher salaries. However, average wage growth has been slowing rather than accelerating. This could be because the shortage is limited to specific types of workers in specific sectors, said David Page, an economist at Axa Investment Managers. There is evidence that pay is shooting up for some sorts of workers such as bricklayers, but these instances might be too isolated to affect average wages overall. Alternatively, Mr Page said wages could be weak because employees do not feel secure enough to ‘shop around and cash in on’ their scarcity value. Some economists were sceptical that skill shortages were a growing problem at all. Mark Beatson, chief economist at the Chartered Institute of Personnel and Development, said there was ‘quite a bit of hype and special pleading’ from businesses over the issue. ‘To a certain extent, skill shortages will always be with us, no matter how much money is pumped into the system to boost supply’, he said. ‘If you look at the types of jobs on this skill shortage list, they’re not very different from what they were 10 years ago’. (Sarah O’Connor and Employment Correspondent. Source: FT.com, 28 January 2016; copyright © The Financial Times Limited 2016).

Questions 1

Why do you think the skills shortages referred to in the case are reportedly most acute in the electricity, gas, water, construction, transport and manufacturing sectors?

To what extent do you think it is fair for the government to criticise employers for not doing enough to train workers and so lay some of the blame for skills shortages at their door?

Do you genuinely think there is a skills shortage in the UK? What evidence do you have to support your views?

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References and further reading Arlidge, J. (2016), Reality Cheque, Sunday Times Rich List 2016, The Sunday Times, April. Baker, C. and Cracknell, R. (2014), Women in Public Life, the Professions and the Boardroom. House of Commons Library, Standard Note SN05170. Bayliss, V. (1998), Redefining Work: An RSA Initiative. London: Royal Society for the Encouragement of Arts, Manufactures and Commerce. BBC News (2016), Parents seek teacher for remote Hebridean island of Muck. Online: www.bbc.co.uk. BIS (2014), The Fourth Work-Life Balance Employer Survey (2103). BIS Research Paper No. 184, December 2014. Butler, P. and Walker, P. (2016), Universal credit falls five years behind schedule, The Guardian, 20 July. Cangiano, A. (2016), The Impact of Migration on UK Population Growth, The Migration Observatory. Online: www. migrationobservatory.ox.ac.uk. Catney, G. and Sabater, A (2015), Ethnic Minority Disadvantage in the Labour Market, Joseph Rowntree Foundation, March. CBI (2011), Mapping the Route to Growth: Rebalancing Employment. Brief, June. Centre for Women and Democracy (2015), Sex and Power: Who Runs Britain? Counting Women in Coalition, funded by the Joseph Rowntree Charitable Trust. Clutterbuck, D. (2004), Managing Work–Life Balance in the 21st Century. London: CIPD. Cooke, L. and Baxter, J. (2010), ‘Families in international context: Comparing institutional effects across western societies’, Journal of Marriage and Family, 72, 3: 516–36. Craig, L. (2006), ‘Children and the revolution: A time diary analysis of the impact of motherhood on daily workload’, Journal of Sociology, 42: 125–43. Crompton, R. and Lyonette, C. (2009), ‘Partners’ relative earnings and the domestic division of labour’. Conference presentation at Gender Equality Network Conference; Gender Inequalities in the 21st Century, University of Cambridge, 26 March. Cully, M., Woodland, S., O’Reilly, A. and Dix, G. (1999), Britain at Work: As Depicted by the 1998 Workplace Employee Relations Survey. London: Routledge. Delebarre, J. (2016), Unemployment by Ethnic Background. House of Commons Library, Briefing Paper Number 6385, 27April. Delson, L. (1998), ‘Why do men work part-time?’, in J. O’Reilly and C. Fagan (eds), Part-Time Prospects: An International Comparison of Part-Time Work in Europe, North America and the Pacific Rim. London: Routledge, pp. 57–76. Dent, M. (1991), ‘Autonomy and the medical profession: Medical audit and management control’, in C. Smith, D. Knights and H. Willmott (eds), White-Collar Work: The Non-Manual Labour Process. Basingstoke: Macmillan, pp. 65–88. Dodds, L. (2015), ‘Net migration rising’, The Daily Telegraph, 21 May. Doeringer, P.B. and Piore, M.J. (1971), Internal Labour Markets and Manpower Analysis. Lexington, MA: Heath. Dustmann, C., Frattini, T. and Theodoropoulos, N. (2011), ‘Ethnicity and second generation immigrants’, in P. Gregg and J. Wadsworth (eds), The Labour Market in Winter: The State of Working Britain. Oxford: Oxford University Press. Edwards, P. and Wajcman, J. (2005), The Politics of Working Life. Oxford: Oxford University Press, pp. 220–39.

EHRC (2013), How Fair Is Britain? Equality, Human Rights and Good Employment Relations in 2010. The First Triennial Review. Online summary: http://www.equalityhumanrights. com/key-projects/how-fair-is-britain/online-summary/ employment/ (accessed 16 January 2014). Eurostat (2016), Eurostat Statistics Explained: Unemployment Statistics, June. Online: www.ec.europa.eu. EqualPayPortal, Up-to-date information on the gender pay gap. Online: www.equalpayportal.co.uk (last accessed 14 August 2016). Felstead, A., Gallie, D., Green, G. and Inanc, H. (2012), Work Intensification in Britain: First Findings from the Skills and Employment Survey, 2012. ESRC Centre for Learning and Life Chances in Knowledge Economies and Societies (LLAKES). Ford, M. (2015), Ethnic Penalties and Inequalities, Justice Matters for Young Black Men: Tackling the Ethnic Penalty, Centre for Crime and Justice Studies. Friedman, A. (1977), Industry and Labour. London: Macmillan. Gallie, D., White, M. and Cheng, Y. (1998), Restructuring the Employment Relationship. Oxford: Clarendon Press. General Medical Council (2016), List of Registered Medical Practitioners – Statistics. Online: www.gmc-uk.org. Gordon, D.M., Edwards, R. and Reich, M. (1982), Segmented Work, Divided Workers: The Historical Transformation of Labour in the United States. Cambridge: Cambridge University Press. Green, F. (2006), Demanding Work: The Paradox of Job Quality in the Affluent Economy. Oxford: Princeton University Press. Heath, A. and Cheung, S.Y. (2006), Ethnic Penalties in the Labour Market: Employers and Discrimination. Research Report 341. London: DWP. Holmes, C. and Mayhew, K. (2012), The Changing Shape of the UK Job Market and Its Implications for the Bottom Half of Earners. London: Resolution Foundation. Kelliher, C. and Anderson, D. (2010), ‘Doing more with less? Flexible working practices and the intensification of work’, Human Relations, 63, 1: 83–196. Kollowe, J. (2016), ‘Job losses gather momentum across UK and Europe’, The Guardian, 18 February. Kollowe, M. (2012), ‘UK unemployment falls due to temporary Olympics jobs boost’, The Guardian, 15 August. Li, Y., Devine, F. and Heath, A. (2008), Equality Group Inequalities in Education, Employment and Earnings: A Research Review and Analysis of Trends over Time. Manchester: EHRC. Longhi, S., Nicoletti, C. and Platt, L. (2012), Explained and Unexplained Wage Gaps across the Main Ethno-Religious Groups in Great Britain. Oxford Economic Papers, pp. 1–23. Longhi, S. and Platt, L. (2009), Pay Gaps and Pay Penalties by Gender and Ethnicity, Religion, Disability, Sexual Orientation and Age. London: EHRC. Marlow, S. and Carter, S. (2004), ‘Accounting for change: Professional status, gender disadvantage and self-employment’, Women in Management Review, 19, 1: 5–17. Marx, K. (1932), Economical and Philosophic Manuscripts of 1844. Moscow: Progress Publishers. Mason, R. (2012), ‘One in four British babies born to foreign mothers’, The Telegraph, 25 October. Millward, N., Bryson, A. and Forth, J. (2000), All Change at Work? British Employment Relations as Portrayed by the Workplace Industrial Relations Survey Series. London: Routledge.

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CHAPTER 5 TALENT MANAGEMENT JULIE BEARDWELL

Objectives ●

To define talent and talent management.

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To consider ways of identifying talent to meet organisational requirements.

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To identify the contribution of recruitment and selection to talent management. To investigate initiatives designed to enhance employee retention. To identify the contribution of employee development activities, succession planning and career management to talent management.

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Case study Talent management in the Red Arrows In the UK, the Royal Airforce Acrobatic Team, the Red Arrows, is one of the world’s premier aerobatic display teams. Representing the speed, agility and precision of the RAF, the team is the public face of the service and assists in recruiting to the Armed Forces. Red Arrows pilots are among the most highly qualified and experienced within the RAF: all have above-average flying skills and are proficient at formation flying before being selected for the team. Each year the RAF asks for volunteers from suitably qualified pilots. There are always more volunteers than places available so a paper pre-selection board reduces the number to about nine. These pilots are then attached to the Red Arrows for a week to undertake a flying test, meet the present team, fly in the back seat during display practices

and be interviewed. Meeting the high flying standard is the first consideration, but, once this has been achieved, pilots are chosen for their personal qualities. The current pilots make their choices at a closed meeting chaired by the team leader. Normally each of the display pilots stays with the team for a three-year tour of duty. The reason for this is that by changing three pilots each year the expertise level within the team is optimised: three first-year pilots, three secondyear pilots and three in their final year. On completion of their tour of duty, pilots return to the ‘front-line’ squadrons to resume their mainstream career. (www.raf.mod. uk/reds)

Introduction The preoccupation with talent that has emerged in recent years shows no signs of abating. There continues to be an abundance of TV shows that are based on a competitive elimination process to identify the most ‘talented’ individual in a variety of fields. This interest in searching for and identifying talented individuals is not restricted to the media. Attracting and retaining talented individuals are important issues in the workplace, and talent management is a top priority for many organisations. A global study of human resource (HR) leaders shows that talent management is the most critical issue facing HR departments worldwide. The study, conducted by the Boston Consulting Group and the World Federation of Personnel Management Associations (WFPMA), involved an online survey of nearly 5,000 executives and over 200 in-depth interviews, and the results reveal that talent management was at the top, or near the top, of executive agendas in almost all of the 83 countries surveyed (Phillips, 2008). These findings pre-date the recession, but recent surveys undertaken by the Chartered Institute of Personnel and Development (CIPD, 2015a: 4) found that talent management is a top priority for half of CEOs (CIPD, 2015a) and nearly three-fifths of employers deploy talent management in their organisations (CIPD, 2015b). But what do we mean by talent management? The term was first coined by the McKinsey Group in the late 1990s when they warned that a ‘war for talent’ was imminent due to a predicted shortage of people with leadership potential. Since then, use of the term has become increasingly common, but its meaning still remains somewhat elusive and open to a number of different interpretations. This chapter will therefore begin by defining the terms ‘talent’ and ‘talent management’ before exploring the activities associated with talent management and their effectiveness.

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Defining talent management The Compact Oxford English Dictionary defines talent as ‘natural aptitude or skill’ and ‘people possessing such aptitude and skill’, so that talent can apply equally to specific skills and to the people who possess these skills. In the workplace context, talent can be defined as ‘those individuals who can make a difference to organisational performance, either through their immediate contribution or in the longer term by demonstrating the highest level of potential’ (CIPD, 2006: 3). Thus, talent can be used to refer to everyone, on the assumption that people all possess individual skills and abilities, or talent can be used in a more exclusive sense to refer only to those who can demonstrate high performance or potential. The initial McKinsey report focused on the recruitment and retention of ‘A players’, the top-performing 20 per cent of managers (Guthridge and Lawson, 2008), arguing that ‘managerial talent is not the only type of talent that companies need to be successful, but it is a critical one’ (Michaels et al., 2001). Since then, consideration of talent has broadened to reflect recognition of the valuable contribution of ‘B players’, that is, the capable, steady performers that make up the majority of the workforce (Guthridge and Lawson, 2008). A third interpretation suggests that the focus of any talent management activity should be on the key positions that are important to fill in any organisation (CIPD, 2006). Thus, talent can be used in an exclusive sense, to refer to a select group of high-flyers; in an inclusive sense, to refer to all employees; or in a hybrid sense, to refer to key workers or roles that are critical to organisational success and that may be at different levels of the organisation. A critical review of the literature (Lewis and Heckman, 2006: 140–41) identifies three distinct perspectives on talent management:

Explore

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Talent management as HR management. Talent management is seen to encompass typical HR practices, functions, activities or specialist areas, such as recruitment, selection, development, and career and succession management. From this perspective, the emphasis is on HR doing what it has always done but ‘doing it faster (via the internet or outsourcing) or across the enterprise rather than within a department or function’ (Lewis and Heckman, 2006: 140).

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Talent management as HR planning. Talent management is viewed primarily as a set of processes designed to ensure an adequate flow of employees into jobs throughout the organisation. Here, the focus is on projecting staffing needs and ensuring an adequate and appropriate talent pipeline.

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Talent management as a general good. This third perspective focuses on talent generically, without considering organisational boundaries or specific positions. Two different approaches emerge in this perspective: organisations that focus their attention on attracting, developing and retaining high-performing individuals (the exclusive approach identified earlier); and organisations that aim to manage everyone to better performance (the inclusive approach).

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Think about a place where you have worked or an organisation with which you are familiar. How relevant are these perspectives to the approach used in that organisation? To what extent will the approach to talent management adopted by an organisation influence your decision about whether to apply for a job in future?

Research undertaken on behalf of the Corporate Research Forum (Hirsh, 2012: 23) found that at least half of the respondents use talent management as a general set of human resource management (HRM) practices, while three-quarters operate around the second perspective with

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a focus on succession planning. Responses to the survey show two main aims for talent management: ●

Echoing of long-established definitions of workforce planning – phrases like ‘the right people, in the right place at the right time’.

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Developing the workforce, either in its entirety or those with high or leadership potential – that is, building the talent pipeline.

Strategic talent management Whichever perspective is applied, there is nothing particularly new about the individual activities that comprise talent management. In fact, Lewis and Heckman (2006: 141) suggest that the first two perspectives are little more than a rebranding of HR practices and workforce planning practices that does little to advance our understanding of ‘the strategic and effective management of talent’. Others, however, do suggest that talent management is a strategic process closely aligned with business strategy; for example, Armstrong (2014: 264) sees talent management as an integrated bundle of activities, ‘the aim of which is to secure the flow of talent in an organisation, bearing in mind that talent is a major corporate resource’. CIPD (2015c: 1) defines talent management as ‘the systematic attraction, identification, development, engagement, retention and deployment of those individuals who are of particular value to an organisation, either in view of their “high potential” for the future or because they are fulfilling business/operationcritical roles’. The existence of a strategy can support the development of plans that are concerned with attracting sufficient high-quality external applicants and making effective use of the internal labour market through the retention, deployment and engagement of the existing workforce. These plans are based on predictions of demand, that is, the numbers of people and skills that the organisation will need in the future, and supply, that is, the availability of those people and skills already in the organisation and in the external labour market. Reconciliation of these plans can help organisations to determine the optimum balance between external and internal recruitment. Some organisations prefer to fill as many vacancies as possible with existing employees in order to motivate and develop people and retain critical skills. This approach requires considerable investment in training and development and the support of a performance management system with an emphasis on identifying potential and on securing commitment from employees. However, the internal recruitment pool is likely to be relatively small, so the potential downside of internal recruitment is that the organisation does not necessarily get the best person for the job. An emphasis on external recruitment might help to bring new ideas and new styles of working into the organisation, but this approach may also reflect a short-term focus and an unwillingness or inability to invest in the existing workforce. Within the UK, the unwillingness may arise from a fear of engaging in costly development activities with staff, which could make them attractive to competitors. Alternatively, management may believe that future changes can pose problems in offering long-term employability or promotion, and do not want to raise unrealistic expectations among the workforce. At the same time, rapidly changing organisational requirements may mean that there is no time to develop the required competencies in-house. In practice, many organisations adopt a combination of both external and internal recruitment, depending on the positions to be filled and the skills available in-house. Cappelli (2008) argues that adopting a supply chain

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perspective and applying operations principles to talent management can help to address the risks associated with estimating demand and the uncertainty of supply. A KPMG white paper, ‘Tune into Talent’ (2013: 3), suggests that, too often, organisations ‘make plans for tomorrow based on people they have and the situation they are in today’ rather than taking ‘a cold, hard look at current processes and technologies – and being prepared to radically evolve them to meet the needs of the next generation of employees’. Empirical evidence appears to support the criticism that few organisations are adopting a strategic approach to talent management. Research studies (e.g. Hills, 2012) have found that few organisations have developed a formal talent management strategy, and that those that have a strategy have experienced difficulties in implementation. Survey data (CIPD, 2015b: 21) found that talent management activities were more likely to be aimed at developing high-potential employees (56 per cent) or growing senior managers (52 per cent) than ‘enabling the achievement of the organisation’s strategic goals, (27 per cent). However, whether talent management is a strategic or a reactive process, its key components are concerned with attracting, identifying, developing and retaining talented individuals. This chapter will explore each of these activities in turn, considering the different methods that organisations may use and the effectiveness of those different approaches.

Attracting talent Attracting talent is primarily aimed at the external labour market and involves the use of recruitment and selection techniques to identify the skills required and then to attract and choose the most suitable people to meet an organisation’s HR requirements. Recruitment and selection are integrated activities, and where recruitment stops and selection begins is a moot point (Anderson, 1994). Nevertheless, it is useful to try to differentiate between the two areas. Whitehill (1991) describes the recruitment process as a positive one, ‘building a roster of potentially qualified applicants’, as opposed to the ‘negative’ process of selection. So a useful definition of recruitment is ‘searching for and obtaining potential job candidates in sufficient numbers and quality so that the organisation can select the most appropriate people to fill its job needs’ (Dowling and Schuler, 1990: 51). Selection is concerned more with ‘predicting which candidates will make the most appropriate contribution to the organisation – now and in the future’ (Hackett, 1991: 49), but also affects the ability to attract suitable candidates, as applicants may be put off if the selection practices appear unfair or unprofessional.

External recruitment The recruitment process involves identifying the skills and abilities required and then choosing the most effective recruitment methods to attract a pool of suitable candidates. When organisations choose to recruit externally rather than internally, the search takes place in local, regional, national and/or international labour markets, depending on numbers, skills, competencies and experiences required, the potential financial costs involved and the perceived benefits involved to the organisation concerned. External recruitment poses problems for many organisations: over three-quarters of respondents to the CIPD (2015a) Resourcing and Talent Planning Survey report recruitment difficulties. The main reasons for recruitment difficulties vary with role but lack of specialist or technical skills is one of the main factors. A fifth of those who have difficulty recruiting administrative or manual workers report pay as the main concern (CIPD, 2015: 12).

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Respondents to the survey also report a variety of means to address these difficulties, including sponsorship of relevant professional qualifications, up-skilling existing employees for hard-to-fill positions and recruiting candidates from different sectors/industries.

Employer branding Over the last decade, skills shortages and a tough economic environment have resulted in fierce competition between organisations to attract and retain talent. One response to these difficulties has been to promote a strong employer brand that markets what the organisation has to offer potential and existing employees. Employer branding adopts similar techniques to those developed by marketeers to attract customers and maintain their loyalty, but in this case applies them to employees. Employer branding can therefore be defined as ‘[a] set of attributes and qualities – often intangible – that makes an organisation distinctive, promises a particular kind of employment experience, and appeals to those people who will thrive and perform best in its culture’ (CIPD, 2016: 1). All organisations have an employer brand, regardless of whether they have consciously sought to develop one. This brand will be based on the way they are perceived as a ‘place to work’ by potential recruits, existing employees and leavers (CIPD, 2012d). Developing an employer brand involves creating a compelling employer image and convincing employees and prospective employees of its worth (Suff, 2006). A strong employer brand should therefore connect an organisation’s values and its people management strategy and be intrinsically linked to a company brand (CIPD, 2012d). Employer branding also reflects recruitment and selection as a social process, that is, recognising that it is not only the organisation that selects the applicant but also the applicant who selects the organisation (Nickson et al., 2008). In the recent CIPD survey (2015a: 10) respondents were twice as likely to agree as disagree that it is an employees’ rather than an employers’ market at the moment.

Explore

Think about an organisation where you would like to work in future. ●

How would you describe its brand?

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What is it about this brand that appeals to you?

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How is this brand communicated to potential and existing employees?

Employer branding can be projected through a number of different channels (Sparrow and Otaye, 2015: 3): ●

primary – employee recommendations and reviews, corporate events, intranet and communication during the recruitment process;

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secondary – organisation’s career website, job search websites, advertising, social media presence and job fairs;

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tertiary – word of mouth.

Taylor (2014: 170) suggests that a positive employer brand can not only make the organisation more attractive to potential recruits but also reduce recruitment costs. Raising the organisation’s profile and increasing its reputation in the labour market mean that fewer advertisements need

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to be placed to attract the candidates the organisation needs. In addition to being able to attract high-quality applicants, organisations also have to be able to keep them. A strong employer brand is frequently associated with being an ‘employer of choice’ and is seen as a key element of winning the ‘war for talent’ (Williams, 2000: 31): In essence, creating a winning environment consists of developing a high-achieving company with values and brand images of which employees can be proud. At the same time, their jobs should permit a high degree of freedom, give them a chance to leave a personal mark and inject a constant flow of adrenalin. Leadership, of course, should be used to enhance, enable and empower, rather than to inhibit, constrain or diminish.

However, not all commentators view employer branding in a positive light. Taylor (2014: 182) identifies two key criticisms contributing to significant debate about the concept. The first is based on the principle that this kind of marketing activity is essentially manipulative and serves the interests of employers at the expense of employees. To put it another way, employer branding is used to recruit and retain without increasing wages. In response, Taylor points out that publications on employer branding repeatedly state that ‘branding exercises that are dishonest in nature invariably fail’ (2014: 183). Furthermore, the growth of social media means that risks associated with the employee experience not matching that promised by the employer brand are greater than in the past. Employees can and do use social media to comment on their organisations and what it is like to work there. Frank Durrell, TMP Worldwide Head of Digital, commented in a CIPD paper (CIPD, 2012e) that ‘social media can make or break the employer brand and encourage talent to come knocking or redirect it to the competition’. The second criticism views employer branding as merely another management fad that will soon run its course. However, there is little to indicate that the interest in employer branding is waning: on the contrary, 86 per cent of respondents have made efforts to improve their employer brand over the same period (CIPD, 2015a: 10).

Key controversy In the wake of recent corporate scandals, the extent to which the values espoused in employer branding truly reflect organisational culture can be questioned. Research undertaken by CIPD found that a third (34 per cent) of HR professionals and 29 per cent of business leaders said that they have to compromise their personal principles to meet current business needs (Lewis, 2015).

Whether or not an organisation actively engages in employer branding, the process of recruitment involves identifying the types of applicant that the organisation wants in terms of skills, experience and attributes. Traditionally, this approach has been very job-focused, that is, identifying the specific vacancy to be filled and then identifying the person who can best meet the job requirements. More recently, there has been a move towards being more people-focused, that is, identifying the key attitudes and behaviours that will make a valuable employee and then training to match specific job needs. This chapter now considers the advantages and disadvantages associated with both approaches.

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Defining the talent required The traditional approach to defining the type of people an organisation wants to attract involves writing a comprehensive job description of the job to be filled. This enables the recruiter to know exactly what the purpose, duties and responsibilities of the vacant position will be and its location within the organisation structure. The next step involves drawing up a person specification that is based on the job description, and that identifies the personal characteristics required to perform the job adequately. Characteristics are usually described within a framework consisting of a number of broad headings. Two frequently cited frameworks are the seven-point plan (Rodger, 1952) and the fivefold grading system (Munro Fraser, 1954), illustrated in Table 5.1. Both frameworks are dated now, and some headings can appear to be potentially discriminatory (e.g. physical make-up and circumstances). Nevertheless, they continue to form the basis of many person specifications in current use. It is common to differentiate between requirements that are essential to the job and those that are merely desirable. Whatever exact format is used, the person specification can form the basis of the recruitment advertisement, it can help to determine the most effective selection methods and, if applied correctly, it can ensure that selection decisions are based on sound, justifiable criteria. However, the compilation of a person specification needs to be handled with care. Predetermined criteria can contribute to effective recruitment and selection only if full consideration has been given to the necessity and fairness of all the requirements. Preconceived or entrenched attitudes, prejudices and assumptions can lead, consciously or unconsciously, to requirements that are less job-related than aimed at meeting the assumed needs of customers, colleagues or the established culture of the organisation. Examples of this might include insistence on qualifications or experience that are not specifically required to undertake the role or sex role stereotyping. The job-based approach to recruitment and selection can be inflexible in a number of ways. For example, the job description may fail to reflect potential changes in the key tasks, or the list of duties and responsibilities may be too constraining, especially where team-working is introduced. This concentration on a specific job and its place in a bureaucratic structure may be detrimental to the development of the skills and aptitudes needed for the long-term benefit of the organisation. In order to accommodate the need for greater flexibility and the desire to encourage working ‘beyond contract’, many organisations have replaced traditional job descriptions with more generic and concise job profiles, consisting of a list of ‘bullet points’ or accountability statements.

Table 5.1 Person specification frameworks Rodger (1952)

Munro Fraser (1954)

Physical make-up – health, appearance, bearing and speech

Impact on others – physical make-up, appearance, speech and manner

Attainments – education, qualifications and experience

Acquired qualifications – education, vocational training and work experience

General intelligence – intellectual capacity Special aptitudes – mechanical, manual dexterity and facility in use of words and figures

Innate abilities – quickness of comprehension and aptitude for learning

Interests – intellectual, practical, constructional, physically active, social and artistic

Motivation – individual goals, consistency and determination in following them up and success rate

Disposition – acceptability, influence over others, steadiness, dependability and self-reliance

Adjustment – emotional stability, ability to stand up to stress and ability to get on with people

Circumstances – any special demands of the job, such as ability to work unsocial hours and travel abroad Source: ACAS (1983).

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The recognition that jobs can be subject to frequent change can also reduce the importance of the job description and increase the relative importance of getting the ‘right’ person. This approach has the potential for greater flexibility, as it enables organisations to focus less on the job itself and more on an individual’s attitude to work and their adaptability. For example, research into call centre recruitment and selection found that a positive attitude was more important in candidates than their ability to use a keyboard (Callaghan and Thompson, 2002). In a talent management approach, a combination of the job-oriented and the person-oriented approaches may be adopted in order to recruit people who can not only fill a specific vacancy but can also contribute to the wider business goals of the organisation. One way to achieve this is via the use of competencies. The term ‘competency’ can be interpreted in different ways but is generally used to refer to personal attributes of individuals, that is, ‘the behaviours that individuals must have, or must acquire, to perform effectively at work’ (CIPD, 2012f: 1). Competency-based recruitment and selection involve the identification of a set of competencies that are seen as important across the organisation, such as planning and organising, managing relationships, gathering and analysing information and decision-making. Each competency can then be divided into a number of different levels, and these can be matched to the requirements of a particular job. Feltham (in Boam and Sparrow, 1992) argues that a competency-based approach can contribute to the effectiveness of recruitment and selection in three main ways: ●

The process of competency analysis helps an organisation to identify what it needs from its human resources and to specify the part that selection and recruitment can play.

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The implementation of competency-based recruitment and selection systems results in a number of direct practical benefits.

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Where systems are linked to competencies, aspects of fairness, effectiveness and validity become amenable to evaluation. These competence frameworks can be used for more than just recruitment and selection.

However, competency frameworks can be difficult to apply in practice and therefore may not achieve the goals of the organisation. The main reasons for this are that managers do not see the benefit of the competency framework and are not trained adequately in its use; there are no clear links to what the business is aiming to achieve; and many frameworks are a mix of different concepts, which makes them unwieldy (Whiddett and Hollyforde, 2007). What a competency-based approach may discover is that recruitment is not always the answer. There are usually a variety of strategies for achieving a particular competency mix and no ‘right’ solutions. For example, if specialist skills are scarce, an organisation may choose to replace the skills with new technology, train existing staff, or hire specialist consultants when needed in preference to employment of permanent staff (Feltham, 1992). When recruitment and selection are deemed appropriate, a competency-based approach achieves a visible set of agreed standards that can form the basis of systematic, fair and consistent decision-making. A recent variation is in the use of a ‘strengths-based’ approach to recruitment, which involves ‘identifying individuals’ strengths, such as roles they particularly enjoy or at which they excel, and then matching them to appropriate types of work, hence enhancing individual performance’ (CIPD, 2016: 1).

Recruitment methods The choice of methods and media used to attract candidates can determine the numbers and quality of candidates and whether or not they decide to apply for the role. Organisations have a wide variety of methods to choose from, including the use of: ●

the internet, including corporate websites and social media;

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advertising, including local and national press, specialist publications, radio and TV;

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informal personal contacts, such as word of mouth and speculative applications;

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formal personal contacts, such as employee referral schemes, careers fairs and open days;

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noticeboards, accessible by current staff and/or the general public;

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external assistance, including job centres, careers services, employment agencies and ‘head-hunters’;

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links with schools, colleges and universities.

Decisions about the most appropriate method (or methods, as many organisations will use more than one) are likely to be influenced by the level of the vacancy and its importance within the organisation. Other factors to be taken into account when choosing the most appropriate method include the resources available within the organisation (in terms of people and finance), the perceived target groups and the organisation’s stance on internal versus external recruitment. HRM literature emphasises the need to have well-developed internal labour market arrangements for promotion, training and career development, which would suggest that many openings can and should be filled internally (Beaumont, 1993). However, a number of organisations, particularly those in the public sector, have policies that require the majority of posts to be advertised externally. Survey findings suggest that, although the majority of workplaces treat external and internal applicants equally, a fifth give preference to internal candidates and 1 in 10 prefer to recruit externally (Kersley et al., 2006).

Online recruitment Over recent years, there has been a significant increase in use of technology to recruit candidates and the majority of respondents to the latest CIPD survey on recruitment (CIPD, 2015a: 14) have enhanced or developed their own corporate website. Online recruitment enables organisations to reduce the time and cost of recruitment and reach more potential applicants. Online recruitment can be used in a number of ways: ●

to advertise vacancies on corporate websites, job sites or social networking sites;

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to deal with applications, for example, email enquiries, emailed application forms or CVs, online application forms;

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to enhance employer brands;

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to create a personal relationship with the talent pool, for example, through the use of recruitment blogs.

The impact of technology on the recruitment process can vary depending on whether online methods are used to supplement or replace more traditional approaches. For example, corporate and external websites can be used to advertise vacancies in addition to press adverts, while the handling of enquiries and applications via email can lead to a duplication of activity (electronic as well as paper-based systems) rather than a replacement of one system with another. Online recruitment can help to speed up the recruitment process and simplify administration, thus reducing costs. It can reinforce employer branding and provide more tailored information on the post and the organisation. This can enable organisations to include online questionnaires, video links and virtual workplace tours that can provide a ‘realistic job preview’. The information included in a realistic job preview should be important to most recruits, not widely known outside the organisation and related to the reasons why newcomers leave (Wanous, 2009). A realistic job preview can improve the ‘fit’ between employee and organisational expectations and reduce the numbers of employees who leave the organisation after a short time. A study of the

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effectiveness of a realistic job preview for expatriate assignments in a multinational company (Caliguiri and Phillips, 2003) found that candidates who received a realistic job preview reported higher perceived ability to make an informed decision about whether to accept a global assignment than those who did not. On the other hand, some excellent candidates may be deterred from applying if the preview draws too much attention to the potential drawbacks of the role. Taylor (2014) suggests that it may be wise to keep back some of the more negative aspects of the job for discussion at the selection interview. The global, 24/7 coverage of online recruitment also helps to reach a wide pool of applicants and can provide a cost-effective means of building a talent pool for future vacancies. However, the downside is that online recruitment can lead to application overload or, conversely, restrict the applicant audience to those who search for jobs online and can make the process impersonal, which may be off-putting for some candidates. In response to this, an increasing number of organisations are using social networking sites to target potential employees.

Social networking Research undertaken by CIPD (CIPD, 2013: 16) found that over half of organisations (54 per cent) use social media in recruitment but most do not have a dedicated strategy or fully understand how to maximise it. Frank Durrel, TMP Worldwide Head of Digital (CIPD, 2012: 8), suggests a number of ways that social media can be used in the recruitment process, from simply providing information to candidates to arguably more effective interaction and engagement with the target audience. For example, Jaguar Land Rover created a video and enabled graduates to personalise this with an image of themselves and then share it on social media. Interaction can also be used to identify the most suitable candidates: GCHQ launched a code-cracking campaign on social media and only those candidates who could crack the code were directed to the organisation’s website to apply for the job in cyber-security.

Explore

Visit the websites of a number of organisations that appeal to you as potential future employers. Compare and contrast the different uses of social media in recruitment. Which approaches seem to you to be most effective? Why?

Recruitment documentation The response to applicants should indicate the overall image that the organisation wishes to project. Some organisations prepare a package of documents, which may include the job description, the person specification, information about the organisation, the equal opportunities policy, the rewards package available and possible future prospects. Some give candidates the opportunity to discuss the position with an organisational representative on an informal basis. This allows the candidate to withdraw from the process with the minimum activity and cost to the organisation. Much relevant information can now be supplied online, thus improving access and reducing costs.

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The design of application forms can vary considerably, but the traditional approach tends to concentrate on finding out about qualifications and work history, and usually includes a section in which candidates are encouraged to ‘sell’ their potential contribution to the organisation. A more recent development is the adoption of a competency-based focus, requiring candidates to answer a series of questions in which they describe how they have dealt with specific incidents such as solving a difficult problem or demonstrating leadership skills. Some organisations, particularly in the retail sector, include a short questionnaire in which applicants are asked to indicate their preferred way of working. A variant on the traditional application form, ‘biodata’ may also be used. Forms consist of a number of questions that are partly factual (e.g. university attended) and partly about attitudes and values. The results are then compared against an ‘ideal’ profile, which has been compiled by identifying the competencies that differentiate between effective and non-effective job performance in existing employees. Biodata questionnaires are costly to develop and need to be designed separately for each job (Taylor, 2014: 210). There are also problems with potential discrimination and intrusion into privacy, depending on the information that is sought. Taylor (2014: 211) suggests that the apparently arbitrary nature of making selection decisions on the basis of questions such as university attended or preferred holiday destination ‘is disturbing, however effective the approach might be at determining job performance’. Few employers report the full-blown use of biodata, but the principles appear to influence the design of longer and more sophisticated application forms, often completed online (Reynolds and Weiner, 2009).

Selecting talent The stages described in the previous sections constitute recruitment, and are primarily concerned with generating a sufficient pool of quality applicants. The focus now shifts to selection and the next stages concentrate on assessing the suitability of candidates.

Shortlisting It is extremely unlikely that all job applicants will meet the necessary criteria, and so the initial step in selection is categorising candidates as probable, possible or unsuitable. This should be done by comparing the information provided on the application form or CV with the predetermined selection criteria. The criteria may either be explicit (detailed on the person specification) or implicit (only in the mind of the person doing the shortlisting). However, this latter approach is potentially discriminatory, and would provide no defence if an organisation were challenged on the grounds of unlawful discrimination. Potentially suitable candidates will continue to the next stage of the selection process. Other developments chiefly reflect a desire to reduce the time and effort involved in shortlisting from large numbers of applicants. One option is to encourage unsuitable candidates to self-select themselves out of the process. The chapter has already discussed the use of realistic job previews that allow candidates to answer online questionnaires and receive feedback on their answers and potential suitability for the post prior to completing a job application. A variant on this is to use ‘killer’ questions. These are asked at certain stages of an online application process and an incorrect answer will terminate the application at that point (IRS, 2003). Another option is to use software packages that compare CVs with the selection criteria and separate the applications that match the criteria from those that do not. This has the advantage

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Table 5.2 Popularity of selection methods Percentage (%) Interviews following contents of CV/application form

Competency-based interviews

Telephone interviews

Tests for specific skills

General ability tests

Literacy and/or numeracy tests

Assessment centres

Personality/aptitude questionnaires

Group exercises

Online selection tests

Pre-interview references

N – 605 Source: From Resourcing and Talent Planning Survey report, 1 CIPD (2015) p. 24, with the permission of the publisher, the Chartered Institute of Personnel and Development, London (www.cipd.co.uk).

of removing some of the subjectivity inherent in human shortlisting, but it does rely on the selection criteria being correctly identified in the first instance. It can also reject good candidates who have not used the right keywords and so needs to be handled with caution. A third option is to reduce large numbers of applicants via random selection. Although there is concern that this may operate against equal opportunities, it is also claimed that ‘randomised selection may produce a better shortlist than one based on human intervention where the wrong selection criteria are used consistently or where the correct selection criteria are applied inconsistently’ (IRS, 1994: 6).

Selection techniques Various selection techniques are available, and a selection procedure will frequently involve the use of more than one. The most popular techniques are outlined here (see Table 5.2), and their validity and effectiveness are discussed later in the chapter.

Interviews Interviewing continues to be the most popular selection method but can be applied in a wide variety of ways. Differences can include the number of interviewers, the number of interview stages and even the location as organisations that recruit from overseas are increasingly using video/Skype interviews as part of the selection process. The format can be biographical, that is, following the contents of the application form, or it can be based on the key competencies required for the job. Over the years, interviews have received a relatively bad press as being overly subjective, prone to interviewer bias and therefore unreliable predictors of future performance. Such criticisms are levelled particularly at unstructured interviews, and, in response to this,

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developments have focused on structuring interviews more formally or supplementing them with less subjective selection tools, such as psychometric tests and work sampling. See, for example, the approach adopted by Goldman Sachs outlined in Box 5.1 below.

Explore

Imagine you are responsible for selecting operators to work in a contact centre. ●

●

Prepare a set of behavioural questions suitable for the interview. You are looking for evidence of strong social skills (e.g. good verbal communication, positive attitude, good sense of humour, energy and enthusiasm) and good technical skills (e.g. numeracy and keyboard skills). Test out these questions on friends and colleagues to assess their effectiveness. What do you see as the key strengths and weaknesses of this approach?

There are different types of structured interview, but they have a number of common features (Anderson and Shackleton, 1993: 72): ●

The interaction is standardised as much as possible.

●

All candidates are asked the same series of questions.

●

Replies are rated by the interviewer on pre-formatted rating scales.

●

Dimensions for rating are derived from critical aspects of on-the-job behaviour.

The two most popular structured interview techniques are behavioural and situational interviews. Both use critical incident job analysis to determine aspects of job behaviour that distinguish between effective and ineffective performance (Anderson and Shackleton, 1993). The difference between them is that in behavioural interviews, the questions focus on past behaviour (e.g. ‘Can you give an example of when you have had to deal with a difficult person? What did you do?’), whereas situational interviews use hypothetical questions (e.g. ‘What would you do if you had to deal with a team member who was uncooperative?’). Behavioural and hypothetical questions generally form the basis of competency interviews with the supplementary use of probing questions focused on exploring in detail the extent to which candidates can demonstrate the key behaviours and attributes deemed necessary for the role in question. The focus on specific incidents makes it harder for candidates to make up answers and, from an interviewer’s perspective, provides a good basis for justifying selection decisions (Taylor, 2014). A recent development, particularly in early career recruitment (e.g. school leavers, apprentices and graduates), is the adoption of a strengths-based approach to recruitment. While competencies relate to capability, strengths focus on what people enjoy doing. Professor Alex Linley defines strength as ‘a pre-existing capacity for a particular way of behaving, thinking or feeling that is authentic and energizing to the user and enables optimal functioning, development and performance’ (www.cappeu.org). When people are using their strengths they demonstrate a real sense of energy and engagement; they become engrossed in what they are doing; they will rapidly learn new information and will reach high levels of performance (Isherwood, 2008). Strengths-based recruitment is based on the principles of positive psychology, defined as ‘a psychology of positive human functioning...that achieves a scientific understanding and effective interventions to build thriving individuals, families and communities’ (Seligman and Csikszentmihalyi, 2000:13). Advocates of strengths-based recruitment (e.g. Isherwood, 2008) argue the benefits for both organisations and individuals, as it enables organisations to match the strongest candidates to roles that will help them achieve their potential and allows candidates to make informed and authentic choices.

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Box 5.1 Goldman Sachs to drop on-campus interviews Goldman Sachs is abandoning the time-honoured practice of on-campus interviews for undergraduates at elite schools and will now ask students to use pre-recorded interviews to pitch for a job at the bank. The Wall Street bank announced the new initiative on Thursday along with a range of other innovations it says will make its recruitment more consistent and rigorous. ‘The number one priority is how do we find more terrific people that are potential candidates for the firm,’ said Edith Cooper, global head of human capital management at the bank. ‘Leveraging technology will help you get to more places.’ Goldman attracts more than 250,000 applications from students annually, including almost 225,000 from undergraduates. But more than half of the undergraduates it traditionally hires comes from a group of fewer than 50 ‘target’ schools, including prestigious Ivy League colleges. Under the new approach, candidates from any school will instead use a pre-recorded interview programme called HireVue, which JPMorgan uses in its retail bank. The bank will then invite second-round candidates to a ‘structured interview’ where questions will be more prescriptive to allow for candidates responses to be more easily benchmarked against each other. Mike Desmarais, who heads the Goldman global recruiting, said the new approach should ‘highlight people that we might otherwise miss’, giving the bank a more diverse group of candidates to choose from for the 2,500 summer graduates it hires annually. Russell Horwitz, co-chief operating officer of the securities division at Goldman, said the bank’s new approach was better than the current ones where bankers are hired ‘based on instinct and feel that at times does not produce the best outcome’. Ms Cooper insisted that the new system would not be something candidates could learn to game. ‘If you go in there with a script because that’s what everyone says you’re supposed to say it doesn’t take long for people to figure out what it is.’ Goldman is also piloting a personality questionnaire that would ‘evaluate several different personality characteristics and experiences’ that the bank believes are ‘predictive of long-term success,’ Mr Horwitz said. The bank insisted the new approach was not being taken in response to difficulties it faced in hiring and retaining talent. Investment banks on both sides of the Atlantic have been fighting an uphill battle to stem the flow of their younger talent to industries seen as more lucrative or fulfilling, such as hedge funds, private equity and technology. Goldman last year promised junior bankers faster promotions, more diverse experiences and less drudgery. More recent initiatives include Morgan Stanley ’s introduction of four week sabbaticals for newly-promoted vice-presidents. Source: Noonan, L. (2016) ‘Goldman Sachs to drop on-campus interviewing’, Financial Times, 23 June; © Financial Times Limited 2016; reproduced with permission.

Tests The types of test used for selection are ability and aptitude tests, intelligence tests and personality questionnaires. Ability tests (such as typing tests) are concerned with skills and abilities already acquired by an individual, whereas aptitude tests (such as verbal reasoning or numerical aptitude tests) focus on an individual’s potential to undertake specific tasks. Intelligence tests can give an indication of overall mental capacity and have been used for selection purposes for some considerable time. Personality questionnaires allow quantification of characteristics that are important to job performance and difficult to measure by other methods (Lewis, 1985). The debate about the value of personality tests is ongoing, and centres on lack of agreement on four key issues (Taylor, 2014: 218): ●

the extent to which personality is measurable or ‘mappable’;

●

the extent to which personality remains stable over time and across different situations;

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the extent to which certain personality characteristics can be identified as being necessary or desirable for a particular job;

●

the extent to which completion of a questionnaire can provide sufficient information about an individual’s personality to make meaningful inferences about their suitability for a job.

Tests have the benefit of providing objective measurement of individual characteristics, but they must be chosen with care. Armstrong (2014: 239) suggests that a good test is ‘one that provides data that enables reliable predictions of behavior or performance to be made’. He goes on to outline the two key characteristics of a good test (2014: 239): 1. Reliability. A test aimed at measuring a particular characteristic should measure the same characteristic when applied to different people at the same time, or to the same person at different times. 2. Validity. A test should measure the characteristic which it is intended to measure. For example, an intelligence test should measure intelligence and not simply verbal facility. One relatively recent development has been the increased popularity of online testing, particularly in the recruitment of graduates and where employers are faced with high volumes of applicants. Online testing has the potential to reduce delivery costs, thus making testing more affordable for lower-paid jobs. However, there are also some potential disadvantages, including lack of control of the environment in which the test takes place and problems verifying that the individual taking the test is the actual candidate.

Assessment centres An assessment centre is not a place but rather a process that ‘consists of a small group of participants who undertake a series of tests and exercises under observation, with a view to the assessment of their skills and competencies, their suitability for particular roles and their potential for development’ (Fowler, 1992). There are a number of defining characteristics of an assessment centre: ●

A variety of individual and group exercises are used, at least one of which is a work simulation.

●

Multiple assessors are used (frequently the ratio is one assessor per two candidates). These assessors should have received training prior to participating in the centre.

●

Selection decisions are based on pooled information from assessors and techniques.

●

Job analysis is used to identify the behaviours and characteristics to be measured by the assessment centre.

Assessment centres are used by a third of organisations (CIPD, 2015), usually in the appointment of graduates or management positions. The assessment centre process allows organisations to observe candidate behaviour in a work-related setting. Typical exercises can include presentations, role-plays, group discussions as well as interviews and psychometric testing. Combining group and individual exercises can improve the consistency and objectivity of the selection process. In addition, the use of such a sophisticated technique, if handled well, can help the organisation to display a positive image to potential candidates. The drawbacks primarily relate to the costs and resources required. For this reason, assessment centres are most likely to be used in public-sector organisations and by larger private-sector employers (see Box 5.2).

Social media The chapter has already discussed the use of social media to attract candidates, but networking sites are also often used to screen applicants. The annual Eurocom Worldwide study has found that 40 per cent of respondent companies check out potential employees’ profiles on social media and, according to the most recent survey, almost one in five technology firms has rejected a job applicant because of their social media profile (Eurocom, 2012). An article in the Wall Street Journal (Kwoh, 2012) reports on a study undertaken by the Corporate Executive Board, which

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Box 5.2 Graduate recruitment at KPMG KPMG is one of the world’s leading professional services organisations with a global network of member firms operating in 144 countries. The organisation keeps in touch with new and prospective graduate applicants via Twitter and Facebook. It also provides details of the selection process on its website (www.kpmgcareers.co.uk/graduates/howto-apply/application-process/): Stage 1: Online Application Form. This covers academic background and work experience. Stage 2: Situational Judgement Test. This is a multiple-choice test featuring a series of hypothetical, challenging situations that could be encountered as a trainee with KPMG. Stage 3: Online Numerical and Verbal Reasoning Tests. Applicants who are successful with their initial application and SJT are asked to take numerical and verbal tests designed specifically for KPMG. Stage 4: Digital Submission. Applicants who are successful in the online tests are invited to submit a digital submission in audio format. This is a 90-second audio submission that gives candidates the opportunity to demonstrate communication skills and motivation for a career at KPMG. Stage 5: Launch Pad Recruitment Event. If the digital submission is successful, applicants are invited to attend the final stage of the selection process. During the day candidates will be given the opportunity to demonstrate the KPMG behavioural capabilities as well as learn more about career opportunities and meet with partners and graduate trainees.

Questions 1

The Digital Submission (stage 4) has replaced a 45-minute interview. What are the advantages and disadvantages of this change for the organisation and for candidates?

What criteria should KPMG use to measure the effectiveness of the Launch Pad Recruitment Event?

found that, when screening using social media, 44 per cent of organisations have rejected applicants for badmouthing their current employer, 30 per cent for inappropriate language and 17 per cent for excessive personal information. The same report suggests that some companies are reluctant to add social media checks to their hiring process because employers can become aware of information that cannot be legally considered in the selection process, such as religion, race, gender and health status. In addition to potential claims for unlawful discrimination, risks to employers can also include ensuring compliance with data protection legislation and breaching trust and confidence (Cronly-Dillon, 2007). Recent research undertaken by the CIPD (CIPD 2013: 16) found that 38 per cent of organisations look at applicants’ online activity or profiles to inform recruitment decisions. Only 8 per cent reported that they had rejected candidates as a result of this (although 34 per cent reported that they did not know so the number could be higher).

Key controversy Over a third of organisations (34 per cent) look at applicants’ online presence or activity to inform the recruitment process but few always inform candidates of this (CIPD, 2013). To what extent do you consider this a breach of privacy?

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Factors influencing choice of selection techniques What determines the choice of different techniques? One could reasonably assume that a key factor in determining the type of method would be its ability to predict who is suitable and who is unsuitable for the position. In other words, whatever technique is used, people who do well in the selection process should be capable of doing the job and people who do badly should not.

Accuracy Accuracy should be a key factor in determining the choice of selection method, but no single technique can predict with certainty which individuals will perform well in a particular role. It is difficult to assess selection techniques effectively as people who do not perform well during the selection process will not get the chance to demonstrate subsequent job performance. However, studies (e.g. Anderson and Schackleton, 1993: 30) have shown that assessment centres, structured interviews and work sampling have higher levels of accuracy than unstructured interviews and references. See, for example, the approach adopted by Goldman Sachs outlined in Box 5.1 below. The increased use of more accurate methods such as assessment centres and selection testing can help to improve the effectiveness of the selection process, although survey results (e.g. CIPD, 2015) show that interviews are still the most widely used selection method. Concerns about accuracy appear to have encouraged employers to adopt more structured interview formats or to supplement the interview with other selection methods such as tests or work simulation. However, the extent to which the drive for accuracy is the key influence is open to question. A study into the use of selection tests (Wolf and Jenkins, 2006) suggests that their increased use has been driven more by organisations’ desire to protect themselves from legal challenges to 1.0

Perfect prediction (1.0)

0.9 0.8 0.7 0.6 0.5

Assessment centres – promotion (0.68) Structured interviews (0.62) Work samples (0.55) Ability tests (0.54) Assessment centres – performance (0.41)

0.4 0.3

Biodata (0.40) Personality tests (0.38) Unstructured interviews (0.31)

0.2 References (0.13) 0.1 0

Astrology (0.0) Graphology (0.0)

Figure 5.1 The predictive accuracy of selection methods. Source: Adapted from Anderson, N. and Shackleton, V. (1993) Successful Selection Interviewing. Oxford: Blackwell, p. 30.

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selection decisions and by the growing professionalism of HR departments than by considerations of the technical qualities and predictive validity of tests. As a result, the article concludes that ‘further increases in test use are very likely, but...there is no reason...to expect that these will necessarily increase the effectiveness of the selection process’ (Wolf and Jenkins, 2006: 208).

Level of vacancy The level of vacancy can have a significant influence on the choice of selection methods used. Assessment centres, in particular, are more likely to be used for managerial and graduate posts. This may indicate an organisation’s willingness to invest more heavily in future managers than in other parts of the workforce, but may also be due to candidate expectations and the organisation’s need to attract the highest-quality applicants for key positions.

Cost of selection techniques There is no doubt that recruitment and selection can be costly activities, and the costs incurred by some selection techniques can make them prohibitive for all but a few ‘key’ vacancies in an organisation. For example, assessment centres require considerable investment of resources and substantial time commitment from assessors. A CIPD survey (CIPD, 2102a: 14) reported median recruitment costs to be £8,000 for senior management/director positions and £2,500 for other employees. However, in deciding on the most cost-effective methods, the ‘up-front’ costs need to be balanced against the costs of wrong decisions. Jaffee and Cohen (cited in Appelbaum et al., 1989: 60) suggest that consideration of costs should include some or all of the following: ●

the start-up time required by a replacement for the jobholder;

●

the downtime associated with the jobholder changing jobs internally or externally;

●

training and/or retraining for the replacement and the jobholder;

●

relocation expenses;

●

the shortfall in productivity between an effective and an ineffective jobholder;

●

the psychological impact on the ‘failed’ jobholder and the morale of others in the department.

Making the selection decision The aim of the overall recruitment and selection process is to provide enough information to enable recruiters to differentiate between those who can do the job and those who cannot. The prescriptive approach stresses that the final decision should involve measuring each candidate against the selection criteria defined in the person specification and not against each other (Torrington et al., 2008). Searle (2003: 114–16) suggests a number of sources of error and bias in interviewers’ decision-making processes, including: ●

‘similar to me effect’, where interviewers enhance the ratings of those who look like themselves, respond in a similar way, or appear to have equivalent experiences;

●

‘halo effect’, where one aspect of the candidate’s qualities (most commonly physical attractiveness) influences all other aspects and so boosts their overall rating;

●

‘horns effect’, where over-attention to some negative aspect reduces a candidate’s overall rating.

The combination of a number of different selection methods and the increased use of more objective methods can enhance the quantity and quality of information about each candidate, although Anderson and Shackleton (1993) warn of the dangers of information overload in selection.

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Retaining talent Up until now, this chapter has focused on attracting new talent to the organisation, that is, the external element of talent management. However, that is only part of the equation, and talent management is also concerned with the ability to keep high-quality employees and continue to maximise their contribution to the organisation, that is, the internal element. The chapter therefore now focuses on the internal element of talent management by exploring talent retention, talent development, succession planning and career management. The retention of key staff is a major component of talent management as labour turnover can lead to a loss of key skills and knowledge. CIPD research (CIPD, 2015) has shown that many organisations, particularly in the private sector, have taken steps to improve retention over the last few years. The most popular steps include increasing pay and benefits and improving work– life balance. However, to be fully effective, a retention strategy needs to have information on why employees leave the organisation. Investigating labour turnover can include the use of quantitative and qualitative techniques.

Investigating labour turnover: Quantitative methods The most common method of measuring labour turnover is to express leavers as a percentage of the average number of employees. The labour turnover index is usually calculated using the following formula: Number of leavers in a specified period : 100% Average number employed in the same period

This measure is used most effectively on a comparative basis and frequently provides the basis for external and internal benchmarking. Labour turnover can vary significantly between different sectors and industries. For example, a recent survey into labour turnover (CIPD, 2012a) reports that the median labour turnover rate in the UK is 12.7 per cent, but this varies between different sectors (e.g. 9.5 per cent in manufacturing and production and 16.1 per cent in private services). There is no single best level of labour turnover, but external comparisons can be useful to benchmark labour turnover against other organisations in the same industry, sector or location. However, even organisations with lower than average turnover rates can experience problems if people have left from critical jobs or from posts that are difficult to fill. Conversely, high turnover is not necessarily problematic and may be used by cost-focused firms to minimise labour costs (Batt and Colvin, 2011). The labour turnover index is, thus, a relatively crude measure that provides no data on the characteristics of leavers, their reasons for leaving, their length of service or the jobs they have left. So, while it may indicate that an organisation has a problem, it gives no indication about what the specific problem might be, or what might be done to address it. Knowledge about the location of leavers within an organisation can be gained by analysing labour turnover at the department or business unit level or by job category. For example, managers generally have lower levels of resignation than other groups of employees. Any areas with turnover levels significantly above or below organisational or job category averages can then be subject to further investigation. Most attention is levelled at the cost and potential disruption associated with high labour turnover, but low levels of labour turnover should not be ignored as they may be equally problematic. Low labour turnover can cause difficulties as a lack of people with new ideas, fresh ways of looking at things and different skills and experiences can cause organisations to become stale and rather complacent. It can also be difficult to create promotion and development opportunities for existing employees. Nevertheless, many organisations are keen for some levels of stability. While the labour turnover index focuses on leavers, the stability index focuses on the percentage

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of employees who have stayed throughout a particular period, often one year. This therefore allows organisations to assess the extent to which they are able to retain workers. The formula used to calculate stability is: Number of employees with one year’s service at a given date Number employed one year ago

: 100%

Quantitative methods of turnover analysis can be useful for benchmarking the organisation against competitors and for analysing the relative performance of different parts of the organisation. Year-on-year comparisons can also be used to monitor the effectiveness of any retention initiatives. The major drawback of quantitative methods is that they provide no information as to the reasons why people are leaving. So, quantitative analyses can help to highlight problems but they give those responsible for talent management no indication about how these problems might be addressed.

Investigating labour turnover: Qualitative methods Investigations into reasons for turnover are usually undertaken via qualitative means. A variety of approaches are used in UK organisations. Exit interviews are the most commonly used methods of finding out why people leave. The benefits of exit interviews are that they are flexible enough to investigate reasons for leaving, identify factors that could improve the situation in the future and gather information on the terms and conditions offered by other organisations. Generally, exit interviews collect information on the following (IRS, 2002): ●

reasons for leaving;

●

conditions under which the exiting employee would have stayed;

●

improvements the organisation can make for the future;

●

the pay and benefits package in the new organisation.

There can also be a number of problems. The interview may not discover the real reason for leaving, either because the interviewer fails to ask the right questions or probe sufficiently or because some employees may be reluctant to state the real reason in case this affects any future references or causes problems for colleagues who remain with the organisation, for example, in instances of bullying or harassment. Conversely, some employees may choose this meeting to air any general grievances and exaggerate their complaints. Some organisations collect exit information via questionnaires. These can be completed during the exit interview or sent to people once they have left the organisation. They are often a series of tick boxes with some room for qualitative answers. The questionnaire format has the advantage of gathering data in a more systematic way, which can make subsequent analysis easier. However, the standardisation of questions may reduce the amount of probing, and self-completed questionnaires can suffer from a low response rate. Reasons for leaving can generally be divided into four main categories: ●

voluntary, controllable – people leaving the organisation due to factors within the organisation’s control, for example, dissatisfaction with pay, prospects, colleagues;

●

voluntary, uncontrollable – people leaving the organisation due to factors beyond the organisation’s control, for example, relocation, ill health;

●

involuntary – determined by the organisation, for example, dismissal, redundancy, retirement;

●

other/unknown.

Attention is usually concentrated on leavers in the voluntary, controllable category as organisations can potentially take action to address the factors causing concern. However, distinctions between controllable and uncontrollable factors can become blurred. For example, in some

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instances, advances in technology and greater flexibility can facilitate the adoption of working methods and patterns to accommodate employees’ domestic or personal circumstances. The involuntary category is also worthy of attention as high numbers of controlled leavers can be indicative of organisational problems, for example, a high dismissal rate might be due to poor recruitment or lack of effective performance management. While exit interviews or exit surveys can provide some information about why people are leaving, they do not necessarily identify the triggers that made someone decide to leave. For example, someone might say that they are leaving to go to a job with better pay, but this does not show what led the person to start looking for another job in the first place. In order to address labour turnover problems and improve retention, organisations need to differentiate between ‘push’ and ‘pull’ factors. Once an individual has decided to look for another job, they are likely to base their decision on ‘pull’ factors, that is, the attractions of the new job or organisation in relation to their existing circumstances. However, the decision to look for another job can be triggered by ‘push’ factors, that is, aspects of the current role or organisation that are deemed unsatisfactory. A study into turnover of healthcare professionals in the UK (Loan-Clarke et al., 2010: 402) found that reasons for leaving NHS employment were more often stated in terms of what was wrong with the NHS (push factors) rather than what was right with the alternative (pull factors). Mitchell et al. (2001) also suggest that decisions to leave or stay are influenced by the degree of job-embeddedness. This relates to how well an individual fits their job (i.e. alignment of skills with job demands), their community (interpersonal relationships) and what they would have to give up if they left. One way to identify potential ‘push’ factors is to conduct attitude surveys within the organisation. Attitude surveys have an advantage over exit interviews and leaver questionnaires in that they can identify potential problems experienced by existing employees rather than those that have already decided to leave. This means that any response can be proactive rather than reactive. However, it also means that organisations can make problems worse if they do not act on the findings: ‘Telling employees that an organisation cares enough to get their opinion and then doing nothing can exacerbate the negative feelings that already existed, or generate feelings that were not present beforehand’ (IRS, 2002: 40). The final method to investigate labour turnover to be discussed here is risk analysis. This involves identifying two factors: the likelihood that an individual will leave and the consequences of the resignation (Bevan et al., 1997). Statistically, people who are younger, better qualified and who have shorter service, few domestic responsibilities, marketable skills and relatively low morale are most likely to leave (IRS, 2001). The consequences of any resignations are likely to be determined by their position in the organisation, performance levels and the ease with which they can be replaced. The risk analysis grid (Bevan, 1997) shows how the two factors can be combined (Figure 5.2). This then enables the organisation to target resources or action at the people it would be most costly to lose. However, the results should be treated with caution as the process does assume an element of predictability, whereas research suggests that decisions to leave are often complex and dynamic, and may be unpredictable or precipitated by sudden events (Morrell and Arnold, 2007).

Explore

Think about an organisation you have left or are considering leaving. ●

What impact would the factors listed above have on your decision?

●

Why?

Information from current employees and leavers can help organisations determine the most effective steps to avoid high levels of turnover and improve employee retention. However, De Vos and Meganck (2009) suggest that some retention initiatives are often based on HR managers’ understanding of employees’ reasons for leaving rather than their reasons for staying, which can

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High

Low

High

Danger zone

Watching brief

Low

Impact on organisation

Likelihood of leaving

‘Thanks for all you’ve done’

No immediate danger

Figure 5.2 Risk analysis grid. Source: Adapted from Quit stalling, People Management, p. 34 (Bevan, S 1997), with permission from Stephen Bevan.

reduce their impact. Findings from the CIPD (2015a: 31) survey show the most common steps taken by organisations to improve retention: ●

improved pay (50 per cent);

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increased learning and development opportunities (49 per cent);

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improved line management people skills (45 per cent);

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improved selection techniques (40 per cent);

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improved induction process (39 per cent);

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improved employee involvement (38 per cent);

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improved benefits (38 per cent);

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changes made to improve work–life balance (36 per cent).

Attention to the skills and abilities of managers is perceived by some as a key element of retention: ‘put simply, employees leave managers not companies’ (Buckingham, 2000: 45). Buckingham (2000) argues that employees are more likely to remain with an organisation if they believe that their manager shows interest and concern for them; if they know what is expected of them; if they are given a role that fits their capabilities; and if they receive regular positive feedback and recognition. However, he also suggests that ‘most organisations currently devote far fewer resources to this level of management than they do to high-fliers’ (Buckingham, 2000: 46).

Developing talent Learning and performance improvement have always been an integral part of talent management (Frank and Taylor, 2004). Learning and development are discussed in detail in Chapter 7, so this section is merely intended to highlight the key developmental practices associated with talent management. Research undertaken by CIPD (CIPD, 2015b: 21) found that the main objectives of talent management activities are: ●

developing high-potential employees (56 per cent);

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growing future senior managers/leaders (52 per cent);

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retaining key employees (38 per cent);

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meeting the future skill requirements of the organisation (36 per cent);

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enabling the achievement of the organisation’s strategic goals (27 per cent);

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attracting and recruiting key staff to the organisation (327 per cent).

The most appropriate methods to develop talent are likely to be influenced by the size and nature of the talent pool; by the organisation’s focus on talent management, that is, whether it is exclusive, inclusive or hybrid; and by organisational context. For example, the survey findings show that larger organisations are more likely to favour high-potential development schemes while smaller oragnisations are more likely to rely on courses at external institutions (CIPD, 2015b: 21). Three-fifths of respondents rated their talent management activities as ‘fairly effective’, but only 5 per cent rated them as very effective, suggesting that there is still considerable scope for improvement in this area. The emphasis on developing high-potential employees and growing future senior managers/leaders is frequently associated with succession planning and career management. Research undertaken by CIPD (CIPD, 2010) explored the perceptions of senior employees who were part of a talent pool or talent programme in their organisation. The results showed that ‘the power and energy created from the formation of peer groups amongst the highest-performing individuals across the business...provides a significant opportunity for organisations to harness talent’ (CIPD, 2010: 3). Respondents to the study valued coaching, mentoring and networking above the more formal development activities of a talent management programme. The results also demonstrate the importance of having a selection process for the talent programme, as this enhances the value of the programme to successful applicants. There is a danger of lower levels of organisational commitment from those who are not successful, so organisations need to give full consideration to how this group will be handled.

Box 5.3 Talent management for leadership positions In 2012, the Institute of Leadership and Management (ILM, 2012) commissioned independent research with 750 UK organisations across the public and private sectors to identify the challenges they face in recruiting and developing skilled leaders and managers. The key findings are that most organisations lack a functional talent pipeline with many having no talent plan at all. As a result, many UK organisations are heavily reliant on external recruitment for management vacancies, especially at senior levels. This is driven in large part by shortcomings in internal leadership and management development. At the same time, almost half (47 per cent) of employers cite the lack of internal staff capability as the single biggest barrier to ensuring an effective pipeline of leaders and managers. Part of the problem is that the criteria for recruitment vary hugely between junior and senior management levels. Often, first line managers are recruited on the basis of technical skill and knowledge, but while these skills are deemed useful for junior managers, they become less important in senior management, when strategic and financial skills become crucial. Employers recruiting in this way are likely to end up with teams led by ‘expert novices’ – technical experts with low awareness and poor leadership and management skills, who struggle to satisfy the immediate requirements of first line management and are ill-equipped to progress into senior positions. A shortage of ‘softer’ leadership and management skills also presents a particular challenge to UK employers. Organisations consistently struggle to find managers at every level who are emotionally intelligent, inspirational and creative – attributes that are considered critical for twenty-first-century management as businesses adapt to diversity, complexity and change. Despite these deficits and deficiencies, only 57 per cent of employers have a plan in place to ensure that they have a pool of leaders and managers that are suitably skilled to fill future vacancies.

Questions 1

What are the main implications of the lack of an effective talent pipeline for individuals and organisations?

What steps can organisations take to address the problem in the short term and in the longer term?

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Two inter-linked key processes that underpin the creation and development of a talent pipeline are succession planning and career management. Succession planning is primarily driven by organisational requirements, and is a process by which successors are identified for key posts, and development activities and career moves are planned in the short and long term (Hirsh, 2012). Career management can be seen as a process that allows individuals to identify future career moves (either within or beyond the existing organisation) and the skills and knowledge required to prepare themselves to gain these roles. The key elements of each approach are considered below.

Succession planning Succession planning can be seen as a means of ensuring that an organisation is creating a ‘talent pipeline’, that is, developing a pool of individuals who are capable of filling key positions in the future in order to ensure that the future needs of the business are met. There is nothing new about organisations identifying and grooming people to fill key posts. The traditional approach to succession planning relied on identifying a few key individuals who would be ready to take on senior roles at certain points in time. However, to be effective, this requires a stable environment and long-term career plans. In response to a rapidly changing environment where the future is uncertain, the focus has moved away from identifying an individual to fill a specific job towards developing talent for groups of jobs as well as planning for jobs that do not yet exist. Succession planning can help to retain talent by providing career development opportunities for individuals and making sure that the organisation has the skills it needs to respond to the rapidly shifting sands that make up today’s business environment (Hills, 2009). A study undertaken for the Corporate Research Forum, Planning for Succession in Changing Times (Hirsh, 2012: 20), identifies two broad reasons why organisations undertake succession planning: first, mitigating the short-term business risk of not being able to fill a key job role, especially at senior level; and second, developing the longer-term pipelines of people with the skills, knowledge and career experiences to meet future business needs. The study (Hirsh, 2012: 21) further suggests that these drivers are being sharpened by contemporary business pressures, including: ●

governance pressures from regulators, governments and investors – increasing the need for robust succession planning for senior roles;

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rapid and large-scale strategic refocusing of some businesses into new markets – leading to the need for global pipelines of internal successors with different skills and experiences;

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global deployment – leading to a need for more consistent processes for identifying and developing potential across the organisation.

A key issue in contemporary succession planning is the balance between internal and external labour markets. Succession planning can be used as a means to retain and motivate key members of the existing workforce, but there is a danger that the organisation can become stale in the absence of ‘new blood’. Some senior external appointments are therefore necessary to improve diversity and to bring on board people with different skills and experience, but too many can result in frustration and the loss of some key talent if existing employees feel that they have been overlooked. A study of over 1,000 employers in the UK (Parry, 2008) found that the majority of employers believe that internal development brings greater benefits to the organisation than external recruitment. The main benefits are perceived as cost-effectiveness, better staff retention and increased employee motivation. However, the same study found that more than half fill their vacancies by external recruitment. A high proportion of organisations also appears to rely on external recruitment rather than succession planning to fill the most senior positions. For example, a study of chief executives in 20 large organisations in the USA (Cohn et al., 2005: 65) found that only a

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quarter have talent pipelines that extend three levels below them. The findings reported in box5.3 suggest a similar situation in the UK with organisations more likely to recruit managers from an external rather than internal talent pool.

Key controversy Consider these two questions posed by Clutterbuck (2012: 26). If succession planning and talent management work, how come the wrong people so often get to the top? If succession planning and talent management work, why – in spite of so much effort to bring about change – is the diversity at the bottom of organisations not reflected in senior positions?

A number of studies suggest that, even where succession planning does occur, the results are less than satisfactory. The CRF study (Hirsh, 2012), mentioned earlier, found that 76 per cent of organisations use some formal succession planning (although this falls to only 28 per cent in small and medium-sized companies), but only 56 per cent of survey respondents were satisfied with their organisation’s ability to fill senior positions and 42 per cent were actively dissatisfied. Succession planning is often linked to competency frameworks, and part of the problem may be that these frameworks focus on competencies demonstrated by successful leaders in the past, rather than on the skills, behaviours and abilities that are required now and in the future. As a result, Clutterbuck (2012: 27) argues: The system [talent planning] does work, in the sense that, if you identify a particular group and give them lots of opportunities to experience and to learn, they are likely to advance faster than less privileged colleagues. But that doesn’t prove that these were the most talented employees. In reality, those people might have taken the hint and gone off to work elsewhere, often for themselves, where their talent is appreciated.

Careers and talent management The second core element for internal talent development is career management. Career can be a complex concept, so this section begins by defining career and its multi-faceted meanings and perspectives before exploring the contribution of career management and development to talent management practice.

Defining career Career is a familiar term in everyday speech and formal discourse, where it has been defined as: ●

‘a succession of related jobs, arranged in a hierarchy of prestige, through which persons move in an ordered, predictable sequence’; (Wilensky, 1960: 554)

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‘the evolving sequence of a person’s work experiences over time’. (Arthur et al., 1989: 8)

It has other related meanings, too, for it is used in different contexts, from different perspectives and for different purposes, but all are grounded in settled arrangements in society, the economy and the organisation of work.

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Elements in the meaning of career The various meanings of ‘career’ have the following elements, explicitly or implicitly: ●

Movement of an individual, group or groups of individuals through social space: – connecting roles and establishing regular sequences and continuities; – so often regarded as more than ‘just a job’.

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Movement often seen as advancement: forward (metaphor of pathway) or upwards (metaphor of ladder): – roles often arranged hierarchically.

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Some sequences recognised as contributing to the individual’s social capital by giving social status, financial, reputational rewards and ‘success’: – career sometimes regarded as elitist.

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Movement through time: – connecting past, present and future; – having a strong future orientation; – weaving a continuing thread; forming a trajectory.

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Implicating the individual’s sense of self and need for self-fulfilment: – – – –

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linking an individual’s dreams, goals, actions and achievements; interacting with individual development; giving the basis of a narrative; creating relationships.

Interaction of individual biography and social or organisational structure: – individual thereby contributing to that wider structure; – and from it deriving overarching framework of norms, values and meanings, which provides goals, directions, limits and guidelines for life.

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Interaction of factors internal and external to the individual in their career and contribution to the process of socialisation.

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Dual aspects of career – the individual’s outer and inner worlds: – objective career – observable movement through social space and time; – subjective career – the personal experience people have of that movement and its private meaning and significance for them.

Career in different contexts Career is commonly used in occupational, organisational and professional contexts, where its elements of movement, sequence, progression and advancement are particularly significant. Government policies in the UK and more widely (OECD, 2003) recognise the significance of career guidance for the efficiency of labour markets and the education system, the promotion of equity and as a contribution to lifelong learning, although they do not define career itself. Career seen from different perspectives Further understandings of career arise from the differing perspectives from which it can be viewed. These vary from those of an individual, an organisation, the economy or society and from the various academic disciplines concerned with them. These include vocational, organisational and occupational psychology, various branches of economics, sociology, education, counselling, HRM (see e.g. Arthur et al., 1989; Adamson et al., 1998). These disciplines have generated a rich fund of theories addressing different aspects of career, or the same aspects but from different disciplinary perspectives, for example, vocational psychology and organisational psychology, on career development and career management (Collin and Patton, 2009).

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Some theories explain career in terms of external influences upon the individual, for example, the economic system and labour markets; social class, social structure and social mobility; education; organisational and occupational structure; and mobility. Other theories examine factors internal to the individual, for example, age, gender, psychoanalytical explanations; personality traits; lifespan development; and implementation of self-concept. There are also theories about the interaction of internal and external factors, for example, decision-making and social learning. Further theories address careers in organisations, for example, career development, career planning and career management. There are also theories concerned with subjective experiences, and how to interpret and study them (see Chapter 3), for example, narrative approaches, relational approaches and social constructionist approaches. ‘Career’ used for different purposes A particular meaning of ‘career’ may be specified by a speaker or a writer, whether informally or formally, while others may be left vague. Intentionally or otherwise, the user may elide them or use them interchangeably or inconsistently. Nevertheless, this does not seem to confuse listeners/readers. Rather, they accept the multi-layered richness of the term, and this lends it a rhetorical power to convey more than is actually stated, or to obscure what the user prefers to remain hidden. For example, the manager may use ‘career’ to motivate employees to learning and application in work, to encourage aspiration, or to endorse particular pathways as desirable or rewarding. At the same time, however, such wording could be glossing over or obscuring the actual prospects of mundane jobs or the ways in which organisational incentives and structures are in effect regulating and controlling employees. And the employees themselves may be constructing the career they want by piecing together parts of their work, social and personal lives.

Career development and career management From the individual perspective, career development is a unique lifelong process of learning, work and leisure that takes place through a series of planned and unplanned stages, transitions, influences and decisions (McIlveen, 2009). The individual’s career management, or self-management, is an active process that aims to achieve a fulfilling career. It includes strategies such as learning a new skill or gaining a mentor (see Chapter 7), and other behaviours, such as becoming more self-aware, choosing realistic goals, making decisions effectively and negotiating transitions (McIlveen, 2009). From the organisational perspective, the organisation manages the career development of its employees primarily to meet its own needs and only secondarily for its employees’ benefit (Creed and Hood, 2009). It requires sufficient and appropriately skilled employees to be available for its present and expected future effective functioning and to enhance its competitive advantage. It uses a range of activities to achieve this, such as succession planning, assessment centres, performance appraisal, mentoring, career counselling and secondments (Baruch, 2009). Career development and career management in talent management Career development and management play a part in talent management through attracting new talent, and retaining and developing it by: ●

offering a long-term career perspective;

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suggesting stability and security;

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suggesting enlightened employment policies;

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indicating the possibility of future progress and rewards;

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having recognisable career patterns, pathways and ladders;

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shaping employees’ expectations and needs;

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providing future goals for employees;

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providing incentives for individual effort;

DEVELOPING TALENT ●

encouraging employees to invest in their own career development;

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investing in and rewarding employees;

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motivating and persuading employees;

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encouraging and supporting employees’ development;

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investing in employees’ individual learning and development;

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influencing employees’ behaviour in desirable directions;

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shaping employees’ organisational identity.

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At the same time, employees may have their own career development and management plans. Some of these may work synergistically with those of their employers, while for others there may be a discrepancy between their goals that would undermine effective talent management.

Changes in the nature of career According to Kanter (1989) there are three principal forms of career: ●

The professional form – weakly connected to employing organisations, and defined by craft or skill; occupational status achieved through monopolising socially valued knowledge and reputation.

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The entrepreneurial form – developed by creating valued new outputs or organisational capacity; it offers freedom, independence and control over tasks and surroundings, but entrepreneurs have only what they grow themselves.

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The bureaucratic form – defined by advancement in a formally defined hierarchy. This form has come to dominate the view of organisational careers generally.

In the final quarter of the twentieth century, globalisation as well as major technological and other developments resulted in, inter alia, flatter and more flexible forms of organisation and changes in the organisation of work, and these threatened the ‘onward and upward’ bureaucratic career. New forms of career began to be identified, such as: ●

The subjective career. According to Weick and Berlinger (1989: 321), in ‘self-designing organisations’ in which the advancement and stable pathways of the typical career are absent, the objective career ‘dissolves’ and the subjective career ‘becomes externalized and treated as a framework for career growth’ and a resource for further organisational self-design.

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Weick and Berlinger (1989: 323–6) liken this to the ‘Protean career’ (Hall, 1976) in which people engage in ‘interminable series of experiments and explorations’. This calls for frequent substantial career moves in order to incorporate a changing, complex and multi-layered sense of self; the ‘decoupling’ of identity from jobs; the preservation of the ability to make choices within the organisation; the identification of distinctive competence; and the synthesis of complex information.

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The portfolio career in which workers, perhaps self-employed, manage several concurrent streams of work, jobs or contracts (Handy, 1990).

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The boundaryless career. Whereas traditionally careers took place ‘through orderly employment arrangements’ within organisations, many are now crossing traditional boundaries between organisations, and home and work (Arthur and Rousseau, 1996: 3).

Nevertheless, Guest and McKenzie Davey (1996: 22) cautioned against writing off the traditional career: in their own research they found little evidence of major organisational transformations. Moynagh and Worsley (2005), drawing on the Economic and Social Research Council (ESRC) Future of Work research programme (www.leeds.ac.uk/esrcfutureofwork/), also considered that long-term jobs and careers would continue to exist. Meanwhile, it was thought that attributes of the ‘professional’ and ‘entrepreneurial’ forms were likely to be found more extensively in the twenty-first century (CIPD, 2002).

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Explore

●

What contribution could the subjective career make to talent management?

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Do you consider that you will have a career in the future?

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How do you envisage it?

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How will it be likely to differ from the careers of your parents’ and grandparents’ generations?

More recently, economic and technical changes have resulted in shifts in working patterns such as zero hours contracts, the growth of self-employment associated with the ‘gig economy’ and the rise of unpaid ‘internships’ that have challenged the concept of the traditional career for some. Those having such experiences are labelled the ‘precariat’ by Standing (2011); they are without long-term jobs, stable occupational identities, careers, stable social protection or protective regulations. Such changes affect many of the elements of career noted earlier, and working life is fragmenting for young and adult workers. Traditional continuities, sequences and trajectories are being disrupted or destroyed, the future time perspective is being eroded, and advancement is becoming irregular, rewards less certain and aspirations dampened. With increasing competition for first jobs, the start of the career is delayed, and with demographic changes dictating delayed pension age, the overall familiar shape of working life is no longer predictable. It is now essential to manage one’s own career, to invest in learning and development and to remain employable (see Chapter 7). It could be that the subjective career may become more significant than before. Research undertaken by CIPD (2016) suggests that less than half of employees are satisfied or very satisfied with the current level of training and career progression. Graduates are more likely to say that their career progression has failed to meet expectations compared with respondents whose highest qualification is GCSE or equivalent. From an individual perspective, the main contributory factors are seen as poor career advice and poor line management. From an organisational perspective, another key factor is unrealistic expectations: only 16 per cent of respondents to the CIPD’s 2015 Resourcing and Talent Planning Survey agree that young people have realistic expectations about their career. The likely outcome of this mismatch is employee turnover, so the need for effective talent planning becomes ever more critical.

Concluding comments Organisations appear to be sending out some mixed messages regarding talent management. On the one hand, survey respondents suggest that talent management is a top priority for the majority of organisations, and most HR professionals consider that it can have a positive impact on an organisation’s financial performance. On the other hand, many organisations do not have a talent management strategy and there appears to be a tendency to buy in talent through external recruitment rather than ‘growing your own’ through employee development activities. Even where talent management activities are in place, evidence of their effectiveness is ‘woefully thin’ (Clutterbuck, 2012: 26). Survey data (CIPD, 2016) suggest that relatively high numbers of employees leave their organisation for ‘pull’ factors such as promotion or ‘push’ factors such as lack of development and career opportunities. These results suggest that many organisations could benefit from paying the same attention to the talent within the existing workforce as they do to attracting talent externally. The majority of employers claim that internal recruitment brings greater benefits to the organisation than external recruitment (Parry, 2008), so why does there seem to be this gap between the rhetoric and the reality?

SUMMARY

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One explanation is that, while there have been a number of significant developments in the activities encompassed within the talent management umbrella, for example, the growing interest in employer branding, employee engagement and the benefits of being an employer of choice, in many cases talent management activities lack the integration necessary to secure the flow of talent that organisations will require in the future. However, increased competition for key talent could potentially help organisations to focus more attention on the talent that exists within the current workforce. In a survey conducted by the CIPD (CIPD, 2015a), organisations are increasing their efforts to improve employee retention, and the vast majority is upskilling existing employees for hard-to-fill vacancies, or would consider doing so. This does not mean the end of the external labour market, but it does suggest that a number of organisations appear to be following the principles outlined by Cappelli at the beginning of the chapter. Time will tell whether the practice lives up to expectations.

Summary ●

Talent can be used in an exclusive sense to refer to a select group of high-flyers; in an inclusive sense to refer to all employees; or in a hybrid sense to refer to key workers or roles that are critical to success, wherever they are in the organisation. The focus of talent management activities can therefore vary, but definitions include the need to attract, retain, motivate and develop individuals.

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Methods used to identify the skills required can be job-based or person-based. The emphasis on identifying people with the ‘right’ attitudes has led to a growth in competency frameworks, but these can be difficult to apply in practice.

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Recruitment activities can contribute to talent management by attracting a pool of suitable candidates. In recent years there has been significant growth in the use of e-recruitment, which can help organisations to reach more candidates and to develop a ‘personal’ relationship with the talent pool. The purpose of selection methods is to differentiate between suitable and unsuitable candidates and, if handled effectively and professionally, these can also convey a strong image of the organisation.

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Employee retention is a key element of talent management, as selecting and developing highquality employees are of limited value if the organisation then loses their skills and expertise. A number of initiatives have been introduced to aid retention, and the most popular are increased learning and development opportunities as well as improved line management people skills.

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Learning and performance improvement have always been an integral part of talent management. A combination of development activities, succession planning and career management can be used to retain and motivate the workforce and ensure that the organisation has a talent pipeline to meet future requirements. However, evidence suggests that these activities are not yet as effective as they might be at ensuring that organisations have the talent they need for the future.

Questions 1 In the face of increased competition for key talent why do so many organisations still fail to ‘grow their own’? 2 Evaluate the key factors likely to influence selection decisions. 3 Who should take prime responsibility for an individual’s career development?

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Case study Staff retention and staying power: Nissan builds on loyalty at Sunderland plant Some of carmaker’s earliest recruits are now among its most senior executives. Since the first Bluebird rolled off the production line in July 1986, the Nissan plant in Sunderland has grown from a £50m assembly operation into the UK’s biggest car production site. Now a £3.7bn investment employing 6,800 people, it is also north-east England’s biggest private sector employer, offering relatively good pay and secure work in an area with the UK’s highest regional unemployment. For these reasons, employees tend to stick around. Turnover of production staff is 3.66 per cent a year, against the UK average of 13.6 [per cent], according to the CIPD, the professional association for HR. And some of the earliest recruits, identifiable by their low employee number, are among the most senior executives. Keith Watson, a 55-year-old production supervisor on trim and chassis line 2, joined in 1985 as employee number 179. ‘In the early days we were building four cars a day’, he says. News that Nissan wanted more did not go down well. ‘We were panicking, saying we will never get six a day. Now it’s 2,000 a day’. As it has expanded, some of the biggest changes in the plant have focused on ergonomics and technology to reduce strain on workers and accelerate the pace of production. Each of the plant’s 300 supervisors, responsible for more than 4,000 production staff, is trained in ergonomic assessment. Innovations include seat shuttles, developed by the inhouse kaizen, or continuous improvement team, to allow operators to sit and be transported as they work on cars on the line, rather than having to duck and twist. On the line where the Qashqai and electric Leaf are made, a height-adjustable skillet, resembling the middle section of an accordion, raises and lowers the vehicle to the height at which the operator needs to work. Robotics have played a part too, with the body shop moving from high levels of manual welding to 93 per cent automation. The new welding facility for the Infiniti, the luxury brand that Sunderland has just begun producing, is completely automated with 141 robots. However, work on the production line remains intense and tiring; stamina is vital.

‘It’s still a hard job’, says Mr Watson. ‘Some operators are so fluent it’s unbelievable; it’s like second nature to them. They’re athletes in a way’. Mr Watson’s contemporaries in 1985 included team leader Trevor Mann (number 127), now Nissan’s chief performance officer and most senior European executive, based in Yokohama. Mr Mann says the early intake was a tightly knit team with a desire ‘to be as good as the Japanese’. Colin Lawther (number 120), a chemist who joined in 1985, is senior vice-president responsible for manufacturing, supply chain management and purchasing in Europe. ‘We came from a fairly deprived area. We had this tremendous fighting spirit’, he says. Kevin Fitzpatrick, a paint shop supervisor back in 1985 (number 63), is the site’s most senior employee as Nissan Motor Manufacturing’s UK vice-president. He says a culture of encouraging people to learn and try new things has helped keep him there. ‘In my previous company your only chance to progress was if somebody retired’, he says. Of 4,305 production staff, more than a third are over 40 and late 50s is the site’s most common retirement age. But this is not always the end of the story. Barry Loneragan (employee 102) joined as a team leader in 1985 and retired as technical services manager eight years ago. Now, aged 67, he returns regularly, employed by an outside agency, to do plant tours. So do two other pensioners. Mr Loneragan is proud of what the early intake achieved. ‘We had to go out and prove ourselves. It was that togetherness; the will to succeed. The legacy lives on’, he says. Source: Tighe, C. (2016) Nissan builds on loyalty at Sunderland plant, The Financial Times, 7th March.

Questions 1

What are the benefits of Nissan’s approach to employee retention?

What factors should other organisations, wanting to adopt a similar approach, need to consider?

What impact might Britain’s decision to leave the European Union have on employment at Nissan?

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References and further reading The text marked with an asterisk is recommended for further reading. ACAS (1983), Recruitment Selection, Advisory Booklet No. 6. London: ACAS. Adamson, S. J., Doherty, N. and Viney, C. (1998), ‘The meanings of career revisited: Implications for theory and practice’, British Journal of Management, 9: 251–9. Anderson, A.H. (1994), Effective Personnel Management: A Skills and Activity-Based Approach. Oxford: Blackwell Business. Anderson, N. and Shackleton, V. (1993), Successful Selection Interviewing. Oxford: Blackwell. Appelbaum, S., Kay, F. and Shapiro, B. (1989), ‘The assessment centre is not dead! How to keep it alive and well’, Journal of Management Development, 8(5): 51–65. Armstrong, M. with Taylor, S. (2014), Armstrong’s Handbook of Human Resource Management Practice, 13th edn. London: Kogan Page. Arthur, M.B. and Rousseau, D.M. (eds) (1996), The Boundaryless Career: A New Employment Principle for a New Organizational Era. Oxford: Oxford University Press. Arthur, M.B., Hall, D.T. and Lawrence, B.S. (eds) (1989), Handbook of Career Theory. Cambridge: Cambridge University Press. Baruch, Y. (2009), ‘Career planning and management interventions from the organizational perspective’, in A. Collin and W. Patton (eds), Vocational Psychological and Organisational Perspectives on Career: Towards a Multidisciplinary Dialogue. Rotterdam: Sense Publishers, pp. 131–45. Batt, R. and Colvin, A. (2011), ‘An employment systems approach to turnover: Human resources practices, quits, dismissals and performance’, Academy of Management Journal, 54(4): 695–717. Beaumont, P. (1993), Human Resource Management: Key Concepts and Skills. London: Sage. Bevan, S. (1997), ‘Quit stalling’, People Management, 20 November, 3(23), 32–5. Bevan, S., Barber, I. and Robinson, D. (1997), Keeping the Best: A Practical Guide to Retaining Key Employees. London: IES. Boam, R. and Sparrow, P. (eds) (1992), Designing and Achieving Competency: A Competency-Based Approach to Developing People and Organisations. Maidenhead: McGraw-Hill. Buckingham, G. (2000), ‘Same indifference’, People Management, 17 February: 4–46. Callaghan, G. and Thompson, P. (2002), ‘We recruit attitude: The selection and shaping of routine call centre labour’, Journal of Management Studies, 39(2): 233–54. Caliguiri, P. and Phillips, J. (2003), ‘An application of self-assessment realistic job previews to expatriate assignments’, International Journal of Human Resource Management, 14(7): 1102–16. Cappelli, P. (2008), ‘Talent management for the twenty-first century’, Harvard Business Review, March, 86(3): 74–81. Carroll, M., Smith, M., Oliver, G. and Sung, S. (2008), ‘Recruitment and retention in front-line services: The case of childcare’, Human Resource Management Journal, 19(1): 59–74. CIPD (2002), The Future of Careers. London: CIPD. CIPD (2006), Talent Management: Understanding the Dimensions. Report, October. London: CIPD.

CIPD (2009), Employer Branding: Maintaining Momentum in a Recession. Guide, June. London: CIPD. CIPD (2010), The Talent Perspective: What Does It Look Like to Be Talent Managed? Survey report, summer. London: CIPD. CIPD (2011), Resourcing and Talent Planning. Survey report, June. London: CIPD. CIPD (2012), Harnessing Social Media for Organisational Effectiveness. Research report, June. London: CIPD. CIPD (2015a), Resourcing and Talent Planning. Survey report, June. London: CIPD. CIPD (2015b), Learning and Talent Development. Survey report, April. London: CIPD. CIPD (2015c), Talent Management: An Overview. Factsheet, August. London: CIPD. CIPD (2015d), Employer Brand. Factsheet. London: CIPD. CIPD (2016a), Competence and Competency Frameworks. Factsheet, July. London: CIPD. CIPD (2016b), Employee Outlook: Focus on Skills and Career. March. London: CIPD. Clutterbuck, D. (2012), ‘The talent wave’, People Management, October: 26–29. Cohn, J., Rakesh, K. and Reeves, L. (2005), ‘Growing talent as if your business depended on it’, Harvard Business Review, October: 63–70. Colao, J.J. (2012), ‘With Facebook your recruitment pool is one billion people’, 12 September. Online: http://www.forbes. com/sites/jjcolao/2012/09/12/with-facebook-your-recruitment-pool-is-one-billion-people/ (accessed 16 January 2014). Collin, A. and Patton, W. (eds) (2009), Vocational Psychological and Organisational Perspectives on Career: Towards a Multidisciplinary Dialogue. Rotterdam: Sense Publishers. Collin, A. and Young, R.A. (eds) (2000), The Future of Career. Cambridge: Cambridge University Press. Creed, P. and Hood, M. (2009), ‘Career development, planning, and management from the organisational perspective’, in A. Collin and W. Patton (eds), Vocational Psychological and Organisational Perspectives on Career: Towards a Multidisciplinary Dialogue. Rotterdam: Sense Publishers, pp. 41–6. Cronly-Dillon, M. (2007), ‘Face up to rules on researching recruits on line’, People Management, 13(21): 20. De Vos, A. and Meganck, A. (2009), ‘What HR managers do versus what employees value: Exploring both parties’ views on retention management from a psychological contract perspective’, Personnel Review, 38(1): 45–60. Dowling, P.J. and Schuler, R.S. (1990), International Dimensions of HRM. Boston, MA: PWS-Kent. Eurocom (2012), ‘One in five technology firms has rejected a job applicant because of social media profile – Eurocom Worldwide Annual Survey’. Press release. Online: http://www.eurocompr.com/prfitem.asp?id=14921 (accessed 23 March 2013). Feltham, R. (1992), ‘Using competencies in selection and recruitment’, in R. Boam and P. Sparrow (eds), Designing and Achieving Competency: A Competency-Based Approach to Developing People and Organisations. Maidenhead: McGraw-Hill. Fowler, A. (1992), ‘How to plan an assessment centre’, PM Plus, December: 21–3.

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Frank, F. and Taylor, C. (2004), ‘Talent management: Trends that will shape the future’, Human Resource Planning, 27(1): 33–41. Griggs, T. (2011), ‘The self-imposed talent shortage’, Financial Times, 10 February. Guest, D. and McKenzie Davey, K.M. (1996), ‘Don’t write off the traditional career’, People Management, 22 February: 22–5. Guthridge, M. and Lawson, E. (2008), ‘Divide and survive’, People Management, 18 September: 40–44. Hackett, P. (1991), Personnel: The Department at Work. London: IPM. Hall, D.T. (1976), Careers in Organizations. Pacific Palisades, CA: Goodyear. Handy, C. (1990), The Age of Unreason. New York: McGraw-Hill. Hills, A. (2009), ‘Succession planning – or smart talent management’, Industrial and Commercial Training, 41(1): 3–8. Hirsh, W. (2012), Planning for Succession in Changing Times. Research report. London: CRF. ILM (2012), The Leadership and Management Talent Pipeline. Research report. London: ILM. IRS (1994), ‘Ensuring effective recruitment’ and ‘Random selection’, Employee Development Bulletin, 51, March: 2–8. IRS (2001), ‘Risk analysis and job retention’, Employee Development Bulletin, 141, September: 3–4. IRS (2002), ‘The changing face of succession planning’, IRS Employment Review, 756, 22 July: 37–42. IRS (2003), ‘Spinning the recruitment web’, IRS Employment Review, 767, 10 January: 34–40. Isherwood, S. (2008), ‘Flaws exposed in talent spotting models’, guest column, Financial Times, 13 October. Kanter, R.M. (1989), ‘Careers and the wealth of nations: A macro-perspective on the structure and implications of career forms’, in M.B. Arthur, D.T. Hall and B.S. Lawrence (eds), Handbook of Career Theory. Cambridge: Cambridge University Press, pp. 506–21. Kersley, B., Alpin, C., Forth, J., Bryson, A., Bewley, H., Dix, G. and Oxenbridge, S. (2006), Inside the Workplace: Findings from the 2004 Workplace Employment Relations Survey. Abingdon: Routledge. Kwoh, L. (2012), ‘Beware: Potential employers are watching you’, Wall Street Journal, 29 October. Online: http://online.wsj. com/article/SB10000872396390443759504576314100938792 78.html (accessed 23 March 2013). KPMG (2012), Tune into Talent. White Paper. KPMG International, March. Lewis, C. (1985), Employee Selection. London: Hutchinson. Lewis, G (2015), ‘Next corporate scandal already “in the pipeline” warns CIPD’, People Management, 22 October. Lewis, R. and Heckman, R. (2006), ‘Talent management: A critical review’, Human Resource Management Review, 16: 139–54. Loan-Clarke, J., Arnold, J., Coombs, C., Hartley, R. and Bosley, S. (2010), ‘Retention, turnover and return – a longitudinal study of allied health professionals in Britain’, Human Resource Management Journal, 20(4): 391–406. Marchington, M. and Wilkinson, A. (2012), Human Resource Management at Work, 5th edn. London: CIPD. McIlveen, P. (2009), ‘Career development, planning, and management from the vocational psychology perspective’, in A. Collin and W. Patton (eds), Vocational Psychological and Organisational Perspectives on Career: Towards a Multidisciplinary Dialogue. Rotterdam: Sense Publishers, pp. 63–90. Michaels, E., Handfield-Jones, H. and Axelrod, E. (2001), The War for Talent. Boston, MA: Harvard Business School Press. Mitchell, T., Holtom, B., Lee, T., Sablynski, C. and Erez, M. (2001), ‘Why people stay: using job embeddedness to predict

voluntary turnover’, Academy of Management Journal, 44(6): 1102–22. Morrell, K. and Arnold, J. (2007), ‘Look after they leap: Illustrating the value of retrospective reports in employee turnover’, International Journal of Human Resource Management, 18(9): 1683–99. Moynagh, M. and Worsley, R. (2005), Working in the TwentyFirst Century. Leeds/Norfolk: ESRC/The Tomorrow Project. Munro Fraser, J. (1954), A Handbook of Employment Interviewing. London: Macdonald & Evans. Nickson, D., Warhurst, C., Dutton, E. and Hurrell, S. (2008), ‘A job to believe in: Recruitment in the Scottish voluntary sector’, Human Resource Management Journal, 18(1): 20–35. OECD (2003), Education Policy Analysis 2003. Paris: OECD. Parry, E. (2008), Nurturing Talent: A Research Report. October. Cranfield University. Phillips, L. (2008), ‘Talent management is a global preoccupation’, PM Online, 14 April. Reynolds, D. and Weiner, J. (2009), Online Recruiting and Selection. Chichester: Wiley-Blackwell. Richard, D. (2012), The Richard Review of Apprenticeships Summary (www.bis.gov.uk). Online: https://www.gov.uk/ government/uploads/system/uploads/attachment_data/ file/34708/richard-review-full.pdf (accessed 9 January 2017). Rodger, A. (1952), The Seven Point Plan. London: National Institute of Industrial Psychology. Sadler, P. and Milmer, K. (1993), The Talent-Intensive Organisation: Optimising Your Company’s Human Resource Strategies. Special Report P659. London: The Economist Intelligence Unit. Searle, R. (2003), Selection and Recruitment: A Critical Text. Milton Keynes: Open University Press. Seligman, M. and Csikszentmihalyi, M. (2000), ‘Positive psychology: An introduction’, American Psychologist, 55(1): 5–14. Standing, G. (2011), The Precariat: The New Dangerous Class. London: Bloomsbury. Suff, R. (2006), ‘More than just a pretty face: Building an employer brand’, IRS Employment Review, 857, October: 42–5. * Taylor, S. (2014), People Resourcing, 6th edn. London: CIPD. Torrington, D., Taylor, S. and Hall, L. (2005), Human Resource Management, 6th edn. Harlow: Pearson Education. Torrington, D., Hall, L. and Taylor, S. (2008), Human Resource Management, 7th edn. Harlow: Prentice Hall. Wanous, J. (2009), ‘Realistic job previews’, in C. Cooper (ed.), Blackwell Encyclopedia of Management. Blackwell Reference (http://www.blackwellreference.com). Weick, K.E. and Berlinger, L.R. (1989), ‘Career improvisation in self-designing organizations’, in M.B. Arthur, D.T. Hall and B.S. Lawrence (eds), Handbook of Career Theory. Cambridge: Cambridge University Press, pp. 313–28. Whiddett, S. and Hollyforde, S. (2007), Competencies. Toolkit. London: CIPD. Whitehill, A.M. (1991), Japanese Management: Tradition and Transition. London: Routledge. Wilensky, H.L. (1960), ‘Work, careers and social integration’, International Social Science Journal, 12: 543–74. Williams, M. (2000), ‘Transfixed assets’, People Management, 3 August: 28–33. Wolf, A. and Jenkins, A. (2006), ‘Explaining greater test use for selection: The role of HR professionals in a world of expanding regulation’, Human Resource Management Journal, 16(2): 193–213.

CHAPTER 6 MANAGING EQUALITY AND DIVERSITY MIKE NOON

Objectives ●

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To define discrimination and explain the forms of legal protection in the workplace. To describe, evaluate and compare the social justice and business case arguments for pursuing policies of equality and diversity. To explain the deep-rooted causes of the problems of equality and diversity using the concept of institutional discrimination. To explain the purpose of equality and diversity policies and assess their limitations. To define and explain the meanings of positive action and positive discrimination. To explain the concepts of ‘sameness’ and ‘difference’, and evaluate their importance in guiding policy within organisations. To assess the process of discrimination in an organisation and outline its possible consequences.

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Case study Women in the boardroom

We are at a magic moment. The debate about the lack of female participation at the upper echelons of business is high on the political agenda in the UK and Europe. As a result of the efforts of campaigners, individuals and companies, a rising number of women occupy oversight roles in the boardroom. Source: Financial Times (2015), ‘Opinion: We need women as chief executives, not just non-executives’, 29 April, p. 6.

The quote is from Barbara Judge who took over as head of the UK’s Institute of Directors – the first woman to do so in its 112-year history. The challenge of getting more women into senior roles is already being tackled because it is simply not good business sense to exclude women from the top jobs. There is research evidence to support this. The consultancy organisation McInsey & Company (2015) found that companies in the top quartile for gender or racial and ethnic diversity of their leadership teams are statistically more likely to have financial returns above their national industry medians. In contrast, organisations in the bottom quartile for leadership diversity are less likely to achieve returns above the average for their industry. But how is boardroom gender equality achieved? Some countries have introduced gender quotas to force organisations to appoint more women in the top roles. The prime example is Norway, which requires a gender balance of at least 40 per cent of men and 40 per cent of women on all listed company boards. Belgium, Denmark, Finland,

France, Iceland, Italy, Spain and Germany also have some form of quota law in place or in process. But quotas are controversial. Opponents argue that businesses should be free to appoint the best person for the job and that quotas lead to the suspicion that someone has been appointed not on the basis of merit but because of their gender. They argue that quotas are bad for business and demeaning for women, and that the problem of underrepresentation stems from there being insufficient women with relevant experience who can be promoted. By contrast, supporters of quotas argue that research reveals how managers tend to appoint those who are similar to themselves, so without quotas there will simply be the perpetuation of the status quo: the domination of senior roles by men. They argue that quotas not only encourage board members to think differently about the types of qualities needed for the role, but also force senior managers in organisations to consider the ‘talent pipeline’ and improve the development opportunities provided for women managers. Between opponents and supporters of quotas are those taking a middle road: they are against the idea of enforced quotas, but agree that something needs to be done. They argue that, left alone, nothing will change – or the rate of change will be incredibly slow – so they suggest that there needs to be encouragement through methods such as voluntary codes of best practice, targets and ‘comply or explain’ initiatives, which require disclosure about diversity policies and progress in company annual reports and websites.

Introduction The opening case study illustrates the type of inequality problem that managers can face. Problems like this cannot, and should not, be ignored. In fact, the case raises five common core issues and associated dilemmas that need to be addressed – five issues that this chapter will focus upon in detail, but that are outlined here: ●

First, the opening case raises issues about the forms of discrimination and the legal protection in place. Are women being refused access to board directorships because of their sex, or are they being excluded because they had previously not been given (or not taken) sufficient managerial experience to make them strong candidates? In other words, was there direct discrimination against women or is it that women lack the requisite experience – so no unfair discrimination is occurring? And if it is the latter, might this in some circumstances also be

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aform of discrimination (indirect discrimination) if unjustifiable criteria of selection are applied that disadvantage women as a group because they are not given the same promotion opportunities as men in order to build experience? Moreover, in either circumstance what legal issues might managers need to consider? ●

Secondly, the opening case raises the issue of why inequality is a problem. Discussion of equality problems tends to revolve around fairness and inefficiency. So in the case study, there is the concern with the unfairness of women not getting access to the senior roles, but also the problem of the inefficiency of this because organisations are potentially missing out on the talents of 50 per cent of the population. These two sets of arguments can be described as the social justice and business case arguments for equality and diversity, and are applicable to many contemporary equality problems.

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Thirdly, there is the issue of identifying the underlying causes of the problem of inequality within organisations. Can it simply be explained away as blatant discrimination by individuals? Or is it more deep-rooted and caused in more subtle ways by the dominant organisational processes, procedures, structures and cultures? So in the opening case, is it that men do not want women in senior roles because, for instance, they do not think women have the capability? Or is it that the men have tended to perpetuate ways of operating that make it more difficult for women to progress through the ranks and compete on equal terms with the men?

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Fourthly, there is the issue of how to deal with the problem. In the opening case, there are some people calling for regulation through the introduction of quotas (an interventionist approach) while others are suggesting that it should be left to the organisations themselves (a voluntarist approach). In addition, some people take a middle position because they want something to be done, but do not want high levels of regulation. This type of approach is often associated with calls for taking ‘positive action’, and it forms the backbone of most equality and diversity policies and practices in organisations.

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Finally, there is the challenge of devising effective policies and initiatives. This task should not be underestimated because there will be conflicting opinions about whether the policy should be aimed at treating everyone the same, or whether it should take people’s differences into account. And if the latter, should policies be mindful of differences between groups, or should they focus on individuals? So, in the opening case, ought an organisation wishing to gain a better gender balance seek to implement policies that encourage a simple gender-blind approach, or should it have policies that take into account the relative disadvantage of women in the hierarchy? Should certain women be fast-tracked? Or is there a need for a complete overhaul of the processes of selection and promotion throughout the management structure?

So these five issues – discrimination and legal protection, the problem of inequality, the underlying causes of the problem, the ways of dealing with the problem and the devising of effective equality and diversity policies and initiatives – form the core structure of this chapter.

Discrimination and legal protection in the workplace ‘Discrimination’ is the process of judging people according to particular criteria. For example, in the selection process for a teaching post, the appointment panel might discriminate in favour of a candidate who answers their questions clearly and concisely, and discriminate against a candidate who mutters and digresses from the point. However, when most people use the term ‘discrimination’, they tend to mean unfair discrimination. The word is mainly used to denote that the criteria on which the discrimination has occurred are unjust. It is likely that most people would not describe the teaching post example above as ‘discrimination’, because they would not consider the criteria the panel used (clarity and conciseness) as unfair. However, if the criterion

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the appointment panel used to choose between candidates was gender or race, then most people would call it ‘discrimination’. So this chapter will adopt the commonly understood meaning of the term ‘discrimination’ to describe situations where there is less favourable treatment that cannot be justified.

Where can discrimination occur? In all of the chapters in this book, you will have encountered issues where people (usually managers) are making choices that affect the lives of others in the workplace. It is at these decision points where judgements might be made that are unfairly discriminatory. In other words, there are numerous sites of potential discrimination that you have already encountered. To illustrate, the following list shows some human resource management issues where equal opportunities must be considered unless an organisation wants to run the risk of legal action being taken against it by disgruntled employees (or prospective employees) who have been unfairly treated:

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Advertising of posts

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Allowances and bonus payments

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Recruitment procedures

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Dismissal procedures

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Selection techniques

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Occupational pensions

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Contractual terms and conditions of employment

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Employee involvement arrangements

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Pay

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Training opportunities

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Dress codes

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Workplace culture and norms

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Working hours

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Custom and practice arrangements

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Workplace disciplinary procedures

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Promotion procedures

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Appraisal interviews

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Selection for redundancy

Consider the list of HRM issues above. Select five of these and in each case give an example of how equal opportunity considerations need to be taken into account. (For instance, in considering the advertising of posts, managers might want to bear in mind the demographics of the readership of the newspaper, magazine or website where the advert is placed.)

Legal protection against unfair discrimination In Europe, there has been a move towards a common platform of human rights in relation to equality and fairness. One of the key developments has been the attempt to harmonise the protection against discrimination at work. Within each country there have been changes in national legislation – either amendments to existing laws or the introduction of new laws – in compliance with European Union (EU) directives. The basic principle behind the directives is a right to equal treatment irrespective of sex/gender, racial or ethnic origin, religion or belief, disability, age or sexual orientation. In other words, if someone considers they have been unfairly treated because of their sex, age, religion and so forth, they have a legal right to challenge their employer and seek compensation. Within the UK, the Equality Act 2010 uses the term ‘protected characteristics’ to denote those aspects where there is legal protection: ●

age;

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disability;

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gender reassignment;

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marriage and civil partnership;

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pregnancy and maternity;

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race (includes, colour, nationality, ethnic or national origins);

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religion or belief (covers philosophical belief, and includes a lack of religion or belief);

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sex;

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sexual orientation.

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Of course, there are other characteristics that could be added to this list, such as size (both height and weight), appearance (haircut, tattoos, piercings and norms of attractiveness), health, class (socio-economic group), accent, schooling or university. None of these other characteristics is covered directly by European law or UK legislation, so it is often lawful for an employer to discriminate against someone on any of these grounds, although in some instances there might be some protection for the individual through laws that cover indirect discrimination (see below), or the violation of human rights.

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On the basis of the preceding discussion reflect on your own experiences by identifying the ways you might have been disadvantaged personally in your past or current employment (or in any other aspect of your life). You do not need to think of dramatic examples of discrimination (although you might have experienced these) but think of instances where characteristics that are part of your identity have influenced a person’s decision, behaviour or attitude towards you. Remember you can consider the unprotected characteristics as well as the protected ones.

Key controversy You can be lawfully denied a job because you have a visible tattoo but not because of your skin colour. Is that fair?

The forms of legal protection In many countries, legislation sets limits to lawful managerial action and places obligations on managers to act in accordance with principles of fairness. In other words, some equality and diversity practices are the result of a legal obligation, rather than management choice. Bearing this general point in mind, you should also note the following: ●

The type and extent of this legislation varies from country to country, so it is important to read about the specific legislation in your own national context.

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Opinion varies as to whether state regulation is necessary or the extent to which it is legitimate or practical to legislate to prevent discrimination and promote equality of opportunity.

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Even when legislation is in place there is no guarantee that this will ensure equality of opportunity. This might be because the legislation is ignored (unlawfully) or because it is ineffective (too weak, too many loopholes, difficult to enforce and so on).

Within European workplaces EU directives have provided a shared platform of protection and established common legal definitions of four forms of discrimination (although, of course, interpretation of the meaning and the application might still vary in different national contexts). The descriptions and examples below are taken from the UK’s application of the directives through the Equality Act 2010. 1. Direct discrimination occurs when a person is treated less favourably than another is, has been or would be treated in a comparable situation on one of the protected grounds (sex/ gender, racial or ethnic origin, etc.) (see Box6.1). Example (HMSO, 2010: 18): ‘If an employer

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recruits a man rather than a woman because she assumes that women do not have the strength to do the job, this would be direct sex discrimination.’ In addition to protection against less favourable treatment due to the possession of one of the characteristics, the UK’s Equality Act 2010 also covers cases where a person is treated less favourably because (a) they are wrongly assumed to have a protected characteristic, or (b) they are associated with someone who has one of the protected characteristics (except marriage and civil partnership). Example of (a) (HMSO, 2010: 19): ‘If an employer rejects a job application form from a white man whom he wrongly thinks is black, because the applicant has an African-sounding name, this would constitute direct race discrimination based on the employer’s mistaken perception.’ Example of (b) (HMSO, 2010: 18): ‘If a Muslim shopkeeper refuses to serve a Muslim woman because she is married to a Christian, this would be direct religious or belief-related discrimination on the basis of her association with her husband.’ 2. Indirect discrimination occurs where a policy, provision, criterion or practice that applies in the same way for everyone has an effect that disadvantages a group of people because of their age, disability, gender reassignment, marital/civil partnership status, race, sex or sexual orientation. Someone from that group can then claim they have been indirectly discriminated against. It will be deemed indirect discrimination unless the employer can justify the policy or action as a proportionate means of achieving a legitimate aim (see Box6.1). Example (HMSO, 2010: 24): ‘An observant Jewish engineer who is seeking an advanced diploma decides (even though he is sufficiently qualified to do so) not to apply to a specialist training company because it invariably undertakes the selection exercises for the relevant course on Saturdays. The company will have indirectly discriminated against the engineer unless the practice can be justified.’ 3. An instruction to discriminate is where one person obliges another to act in a discriminatory manner against a third party covered by one of the protected grounds. In such situations, it is the employee being told to act in a discriminatory manner who can make a claim for direct discrimination against his or her employer. Example (HMSO, 2010: 19): ‘If the manager of a nightclub is disciplined for refusing to carry out an instruction to exclude older customers from the club, this would be direct age discrimination against the manager unless the instruction could be justified.’

Box 6.1 Direct and indirect discrimination A Muslim woman applied for a job as a stylist in a hair salon in London, but she was rejected because she wore aheadscarf and the salon owner argued that all the stylist ld display their own hair. In this case, there is no direct discrimination on the ground of her religion, because the owner of the salon would have rejected a non-Muslim who permanently wore a headscarf or other head covering. Potentially, there is indirect discrimination because the salon owner’s rule of no headscarves would affect Muslim women more than non-Muslims, as it is a dress code observed in the main by Muslim women.

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The key issue in Box6.1 is whether the requirement that stylists display their hair is a ‘proportionate means of achieving a legitimate aim’. If it is, then a claim of indirect discrimination would fail. If it is not, then the salon owner is indirectly discriminating. ● ●

What do you think? Using the same reasoning as above, consider the following situation and explain the grounds on which a claim of discrimination might be made: The managers of a tourist attraction in Glasgow advertised for a worker no taller than 1.7 metres (5 ft 7 in) to fit into a costume for an exhibition.

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4. Harassment is where unwanted conduct related to the protected grounds of discrimination takes place with the purpose or effect of violating someone’s dignity and of creating an intimidating, hostile, degrading, humiliating or offensive environment. Examples (HMSO, 2010: 29): ‘An employer who displayed any material of a sexual nature, such as a topless calendar, may be harassing employees where this makes the workplace an offensive place to work for any employee, female or male. A shopkeeper propositions one of his shop assistants. She rejects his advances and then is turned down for promotion which she believes she would have got if she had accepted her boss’s advances. The shop assistant would have a claim of harassment.’

Differences between and within social groups One of the assumptions sometimes made is that all discrimination is the same, irrespective of whether it is based on sex, race/ethnicity, disability and so forth. While it is certainly the case that the consequences of discrimination (the disadvantage suffered) are the same (or very similar) for the victims, the reactions and attitudes of the members of the social groups affected can differ. The term ‘social group’ refers to people who share similar characteristics; for example, it is possible to refer to women as a social group, or people with a disability as a social group. Of course, it would also be possible to break these social groups down even further – for instance, white women; or Muslim men with a disability; or even white, partially sighted, lesbian atheists under 25years old. For our purposes at this stage, the social group is defined by one of the key characteristics (sex, age, ethnicity, etc.), although shortly we shall explore why this is an over-simplification. It is important to acknowledge differences between social groups. They may all be victims of discrimination, but it would be inaccurate to assume the experience of being discriminated against because you are a woman is the same as that of being discriminated against on the grounds of sexual orientation; or that the discrimination experienced by disabled employees is the same as that endured by ethnic minority employees. For example, someone’s social group might be identifiable because of visible characteristics, such as sex, race/ethnicity, some forms of disability, and religions that require certain codes of dress. Other characteristics, such as sexual orientation and some religions or beliefs, can be hidden, enabling potential victims to avoid disadvantage and discrimination through behaviour that disguises their true identities. A further issue to consider is that some people experience discrimination because of more than one characteristic they possess. This has been discussed by researchers in two ways: ●

Multiple discrimination. This refers to situations where a person suffers unfair treatment due to two or more characteristics – for example, their sex and their age. The conclusion drawn by some researchers (e.g. Berthoud, 2003) is that there is some sort of additive effect. In other words, for example, in terms of getting a job, there is a disadvantage associated with being a woman to which is added the disadvantage of being an older worker. It is sometimes referred to as ‘double jeopardy’.

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Intersectionality. This term is also used to describe situations of multiple discrimination. However, there is an important distinction. Researchers conclude that the disadvantages caused by two or more characteristics are not simply additive because they produce a totally different experience for the person (see e.g. Acker, 2006; Bradley and Healy, 2008). For instance, the experience of being from an ethnic minority background and also a woman is not just the sum of the two disadvantages (ethnicity and sex) but rather the product of the interaction between these two characteristics. It can be described as producing a new and potentially greater disadvantage that is distinct from the specific category (the intersection). For example, an employee might be discriminated against because she is both a woman and Asian, and might therefore not share the same concerns about, or experiences of, discrimination as her white women colleagues or black male colleagues. Researchers argue that for this reason it is important to study the intersections between the various characteristics, because these are categories in their own right.

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Finally, it is important to recognise differences within social groups, rather than consider each group to be homogeneous. For instance, Reynolds et al. (2001) point out how disability can be a diverse and wide-ranging categorisation. People may move into a state of disability from illhealth, work accidents or ageing, and so, while some people are ‘born disabled’, there is an increasing proportion of employees who ‘become disabled’. Moreover, the needs of those with different ‘disabilities’ are so wide-ranging that it might be suggested there is very little meaning in such a broad category as ‘disability’. The same conclusion might be reached for race/ethnicity. Commentators (e.g. Modood et al., 1997; Pilkington, 2001; Nazroo and Karlsen, 2003) argue that research evidence suggests there is so much ethnic diversity that to describe discrimination as being the same across different ethnic groups fails to take into account its differential impact. This means it is essential to recognise the differences between ethnic groups not only in terms of their experiences of discrimination, but also in their varied requirements for redressing the discrimination.

Key controversy Are some protected characteristics more important than others? Or should all protected characteristics be treated equally?

What are the implications for managers? The overall situation is that managers must operate within a legal context that has established rights for individuals that protect employees and job applicants. Of course, this does not stop some managers from ignoring or flouting these laws, but this carries both a pecuniary and a reputational risk for the organisation. Within this legal framework, managers must also be aware of the differences in the needs of the various groups and individuals that experience discrimination. These are important issues because it means: ●

Managers should not assume that discrimination means the same thing irrespective of the social group concerned.

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Managers should not assume that a solution to rectify disadvantage for one social group (e.g. women) will be appropriate or welcomed by a different social group (e.g. disabled people).

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Managers should expect that attitudes will differ within social groups (e.g. Asian employees and black employees).

The recognition of this diversity has led some commentators to argue that, rather than defining people by their similarities to others, managers should see all employees as individuals with unique skills and needs. This is an issue that we return to later in the chapter.

Why is inequality a problem and why should managers be concerned with it? A key question that needs to be addressed is why managers should care whether some people are disadvantaged and suffer unfair treatment. In answering this question, it is useful to distinguish between two different sets of arguments, which can be labelled ‘the social justice case’ and ‘the business case’.

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The social justice case The social justice case is that managers have a moral obligation to treat employees with fairness and dignity. Part of this involves ensuring that decisions are made without resorting to prejudice and stereotypes (for definitions of these terms, see Box6.2) because then there is a lower risk of any particular group being disadvantaged and therefore less chance of an individual feeling that he or she has been discriminated against. Social justice arguments are typically based on one or more of the following points.

Equality of opportunity The ‘level playing field’ argument is that managers have a responsibility to ensure that everyone is given the same opportunity to access jobs and promotion opportunities, and that what separates the winners from the losers are the skills and abilities they possess. Managers might therefore need to intervene to ensure that such equality of opportunity is provided, otherwise factors other than skills and abilities will determine success. The particular objective is ensuring procedural justice so that the processes at key decision points are free from bias and distortion.

Equality of outcome The focus is on the outcome of any process. Are the rewards (jobs, pay, bonuses, training opportunities, etc.) distributed in a manner that truly takes into account skill and abilities or, put more prosaically, does everyone get ‘a fair share of the cake’? While procedures are essential, it is vital not to overlook the outcomes, so there also needs to be a concern with distributive justice. Importantly, this approach can help draw attention to how individuals from some groups can enter a ‘level playing field’, yet they do so from a position of prior disadvantage, which is rarely taken into account. As we saw in Case Study about women on company boards, some people argue

Box 6.2 Prejudice and stereotyping The following definitions come from a dictionary of HRM. Prejudice – this means holding negative attitudes towards a particular group, and viewing all members of that group in a negative light, irrespective of their individual qualities and attributes. Typically we think of prejudice as being against a particular group based on gender, race/ethnicity, religion, disability, age and sexual orientation. However, prejudice extends much further and is frequently directed at other groups based on features such as accent, height, weight, hair colour, beards, body piercings, tattoos and clothes. It is extremely rare to find a person who is not prejudiced against any group – although most of us are reluctant to admit to our prejudices. Source: Heery and Noon, 2008: 359.

Stereotyping – this is the act of judging people according to our assumptions about the group to which they belong. It is based on the belief that people from a specific group share similar traits and behave in a similar manner. Rather than looking at a person’s individual qualities, stereotyping leads us to jump to conclusions about what someone is like. This might act against the person concerned (negative stereotype) or in their favour (positive stereotype). For example, the negative stereotype of an accountant is someone who is dull, uninteresting and shy – which, of course, is a slur on all the exciting, adventurous accountants in the world. A positive stereotype is that accountants are intelligent, conscientious and trustworthy – which is an equally inaccurate description of some of the accountants you are likely to encounter. The problem with stereotypes is that they are generalisations (so there are always exceptions) and can be based on ignorance and prejudice (so are often inaccurate). It is vital for managers to resist resorting to stereotyping when managing people; otherwise, they run the risk of treating employees unfairly and making poor-quality decisions that are detrimental to the organisation. Source: Heery and Noon (2008: 443–4).

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Explore

Read the definitions in Box6.2. Be honest with yourself and think about the prejudices you have and the stereotypes you use to categorise people. Try to think of at least two examples for each. (Even the most politically correct among us have deep-seated prejudices and stereotypes. By recognising and confronting our prejudices and stereotypes, we have a better chance of not letting them influence the decisions we make.)

there is a need for quotas to address the disadvantage women face in climbing the management hierarchy in order to compete for the board positions.

Fairness and human rights Treating people fairly is an end in itself and it should not be seen merely as the means to an end. From an ethics perspective, this means taking a deontological stance where an action is not evaluated in terms of its consequences but is judged in relation to the act itself. In other words, the everyday management processes should take into account fair treatment because this is the right (ethical) thing to do, not because of the benefits it brings or the absence of harm caused. This line of thinking is counter-intuitive to business, whereby success is measured in terms of outcomes (reflecting a teleological ethical stance). However, the recognition by some large organisations of the importance of corporate social responsibility in relation to their public image, consumer taste and pressure from social movements means that adopting ethical, rights-based stances might be an obligation and a necessity, or might even offer commercial advantages. There is, of course, a sleight of hand here: arguing that fairness is a worthy ethical value only because of the business advantages it brings is wholly different from arguing that it is the right approach irrespective of any business benefits.

Limitations of the social justice argument The social justice approach is not unified. It can be seen from the three sets of arguments in the previous section that there is a different emphasis in each, which can lead to different policy suggestions as to how organisations should address the problems of disadvantage and inequality. Most notably, those who favour procedural intervention to equalise opportunities tend to advocate a ‘light touch’ in terms of legal regulation and best-practice guidelines, while those who focus on equality of outcomes advocate stronger legislation and/or more radical changes to organisational processes and practices. These types of difference in approach are returned to later in this chapter when examining policy choices for managers. Critics of the social justice case tend to argue that while the pursuit of fairness is laudable, it is not the prime concern of organisations. The goals of managers in organisations are profit and efficiency, rather than morality. If social justice was to guide their decision-making, it might have a detrimental effect on the operation of the business and ultimately the bottom line. This line of argument has led to an additional rationale for equality and diversity that is usually more appealing to managers: the business case.

The business case The second set of arguments that can be used to justify why managers should be concerned with eliminating disadvantage is based on making a business case. The point is that, aside from any concerns with social justice, fair treatment simply makes good business sense for five key reasons: 1. It creates a wider pool of labour for recruitment. When managers are open-minded about the people they could employ for various jobs at different levels in the organisation, they will have a wider pool of talent from which to recruit. This is particularly important when an

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organisation is attempting to secure scarce resources, such as employees with specific skills or experience. 2. It is a more effective use of human resources. If managers discriminate on the basis of sex, race/ethnicity, disability and so on, they run the risk of neglecting or overlooking talented employees. The consequence is that the organisation fails to maximise its full human resource potential and valuable resources are wasted through either under-utilising the competences of existing employees, or losing disgruntled, talented staff to other organisations. These considerations are vital for effective talent management (see Chapter5). 3. It provides more opportunity for innovation. The greater the range of employees from different backgrounds and with different perspectives, the greater the opportunity for the development of new ideas about products, services, ways of working and problem-solving. This might help place an organisation at the cutting edge within its industry and help generate a creative and vibrant working environment/culture. 4. It leads to a wider customer base. An organisation with a diverse workforce might be in a better position to identify and exploit new market opportunities and attract new customers – which of course links in with the previous point about being innovative. In addition, increasing the diversity of the workforce might also lead to new customers for the existing products or services particularly where there are face-to-face sales interactions that benefit from empathy with the customers. 5. It leads to a positive organisation image. If there is a clear statement of the organisation’s commitment to fair treatment, backed by meaningful practices that result in a diverse workforce, managers will be able to project a positive image of the organisation to customers, suppliers and potential employees – so could be helpful in terms of employer branding (seeChapter5). It will also contribute to the corporate social responsibility agenda that an organisation might have, and thereby help improve the public perception of the organisation. Within the organisation, it might increase employee commitment and retention because if employees find that their organisation genuinely values and rewards ability and talent, then they are less likely to seek opportunities elsewhere.

Limitations of the business case arguments Cunningham and James (2001) found that line managers often justified their decision not to employ disabled people on the grounds that the necessary workplace adjustments would eat into their operating budgets. Indeed, equality and diversity initiatives often have a cost associated with them, the recovery of which cannot always be easily measured and might only be realised in the long term. The danger (highlighted by commentators such as Dickens, 1994, 2000; and Webb, 1997) is that such initiatives can only be justified as long as they contribute to profit. For example, in Webb’s (1997) case study of an international computing systems manufacturer, the corporate philosophy was to encourage employee diversity to bring in new ideas, meet customer needs and achieve success in the global marketplace. However, at divisional level in the UK, the requests from women for childcare provision and flexible hours were rejected on the basis that these would adversely affect profitability. Furthermore, although managerial opportunities were open to women, this was clearly on men’s terms, as Webb (1997: 165) explains: Women graduate engineers are aware that they have to fit in as ‘one of the boys’ and, however supportive the line manager, these are all men: ‘I think the difficulty is still being able to sit down, map out your career and possibly say that at a certain time you many well wish to have a family.’ (graduate sales rep.)...Even for those willing to adopt male work norms, the corporate orientation to innovation and change means that the uncertainties experienced by managers are likely to result in the continuing exclusion of women, who continue to be regarded as a riskier bet than men.

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This type of problem is common and is expressed vividly by Liff and Wajcman (1996: 89) in the following quote: Managers’ perceptions of job requirements and procedures for assessing merit have been shown to be saturated with gendered assumptions.... Feminists can argue (as they have for years) that not all women get pregnant, but it seems unlikely that this will stop managers thinking, ‘Yes, but no men will.’

A further problem concerns measuring the effects of extending opportunities. The underlying assumption is that all initiatives will have a positive effect on business (hence they make good business sense). But this logic requires that they are subsequently measured and evaluated to assess their effects. Two difficulties arise: 1. Finding a meaningful measure. In some instances, this is feasible. For example, it would be possible to recruit more salespeople from a particular ethnic group in order to increase sales to customers from the same ethnic group, and in this case appropriate measures would be the number and value of sales and the number of customers. However, in other instances, measurement is very difficult or impossible. For example, how would you measure the impact of diversity-awareness training? Or the effects of flexible working arrangements? In both cases, it might be possible to measure the effects in terms of attitudes or changes in performance, but it would be more difficult to attribute these solely to the specific initiatives. 2. Measuring in the short term. In many instances, the full effects of an equality or diversity initiative would only be realised in the long term. For many managers within organisations, this would be a disincentive to invest in such initiatives, particularly if the performance of their department was measured in the short term. Moreover, it would be an even greater disincentive to invest if the manager’s salary or bonus was affected by the short-term performance of their department. Overall, the business case argument can make an impact – for example, in circumstances of skills shortages, needs for particular types of employees, or local labour market conditions – but this is likely to be variable and patchy. As Dickens (1999: 10) states: The contingent and variable nature of the business case can be seen in the fact that business case arguments have greater salience for some organisations than others.... The appeal of a particular business case argument can also vary over time as labour or product markets change, giving rise to ‘fair weather’ equality action.

In summary, there are three sets of problems associated with the business case. ●

There will not always be a business case for equality and diversity initiatives because it depends on the particular circumstances of the organisation.

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The business case might be difficult to prove (in quantitative terms), even if it seems persuasive.

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Even if there is a business case that can be proven at a given time, circumstances change (not least economic ones) so the particular business case might cease to have relevance.

By contrast, the social justice case applies to all organisations, does not require proof (as it is based on a universal principle) and is far more resilient because it is not affected by the vagaries of the market (see Noon, 2007).

Explore

A New York patisserie owner told a job applicant, ‘I can’t hire you because you’re black’. The owner explained that she wouldn’t be a good fit for the ‘counter girl’ position in the French-style patisserie because black workers in the front of the store would scare away customers. Then the applicant was told to look at the pictures hanging around the bakery; they were all of white people.

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The owner said that the applicant would be hired if there were a job open in the kitchen, where no one would see her, and suggested applying for a job at another local bakery where bosses wouldn’t care what the workers look like. After an investigation and a trial, the bakery was fined $25,000 for racial and gender discrimination. Source: Based on a report in the New York Daily News, 29 September 2013. ●

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Evaluate this case from (a) the perspective of the owner and (b) the perspective of the applicant. What arguments could you make to persuade the owner to take a different approach to recruitment in the future?

Justice and business sense As you might have realised, the two sets of arguments are not necessarily mutually exclusive. Indeed, it is feasible and practical for managers to use both sets to justify equality or diversity initiatives in their organisations. By stressing both arguments, there is more chance of gaining commitment to equality and diversity from a wider group of people. It does not really matter whether a manager is committed to equality for reasons of justice or because of a compelling business case – it is the fact that they are committed that counts. Of course, this is not quite as simple in practice, because once commitment has been gained there is then the question of how to deal with the problems of discrimination. A starting point is to identify the underlying causes of the discrimination, inequality or lack of diversity.

What are the embedded and deep-rooted causes of the problems of equality and diversity within an organisation? Institutional discrimination One of the key issues that managers must face is whether their organisations operate in ways that are fundamentally discriminatory. This is sometimes referred to as institutional racism, institutional sexism, institutional homophobia and so on. The term means that discrimination is deep-rooted in the processes and culture of an organisation, and cannot simply be explained as the actions of individuals who are blatantly prejudiced against particular groups. The discrimination might be intentional – for example, a promotion process might be known by managers to favour men over women, but no one challenges it or wishes to improve it. Equally, the discrimination might be unintentional – for example, the managers simply do not realise that holding team-building meetings in the pub after work might be disadvantageous for employees with young families and may conflict with some religious beliefs. Moreover, managers might be completely unaware of their own deep-rooted attitudes and preferences which are influencing them to make biased decisions in favour of some groups and against others (see Box6.3). Examples of processes that are sometimes described as evidence of institutional discrimination are: ●

word-of-mouth methods for recruitment;

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dress codes that prevent people from practising their religious beliefs;

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promotions based on informal recommendations, rather than open competition;

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informal assessments rather than formal appraisals;

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assumptions about training capabilities;

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assumptions about language difficulties and attitudes.

Often these types of process are not recognised as being discriminatory and have been in operation for many years. It is only when an organisation is faced with a legal challenge that such practices are seen to be having a discriminatory impact. HR managers should regularly scrutinise organisational procedures, and collect and analyse data on the demographic profile of the different levels in the hierarchy, types of job, locations of work and particularly in the different formal processes, such as recruitment, selection, appraisal, promotion, training and discipline. Institutional discrimination can be perpetuated through some workplace cultures when they have the effect of excluding people from particular social groups by making them feel unwelcome or uncomfortable. This is a key issue for managers because organisations might have cultures that are long established and deeply embedded. An interesting review of the way organisational cultures can marginalise social groups is provided by Kirton and Greene (2005: 83–109). Most notable among their conclusions are the following points: ●

Organisational cultures are infused with gendered meanings, which are often unarticulated and thus rendered invisible. The gendered hierarchy is an example, as are various unwritten codes, rules, customs and habits that guide gendered behaviour and underpin expectations of organisational members.

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Sexual harassment and the use of sexual humour are pervasive and the outcome of workplace gendered social relations, which are powerful mechanisms for the control and subordination of women.

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Stereotypes (based on gender, race, disability, sexual orientation and age) are reinforced through jokes and humour, leading to negative organisational experiences for some people.

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Non-disabled people’s lack of contact with disability reinforces their fear and ignorance surrounding the issue.

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Employer ageism is often mediated by other factors, particular gender.

Box 6.3 Probing prejudice Every day David Amodio comes face to face with prejudice – not in the form of insults and put-downs, but as hotspots and squiggles on PC screens depicting the brain behaviour of people showing pictures of strangers from other racial groups. Professor Amodio, who teaches at New York University, is a pioneer of social neuroscience, an interdisciplinary field that explores the neural reactions underlying phenomena such as motivation, prejudice and cooperation.... Some management experts believe such scientific exploration of the brain is helpful to businesses.... Employers from banks to IT companies have been calling in academics and coaches to talk about its implications for the world of work. By probing the neural roots of behaviour that psychologists have puzzled over, neuroscience may help to solve conundrums such as why many companies still struggle to create socially and ethnically diverse workplaces even though they profess equal opportunity. At Prof Amodio’s NYU, volunteers wearing scalp sensors took part in experiments assessing their susceptibility to stereotyping others. Those who turned out to be fairly unprejudiced showed greater electrical activity in brain regions associated with self-control, suggesting they were working hard to stay focused on the task and respond impartially. This suggests that the brain can apply a conscious override to knee-jerk bias. Other experiments measuring threat responses in the brain agree with the idea that while we may instinctively mistrust ‘difference’, the brain’s neocortex – which evolved as primate social networks became more complex – has mechanisms to keep prejudice at bay. ‘Though we may have unconscious prejudices, we can be adept at regulating our behaviour’, says Prof Amodio.

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Such research could provide pointers for employers. For example, if prejudice is partly innate, encouraging managers to spot their prejudices and work around them may be more effective than repeating the mantra that prejudice is wrong. Such an approach might have helped Zillah Byng-Maddick, chief financial officer at Future Publishing. At a past employer, she confronted a personal prejudice in the shape of a well-qualified but obese interviewee. Try as she might, she could not silence the thought that overweight people are lazy. ‘I kept saying to myself, listen to what they have to say...but I couldn’t get past their weight’. Her response was probably doomed to fail. ‘Trying to suppress a bias usually backfires, because it keeps you thinking about the bias all the more’, says Prof Amodio. However, her current approach to talk first by phone, so that her first impressions were unaffected by looks’, he says, ‘is spot on’. Source: Abridged from ‘Brain science fires up the neurons of managers’ by Alicia Clegg, Financial Times, London, 13 May 2014, p. 12.

Explore

The concept of unconscious bias has become very popular among HR professionals. Based on neuroscience (see Box 6. 3), it suggests that bias is deep-rooted and so everyone has preferences and prejudices that they are not necessarily aware of. By becoming aware of these biases managers have a better chance of keeping them in check, and therefore an increased likelihood of not relying on them as lazy shortcuts when making decisions about individuals. One way of measuring the biases is by exploring our implicit attitudes. These are attitudes and beliefs that people are unable to report (because they are not aware of them) or unwilling to report (because they believe it would not be socially acceptable or appropriate to do so). Psychologists have devised methods of revealing these hidden attitudes through various techniques, in particular implicit association tests. Your task is to check out your own preferences by taking one of the implicit association tests run from Harvard University’s ‘Project Implicit’, which explores global social attitudes. Use this link (https://implicit.harvard.edu/implicit/), continue as a guest by choosing your country and language, then select one of the demonstration tests (choose the one that most interests you). At the end of the test you get a profile of your preferences. When you have completed the test, reflect on these questions. ●

How did your result make you feel?

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Are you likely to change your behaviour in the light of the result of the test? If so, in what ways?

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How useful might it be for all managers to take a test like this?

Two problems with institutional discrimination The first problem is inertia. Even when institutional discrimination has been identified there is no incentive to make changes because those people in positions of influence have benefited (and continue to benefit) from the system. Furthermore, those people most likely to change policies within the organisation (the ‘victims’ of discrimination) are denied access to decision-making processes. The second problem is with the concept of institutional discrimination itself. Some critics argue that it can lead to a tendency to blame ‘the system’, rather than focusing on the people who shape and sustain the system. In some circumstances, this can be helpful, because by removing blame from individuals it might be easier to encourage action to address the problem. In other circumstances, it can result in nothing being done, because no one is deemed responsible or held accountable.

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In defence of the concept of institutional discrimination, it can be argued that it alerts people to the way that the fundamental structures and processes can be detrimental to equality and diversity, and that unless action is taken to address these fundamentals, nothing will improve. This is an important point, because it suggests that in many instances the drive to equality and diversity requires some radical changes, rather than just equality/diversity statements and positive action initiatives.

Key controversy If an organisation is institutionally racist, does it mean that no one is to blame for what has gone on, or that everyone is to blame for not caring and not bothering to look more closely?

Using equality and diversity policies to deal with the problems If the issue of disadvantage is to be addressed in a systemic and consistent way within an organisation, then it is essential to have an overall policy that guides decision-making and action. Increasingly, such policies are being created, although the terminology differs from organisation to organisation: some call them equal opportunity policies, others diversity policies, and more recently the term ‘inclusion’ is being used (see Oswick and Noon, 2014). To complicate matters further, some organisations blend all three terms. The rationale for the adoption of policies can be based on a mix of justice and business sense arguments, as was noted earlier. The EHRC in the UK recommends that all organisations have an equality policy, as well as putting in place effective methods of ensuring that the policy is actually put into practice. The form of equality policies varies between organisations, and Table6.1 shows how organisations might be categorised according to the extent to which they are actively engaging with equality issues. At one extreme are those organisations that do the absolute minimum – barely meeting the legal requirements – and at the other extreme are those fully committed to an equality/diversity agenda. One particular technique recommended by advocates of equality and diversity as a way of embedding policy is ‘discrimination proofing’ the organisation. This entails auditing the HR processes to assess the potential areas where unfair practice might occur. The identification of

Table 6.1 Types of equal opportunity organisation The negative organisation

Has no equal opportunity policy Makes no claims of being an equal opportunity employer Might not be complying with the law

The minimalist organisation

Claims to be an equal opportunity employer Has no written equal opportunity policy Has no procedure or initiatives, but will react to claims of discrimination as they arise

The compliant organisation

Has a written equal opportunity policy Has procedures and initiatives in place to comply with some aspects of good practice recommendations

The proactive organisation

Has a written policy backed up with procedures and initiatives Monitors the outcomes of initiatives to assess their impact Promotes equality using a full set of good practice guidelines, and might even go beyond these

Source: Based on Healy (1993) and Kirton and Greene (2005).

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unfairness might signal the absence of clear policy or procedures, or the failure of existing procedures, often through a managerial lack of knowledge or training. The purpose of such an exercise is to identify the areas of vulnerability and to take action to make improvements where they carry an unacceptable level of risk.

Explore

Thinking about categorising equality approaches, look at Table6.1. ●

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In which category would you place the organisation where you study and where you work (or have previously worked)? Explain your reasoning.

Two key components: Positive action and equality monitoring To ensure the effectiveness of equal and diversity policies, there need to be positive action initiatives and effective equality monitoring in place. These two components are a feature of those organisations with a ‘proactive’ approach to equality and diversity.

Positive action Positive action means more specific initiatives designed to compensate for present or past disadvantages that have been caused by unfair discrimination. Typically, positive action initiatives encourage under-represented groups to apply for jobs or promotion within the organisation. Positive action might also be concerned with making changes to working arrangements to encourage the retention of employees by making the workplace more suited to the needs they have that differ from the majority of employees. Here are a few examples of the type of initiatives that could be described as ‘positive action’: ●

launching a recruitment campaign in specific locations known to have a high density of ethnic minorities;

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ensuring company social events, where partners are invited, include same-sex partners;

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introducing a vocational training scheme open only to employees aged 55 or over;

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adapting the uniform or dress code requirements to take into account religious requirements;

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introducing flexible working hours to accommodate family needs;

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providing a sign language interpreter for a training course.

You will encounter other examples of positive action throughout the chapter, and there will be some subtle distinctions made between different types of positive action. There is one important distinction that must be made: positive action is not the same as ‘positive discrimination’. The latter means the preferential treatment of a person because of their sex, ethnicity, age and so forth, and this is unlawful under most discrimination law within Europe. For example, imagine that a school had no black or Asian teachers, so the governing body decided to shortlist only ethnic minority candidates for the next teaching post that became available. This would be positive discrimination and is unlawful because the candidates have been shortlisted due to their ethnicity, not due to their skills, experience, qualifications, and so on (see Box6.4 for a discussion on positive discrimination). On the other hand, an entirely lawful positive action initiative would be for the school to state on the advert that ‘applications from ethnic minorities would be particularly welcome’; and this could result in a preponderance of applications from black and Asian candidates with stronger CVs than white applicants and consequently perhaps a shortlist composed exclusively of candidates from ethnic minority backgrounds.

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Box 6.4 Time to rethink positive discrimination? I have made arguments in favour of adopting some forms of positive discrimination in two journal articles (Noon, 2010, 2012). My view is that positive discrimination is often misunderstood because it is often assumed to be simply about quotas, when in fact it can take different forms. There are typically four main objections made by people who criticise the idea of positive discrimination: it fails to select the ‘best’ candidate; it undermines meritocracy; it has a negative impact on the beneficiaries; and it leads to the injustice of reverse discrimination. In the articles, I argue that it is possible to logically challenge each of these criticisms. The extract below is the challenge I make to the second of these criticisms, namely that positive discrimination undermines meritocracy. My argument is that meritocracy is not as prevalent, objective or fair as we are sometimes led to believe. The issue of meritocracy raised by the critics is frequently an appeal to principles of economic individualism. Typically it finds an expression among those who argue for non-interventionary approaches to securing equality. For example, the head of diversity at PricewaterhouseCoopers stated, ‘It makes commercial sense to create an environment where meritocracy prevails. Anything other than this is de-motivating for everyone and productivity will inevitably drop.’ Hilpern, 2007: 13.

There are at least four challenges that can be made to the veracity of statements such as this: 1 It might not be in the interests of managers to ensure meritocracy due to internal politics, and might not be possible due to well-known processes that influence the selection of candidates (e.g. stereotyping, halo/horns effects, cronyism and ‘old boys’ network’). 2 If it is a superior business model that produces greater advantages of productivity and commitment, then why are not all companies following it? 3 It is difficult to prove quantitatively the commercial advantages. 4 There is a contingent nature to these advantages: in some instances there will be a business case for meritocracy, while in other instances it might be to a business’s advantage to discriminate unfairly (Dickens, 1994; Noon, 2007). An additional problem is that the concept of merit is not as value neutral as it might first appear. How is merit to be measured? Should it be focused on talent and ability, or should it also reflect effort and achievement? If elements of the latter category were included then merit would recognise personal achievements against the odds; for example, someone from an underprivileged background, state schooling and a low ranking university might be more meritorious than a middle-class person from a private school and a top university, even if the latter had better qualifications. Objections based on the principle of merit can of course be used to disguise prejudicial views about certain groups being unable or unsuitable to perform certain work. The view promulgated is that some social groups fail due to inability (typically a biological essentialist perspective) or personal choice (typically a preference theory perspective), but such arguments surface even in the absence of positive discrimination initiatives; in other words, positive discrimination does not cause those views to be held, rather it provides the excuse for them to be expressed.... An observation made by Reyna et al. (2005) is that both opponents and supporters of US initiatives designed to redress disadvantages in access to college, jobs or promotions (sometimes called affirmative action programmes) claim the principle of merit to be their main concern in taking their stance. Opponents argue that it infringes merit by giving preferential treatment based on social group characteristics (sex, race, etc.) while supporters argue that only by taking these characteristics into consideration can a truly meritocratic process be ensured. Overturning the notion of meritocracy produces an uncomfortable alternative proposition for the advantaged group: that meritocracy is not the prevalent norm and so, logically, some people in the advantaged group do not deserve to be in their jobs. Intuitively people may know this proposition to be plausible – most people are able to point to instances of favouritism, cronyism, nepotism and the like – but the issue is how widespread this is believed to be. People are unlikely to argue that their own position was gained through a non-meritocratic process, even though they might claim this is the case for their superordinates or their co-workers. Source: Abridged from pp. 733–34 of Noon, M. (2010), ‘The shackled runner: Time to rethink positive discrimination?’, Work, Employment and Society, 24, 4: 733–41.

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Key controversy The progress to equality at work for some groups has been slow and inadequate. Isn’t it about time we faced up to the reality that radical change can only take place through positive discrimination? And does it matter that white, male, able-bodied, heterosexual men will have to give up the privileges and advantages they have enjoyed for decades?

There is sometimes a fine line that distinguishes positive action from positive discrimination, but it should be drawn where the initiative goes beyond encouragement and persuasion. In other words, if an initiative means that a person is selected primarily because of their ethnicity, sex, age, religion, sexual orientation, and so on, then this is likely to be unlawful positive discrimination. But the boundary is far from clear. In France, the positive action on disability is more like positive discrimination because there is a requirement for 6 per cent of the workforce to be disabled – and similar quota-based systems (or quota-levy systems where employers can opt out through paying a tax to a special fund) operate in countries as diverse as Japan, Venezuela, Poland and Austria. In the UK, the disability discrimination legislation allows employers to discriminate in favour of individuals because of their disability; indeed, there is no legal protection for someone to claim that they have been treated unfairly because they are not disabled. There are also some other exceptions (see Box6.5) and in the UK employers are allowed to take into account protected characteristics in the selection and promotion when making a decision between candidates that are equally qualified for the job. This ‘tie break’ clause was introduced (to the indignation of much of the UK media) by the Equality Act 2010, and, although it is clearly stated to be a form of positive action, it reveals just how blurred the boundary between positive action and positive discrimination can become.

Box 6.5 Lawful ‘positive discrimination’ in the UK There are some exceptional circumstances where an organisation can claim there is an ‘occupational requirement’ explicitly to take into account one of the characteristics; for example, considerations of privacy or decency mean that the managers of a gym could require the changing room attendant to be the same sex as those using the facilities, or an advertising agency can interview only people with disabilities for a photo-shoot for a disability charity’s publicity campaign. The organisation must show that the requirement is really genuine for commercial or operating purposes, so, for example, it would be difficult for a games software company to require all of its game developers to be under the age of 25 or for even a Catholic school to require all staff to be practising Catholics.

Questions Decide in each of the three cases below whether the action is likely to be lawful and explain your reasoning. (a) The film-makers who create the Bond movies need to find a new James Bond because the current actor no longer wishes to continue in the role. When looking for someone to take the role, can they lawfully restrict their search to white, able-bodied, male actors? (b) A charity has been set up to support women who have been the victims of rape. The managers want to employ counsellors to help the women come to terms with their ordeal. Can they lawfully advertise only for women counsellors? (c) A bar owner employs only staff only in their 20s and 30s because she argues that older employees would put off her clientele. Is she acting lawfully?

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Understandably, the distinction between positive action and positive discrimination is often misunderstood. This means that completely lawful positive action is sometimes misconstrued in the media and in blogs, and is frequently disparaged as being positive discrimination – usually followed with the words, ‘It’s political correctness gone mad’! But, setting this confusion aside, lawful positive action initiatives are frequently met with disapproval from those who will not benefit from them. So a recruitment campaign targeted at attracting women into a male-dominated workplace will often be questioned by the men who see no need for change. However, if those who are openly hostile or resistant to the action are told what the social and organisational benefits are, they might moderate their position. Important in this respect is the production of the argument and evidence of the need for a change. As was noted earlier, business case arguments can sometimes be used to convince sceptics that equality of opportunity needs to be addressed. In addition, the collection of data (particularly statistical information) is important not only for demonstrating current inequalities, but also as a tool for evaluating the effects of any positive action initiatives – and hence assessing their worth. The process of systematic data collection is called equality monitoring.

Equality monitoring One of the key ways of helping to ensure the effectiveness of policies is through the use of equality monitoring. This is a process of systematically collecting and analysing data on the composition of the workforce, particularly with regard to recruitment and promotion. The rationale behind monitoring is that it is impossible for managers to make an assessment of what action to take (if any) unless they are aware of the current situation. Of course, the supposition behind this is that managers might want to take action – but if this is not the case, then logically managers might not see the value in collecting the data in the first place. Therefore, equality monitoring has both advocates and detractors who marshal different arguments to justify their position; these are summarised in Table6.2. Once again there is also variation in practice, depending on the national context. For example, in France, it is unlawful for data to be collected on the ethnic composition of the workforce, because this contravenes French policy on ethnic integration. By contrast, in the UK, public authorities now have a legal requirement to collect ethnic monitoring data on staff in post, applications for employment, promotion and training, and then to analyse these data and act upon any evidence of unfairness or disadvantage.

Table 6.2 The arguments for and against monitoring The case in favour of equal opportunities monitoring

The case against equal opportunities monitoring

It allows managers to demonstrate what is being done and identify particular problem areas so they can take action

It stirs up trouble and discontent, and can create problems that would otherwise not arise

It encourages managers to think creatively about positive action initiatives

It puts undue pressure on managers, and might encourage them to lower standards or appoint for the wrong reasons

It removes the need for stronger legislation, such as quotas (positive discrimination)

It is positive discrimination ‘by the back door’

The data can be kept confidential, just like any other information

It is an invasion of privacy and open to abuse

It provides useful information to help management decision-making

It creates the requirement to collect information that is unnecessary

Organisations conducting their activities in line with the legal requirements have nothing to fear

Organisations with no problems regarding equal opportunities do not need this burdensome bureaucratic mechanism

The costs are modest

It is an unnecessary expenditure

It is good business practice

The business should focus on its commercial activities

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Criticism of equality and diversity policies Naturally, there are some criticisms of equality and diversity policies. The first is that the policies are sometimes not worth the paper they are written on. Just because an organisation has a policy does not mean that the policy is effective. Indeed, research has found that in the majority of cases equality and diversity policies are not backed up with equality practices, so they lack substance and have little impact in ensuring that equality of opportunity prevails (Hoque and Noon, 2004). It might further be argued that in some organisations managers want to present the positive image of being aware of equality concerns, but do not wish to introduce procedures or initiatives that might (in their opinion) constrain or limit their decisions about whom to appoint, train, promote and so on. However, when policies are backed up with strong equality practices, they can be very effective in ensuring equal treatment (Noon and Hoque, 2001). A second criticism is that formal policies do not prevent managers from finding ways of evading or distorting the procedures. A particularly vivid example is from Liff and Dale’s (1994) case study of a UK local government authority. A black woman on a clerical grade was told that she needed to get a professional qualification if she wanted promotion. She obtained the qualification, then ‘she was turned down again, this time in favour of a white woman without qualification: a decision justified [by the managers] on the grounds of “positive action”’ (p. 187). In another study (Collinson et al., 1990) even the personnel/HR managers, who are supposedly the guardians and promoters of good practice, were colluding with line managers to avoid equal opportunity guidelines. A third criticism is that, even where managers are working within the procedures, there is a huge amount of informal practice and discretion that means unfair treatment can persist. In the following quote, Liff (2003: 434) gives examples from two key studies that were among the first to explain how this might occur during selection interviewing: Collinson et al. (1990), during detailed observation of interviews, found that managers used different (gender-based) criteria to assess whether applicants were able to meet the job requirements. For example, a form of behaviour described as ‘showing initiative’ and assessed as desirable when demonstrated by a male applicant, in a woman applicant was seen as ‘pushy’ and undesirable. Similarly Curran (1988: 344) showed that managers often found it hard to separate the assessment of a characteristic such as leadership from the concept of masculinity, or a ‘requirement for a pleasant personality and one for a pretty girl with a smile’. What is important about these findings is that they show that for some managers at least, gender becomes part of their assessment of suitability criteria.... Such findings also reduce the force of the prescriptive advice to excluded groups that they can succeed simply by gaining the necessary skills and demonstrating their ability at job-related tasks.

A recent theorisation (Noon et al. 2013) suggests that too much formalisation can result in the somewhat ironic situation of fairness being undermined not by managers’ evasion of procedures, but by managers’ compliance with procedures. There are three types of behaviour that, by sticking closely to the rules and procedures, mean effective equality and diversity outcomes are circumvented in the selection process. To quote the authors: The first type can be best described as ‘robotic’, because managers were operating at an unquestioning level of compliance in order to get the process done, strictly in line with protocol, for instrumental reasons. The second type can be called ‘defensive’, and arises from a fear of getting the process wrong. It represents the scrupulous adherence to procedure for self-protection, even in the belief that such adherence would not select the best candidate. The third type can be described as ‘malicious’. It involves sticking closely to the rules in the knowledge that this provides the cover under which discriminatory decisions can be made and, as we have seen, may involve the collusion of interviewers’ ratings. Moreover, such collusion may be seen as a means of undermining an imposed system or indeed a form of resistance to equality itself. (Noon et al., 2013: 344)

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Explore

To what extent do the criticisms outlined above apply to the equality and diversity policy in your own organisation?

Devising equality and diversity policies It has been noted above that equality and diversity policies are seen as desirable and that recommendations are often made to organisations about how to frame such policies. Ultimately, however, it is up to the decision-makers within organisations to choose the form and content of their policies – although there will be certain legal requirements within which they are expected to operate. When formulating policy, managers are faced with addressing the key question of how to treat people at work in order to ensure fairness. Or, to express this more specifically: to ensure fairness, should managers ignore the differences between people and treat them the same, or should managers acknowledge differences and treat people differently? The way the question is answered will determine the types of policies and initiatives that can be implemented. To help explain this, Figure 6.1 categorises the perspectives and the sections below analyse each category.

The sameness perspective A word of warning is needed here. This concept of ‘sameness’ acknowledges genuine differences between people, but suggests that attributes such as intelligence, potential to develop skills, values, emotions and so forth are distributed evenly across different social groups. Consequently, it is argued that any differences between people on these attributes are not determined by their gender, ethnicity, age, sexual orientation and so forth, but arise from their upbringing, experiences, socialisation and other contextual factors. Therefore, the important guiding principle for managers is that people should be treated equally regardless of their sex, ethnic group, age and so forth.

Treatment of people based on...

Sameness

Difference

Guiding principle: Equal treatment

Guiding principle: Special treatment

Collectivist strand

Individualist strand

Guiding principle: Special treatment according to social group membership

Guiding principle: Special treatment according to individual needs

Figure 6.1 The perspectives of ‘sameness’ and ‘difference’. Source: Adapted from Noon and Blyton (2007).

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Below are a few examples of the kinds of practice that this perspective might lead organisations to adopt: ●

Ensure that age is not used as a criterion to decide whether an employee is suitable for training.

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Ensure that the same questions are asked of men and women during selection interviews.

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Ensure that gender-specific language does not appear in job adverts, job descriptions and other organisation documents.

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Ensure that part-time working opportunities are available to men and women.

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Ensure that any company benefits (e.g. pensions, insurance rights and health scheme subsidies) are available to partners of non-married couples and same-sex partners.

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Ensure the same pay for the same job.

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Ensure that the rules regarding the display of religious symbols apply to all employees regardless of their religion or beliefs.

The guiding policy behind these types of initiative is equal treatment. Obviously, any such organisational initiative is influenced by the legal context in which the organisation is based. There is likely to be legislation that requires organisations to undertake some actions. For instance, in the UK, the legislation sets some of the parameters in the recruitment process (see Chapter 4), in terms and conditions of employment (Chapter 10) and in reward systems (Chapter13).

Explore

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Draw up a list of the initiatives designed to address equality and diversity in your organisation (if you work full-time or part-time) or in an organisation with which you are familiar (if you are a full-time student). Your list does not need to be exhaustive, but try to include initiatives additional to the examples already given. Which of the initiatives have arisen because of legal requirements and which have been introduced out of choice (i.e. voluntarily)? Select one or two of those initiatives that have been introduced voluntarily and assess the influences that led to the initiatives being adopted. These could be internal or external pressures.

Limitation of the sameness approach There is a substantial problem with this sameness approach. It assumes that disadvantage arises because people are not treated the same. While this is sometimes the case, disadvantage can also arise due to treating people the same when their differences ought to be considered. This is eloquently summed up by Liff and Wajcman (1996: 81) in relation to gender: All policies based on same/equal treatment require women to deny, or attempt to minimize, differences between themselves and men as the price of equality. This, it is suggested, is neither feasible nor desirable. Such an approach can never adequately take account of problems arising from, say, women’s domestic responsibilities or their educational disadvantage. Nor does it take account of those who want to spend time with their children without this costing them advancement at work. Sameness is being judged against a norm of male characteristics and behaviour... [The sameness approach to equal opportunities takes] an over-simplistic view both of the problem of inequality (seeing it as a managerial failure to treat like as like) and its solution (‘equality’ can be achieved by treating women the same as men).

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Explore

In terms of the paradox of treating people differently to ensure equality, imagine you were to ask someone who has not studied HRM this question: ‘If a manager wants to ensure equality of opportunity should he or she treat job applicants the same or differently’? The person would very likely reply: ‘Treat everyone the same’. This tends to be the ‘common sense’ view. Imagine then you asked: ‘So does this mean that if someone in a wheelchair applied for an office job in a building with no lift then the manager should expect them to walk up a flight of stairs to the second floor interview room’? You are likely to get an answer like this: ‘No, of course not! The interview could be held in another room’. You could then point out the apparent inconsistency in their position by asking, somewhat provocatively: ‘So are you saying people should be treated the same or treated differently’? Assuming the person still wanted to talk with you, he or she might point out that there always need to be exceptions. Such an answer would be significant because it shows that they are accepting an incredibly important logical principle: that fairness can be achieved sometimes by treating people the same and sometimes only by treating people differently, depending on the circumstances. Based on this principle, equality laws tend to start with the requirement that everyone should be treated the same (irrespective of sex, race, religion, etc.) and then the laws go on to define the exceptions to this general requirement – in other words, conditions under which different treatment is allowed or required in order to ensure that particular groups are not put at a disadvantage. You might also recognise this as the principle underlying the distinction behind direct and indirect discrimination, discussed above. Now try the question out on a real person.

The difference perspective The ‘difference’ perspective assumes that key differences exist between people and that these should be taken into account when managers are making decisions. Ignoring such differences can lead to people being disadvantaged. Again there is a word of warning. There are two branches of this perspective: the collectivist branch and the individualist branch. This conceptual distinction must be made because each branch leads to different conclusions about the appropriate policy to put into place.

The collectivist branch This approach argues that the differences between people are associated with the social groups to which a person belongs (based on gender, ethnicity, disability, etc.). For example, as the earlier quote from Liff and Wajcman (1996) underlines, women’s domestic responsibilities are different in general from those of men – most notably in the time spent on childcare – so to ignore this difference will disadvantage women. In practical terms, it means that two candidates (one male, the other female) might be of the same age and both have children, but the female candidate is likely to have less direct work experience because she has had to take time out to have children and might have chosen to take extended maternity leave. By ignoring the differences associated with childbirth and childcare, the woman might appear a weaker candidate; by recognising the differences, the woman’s achievements within her more restricted periods of employment can be assessed. The collectivist branch therefore argues that differences between social groups exist and should be considered in relation to ensuring fairness at work. This means that it might be relevant to introduce practices that are based on recognising differences between social groups, rather than ignoring differences. The following are some examples of the types of initiative that might arise from taking this collectivist difference perspective: ●

single-sex training schemes (developing skills to allow access to a wide range of jobs);

●

payment for jobs based on principles of equal value (see also Chapter13);

●

job advertisements aimed at encouraging applications from under-represented groups;

DEVISING EQUALITY AND DIVERSITY POLICIES ●

reassessment of job requirements to open opportunities up to a wider range of people;

●

choice of food in the workplace cafeteria that reflects different cultural needs.

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The guiding policy behind these types of positive action initiative is special treatment according to social group membership. There is a wide range of such initiatives, and the legal context must be taken into account because some principles, such as ‘equal value’, might be a legal requirement for all organisations, while others are left entirely to the discretion of managers. The general policy of special treatment offers a persuasive approach because it recognises that disadvantage is often an intrinsic part of existing organisational structures, practices and culture – see the section above on institutional discrimination. Simply adopting a policy of same treatment would not remove this existing disadvantage; instead something has to be done to get to the root of the problem and redress the existing imbalance. A good example of this is the requirement for all EU countries to ensure reasonable accommodation/adjustment for people with disabilities. In the workplace this means that managers are legally required to take into account the particular needs of employees (and prospective employees) with disabilities. This ‘special treatment’ is not designed to give an advantage to such employees, but rather to recognise that the existing conditions mean that they are disadvantaged, so changes must be made in order to redress this unfairness.

Explore

You are managing an operations team in an e-commerce company. A junior member of staff was diagnosed with depression about a year ago. She did not tell you until three months ago, when she confided in you about what she was experiencing and the treatment she was getting from her doctor and therapist. A month ago the employee was signed off on sick leave. She returned to work last week but is overwhelmed. She is determined, though, to carry on with her training. What issues do you need to consider?

The individualist branch The second branch of the difference perspective focuses on the individual rather than the social group. This approach emphasises the individuality of all employees, pointing out that people have unique strengths and weaknesses, abilities and needs. It suggests that it is not important to focus on characteristics that associate people with a particular group – for instance, their sex or whether they have a disability – but rather to concentrate on their individuality. A label that is often associated with this approach is ‘managing diversity’. It is increasingly being used by organisations as a term to describe their approach to ensure fairness and opportunities for all. However, a particular problem is that the term ‘managing diversity’ can have various meanings. It has become one of those widely used management phrases, so can mean different things in different organisations. At one extreme it is simply a synonym for ‘equal opportunities’ – used because the latter is seen as old-fashioned or backward-looking – and therefore has no distinct or special meaning of its own. At the other extreme, managing diversity represents a new approach to dealing with disadvantage at work. A notable example of the new approach based on recognising individual differences is Kandola and Fullerton (1994). They argue that managing diversity is superior to previous approaches to equality at work for five reasons: ●

It ensures that all employees maximise their potential and their contribution to the organisation.

●

It covers a broad range of people; no one is excluded.

●

It focuses on issues of movement within an organisation, the culture of the organisation, and the meeting of business objectives.

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It becomes the concern of all employees and especially all managers.

●

It does not rely on positive action/affirmative action.

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Below are some examples of the types of initiative that might arise from taking this individualist difference perspective: ●

Offer employees a choice of benefits from a ‘menu’ so they can tailor a package to suit their individual needs.

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Devise training and development plans for each employee.

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Provide training to ensure that managers are aware of and can combat their prejudices based on stereotypes.

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Explore and publicise ways that diversity within the organisation improves the organisation – for example, public perceptions, sensitivity to customer needs, wider range of views and ideas.

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Re-evaluate the criteria for promotion and development and widen them by recognising a greater range of competences, experiences and career paths.

The guiding policy behind these types of initiative is special treatment according to individual needs. Of course, this approach has its critics, and in particular three objections can be raised: 1. The approach tends to understate the extent to which people share common experiences. It has a tendency to reject the idea of social groups, which is somewhat counter to people’s everyday experiences. For example, while several disabled people might differ considerably across a whole range of attributes and attitudes, their common experience of disability (even different forms of disability) might be sufficient to create a feeling of cohesion and solidarity. In particular, some people might actively look for social group identity if they feel isolated or vulnerable. 2. The approach ignores material similarities between social groups. For example, Kirton and Greene (2005: 131) note that ‘women of all ethnic groups typically take on the responsibility for childcare and elder care, and are less able to compete for jobs with men, notwithstanding qualitative ethnic differences in how women...may “juggle” their multiple roles’. 3. The approach has a tendency to emphasise the value of diversity in terms of the business sense arguments outlined earlier in the chapter. As was noted, such arguments have their limitations because they focus only on those initiatives that can be shown to contribute to the profitability or other performance indicators of the organisation. In practice, this extends opportunities only to a selective number of individuals whose competencies are in short supply or have been identified as being of particular value.

Sameness and difference As has been shown in the preceding discussion, disadvantage can arise by treating people the same or by treating people differently, so any policy that emphasises one perspective more than the other runs the risk of leaving some disadvantages unchecked. What is called for is a mixed policy because this recognises that to eliminate disadvantage it is necessary in some circumstances to treat people the same, and in other circumstances to treat people differently. Of course, this is a challenge in itself, because in what circumstances do you apply one criterion and not the other? For example, imagine the following situation. A woman applies for a job as an adviser selling financial products in a company that is dominated by men. ●

Scenario 1. She has the same qualifications and experience as male applicants, but the all-male selection panel might reject her because they consider that she would not ‘fit in’ with the competitive, aggressive culture of the organisation.

●

Scenario 2. She has the same qualifications as male applicants but has taken a career break for childcare purposes. The selection panel reject her because compared with men of the same age she has less work experience.

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The panel reject her in both scenarios but using different criteria: in the first scenario they use the criterion of difference (recognising gender); in the second they use the criterion of sameness (ignoring gender). But if the panel were to reverse their logic of difference and sameness, it might lead them to alternative conclusions. In the first scenario, if the panel ignored gender, they would arrive at the conclusion that she was appointable. In the second scenario, if they recognised that, because of her gender, she has had extra domestic commitments so cannot be compared with men of the same age then again they might conclude that she is appointable. This illustrates that managers have a key role in dealing with disadvantage, because they determine the criteria and define the circumstances in which sameness and difference are either recognised or ignored.

Key controversy If a job applicant has been disadvantaged in the past, perhaps because of a disability, their sex or their ethnic background, should they be treated the same as the other applicants or should their disadvantage be taken into account when deciding whether to offer them a job?

Long and short agendas Some commentators argue that fundamental change is needed if the elimination of disadvantage is to be achieved. Foremost among these commentators is Cockburn (1989, 1991), who points out that many of the positive action policies and initiatives adopted by managers in organisations are concerned only with the short term. Typically they are concerned with fixing current problems, responding to outside pressures, or perhaps attempting to impress customers and clients. The proposition advanced by Cockburn is that, as well as this short agenda (with its laudable aim of eliminating bias), there is the need to consider the long agenda. This would be a challenging project of organisational transformation, requiring fundamental changes to the processes, roles, norms, attitudes and relationships within organisations. Cockburn (1989: 218) explains: As such it brings into view the nature and purpose of institutions and the processes by which the power of some groups over others in institutions is built and renewed. It acknowledges the needs of disadvantaged groups for access to power.... But it also looks for change in the nature of power, in the control ordinary people of diverse kinds have over institutions, a melting away of the white male monoculture.

The obvious problem for enacting the long agenda is that those in positions of influence within organisations have little incentive to make changes that might challenge their own power and dominance. The long agenda therefore has to be led by activists and advocates. This might be through committed individuals within organisations, but it would also require collective voice and action. It might need a political context that encourages a more active approach by organisations to ensuring equality of opportunity – through, for example, compulsory monitoring or employment quotas for disadvantaged groups.

The process of discrimination in an organisation The discussion so far in this section has explored the complexity of taking into account concerns about ‘sameness’ and ‘difference’. It is also important to consider other pressures and influences

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that are likely to have an impact. Figure6.2 is a flow chart that maps the relationship between the key components and thereby shows how the process of discrimination occurs in organisations (Noon and Blyton, 2007). Each of the components of this flow chart is discussed in this section, and is linked with many of the issues raised in the earlier part of the chapter. At the centre of the process lie two vital questions: what should be the basis of any specific policy, and is the policy fair? Try to envisage this in terms of specific policies, such as promotion, awarding of merit pay, entitlement to career development opportunities and so on. The first question is of vital concern to managers, as their decisions are going to shape a particular policy. However, as the diagram shows, such decisions are not made in isolation but are subject to a range of influences: personal influences (belief, values and political agenda), external pressures and organisational pressures: ●

Personal influences. A manager will have their individual beliefs and values that fundamentally guide behaviour and influence decisions. So, for instance, a strong belief in social justice is going to affect the choices that a manager makes, as is a particular prejudice or stereotype about a social group. Combined with this is the individual political agenda of the manager, which might moderate the values and beliefs in some way. For example, a male manager might believe that women do not make good leaders but knows that in order to get promotion he must suppress this view in order not to alienate his boss – who is a woman. This reflects the micro-politics of organisational life and will operate at all levels. The intermixing of beliefs, values and political manoeuvring is going to have an influence on the manager’s decisions.

●

External pressures. In addition to these personal pressures, the manager is faced with external pressure. This could be legislation requiring (or prohibiting) certain action, public opinion, customer or client pressure, supplier influence, labour supply issues and so forth. For instance, it was noted in the discussion about the business case that managers might adopt equal and

Individual beliefs and values

External pressures

Individual political agenda

Internal organisational pressures

What should be the basis of speciﬁc policy in respect of the various criteria (sex, age, race, qualiﬁcations, experience, etc.)?

Sameness

Difference

Equal treatment

Special treatment

Is the policy fair? Yes Fair discrimination

Figure 6.2 The process of discrimination in an organisation. Source: Adapted from Noon and Blyton (2007).

No Unfair discrimination

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diversity initiatives in order to improve the public image of their organisations, or to access a wider customer base. ●

Internal organisational pressures. The final set of pressures arises from within the organisation. These pressures might come from other managers, employees (especially through engagement surveys and grievances), trade unions, works councils and so forth. There might also be pressure as a result of data collected within the organisation. For example, high levels of employee turnover might encourage positive action initiatives that help to retain employees, develop and make better use of skills, and provide a more supportive and encouraging environment. In addition, there are likely to be pressures because of the workplace culture and traditions of the organisation – the sorts of issues that were discussed in the section on institutional discrimination.

These combined pressures establish the context in which decisions are made about specific policies within the organisation. As was noted earlier in the chapter, managers must make choices between people and therefore criteria have to be used to differentiate people. For example, imagine you are running a recruitment process and have received a pile of application forms. In deciding your shortlisting policy (i.e. who to call for an interview) you might use the criterion of ‘previous experience’ as a way of choosing between applicants. Those who meet the minimum requirements are interviewed; those who do not are rejected. At the same time, you might think that formal qualifications are irrelevant for the particular job and so you do not take these into account when shortlisting the applicants. Hence your shortlisting policy is based on ‘difference’ with regard to experience, and ‘sameness’ with regard to formal qualifications. There is nothing wrong with this mixture – it reflects the possibility of combining principles of sameness and difference. The consequence of this combination is that someone with a university degree will be treated the same as someone without a degree (equal treatment), but if they have previous work experience they will get treated more favourably (in this instance, shortlisted) compared with someone without appropriate previous experience. Logically, this raises the question of whether this is fair (note the next stage in the flowchart). If you think such a shortlisting policy is fair then you are likely to be in agreement with the decisions about the criteria for equal and special treatment. However, if you think this is unfair, this might be because you feel either or both of the following: ●

equal treatment was applied inappropriately (e.g. formal qualifications should have been taken into account);

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special treatment was given inappropriately (e.g. previous experience should not have been taken into account).

If you were an employee in the organisation then this feeling of unfairness might simply produce a feeling of discontent. On the other hand, it might drive you to take action, such as voicing your opinion to managers, going to the trade union, discussing the issue with other employees or even looking for a job elsewhere. Such actions might then produce internal organisational pressures on future decisions (shown by the feedback loop in Figure6.2). Mapping out the process in this way reveals that every managerial decision about appointments, promotions, allocation of work, bonuses, training opportunities and so forth is likely to be met with a variety of responses: some individuals and groups will interpret the decision as fair and others as unfair, depending on whether they consider the equal or special treatment to be justifiable. The extent to which employees concern themselves with issues of fairness will vary according to the circumstances and is likely to reflect whether they are directly involved with, or affected by, the outcome.

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Reflecting on fairness: ●

Have you directly experienced or observed treatment you considered unfair?

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If so, what did you do about it?

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What other options did you have?

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Concluding comments The chapter is focused on equality and diversity, but recently a new concept has surfaced: inclusion. Strictly speaking, the idea of inclusion has always been present in the equality and diversity debate, but some commentators are now making a clear distinction between diversity and inclusion. For instance, the UK’s Chartered Institute of Personnel and Development (CIPD) has a specialist adviser on diversity who is quoted as follows in an article by Evans (2006: 26): We talk much more about inclusion now, which is a dynamic.... It is not about visible or non-visible traits of characteristics such as race or gender, sexuality or disability, which can all be stereotyped. It is about celebrating difference as an asset, since everyone is unique, and recognising that everyone can make a contribution.

In an attempt to bring some clarity, Roberson (2006) assesses the views of a range of practitioners about what they mean by diversity and inclusion. She finds that their definitions of ‘diversity’ tend to focus on differences and the demographic composition of groups or the organisation, while their definitions of ‘inclusion’ focus on organisational objectives to increase participation of all employees and to leverage diversity effects in the organisation. While Roberson’s findings generally suggest conceptual distinctiveness, she also adds a caveat noting how, in operational terms, there is likely to be overlap between diversity and inclusion, and that for some organisations a change of emphasis from diversity to inclusion might simply be a change in language and might not make any difference to policies and initiatives. Generally, it seems that academic commentators, consultants and practitioners are beginning to suggest that, while diversity is concerned with recognising the value of differences within the workforce and managing them for commercial advantage, inclusion is concerned with the processes that incorporate differences into business practices and thereby help to realise the value. It could mean that we are at the start of a new trend towards managing inclusion (see Oswick and Noon, 2014), adding even more complexity to the topic area, and creating an even wider range of issues for managers to consider when developing policies and initiatives to address discrimination and disadvantage in organisations.

Summary ●

Discrimination can occur at any decision point within an organisation. Employees are legally protected in terms of certain characteristics. The type and extent of protection necessarily vary from country to country, although within the EU there is a common platform of protection. A key feature is the protection against direct and indirect discrimination.

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It is vital to recognise the diversity between social groups and also within social groups. It is also important to acknowledge that some people are discriminated against due to more than one characteristic – an effect that is described by academic commentators as multiple discrimination or intersectionality, depending on the assumed impact on the individual. This diversity means policies need to be sensitive to different experiences of discrimination and different needs of disadvantaged groups and individuals.

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The reason for managers to intervene in order to prevent discrimination can be based on arguments of social justice or business needs – or both. The social justice case stresses the moral argument with reference to equality of opportunity, equality of outcome, fairness and human rights. Critics argue that managers should be concerned with profit and efficiency, not morality. The business case stresses various ways that equality and diversity are good for business needs (wider recruitment, effective use of human resources, innovation, attracting customers and company image), but critics point to limitations of the business case, including instances where it can make good business sense not to act in the interests of equality and diversity.

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Deep-rooted problems are often caused by institutional discrimination. This term is used to describe organisations that have processes and practices that are fundamentally discriminatory – sometimes without managers realising it – and are reinforced through existing organisational structures and workplace cultures. Tackling such fundamental problems might require a more radical agenda than that being proposed by many advocates of equality and diversity.

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Equality and diversity policies vary between organisations; they range from those that are simply empty statements to others that are backed up by effective action programmes. For policies to be effective, they need to have positive action initiatives to ensure policy is implemented, and monitoring to assess the effectiveness of the initiatives over time. It is important to recognise that positive action and positive discrimination are not the same – although they are often confused – and offer very different solutions to the problems of discrimination and disadvantage.

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Managers devise equality and diversity policies based on assumptions of sameness or assumptions of difference. These two perspectives help to explain why there is often a lack of agreement about how to ensure fairness. The sameness perspective emphasises similarities between people and advocates equal treatment. The difference perspective emphasises diversity either between social groups or between individuals. These two branches of the difference perspective are similar in that they both advocate special treatment that takes the differences between people into account, but they differ in their suggestions about the types of initiative that organisations should adopt.

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The term ‘managing diversity’ is often used to describe the approach to fairness that emphasises the individual differences between people. In some instances, it is an alternative approach advocated by commentators who think traditional equal opportunities policies have failed and are fundamentally flawed.

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It is important for managers to recognise that unfair treatment sometimes results from treating people differently when they ought to be treated the same, and sometimes from treating people the same when key differences ought to be recognised. Policies, procedures and attitudes within an organisation should therefore be based on recognising both the similarities and differences between people.

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The process of discrimination can be seen as the combination of personal, external and internal pressures on managers to make choices according to principles of sameness or difference, in their decisions about appointments, promotions, allocation of work, training opportunities and so forth. Perceptions of unfairness are the result of a mismatch between the expectations of employees and the manager’s decisions. Viewed in this way, all decisions are susceptible to claims of unfairness, depending on the perspective of the individuals concerned, the perceived appropriateness of the criterion for the decision and the individual and social acceptability of the type of treatment (special or equal).

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A recent development within the field has been the emergence of the concept of managing inclusion, which seems to be an acknowledgement of the need for managers not only to recognise the value of diversity but also to develop policies, processes and initiatives that harness the differences to better and more productive effect.

Questions 1 ‘I don’t like to employ women because our customers are all local tradesmen and they prefer to deal with male staff because they understand the technical aspects of the products’. This statement was made by the manager of a small company that supplies building materials. Comment on the statement using the concepts of stereotyping, prejudice, social justice and the business case. 2 What is the purpose of equality and diversity policies? Why do they sometimes fail to live up to expectations?

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3 Using examples of recruitment and selection, explain how the different perspectives listed below might influence the practices that managers in an organisation might choose to adopt: (a) the sameness perspective; (b) the collectivist strand of the difference perspective; (c) the individualist strand of the difference perspective. 4 ‘I treat everyone the same – so that’s how I ensure fairness’. This quote is from a section manager in a supermarket. Explain why such an approach can sometimes lead to unfairness. 5 If an organisation is accused of being institutionally racist, sexist and homophobic, what does it mean? How would you evaluate whether such a description was legitimate?

Case study Employees of conscience? Read through the scenarios below, which all concern discrimination on the basis of religion.

Scenario 1 – The airline check-in desk worker An airline has a strict uniform policy that prohibits the display of any jewellery. Ms E is a devout Christian and started to wear a small plain silver cross on a necklace that could be seen above her uniform. She worked on the check-in desks and managers asked her to remove it, because it was in breach of the uniform policy. She refused because she felt that she had the right to express her faith while at work. The company offered her the opportunity to move to another non-customer-facing role where the uniform policy did not apply, but she was not prepared to accept this. She was sent home on unpaid leave.

Scenario 2 – The nurse A hospital introduced a uniform policy that prevented nurses from wearing necklaces because of health and safety concerns. Mrs C was an experienced nurse who had been wearing a cross necklace on wards for 30 years without incident. She refused to remove the cross but offered to have a magnetic clasp fitted (so the necklace would come apart easily if it was grabbed by a patient). The hospital insisted that she removed the necklace, but she refused to do so and was moved to a desk job.

Christian principles. He argued that managers should make allowances to take into account his beliefs. He was suspended pending an investigation and then dismissed.

Scenario 4 – The registrar Ms L was a registrar employed to conduct civil marriage services. She took up employment many years prior to the introduction of same-sex civil partnerships, but as soon as these became legal she made it clear to her employers that she was not prepared to conduct them as a matter of conscience, because it was against her Christian beliefs. At first she was able to swap duties with other registrars, but then a change in working conditions introduced by her employer for all staff meant that swapping was no longer possible. She argued that she was being forced to choose between her religious beliefs and her job. She claimed she was shunned and accused of being homophobic by managers and work colleagues. She was eventually dismissed.

Questions 1

(a) Evaluate the key issues in each and decide whether the employees have suffered discrimination. (b) What issues must managers bear in mind when deciding how to proceed? 2

Scenario 3 – The relationship guidance counsellor Mr M was a counsellor employed by a charity providing relationship guidance. He made it clear during a training session that he would have difficulty counselling same-sex couples because this conflicted with his strongly held

Compare scenario 1 and scenario 2.

Compare scenario 3 and scenario 4. (a) Who is being discriminated against, and why? (b) Who has the stronger case, Mr M or Ms L? Explain your reasoning.

Based on all four scenarios, do you think employees should be allowed to exercise their conscience in this way in the workplace? Explain your reasoning.

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References and further reading Acker, J. (2006), ‘Inequality regimes: Gender, class and race in organisations’, Gender, Work and Society, 20, 4: 441–64. Berthoud, R. (2003), Multiple Disadvantage in Employment: A Quantitative Analysis. York: Joseph Rowntree Foundation. Bradley, H. and Healy, G. (2008), Ethnicity and Gender at Work. London: Palgrave. Cockburn, C. (1989), ‘Equal opportunities: The short and long agenda’, Industrial Relations Journal, 20, 3: 213–25. Cockburn, C. (1991), In the Way of Women. Basingstoke: Macmillan. Collinson, D.L., Knights, D. and Collinson, M. (1990), Managing to Discriminate. London: Routledge. Cunningham, I. and James, P. (2001), ‘Managing diversity and disability legislation’, in M. Noon and E. Ogbonna (eds), Equality, Diversity and Disadvantage in Employment. Basingstoke: Palgrave, pp. 103–17. Curran, M. (1988), ‘Gender and recruitment: People and places in the labour market’, Work, Employment and Society, 2, 3: 335–51. Dickens, L. (1994), ‘The business case for equal opportunities: Is the carrot better than the stick?’ Employee Relations, 16, 8: 5–18. Dickens, L. (1999), ‘Beyond the business case: A three-pronged approach to equality action’, Human Resource Management Journal, 9, 1: 9–19. Dickens, L. (2000), ‘Still wasting resources? Equality in employment’, in S. Bach and K. Sissons (eds), Personnel Management, 3rd edn. Oxford: Blackwell, pp. 137–69. Evans, R. (2006), ‘Variety performance’, People Management, 23 November: 26. Healy, G. (1993), ‘Business and discrimination’ in Stacey, R. (ed.), Strategic Thinking and the Management of Change. London: Kogan Page, pp. 169–89. Heery, E. and Noon, M. (2008), A Dictionary of Human Resource Management. Oxford: Oxford University Press. Hilpern, K. (2007), ‘A question of positive motives’, Employers’ Law, October: 12–13. HMSO (2010), Equality Act 2010 – Explanatory Notes. London: HMSO. Hoque, K. and Noon, M. (2004), ‘Equal opportunities policy and practice in Britain: Evaluating the “empty shell” hypothesis’, Work, Employment and Society, 18, 3: 481–506. Kandola, R. and Fullerton, J. (1994), Managing the Mosaic. London: IPD. Kirton, G. and Greene, A.-M. (2005), The Dynamics of Managing Diversity, 2nd edn. Oxford: Butterworth-Heinemann. Liff, S. (2003), ‘The industrial relations of a diverse workforce’, in P. Edwards (ed.), Industrial Relations, 2nd edn. Oxford: Blackwell, pp. 420–46. Liff, S. and Dale, K. (1994), ‘Formal opportunity, informal barriers: Black women managers within a local authority’, Work, Employment and Society, 8, 2: 177–98.

Liff, S. and Wajcman, J. (1996), “‘Sameness” and “difference” revisited: Which way forward for equal opportunity initiatives?’, Journal of Management Studies, 33, 1: 79–94. McInsey & Co. (2015), Diversity Matters. Online: http://www. mckinsey.com/business-functions/organization/ourinsights/why-diversity-matters (accessed 28 April 2016) Modood, T., Berthoud, R., Lakey, J., Nazroo, J., Smith, P., Virdee, S. and Beishon, S. (1997), Ethnic Minorities in Britain: Diversity and Disadvantage. London: Policy Studies Institute. Nazroo, J.Y. and Karlsen, S. (2003), ‘Patterns of identity among ethnic minority people: Diversity and commonality’, Ethnic and Racial Studies, 26, 5: 902–30. Noon, M. (2007), ‘The fatal flaws of diversity and the business case for ethnic minorities’, Work, Employment and Society, 21, 4: 373–84. Noon, M. (2010), ‘The shackled runner: Time to rethink positive discrimination?’, Work, Employment and Society, 24, 4: 728–39. Noon, M. (2012), ‘Simply the best? The case for using threshold selection in hiring decisions’, Human Resource Management Journal, 22, 1: 76–88. Noon, M. and Blyton, P. (2007), The Realities of Work, 3rd edn. Basingstoke: Palgrave. Noon, M. and Hoque, K. (2001), ‘Ethnic minorities and equal treatment: The impact of gender, equal opportunities policies and trade unions’, National Institute Economic Review, 176: 105–16. Noon, M., Healy, G., Forson, C. and Oikelome, F. (2013), ‘The equality effects of the “hyper-formalisation” of selection’, British Journal of Management, 24, 3: 333–46. Oswick, C. and Noon, M. (2014), ‘Discourses of diversity, equality and inclusion: Trenchant formulations or transient fashions?’, British Journal of Management, 25, 1: 23–39. Pilkington, A. (2001), ‘Beyond racial dualism: Racial disadvantage and ethnic diversity in the labour market’, in M. Noon and E. Ogbonna (eds), Equality, Diversity and Disadvantage in Employment. Basingstoke: Palgrave, pp. 172–89. Reyna, C., Tucker, A., Korfmacher, W. and Henry, P.J. (2005), ‘Searching for common ground between supporters and opponents of affirmative action’, Political Psychology, 26, 5: 667–82. Reynolds, G., Nicholls, P. and Alferoff, C. (2001), ‘Disabled people, (re)training and employment: A qualitative exploration of exclusion’, in M. Noon and E. Ogbonna (eds), Equality, Diversity and Disadvantage in Employment. Basingstoke: Palgrave, pp. 190–207. Roberson, Q. M. (2006), ‘Disentangling the meanings of diversity and inclusion in organizations’, Group & Organization Management, 31, 2: 213–36. Webb, J. (1997), ‘The politics of equal opportunity’, Gender, Work and Organisation, 4, 3: 159–69.

PART 3

DEVELOPING THE HUMAN RESOURCE 7 Learning and development 8 Leadership and management development 9 Organisational development

Introduction to Part 3 Changes to the nature of work and to organisations as a result of social progress, technological developments and economic and political factors are likely to trigger a need for organisations to train and develop employees to ensure effectiveness, quality and competitiveness. Attention to human resource development (HRD) also plays a key role in attracting and retaining talent and ought to be a critical pillar of the HR strategy in organisations operating in the public, private and not-for-profit sectors. Part III examines the various forms that HRD takes: the development of the employee both as an individual and as an employee; the development of the employee by the employer or by him or herself; training; education; career development; group development; staff development; professional development; management development; and, even more widely, organisation development. Chapter 7 identifies the strategic importance of HRD in organisations, and considers the significance of learning and development for the individual. It examines the processes and activities undertaken within organisations to enable employees to acquire, improve or update their skills, including e-learning. The chapter then explores the influence of the national context on the type, quality and impact of learning and development taking place in organisations. Chapter8 discusses the development of leaders and managers and explores the significance of leadership and management development to organisational success. It examines the methods, techniques and processes used to develop leaders and managers and how these may be varied to complement different needs and contexts. The chapter also speculates on the likely direction of leadership and management development in the future. Chapter9, the concluding chapter within this section of the textbook, reflects the renewed interest in organisational development (OD) and its contribution to sustainable organisational performance. The chapter traces the historical development of OD and examines contemporary views on the concept. It then investigates the key techniques and practices associated with OD and the skills required by OD practitioners. It concludes with an examination of the relationship between OD and organisational strategy, structure and culture.

CHAPTER 7 LEARNING AND DEVELOPMENT MAIRI WATSON AND JIM STEWART

Objectives ●

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To define learning and development. To identify the strategic importance of learning and development in the light of the significant changes taking place in organisations. To examine the significance of learning and development for individuals. To examine theories of learning and development and their impact on practices. To identify the key components of the planned process of learning and development in organisations. To explore the benefits and challenges of e-learning. To consider the influence of the national context on the quality and impact of learning and development in organisations.

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Case study From business strategy to training plan Garvey Group is a family-owned retail and hotel company in Ireland, with 13 stores and hotels across the south of the country. A core belief is that investment in employees’ learning and talent development produces results to the bottom line. A modified balanced scorecard is used to provide a framework for integrating learning and development into the overall business strategy. A corporate training plan is prepared annually, costed and evaluated through measures such as sales and profitability. Linked to this, an annual training plan is prepared for each branch. Employees’ training needs are identified using the appraisal system, with the dual objec tives of both providing oppor tunit y for individuals to self-identify learning needs as well as informing a needs analysis conducted by HR for each job role.

The company uses a competence-based framework, with much emphasis put on behavioural competences applicable to all jobs, such as customer care, working as a team and ‘subtle selling’. For sales assistants in particular, great emphasis is placed on customer service training, acting as ambassadors for the company and ‘subtle selling’ skills – telling customers in a way about promotions, such that customers might not even notice they are being encouraged to buy more. These skills are seen as essential for achieving business strategy, because sales, repeat business and reputation are so fundamental to corporate performance in this sector. When sales training or training in particular foods is planned, objectives are set for metrics such as increase in sales and return on investment, balancing expenditure with increased sales of those foods. (Source: Extracted from Stewart and Rigg (2011: 34))

Introduction According to Honey (1998: 28–9), learning would be ‘the central issue for the twenty-first century’: Changes are bigger and are happening faster, and learning is the way to keep ahead...to maintain employability in an era when jobs for life have gone. It enables organisations to sustain their edge as global competition increases. Learning to learn...[is] the ultimate life skill.

That was true at the start of the century and is even more so today as transformations in work, organisations, the economy and society identified throughout the textbook are continuing. This chapter addresses this ‘central issue’. It starts by explaining that learning and development are of crucial importance to individuals and that their outcomes are of strategic importance to organisations (and beyond them to the wider economy). It then examines the processes of individual learning and development, which human resource (HR) managers need to understand, and the ways in which human resource development (HRD) mobilises that understanding in order to meet both organisational goals and the learning needs of employees. The chapter closes by explaining the national significance of learning and development, and noting the policies and frameworks that aim to achieve them.

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The strategic importance of learning and development for organisations The labels given to today’s world – the global economy, the network society (Castells, 1996), the knowledge society (Drucker, 1969; UNESCO, 2005) – give a clue to the challenges that many individuals are now facing. New technologies and ways of working are not only creating new tasks but also demanding new ways of thinking about work, doing work and relating with one another (Bayliss, 1998). People need conceptual, ‘helicopter’ and analytical thinking (Wisher, 1994: 37). Whether employed or not, they need to be able to challenge traditional ways of thinking and working; to think and work ‘outside the box’ of traditional job descriptions; to work without prior experience, clear guidelines or close supervision; to be flexible and prepared to change, undertake new tasks, move to another organisation; or to recognise the opportunities for self-employment. This all means that people have to learn and develop continually and effectively in order to adapt to their changing world, construct a meaningful and fulfilling role in it, and acquire the knowledge, skills, competencies, capabilities and employability that will give them satisfaction and the ability to make their way. Organisations also need those outcomes from their employees’ learning and development, for they, too, are being challenged by this changing world. To adapt and survive and be competitive, they have had to become more flexible, innovative, quality-conscious, customer-orientated, constantly improving their performance to remain competitive. They have to ‘think global and act local’ and need people who have a ‘matrix of the mind’, who will share learning and create new knowledge (Ulrich and Stewart Black, 1999). They need what Castells (1998: 341) calls the ‘self-programmable’ labour in the global economy, which has ‘the capability constantly to redefine the necessary skills for a given task, and to access the sources for learning these skills’. It is his view that work that does not require such abilities will be undertaken by ‘generic’ labour, which, lacking self-programmable skills, would be ‘human terminals’ [which could] be replaced by machines, or by any other body around the city, the country or the world, depending on business decisions. While they are collectively indispensable to the production process, they are individually expendable’ (Castells, 1998: 341). Employers have to promote the kind of learning that, through critical thinking and reflection, can recognise, appraise, transmit and apply contextually embedded learning. Human capital approaches, the learning organisation (see Chapter8) and the establishment of the Investors in People award indicate that many employers are now aware of this need. There is also increasing adoption of knowledge management, which has come about with the recognition that the wealth of information produced by advances in information and communications technologies becomes meaningful and of competitive advantage to the organisation only when people share, interpret and elaborate it. Knowledge management embraces the creation, validation, presentation, distribution and application of knowledge (see Nonaka, 1991; Malhotra, 1998; Hwang, 2003). It recognises that not all knowledge is explicit: ‘the knowledge needed to develop a new product is largely in people’s heads.... [It] cannot be written down, because an individual may not even know it is there until the situation demands a creative response’ (Dixon, 2000: 37). It has also been suggested (Snowden, 2002) that knowledge is not an ‘abstract, objective truth’ but a cultural construction within ‘communities of practice’, and hence ‘essentially pragmatic, partial, tentative and always open to revision’ (Blackler, 2000: 61). Hence, to address the complexities of knowledge, high levels of technical, cognitive and ‘soft’ interpersonal skills are called for and this places a great premium on the individual’s learning and development. Organisations need to understand those processes in order to invest in their human capital and facilitate, mobilise and support the learning and development of their employees because ‘[p]eople are our only source of differentiation and sustainable competitive advantage. Essential to that is learning’ (Beattie, 2002). As Guest et al. (1997: 3) wrote:

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Creating, disseminating and embodying knowledge – tacit and explicit – becomes a key strategic resource to be leveraged. It holds the key to unlocking the organisation’s ability to learn faster than its environment is changing. In summary, learning and development lie at the heart of innovation in organisations.

Learning and development are thus now of strategic importance for organisations. Those responsible for HRD in organisations, according to their professional body, the Chartered Institute of Personnel and Development (CIPD, 2002), have an increasingly strategic role and need to become ‘thinking performers’ (CIPD, 2007) who apply ‘a critically thoughtful approach to their job’ (Whittaker and Johns, 2004: 32).

Explore

Before proceeding further, consider some of the changes taking place in organisations you know in response to changes in the operating environment. What are the implications for HRD and for the learning and development of individuals and teams?

Learning and development are also crucial for the wider economy. Skills are ‘the most important lever within our control to create wealth and to reduce social deprivation’ (Leitch, 2006; see also www.ukces.org/uk). The government also recognises their strategic significance nationally and has established the UK Commission for Employment and Skills (www.ukces.org.uk; see also www.delni.gov.uk). It is also now widely recognised that we need to become a learning society, in which there is a culture of, and opportunities for, lifelong learning in order to provide the skills required for competitiveness in a global economy.

Individual learning and development From birth, humans, like all animals, engage actively in the processes of learning and development: they do not have learning and development done to them. Senge (1990: 4) said: ‘Deep down, we are all learners. No one has to teach an infant to learn.... They are intrinsically inquisitive, masterful learners.... [N]ot only is it our nature to learn but we love to learn.’ They continue learning throughout life, whether encouraged or not, whether formally taught or not, whether the outcomes are valued by society or not. This personal learning knows no boundaries: learning in one domain – job, hobbies or maintenance of home and car – crossfertilises that in another and thereby achieves a wider understanding and more finely honed skills. According to Daloz (1986: 1), ‘Most of us have learnt a good deal more out of school than in it...from our families, our work, our friends...from problems resolved and tasks achieved but also from mistakes confronted and illusions unmasked.’ Society facilitates and fosters, channels and controls the learning and development of its members through socialisation and education so that they yield outcomes that contribute to and are acceptable to it. However, although individuals gain a lifetime’s experience of being learners, some of their experiences (especially those in formal educational settings) might not have been happy ones (Honey, 1999). They might be experienced learners, but not necessarily competent or confident learners, and might not learn what society and its institutions want them to learn.

Defining learning and development The words ‘learning’ and ‘development’ are sometimes used loosely and even interchangeably, but to understand them they need to be distinguished and clearly defined.

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Learning is ‘a process within the organism which results in the capacity for changed performance which can be related to experience rather than maturation’ (Ribeaux and Poppleton, 1978: 38). It is not just a cognitive process that involves the assimilation of information in symbolic form (as in book learning), but it is also an affective and physical process (Binsted, 1980). Emotions, nerves and muscles are involved, too. Moreover, intelligence is not a unitary concept [see Gardner (1985, 1999) on multiple intelligences; Mayo and Nohria (2005) on ‘contextual intelligence’], or just a cognitive capacity [see Pickard (1999) on emotional intelligence]. Learning leads to skilful and effective adaptation to and manipulation of the environment, which is one element in a much-quoted definition of intelligence (Wechsler, 1958). Through learning, a person ‘qualitatively [changes] the way he or she conceived something’ (Burgoyne and Hodgson, 1983: 393) or experiences ‘personal transformation’ (Mezirow, 1977). Learning leads to change, whether positive or negative for the learner. It can be more or less effectively undertaken, and it could be more effective when it is paid conscious attention. Development, whether of an organism, individual or organisation, is the process of becoming increasingly complex, more elaborate and differentiated as a result of learning and maturation. It is a process of both continuity and discontinuity. (It is sometimes interpreted as progression and advancement; it is irreversible, although regression to earlier phases can occur.) Quantitative changes lead to qualitative changes or transformations. The disintegration of the existing phase creates the conditions for a new one that is ‘not entirely new – it is a transformation. Each succeeding phase is more complex, integrating what has gone before’ (Pedler, 1988: 7–8). This opens up the potential for new ways of acting and responding to the environment, which in turn leads to the need and opportunity for even further learning, and so on. Overall, then, development is not synonymous with learning, but it cannot take place without learning. Lifelong learning and development mean continuous adaptation. Increased knowledge and improved skills enlarge the individual’s capacities to adapt to the environment and to change that environment, so allowing new possibilities to emerge. As the systems model shows (see Chapter3), external changes will lead individuals on to further internal changes: in their ability to respond to and make their way in their particular environment (their perceptual-motor, intellectual, social and interpersonal skills); in the way they think, feel and interpret their world (their cognition, affect, attitudes and overall philosophy of life); in their social status and the way they see themselves, their self-concept, confidence, and self-esteem. Hence learning sets in train potentially far-reaching changes in the individual. Daloz (1986: 24–6) draws on elements of folk tales to convey the significant effect of this in adult learning: The journey tale begins with an old world, generally simple and uncomplicated, more often than not, home.... The middle portion, beginning with departure from home, is characterised by confusion, adventure, great highs and lows, struggle, uncertainty. The ways of the old world no longer hold, and the hero’s task is to find a way through this strange middle land, generally in search of something lying at its heart. At the deepest point, the nadir of the descent, a transformation occurs, and the traveller moves out of the darkness towards a new world that often bears an ironic resemblance to the old. Nothing is different, yet all is transformed. It is seen differently.... Our old life is still there, but its meaning has profoundly changed because we have left home, seen it from afar, and been transformed by that vision. You can’t go home again. (Source Reprinted with permission of John Wiley & Sons, Inc.)

Key controversy Learning and development often embrace behavioural change and have the potential to promote a profound effect on a person’s life. To what extent do you think this intervention is ethical?

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Explore

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Has your learning caused you to develop?

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Do you notice an altered sense of self?

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Will you be able to ‘go home again’?

Types of learner in the workplace Learners in the workplace are adults and so, to understand how they learn, a model of adult learning (androgogical) rather than of children’s learning (pedagogical) has to be used. According to Knowles and Associates (1984), this takes into account the fact that adult learners are selfdirecting, and motivated by their need to be recognised, to prove something to themselves and others, to better themselves and to achieve their potential. Their learning does not take place in a vacuum. Not only are they ready to learn when they recognise their need to know or do something, but they have experience on which to draw and to hang their new learning and assess its utility. However, the earlier learning experiences of many adults might have been far from effective or comfortable, and contribute to significant barriers to effective learning. Some of these can be internal: poor learning skills or habitual learning styles that constrain them; poor communications skills; unwillingness to take risks; lack of confidence, low expectations and aspirations; and anxiety, fear or insecurity. Other barriers can be thrown up by their situation: lack of learning opportunities or support, inappropriate time or place (see Mumford, 1988), or negative stereotyping from society. These will often be the experience of disabled people whose numbers in employment are likely to increase because of government policies. It has also to be recognised that, as well as personal circumstances, traits and inclinations, the particular context, culture, socialisation and education influence what and how people learn. Earlier in the book (Chapter3) several areas were identified on which there could be significant differences between dominant and alternative assumptions about reality, perhaps embodied in the construction of knowledge and of language, which might affect the experience of, and outcomes from, learning. This could be the case for women and members of cultural and ethnic minorities. Their learning experiences might have generated different knowledge and attitudes that may not be recognised or valued by the mainstream society and so have to be fought for, or subsumed or negotiated to fit in. Of course, this does not always result in negative experiences, and could even offer an advantage in developing some of the skills that organisations now need. Until recently, older workers were widely discriminated against when seeking employment and, when employed, they were often not given training (Naylor, 1987; Dennis, 1988; Laslett, 1989; Waskel, 1991). They have been commonly stereotyped as having failing cognitive and physical abilities, as being inflexible, and unwilling and unable to learn new ways. However, traditional attitudes towards older workers have started to change because of today’s concern for knowledge management and investment in human capital (People Management, 2005b) and demographic changes [see also Smethurst (2006), via the Centre for Research into the Older Workforce at Surrey University, and via a CIPD Factsheet Age and Employment]. With the raising of the state pension age, working lives will be extended and many older people will have to continue learning in order to keep up with the new technologies and practices that will come along. Despite the past negative stereotyping of older people, this will not necessarily be a problem for them. Although there is deterioration in performance with age, it is less than popularly believed: ‘Except where such abilities as muscular strength are of predominant importance, age is not a good discriminator of ability to work; nor of the ability to learn’ (The Carnegie Inquiry into the Third Age, Trinder et al., 1992: 20). Trinder et al. (1992) also note that performance is influenced as much by experience and skill as by age: skill development in earlier years will encourage adaptability in later life. Moreover, although older people are ‘at a disadvantage with speedy and novel (unexpected) forms of presentation’, Coleman (1990: 70–71) reports little or no decline with age in memory and learning, particularly ‘if the material is fully learnt initially’. The continuing

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ability of older people to learn was demonstrated in an apprenticeship programme for older workers organised by BMW. It was completed in 60 per cent of the time taken by the youth apprenticeship scheme: ‘They already had life skills and were used to factory work, making it easier to acquire new skills. But they were also motivated and knew what they wanted to do’ (People Management, 2005a: 17).

Outcomes of learning and development for people at work The outcomes discussed in the following are of considerable significance not only to individuals themselves but also to the organisations that employ them. (You can read more about them in Bloom et al., 1956.)

Psychomotor skills These ‘doing’ skills are needed at every level of an organisation, from the senior manager’s ability to operate a desktop computer to the cleaner’s operation of a floor-scrubbing machine, while more sophisticated skills are needed to operate complex and expensive technology. Skill can be defined as: ...the performance of any task which, for its successful and rapid completion, requires an improved organisation of responses making use of only those aspects of the stimulus which are essential to satisfactory performance. (Ribeaux and Poppleton (1978: 53–4)) . . . an appearance of ease, of smoothness of movement, of confidence and the comparative absence of hesitation; it frequently gives the impression of being unhurried, while the actual pace of activity may of course be quite high...[I]ncreasing skill involves a widening of the range of possible disturbances that can be coped with without disrupting the performance. (Borger and Seaborne (1966: 128–9))

The acquisition of such skills starts with the ability to make a general response to a signal, after which a learner develops a chain of two or more stimulus–response links, including verbal chains and associations; then the ability to make different responses to similar though different stimuli; to achieve concept learning and identify a class of objects or events; to learn rules through the acquisition of a chain of two or more concepts; and, finally, to combine rules and so achieve problem-solving (Gagné, 1970, in Stammers and Patrick, 1975). Recognising and understanding this process suggests how to facilitate learning and prevent failure to learn at the various levels.

‘Soft’ skills These are the ‘feeling’ skills: self-management, interpersonal, language and social skills. They include, for example, asking, listening and focusing; responding, interpreting and questioning; arguing, persuading and criticising; developing, modifying and comparing; acting, influencing and solving. These are needed for communication, team-working and leadership in organisations (see CIPD, 2010).

Cognitive skills These ‘thinking’ skills can be defined in terms of sequences of increasing levels or hierarchies, with the lower levels being prerequisites for, and subsumed by, the higher. This is seen in Bloom et al.’s widely used taxonomy of cognitive skills (as revised by Anderson and Krathwohl, 2001: 67–8): ●

remembering (retrieving, recognising and recalling relevant knowledge from long-term memory);

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understanding (constructing meaning from oral, written and graphic messages through interpreting, exemplifying, classifying, summarising, inferring, comparing and explaining);

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applying (carrying out or using a procedure through executing, or implementing);

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analysing (breaking material into constituent parts, determining how the parts relate to one another and to an overall structure or purpose through differentiating, organising and attributing);

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evaluating (making judgements based on criteria and standards through checking and critiquing);

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creating (putting elements together to form a coherent or functional whole; reorganising elements into a new pattern or structure through generating, planning or producing).

The higher-order skills need to be deployed in order to be effective in complex and challenging situations.

Knowledge There are several kinds of knowledge, and these are learned in different ways. Sometimes a simple distinction is drawn between propositional knowledge, or ‘know-that’, which is derived from formal thinking and learned through education, and ‘know-how’, which is in part learned from performance. Gardner (1985:68) noted: [M]any of us know how to ride a bicycle but lack the propositional knowledge of how that behaviour is carried out. In contrast, many of us have propositional knowledge about how to make a soufflé without knowing how to carry this task through to successful completion.

Bloom et al. (Anderson and Krathwohl, 2001) elaborated that distinction and identified four increasingly challenging levels of knowledge: factual knowledge is of basic elements and terminology; conceptual knowledge is of classifications, principles, theories and models; procedural knowledge concerns techniques, methods and when to use them; and meta-cognitive knowledge is strategic and self-knowledge. Practical knowledge is sometimes ranked lower than other cognitive skills in the social hierarchy of skills, and associated with lower-level occupations. That, however, misrepresents it. According to Jarvis (2004), practical knowledge combines ‘know-that’, ‘know-how’, everyday knowledge acquired through the senses, attitudes/beliefs/values, skills and tacit knowledge (see discussion of situated learning in the section on ‘Overarching theories of learning’). It is needed at all levels of occupation, from sweeper to surgeon, though occupations differ in the balance they need between its components. Collins (1993: 17), for example, writes about: The all too invisible laboratory technician.... Look into a laboratory and you will see it filled with fallible machines and the manifest recalcitrance of nature.... Technicians make things work in the face of this.... Notoriously, techniques that can be made to work by one technician in one place will not work elsewhere. The technician has a practical understanding of aspects of the craft of science beyond that of many scientists. But does the technician ‘understand science’?

There are further aspects of knowledge to be noted. The first is explicit, which can easily be documented, while the second is implicit, which could be, but has not yet been, documented. Then there is tacit knowledge, which is what ‘we know but cannot tell’ (Polanyi, 1966). Sternberg (1985: 169) recognises this in his definition of practical intelligence: ‘Underlying successful performance in many real-world tasks is tacit knowledge of a kind that is never explicitly taught and in many instances never even verbalised.’ Tacit knowledge is drawn upon for the fluent performance of psychomotor skills (see the definition earlier); it is recognised as crucial in knowledge management. It would seem to be acquired through performance and experience rather than through instruction, and is embedded in the context in which this experience is taking place. This can be seen in stage 2 of the model of Dreyfus et al. (1986; see the section on ‘Sequential models’), in which the learner becomes independent of instruction through the recognition of the contextual elements of the task, and thereafter develops the ability to register and ‘read’ contextual cues. However, unlike the formal knowledge that it accompanies, this tacit knowledge never becomes explicit. It has to be

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apprehended in context, and can perhaps be glimpsed by paying attention to the stories that are told in organisations (e.g. Gabriel, 2000). Myers and Davids (1992: 47) question whether ‘tacit skills’ can be taught, and identify that they are often transmitted in ‘an environment of intensive practical experience’ and in task performance: ‘We may yet be able to learn much from “sitting next to Nellie”!’

Competency/competence Both terms are used, but the difference in meaning between them has not been agreed [see the CIPD Factsheet Competence and Competency Frameworks, revised July 2012; for the history, purpose and nature of these developments, see Harrison (1992: 17–77, 2005)]. In their comparison of English and some European understandings of competence, Brockmann et al. (2008) point out that in England it refers to skills-based performance of narrowly defined tasks, whereas in France, for example, it refers to knowledge-based performance that integrates practical and theoretical knowledge with personal and social qualities. However, common definitions refer to the ability to apply knowledge and skills with understanding to a work activity which is assessed via performance, as in: ●

an underlying characteristic of a person which results in effective and/or superior performance in a job (Boyatzis, 1982);

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the ability to perform the activities within an occupational area to the levels of performance expected in employment (Training Commission, 1988).

Competencies/competences can be seen as instances of practical knowledge that have been specifically constructed to meet the purposes of employing organisations. They represent the behavioural and technical abilities an employee must have in order to meet the organisation’s goals. They are a means of ‘aligning what people can offer – their competencies – against the demands of customers rather than against the ill-fitting and ill-designed demands of jobs’ (Martin, 1995: 20). Considerable effort has been put into identifying and defining competencies/competences and, crucially, to expressing them in measurable terms. They are now used to form a comprehensive and continually updated national framework agreed across all sectors and occupations in which elements in an individual’s learning and development, whether achieved through formal education, training or experiential learning across the life span, are identified and assessed against nationally agreed standards. This framework is now often used by organisations in recruitment, assessment, the articulation of learning needs, and the design of training and development. Its language, philosophy and procedures are thus likely to shape individuals’ perceptions of their own learning and learning needs. However, it should be noted that this institutionalised, transorganisational framework has wrenched competencies/competences from their context and hence from the tacit knowledge that characterises practical knowledge.

Employability Since the 1990s, as employment insecurity has grown, attention has focused on employability, an indirect outcome of learning and development. It has become the ‘new security’: individuals who lose their jobs would be capable of finding another elsewhere. Hence it is now a matter of concern not only for individuals but also for government employment policies and provisions and for educational institutions, which aim to help their students develop it. Employability is the capability to gain initial employment, maintain it and obtain new employment if required (Hillage and Pollard, 1998). It focuses on the individual’s assets (knowledge, skills, attributes and behaviours), how the individual deploys them and presents them to an employer, and the context of the work that is sought. UKCES (2009) sees the foundation of employability as a positive approach, upon which the functional skills of effectively using numbers, language and IT can be built. To these are added the personal skills of self-management, thinking and solving problems, working together and communicating, understanding the

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business. Increasingly, employers are emphasising the need for those ‘soft skills’ (e.g., CBI/NUS, 2011). These employability skills are defined by criteria set by employers. However, there is also concern for ‘sustainable employability’, which takes a longer-term view of it and relates it to individual learning and development. Yorke and Knight (2006) suggest that it should cover understanding, beliefs about self-efficacy, the deployment of skills and metacognition, and Watts (2006) adds career development skills. These echo Bloom et al.’s (1956) levels of learning, and can be achieved via experiential and action learning, work experience and the opportunity for reflection and integration. People achieve employability by investing in their human capital of skills and reputation, and this means that they must engage in continuous learning and development, update their skills and acquire others that might be needed in the future by their current or future employer.

Explore

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How is employability supported in your college or university?

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How would you rate your own employability?

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What strategies have you used to enhance your employability?

Theories of learning Both individuals and HRD managers need to understand how such learning outcomes may be achieved, so the chapter will now examine some of the more influential theories of learning and development. (You can read about others in Nolen-Hoeksema et al., 2009.) However, it is worth noting that, in their recent review, McGurk and Sadler-Smith (2012) find that HR developers tend to make use of only a few of them (e.g., Honey and Mumford, Kolb, learning styles: see below), and suggest that they should look to neuroscience and the study of the brain for new understandings of learning.

Theories of learning Three of these will now be presented, one concerning behaviour, another cognition and the third context and social relationships. Some of the differences between them are due in part to their underpinning assumptions, whether positivist, constructivist or social constructionist, as outlined earlier in the book (see Chapter3).

Behaviourist approach The behaviourist (positivist) approach is frequently used to encourage desired behaviours in children and animals, and in basic forms of training. It regards learning as the process by which a particular stimulus (S), repeatedly associated with, or conditioned by, desirable or undesirable experiences, comes to evoke a particular response (R). This conditioning can be of two kinds. With classical conditioning, a stimulus leads automatically to a response, as in Pavlov’s experiment in which dogs were conditioned to salivate at the sound of a bell rung before food was presented. Operant conditioning reinforces or rewards a desired response, which increases the probability of the repetition of the same response when the stimulus recurs. Experimental research (including many animal studies) has shown that negative reinforcement, or punishment, is not as effective for learning as positive reward, and that reinforcement at variable intervals is more effective than continuous reinforcement. Behaviour can be shaped by reinforcing responses that approximate to what is desired until that behaviour is finally achieved.

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Cognitivist approach That behaviourist S–R approach pays no attention to the cognitive processes that come to associate a stimulus with a particular response: it does not investigate what is in the ‘black box’. However, cognitivist learning theories, influenced by constructivism, again originally based on animal studies, do so. They see learning as an association of stimulus with stimulus (S–S). The learner develops expectations that stimuli are linked and so develops a cognitive ‘map’ or latent learning. Hence insightful behaviour appropriate to a situation takes place without the strengthening association of S–R bonds. Social learning theory also addresses what is in the ‘black box’. It recognises the role in learning of the observation and imitation of the behaviour of others, but, as seen in, say, the debates around the influence of the media upon children’s behaviour, there are clearly many moderating variables.

Social constructivist approach Learning, according to the behavioural and cognitivist theories, is largely decontextualised. The social constructivist approach to the understanding of learning, however, recognises the significance of context, culture and social interaction. Rather than being a solely individual experience, learning is a social process that takes place through interaction and collaboration with others (Vygotsky, 1978). This view places emphasis upon language, which it considers to be socially constructed, and on the role of other people in an individual’s learning. Lave and Wenger (1991) develop this further in their notion of situated learning. Individuals learn through socialisation and imitation as they try to address problems in a specific context and in interaction with others. This takes place in a ‘community of practice’, which is a group of people who create a shared identity by participating in a communal activity. Through the relationships between practitioners, their practice and the social organisation of their communities, they develop their practical knowledge.

The process of learning There are several models of the process through which learning occurs, which HR developers could use to point to ways in which learning might be facilitated, made more effective or impeded.

Sequential models One approach is to see learning as an information-processing system in which a signal, containing information, is transmitted along a communication channel of limited capacity and subject to interference and ‘noise’ (Stammers and Patrick, 1975). The signal has to be decoded before it can be received, and then encoded to pass it on. Data received through the senses are filtered, recognised and decoded through the interpretative process of perception; this information is then translated into action through the selection of appropriate responses. The effectiveness of learning depends on attention being paid only to the relevant parts of the stimuli, the rapid selection of appropriate responses, the efficient performance of them, and the feeding back of information about their effects into the system. Overload or breakdown of the system can occur at any of these stages. Gagné (1974, in Fontana, 1981: 73) analysed the sequence of learning, a chain of events, some internal and others external to the learner. It begins with the learner’s readiness to receive information (motivation or expectancy), and continues as the learner perceives it, distinguishes it from other stimuli, makes sense of it and relates it to what is already known. The information is then stored in the short- or long-term memory. Thereafter, it can be retrieved from memory, generalised to, and put into practice in, new situations. Its final phase is feedback from knowledge of the results obtained from this practice. Fitts (1962) uses a three-stage approach, to the acquisition of psychomotor skills in particular. First, the learner has to understand what is required, its rules and concepts, and how to achieve it: the cognitive stage. Then the learner has to practise and establish the stimulus–response links, the

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correct patterns of behaviour, gradually eliminating errors: the associative stage. Finally, the learner refines the motor patterns of behaviour until external sources of information become redundant and the capacity simultaneously to perform secondary tasks increases: the autonomous stage. Burgoyne and Hodgson (1983) use a variation of this in their analysis of how managers learn. Managers gradually build up experience created out of specific learning incidents, internalise this experience and use it, both consciously and unconsciously, to guide their future action and decision-making. The three levels in this process are: ●

Level 1 learning, which occurs when managers simply take in some factual information or data that is immediately relevant but does not change their views of the world.

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Level 2 learning, which occurs at an unconscious or tacit level. Managers gradually build up a body of personal ‘case law’ that enables them to deal with future events.

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Level 3 learning, when managers consciously reflect on their conception of the world, how it is formed, and how they might change it.

Dreyfus et al. (1986, in Cooley, 1987: 13–5 and Quinn et al., 1990: 314–5) set out a more elaborate model of the acquisition of skills that is relevant to understanding the development of cognitive skills. Their five-stage model moves from the effective performance of lower- to higher-order skills. ●

Stage 1: the novice. Novices follow context-free rules, with relevant components of the situation defined for them; hence they lack any coherent sense of the overall task.

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Stage 2: the advanced beginner. Through their practical experience in concrete situations, learners begin to recognise the contextual elements of their task. They begin to perceive similarities between new and previous experiences.

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Stage 3: competent. They begin to recognise a wider range of cues, and become able to select and focus upon the most important of them. Their reliance upon rules lessens; they experiment and go beyond the rules, using trial and error.

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Stage 4: proficient. Those who arrive at this stage achieve the unconscious, fluid, effortless performance referred to in the definitions of skill given earlier. They still think analytically, but can now ‘read’ the evolving situation, picking up new cues and becoming aware of emerging patterns; they have an involved, intuitive and holistic grasp of the situation.

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Stage 5: expert. At this stage, according to Cooley (1987: 15), ‘[h]ighly experienced people seem to be able to recognise whole scenarios without decomposing them into elements or separate features’. They have ‘multidimensional maps of the territory’; they ‘frame and reframe strategies as they read changing cues’ (Quinn et al., 1990: 315). With this intuitive understanding of the implications of a situation, they can cope with uncertainty and unforeseen situations.

Cyclical models and learning styles The Lancaster model is an example of learning as a cyclical process, and is based on analysis of managers’ learning. It represents all types of learning ‘including cognitive, skill development and affective, by any process’ (Binsted, 1980: 22). It identifies three different forms of learning: receipt of input/generation of output, discovery and reflection. As Figure7.1 shows, they take place in both the inner and outer worlds of the individual. Learners receive input as they are taught or given information, or read it in books. They proceed round the discovery loop (action and feedback) through action and experimentation, opening themselves to the new experiences generated, and becoming aware of the consequences of their actions. They follow the reflection loop (conceptualising and hypothesising) when making sense of the information they receive and the actions they undertake, and then, on the basis of this, theorising about past or future situations. Each form of learning is cyclical, and the cycles can be linked in various ways (e.g. learning in formal classroom settings links the receipt of input with reflection), but in effective learning the learner will complete the overall cycle.

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Learner’s inner world

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Outer world

Feedback

Discovery

Learner’s schema, meanings, skills, etc.

Activity

Reflection

Reception of input

Figure 7.1 The Lancaster model of the learning cycle. Source: Based on Binsted (1980: 22); reproduced with permission of MCB University Press.

The best-known model of the learning cycle in the management field is that of Kolb. Learning has two dimensions (Kolb et al., 1984): concrete/abstract (involvement/detachment) and active/ reflective (actor/observer). Effective learning is an integrated cognitive and affective cyclical process. The learner moves in a cyclical manner from becoming fully involved in concrete, new experiences (CE); through observation and reflection on these experiences from many perspectives (RO); using concepts and theories to integrate their observations (AC); to active experimentation in decision-making and problem-solving (AE), and so on (Kolb, 1983). Importantly, these cyclical models draw attention to the significance of learning through action and reflection, as well as through the traditional channels of teaching/learning. They also emphasise that effective learning is achieved by completing the whole cycle and by using methods appropriate to its various phases. They also recognise that individuals might have a preference for a particular phase and so do not complete the cycle and hence do not learn as effectively or as comprehensively as they could. Thus they have different learning styles. Kolb’s Learning Styles Inventory identifies these preferences (Mumford, 1988: 27). The ‘converger’ (AC and AE) prefers the practical and specific; the ‘diverger’ (CE and RO) looks from different points of view and observes rather than acts; the ‘assimilator’ (AC and RO) is comfortable with concepts and abstract ideas; and the ‘accommodator’ (CE and AE) prefers to learn primarily from doing.

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Honey and Mumford (1992) also identify four learning styles, based on the individual’s preference for one element in the learning cycle, and have developed norms based on the results of those who have completed their Learning Styles Questionnaire. Their activists learn best when they are actively involved in concrete tasks; reflectors learn best through reviewing and reflecting upon what has happened and what they have done; theorists learn best when they can relate new information to concepts or theory; and pragmatists learn best when they see relevance between new information and real-life issues or problems (Mumford, 1988). These cyclical models offer HRD managers (and individuals themselves) the means to identify those preferences, and can be used to build on learners’ strengths and reduce their weaknesses. They can also be used to engage in dialogue with learners about their preferences; and to identify means of helping them to complete the whole cycle [see CIPD Factsheet Learning Styles (updated August 2008)]. Hence they can also be used by HR managers to facilitate higher-order skills in the organisation and to design effective learning events, including, Mumford (2002) reminds us, e-learning (see later). According to McGurk and Sadler-Smith (2012), the models of Kolb, and Honey and Mumford, are among the most commonly used by HR managers. Another useful classification is that of single- and double-loop learning. Single-loop learning refers to the detection and correction of deviances in performance from established (organisational or other) norms, whereas double-loop learning (Argyris and Schön, 1978) refers to the questioning of those very norms that define effective performance. Individuals do not necessarily progress from single- to double-loop learning, nor is the former an essential prerequisite for the latter. Learning how to learn calls for double-loop learning.

Critical elements in the process of learning There are several elements of the process of learning that have to be considered to make learning effective. One of these is feedback to learners of the results of their performance (Stammers and Patrick, 1975; Ribeaux and Poppleton, 1978).This could be visual or kinaesthetic feedback from responses to stimuli in the learning situation; or feedback from an external source during or after their performance. Learners may also benefit from receiving guidance before their performance about what to look out for during it. Another crucial issue is whether it is more effective to learn a task as a whole or in parts. It depends on the task’s ‘complexity’ (the difficulty of its component subtasks) and its ‘organisation’ (the degree to which they are interrelated), according to Ribeaux and Poppleton (1978: 61) and Stammers and Patrick (1975: 85–88), who report opposing views. Also significant for learning is memory (for further details, see Stammers and Patrick, 1975; Ribeaux and Poppleton, 1978; Fontana, 1981; Nolen-Hoeksema et al., 2009). An understanding of its nature suggests various ways to improve it and make learning more effective. The transfer of new information from sensory to short-term to long-term memory is clearly crucial: attention, recitation, repetition and constant revision (or overlearning) are needed. The coding and organisation of material to be stored are also important; this is helped by associating the new information with what is already familiar, especially using visual imagery, by attending to the context giving rise to the information to be learned, and by making the effort to understand the information so that it can be stored in the appropriate ‘files’. The learning context or event should not provoke anxiety. It should also be recognised that memory is an active and a constructive process, and not like a camera that has recorded what happened. The process of memory draws inferences from its data inputs and so elaborates upon them, filtering them through the individual’s stereotypes, mindset and worldview. What is then stored is this enhanced and repackaged material.

Explore

On your own or in a group, go through this section on theories of learning and list what you consider to be the key components of learning that will be needed in designing and implementing the training of (i) IT technicians; (ii) care workers and (iii) supervisory staff.

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Theories of the process of development Development, defined earlier, is the process whereby people achieve greater degrees of complexity, even transformation, as they live their lives. There are several approaches to understanding how this process takes place, and they differ in the assumptions they make about reality (see Chapter3). Some appear to be based on the assumption that the social and economic environment provided an objective, orderly, stable framework for individual lives. These would then follow a largely common pattern of sequential phases or stages, sometimes seen in terms of progression or advancement, and the individual had to complete a ‘developmental task’ in order to move on to the next stage. It was assumed that this pattern provided universal norms against which an individual’s development could be calibrated. The development of women and minorities was generally seen in terms of those norms, even those that had been based on the experiences of majority white males. [Hence Gallos (1989) questioned the relevance of many of the accepted views of development to women’s lives and careers, while Thomas and Alderfer (1989) noted that the influence of race on the developmental process was commonly ignored in the literature.] Individuals were socialised to conform to the patterns of behaviour or norms of their social group. These could be expressed as legal constraints – the age of consent, marriage and attaining one’s majority (becoming an adult) – as quasi-legal constraints, such as the age at which the state pension is paid and hence at which most people retire from the labour force, or as social and peer group expectations. For example, Neugarten (1968) recognised how family, work and social statuses provided the ‘major punctuation marks in the adult life’ and the ‘way of structuring the passage of time in the life span of the individual, providing a time clock that can be superimposed over the biological clock’ (p. 146). The workplace was another arena in which development took place, and it could facilitate or hinder it. Stable organisations in the past had their own ‘clocks’. Sofer (1970: 239) notes how his respondents were ‘constantly...asking themselves whether they were on schedule, in front of schedule or behind schedule.... [T]hey had a set of norms in mind as to where one should be by a given age.’ One influential theory which seems to assume this stable framework for individual lives is Erikson’s (1950) psychosocial model of development. It identifies stages of ego development and the effects of maturation, experience and socialisation (see Levinson et al., 1978; Wrightsman, 1988). Each stage builds on the ones before, and presents the expanding ego with a choice or ‘crisis’. The successful resolution of that ‘crisis’ achieves a higher level of elaboration in individuality and adaptation to the demands of both inner and outer worlds, and hence the capacity to deal with the next stage. An unsuccessful or inadequate resolution hinders or distorts this process of effective adaptation in the subsequent stages. For example, according to Erikson, the adolescent strives for a coherent sense of self, or identity, perhaps experimenting with several different identities and as yet uncommitted to one; entry to work and choice of work role play a part here. The adolescent, however, has to make a choice and assume responsibility for its consequences: unless this occurs, there is identity confusion. Young adults have to resolve another choice. This is between achieving closeness and intimate relationships and being ready to isolate themselves from others. The choice for those aged 25 to 65 years is between the stagnation that would result from concern only for self, indulging themselves as though they were ‘their own only child’ (Wrightsman, 1988: 66), and ‘generativity’; that is, the reaching out beyond the need to satisfy self in order to take responsibility in the adult world, and show care for others, the next generation, or the planet itself. The choice of the final stage of life is between construing life as having been well spent and construing it as ill spent. Another influential theory that does not question the assumption of a stable framework of life is Levinson et al.’s (1978) model of the male life span, which they based on their study of the experiences of men in mid-life. They saw this life span in terms of alternating, age-related periods of stability and instability. In the stable period, lasting six to eight years, a man built and enriched the structure of his life: work, personal relationships and community involvement. That

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structure, however, could not last, and so there followed a transitional period, of four to five years, when the individual reappraised that structure and explored new possibilities. These could be uncomfortable or painful experiences, but they were the essential prelude to adapting or changing the life structure, and so achieving a further stable period. By defining the periods within the life span in terms of chronological age – for example, between ages 22 and 28 a man embarked on a stable period and entry into the adult world, and between ages 33 and 40 he entered another stable period in which he settled down – this model was making assumptions about the universal, normative patterning of experiences. Now, and certainly since globalisation and the economic upheavals of the early twenty-first century, it is no longer possible to assume the existence of a normative and stable framework for individuals’ lives. This gives support to an alternative theoretical perspective on development, which emphasises that the environment offers particular opportunities and threats for different people’s lives. The biological, social, economic and psychological strands of their lives interweave and they have to negotiate a balance between changing self and changing environment. This can be conceptualised using the systems model introduced earlier in the book (Chapter3). The process of development or elaboration takes place as the individual’s innate capacity to grow and mature unfolds within a particular context, which in turn facilitates or stunts growth, or prompts variations upon it. The interaction and accommodation between individuals and their environment cannot, therefore, be meaningfully expressed in a cross-cultural or universal model. A further theoretical perspective on individual development acknowledges the significance of a person’s subjective experiences, which some interpret as socially constructed. This emphasises the significance of context, and the dynamic, intersubjective processes through which individuals interpret and make decisions about their lives and careers.

The individual’s own learning and development within an organisation Before turning to how learning and development become embodied in organisational practices to achieve organisational ends, it should be noted that employees’ own learning and development will continue informally and unplanned. They often learn for themselves how to carry out their jobs and improve their performance: through doing and observing and ‘sitting next to Nellie’, and through trial and error. Other people in the work context, their peers, supervisors and subordinates, may well provide models to follow, instruction and feedback, support and encouragement, confidence-building, informal mentoring and coaching, and perhaps even inspiration. Employees may outgrow their jobs as they learn, and seek promotion or to move into new jobs that will allow them to continue their development. They may also take the initiative to acquire additional skills, knowledge or understanding by attending educational and other courses. However, they might not necessarily be exposed to best practice, and might learn poor lessons; or learn ineffectively and in an unnecessarily uncomfortable, effortful or wasteful manner. Thus they might not necessarily themselves benefit from the learning and development they contribute to their organisation, although they would not be able to withhold some of its benefits from their employers. Because of this, employee learning is problematical. With the increasing flexibility of organisations and their contracts of employment, individuals need to engage in lifelong learning. Their need for self-development, both ‘of self’ and ‘by self’ (Pedler, 1988), associated with their need for employability, is likely to be greater than ever in the future. They will need to take responsibility for their own learning, identify their own learning needs and how to meet them, often through the performance of everyday work, monitor their own progress, assess the outcomes and reassess their goals. Others might have a role in an individual’s self-development, not as a teacher, trainer or coach, but perhaps as a mentor, counsellor or learning resource. Although self-development is regarded positively as proactive and entrepreneurial, it can be difficult for the individual to provide evidence of it without some form of accreditation. This

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can be achieved through the Credit Accumulation and Transfer Scheme, and the Accreditation of Prior Learning and of Experiential Learning. These allow individuals to claim accreditation for a range of learning experiences, while Scottish Vocational Qualifications (SVQs) and National Vocational Qualifications (NVQs) (see Chapter8) allow them to gain recognition for aspects of their work performance. Employee development schemes should also help individuals in their self-development, whether systematic or sporadic. While these informal methods of learning might have their weaknesses, they also have strengths. They variously embody characteristics of learning identified earlier. They encourage employees to make use of several types of knowledge – propositional, practical, implicit and tacit. They incorporate the use of feedback. They can offer whole rather than part learning, and the opportunity to reflect. They may stimulate individuals to engage in double-loop learning as they start to examine their underlying assumptions, and to follow the learning cycle of input, action and reflection. They may draw on the experiences of an employee group. Not only would they benefit from their combined various learning styles, but the identification of problems and implementation of their solutions would be embedded in the learning context, which would be likely to increase the effectiveness of their learning.

Learning and development: The organisational context ‘Learning and development’ as an organisational phenomenon exists on several levels: ●

Practical: delivering or facilitating training, learning and development interventions, for example, training, on-the job learning, e-learning, coaching, mentoring, secondments, and so on.

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Professional: hosting a set of plans, policies and strategies to achieve a predetermined set of strategic goals, to coordinate the production of information and evaluation, providing expertise and advice on learning and development as experts in the practice of ethical learning and development, who understand the nature of effective design and delivery.

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Partnership: building relationships intra-organisationally between HRD and HRM, HRD and the wider organisation.

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Strategic: ensuring that learning and development activity contributes to plugging performance gaps identified in strategic planning.

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Cultural: developing a culture that values learning and principles associated with it.

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Extra-organisational: building strategically beneficial relationships outside the organisation to ensure that learning and development in the organisation are up to date and relevant and that they appropriately develop the organisation’s skills base.

In order to design, implement and evaluate effective learning events or HRD interventions (including training, but sometimes covering learning and development more broadly), a cyclical process or system of formal planning ought to be followed (Walton, 1999; Reid et al., 2004; Harrison, 2009; Mankin, 2009; Beevers and Rea, 2010). However, the popularity of planning cycles is more evident in the rhetoric of the literature than in organisational reality, with only 48 percent of employers having a training plan specifying in advance the level and types of training that employees will need in the coming year and only 36 per cent with a budget for training expenditure. Organisations with more than 25 people are much more likely to see these activities as ‘standard’ and to have them in place. Where businesses have a formal plan of business objectives, they are more likely to have a training plan, and where there is a training plan, it is more likely that there will be a training budget (Shury et al., 2008, 2012). The learning and development planning cycle (see Figure7.2) comprises logical stages to ensure consideration of the needs of the individual and the organisation at the early stages; to establish appropriate aims and objectives; to ensure optimum methods of design and delivery; and to carry out effective evaluation of the learning intervention.

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1 Identify learning needs, aims, objectives

4 Evaluate the intervention

2 Determine learning strategies

3 Plan and implement

Figure 7.2 Planning and development cycle. This approach stems from strategic planning approaches, popular for several decades (Rothwell and Kazanas, 1989; Walton, 1999). It matches most organisations’ tendency to treat strategic issues formally, using written documents with aims, objectives, targets, priorities and performance indicators and recognition frameworks, such as Investors in People (www.investorsinpeople. co.uk), relying heavily on analysis, planning and foresight, logical thinking and clarity of organisational objectives. Yet, the approach underestimates iterations of, or interruptions in or to, the process; overlooks changes in material aspects of the process; and ignores influences external or internal to the process. It does not take account of the need for evaluation to happen at all stages of the process, or the way that needs change and develop as the process moves on. It matches well the classical or rational planning approach to strategy, which suggests that organisational strategy is formed through a formal, rational decision-making process (see Chapter2 on strategic HRM), but not with alternative approaches (e.g. evolutionary, processual or systemic (Whittington, 1993), outlined in Chapter2) that conceptualise strategy as something more informal, fragmented and embedded in the social systems (cultural and institutional aspects) of the business.

Stages in the process The next sections cover in sequence: ●

identifying learning needs, aims and objectives;

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determining learning strategies;

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planning and implementation;

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evaluating learning and development interventions.

Identifying learning needs, aims and objectives Identifying learning needs establishes how learning and development strategies, policies, practices and activities can bridge the gap between where the organisation is now and where it needs to be in order to achieve its strategic objectives (CIPD, 2013). A learning need exists when there is a gap between the future requirements of the job and the current capabilities of the incumbent, whether this is measured in terms of skills, attitudes or knowledge, and it is anticipated that a planned learning intervention will overcome the deficiency or barrier (see Figure7.3). Given the multi-level nature of the learning and development process discussed earlier, one would expect multi-level analysis of learning and development needs. So, while this section considers the analysis of learning needs at just three levels: organisational, job and individual (CIPD, 2013), others consider more. McGoldrick et al. (2002), for example, offer a comprehensive structure that suggests seven levels of analysis:

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Learning and development contribute to the develpment of skills, attitudes and knowledge appropriate to an organisation’s needs

State of ineffectiveness: shortfall in skills, attitudes and knowledge GAP

Effective behaviour: skills, attitudes and knowledge

Figure 7.3 The nature of learning needs.

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Extra-organisational: beyond organisational boundaries, attempting to understand, anticipate and create change in the environment and translate it into the advantage of the organisation. This involves practical and analytical research and learning and changing in response to this.

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Inter-organisational: between organisations, transferring learning and information, sharing best practices through collaboration and exchange.

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Intra-organisational: between departments, cross-fertilisation of ideas, encouraging diversity.

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Organisational: recognising the uniqueness of the organisation and responding to its needs for learning and change.

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Departmental: encouraging self-development and creativity through learning by experimentation.

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Group: through good communication, identifying and solving problems to lead to learning and improvement.

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Individual: personal responsibility for identifying learning and improvement needs in knowledge, skills, aptitude and performance.

Despite the aspirations of authors, articles and textbooks, very few organisations have developed or used appropriate measures (Anderson, 2007). Only half of employers (52 per cent) formally assess the extent to which employees currently have gaps in their skills against formal written job descriptions, and 30 per cent do not have formal written job descriptions (Shury et al., 2008). Whichever level of activity is engaged, the process – if treated appropriately as one that is ongoing, iterative and reviewable – is resource- and time-intensive (Mankin, 2009). For the organisation The first level of analysis of learning needs is at the level of the whole organisation. This step provides the link between the broader strategy of the organisation and the HRD strategy; ensures that the learning processes, systems and interventions support the direction in which the business is heading; considers the ‘fit’ with the values and priorities of the organisation; examines feedback provided by evaluation of previous learning and development interventions; and aims to identify the quantity and type of learning required to ensure that all employees have the skills they need to do their jobs. It may consider a short or long time frame and will aid decisions about whether to develop existing staff or employ new talent (Taylor, 2008). However, it is not one that has always received attention, or, if it does, it is considered a ‘one-off’ or ‘special’ review (Mankin, 2009). In practice, this level of analysis can consist of (Reid et al., 2004: 243):

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A global review – where the organisation examines its short- and longer-term objectives and the skills and knowledge required to meet them. This takes the form of a detailed wholeorganisation job analysis.

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Competence-based global review – where competence and performance management approaches are used to align training and development to organisational objectives. It is attractive because it is firmly related to the organisation’s objectives and can be the basis of performance-related pay.

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Critical incident analysis – this is a positive, key-event-focused strategy which considers the main processes in the organisation and considers the learning needs associated with them.

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Priority problem analysis – where the aim is not to consider comprehensively learning needs, but to identify and prioritise the main problems of the organisation and respond using HRD interventions.

At this level, information can be found in strategic and HR plans, succession planning data, performance management data, management information systems and financial plans. For the job Job level analysis has as its purpose the identification of the skills, knowledge and attributes of the job. The most commonly used approaches include interviews with job holders, managers and supervisors, job logs, questionnaires and group discussions. The outcomes of this level of analysis are usually a job description, job specification and job training specification. Job level analysis can be categorised on four levels (Harrison, 2009; Mankin, 2009): ●

Comprehensive analysis – consists of a full and exhaustive analysis of the job, producing a detailed job specification of all the tasks, roles and performance levels associated with the job and the level of knowledge, skills and attitudes required to perform the job effectively.

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Key task analysis – consists of an analysis of the tasks central to effective performance of the job.

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Problem-centred analysis –focuses on problems or performance deficiencies and seeks to identify HRD solutions.

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Critical incident analysis – identifies critical or significant tasks in job performance.

The outcome of the intervention is a job training specification which forms the basis of planning for HRD interventions for each post-holder. For the individual Analysis of training needs at the job level, while common, is not the whole picture, and it is not without its critics, among them Ashworth (2006: 1): It is tempting to address training needs at [ job] level: deciding the training needed for particular roles then rolling out this training to all employees with that job. This approach has the benefit of ensuring all employees have the skills to perform their role effectively. Yet it also has drawbacks, with its ‘sheep dip’ tactics resulting in people attending training they do not need. The consequences are wasted training spend, poor perception of the training department and wasted working time. Addressing training needs analysis at the most individual level possible is time-consuming and can be more costly. But it yields greater benefits...financially...organisationally...and individually. What can make us more a part of the strategic direction of the organisation than delivering the employee resource with the exact skills profile required to realise it?

The individual level of analysis, or person analysis, examines whether those in the job have the necessary capabilities to perform at the correct level. It is often considered to be a response to gaps or failures in performance, identifying where there are areas where individuals are not performing effectively or where they have insufficient knowledge, skills or abilities. However,

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Ashworth (2006) argues that this is potentially the best way for organisations to address strategic learning needs. Information can come from person specifications, personal profiles, self-, peer or manager assessments, the appraisal system and assessment centres.

Determining learning strategies Organisations have a choice about which learning strategy or intervention they identify to meet the needs established in the previous stage and the decision is highly circumstantial or contextual. Criteria can be employed to help to make the appropriate decision, which can include the extent to which the learning (Reid et al., 2004): ●

Fits with objectives: for example, if the objective is practical knowledge, then practical/handson experience should be sought, rather than classroom-based education.

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Is likely to be transferred to the workplace: for example, whether the learning intervention is sufficiently related to the objectives that have to be met, and whether there are systems in place (such as coaching) to support transfer of learning on return to the workplace.

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Matches available resources: for example, practical concerns such as time, money and the availability of internal or external expertise.

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Takes into account learner-related factors: for example, the learner’s preferences in terms of time, location and learning, taking account of the nature of their contract and reasonable expectations on how they use their time.

What do organisations do? Given the extent of expenditure on training and learning activity in organisations (CIPD, 2012c; Shury et al., 2012), the cost-effective use of training methods ought to be an investment that companies and organisations consider carefully. Most employers engage in some form of workplace development activity – in the 12 months prior to the UK Commission’s Employer Perspectives Survey (Shury et al., 2012), 73 per cent of establishments had provided some form of training to staff, with internal training being more common than external training. The annual National Employers’ Skills Survey (published by UKCES) reports employer investment in skills. In the year to the end of 2011 (the most recent report at time of publication), a total of £49 billion (£3,275 per person trained) had been spent on training over 117.3m days (4.3 days per annum per employee). However, many commentators report that organisations choose inappropriate methods that are costly, time-consuming, have a deleterious effect on employees’ perceptions of the value of training and development and ultimately do little to increase skills levels in organisations. The CIPD and the UKCES produce annual reports which include information on training and development activity in organisations. These are available online: ●

National Employers Skills Survey 2011 (published May 2012) – www.ukces.org.uk

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Annual Survey Report 2012: Learning and Development (published April 2012) – www.cipd. co.uk.

The National Employer Skills Survey 2011 notes the division of training into (Davies et al., 2011): ●

On-the-job training – defined as activities that would be recognised as training by staff, and that take place at the individual’s immediate work position, but not the sort of learning by experience that takes place on an ongoing basis. This type of training significantly increased between 2005 and 2011 (Davies et al., 2011). The report recognises that ‘broader activity can take place which leads to skills development but which may not be classified as training’ (Davies et al., 2011: 100), for example, supervision, learning through observation, job enhancement, review and feedback.

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Off-the-job training – which takes place away from the individual’s immediate work position, whether on the premises or elsewhere.

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The type of provision of training by employers varies, with 46 per cent providing off-the-job training and 42 per cent providing on-the-job training (Davies et al., 2011). A summary of some of the main learning interventions is given in the following section. In order to broaden the definitions and provide recognition of the many ways that staff are developed, here the reference is to on- and off-the-job learning rather than training. On-the-job learning On-the-job learning is learning that takes place at the individual’s immediate work situation and includes activities that may not always be recognised by staff as development, for example, staff meetings, discussion, reflection, observation, team-working, undertaking a project, assignment or consultancy, taking on a new area of responsibility, changing work practices or systems and much more. It is popular because it is job-specific and relevant, immediate and flexible. However, identifying the learning that has occurred as a result is more challenging – particularly where it occurs informally, even if planned. In 2012, the CIPD survey identified that it was also one of the most effective methods of training, topped only by in-house development programmes and coaching by line managers, which have grown considerably in popularity in the last three years. However, both positive and negative behaviours and skills can be passed on, underlining the need for suitable role models and opportunities to be identified and developed as part of the organisation’s HRD strategy. On-the-job training ought not to be haphazard and accidental. The most commonly used planned methods are now discussed (see Figure7.4). Observation Obtaining job knowledge from colleagues is the most obvious and cheapest method of on-the-job development and is how the vast majority of employees learn their job and how best to perform it. Social learning theory provides the conceptual basis for this approach (see earlier). Both the strengths and the limitations of this approach are based on its central premise – that people learn well by watching others. It is popular because it is immediate and accessible to most employees. While much of this type of learning happens in an ad hoc, unplanned way, it can be a valid, planned way of transferring learning and knowledge in the workplace. In order to be effective, it relies on good structuring, planning and monitoring. The limitations of this approach are well documented. The underlying assumption is that the role model is an experienced, well-practised and skilled performer who has a good understanding of what needs to be passed on. However, they may not be good at their job, may exhibit inefficient job practices or inappropriate behaviour. There might be someone else who is better, or the role model may not have been trained in the practices they are modelling. Often this is a result of poor structure, design and planning, but it can result in the passing on of bad or even dangerous working practices. Reflective practice Reflective practice is commonly encouraged by professional organisations such as the CIPD and is central to their professional standards (CIPD, 2005). This is discussed in detail in the next chapter. Mentoring The terms mentoring and coaching are sometimes used interchangeably, but there is a difference in the relationship between the participants in the process. Mentoring has a much longer history than coaching, as Mentor was, in ancient Greek literature, the friend to whom Ulysses entrusted the care of his young son before embarking on his epic voyages. The mentoring relationship is most often orientated towards an ‘exchange of wisdom, support, learning or guidance for the purpose of...career growth; sometimes [it is] used to achieve strategic business goals...content can be wide ranging’ (Parsloe and Wray, 2000: 12). Mentoring is based on a ‘role model’ relationship where a more senior or experienced employee takes a supporting role in the development of a new or younger employee. It can be

LEARNING AND DEVELOPMENT: THE ORGANISATIONAL CONTEXT

In-house development programmes

48 46

Coaching by line managers 47

On-the-job training 27 23

Job rotation, secondment and shadowing

Instructor-led training delivered off the job

16 18 16

12 11 11

Formal education courses External conferences, workshops and events

10 9

E-learning 7

Audio tapes, videos and learning resources

1 1

17 18 16 16 16

Coaching by external practitioners

2012 2011 2010 2009

18 18

Action learning sets

19 20 19

Internal knowledge-sharing events

Mentoring and buddying schemes

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14 16

11 10 12

2 2

Base: 2012: 755 2011: 594 2010: 724 2009: 859

Percentage

Figure 7.4 The most commonly used planned methods of on-the-job training. Source: Adapted from Learning and Talent Development Survey, London, CIPD (2012) p. 8, with the permission of the publisher, the Chartered Institute of Personnel and Development, London (www.cipd.co.uk).

formal or informal and relies on the development of a positive advisory relationship. As such, it includes the skills of coaching, facilitating, counselling and networking. The relationship is often mutually beneficial as mentors gain from being challenged to understand their own jobs and their organisation, and so find ways of helping their protégé share this understanding effectively. Effective mentoring relies on the following characteristics: ●

Status and character of the mentor – mentors will generally be senior managers, outside line management, who should have the skills and qualities that protégés respect: good empathic and people development skills. Not all managers will make appropriate mentors.

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The protégé – should have potential and be capable and willing to develop it.

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The relationship – this should be one of mutual trust, and, unless limits are set, it should continue until the protégé no longer needs support.

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The activities – the mentor should: – encourage the protégé to analyse their performance and to identify strengths and weaknesses – feedback should be offered and accepted; – act as a sounding board for protégés’ ideas and give commentary in the context of the work environment;

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– encourage the protégé to observe and analyse the organisation at work, learning more widely about work; – engage the protégé in their networks. Mentoring is part of a range of ‘talent management’ activities that organisations engage in to identify, develop, engage, retain and deploy the most talented individuals (CIPD, 2012c). Coaching The coach does not need to impart knowledge, advice or even wisdom. What he or she must do is speak, and act, in such a way that others learn and perform at their best. (Downey (2003: 17)) Coaching...requires people to see things from others’ perspectives, suspend their judgment and listen at a higher level. (Hall (2005))

Coaching provides a focus for developing individual performance (CIPD, 2012a) in the context of a (usually) one-to-one relationship between a trained coach (either internal or external to the organisation) and an employee/coachee. The relationship is usually time-limited; goal, outcome and solution-focused (Greene and Grant, 2006); and aims to raise awareness and responsibility in the coachee (Whitmore, 2009). Coaching, along with e-learning, represents the largest growth area identified in subsequent CIPD Learning and Development Surveys (2005–12) with staying power that has outlived that expected by the critics. It is considered, along with in-house development programmes, to be the most effective method of learning and development (CIPD, 2012c). Coaching is delivered by either in-house staff or external practitioners (Knights and Poppleton, 2008) and often forms part of managers’ job descriptions. At the centre of coaching are models of structure and skills. The structure of coaching, or the coaching process, is firmly focused on the outcome or longer-term objective that the participants want to achieve. The most popular model is the ‘GROW’ model (Gallway, 1986; Downey, 2003; Cox et al., 2009; Whitmore, 2009) (see Box 7.1). The model takes the participants through four overlapping stages in an iterative process of interaction between the coach and the coachee. This usually takes the form of the coach asking questions in order to raise the awareness and responsibility of the coachee, and allows them to develop practicable solutions or actions in order to achieve the goal. It enables the coach to structure the conversation and deliver a result that emphasises the accountability and responsibility of the coachee and the will to achieve the outcome.

Box 7.1 Typical GROW model Goal: What is the longer-term objective? What is the objective for this discussion? Reality: What is the situation now? Who is involved? What is it costing? What is happening? Options: What are the possible (not necessarily practicable) solutions? What could be done? Will: What will be done? When? With whose support?

Within this conversational process, the coach is using a range of skills: Downey (2003) suggests that the coach can use all of the skills on the spectrum shown in Figure7.5. He indicates that the most effective skills of the coach lie at the non-directive end of the spectrum. For Downey, the skills of the coach are more valuable than experience of the problem the coachee is attempting to resolve. He indicates that while there will be times when the coachee is stuck and the coach knows the solution, there are limitations to the directive approach – namely,

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Non-directive Listening to understand Reﬂecting PULL Paraphrasing PUSH Helping Summarising Solving someone Asking questions that raise awareness someone’s solve their Making suggestions problems for own problems Giving feedback them Offering advice Instructing Directive

Figure 7.5 Spectrum of coaching skills. Source: Downey, M. (2003), Effective Coaching: Lessons from the Coach’s Coach, 3rd edn, p. 23; © 2003 South Western, a part of Cengage Learning, Inc.; reproduced by permission of Cengage Learning, Inc., www.cengage.com/permissions and the author.

the coach has to know the answer already or be able to work it out, the answer is unlikely to be the one that fits the problem best, and the experience of the coachee is excluded. Aside from the generic skills of coaching, expertise from the behavioural sciences is commonly included or expected, for example, psychology and psychoanalysis (Stober and Grant, 2006; Palmer and Whybrow, 2007), and different theoretical approaches are employed, for example, cognitive behavioural, adult learning, psychodynamic, person-centred or transpersonal (Cox et al., 2009). Coaching is beset by a number of debates, not least the one concerning the appropriate way to regulate the profession and develop the skills of those who practise it (Hall, 2005). Professional bodies have been established in the UK (www.associationforcoaching.com), Europe (www.emccouncil.org) and the USA (www.coachfederation.org), providing verified levels of membership and ethical and behavioural codes of practice. Moreover, many universities and professional bodies have introduced development programmes for would-be coaches, and most organisations have a system to measure the abilities or performance of the coaches they use. The emphasis has shifted in the last few years from developing effective coaches and processes to developing a coaching culture (Knights and Poppleton, 2008), with the aim of improving individual and organisational performance. Job rotation, secondment and shadowing In an economic climate where opportunities for progression and advancement may be reduced, job rotation can reduce boredom, vary activities and develop or increase skill levels by encouraging employees to change jobs periodically. If properly structured it can be a positive learning experience for employees and have spin-off benefits for business performance. It is usually part of a larger agenda of job enrichment which aims to motivate staff and increase productivity. However, it has been criticised for being insufficiently planned and structured, with less focus on employee development and more on achieving organisational outcomes of flexibility and efficiency. Secondment encourages the cross-fertilisation of ideas and usually involves an employee leaving, temporarily, their workplace to work for another organisation. Usually it will be a similar job in a different sector, or a similar area of work with a different focus, for example, practical versus theoretical. It is usually for a fixed period of time with a structured procedure for feedback and learning.

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Shadowing is another popular technique where employees gain an understanding of a job or role in a different department. Usually, the participant is not expected to carry out the job role they are shadowing, but learn about a job by walking through the work day as a shadow to a competent worker. Normally it is temporary, and allows the participant to view at first hand the work environment and skills in practice, with the intention of gaining skills and experience in that area in order to inform job choices, or to develop cross-departmental understanding. E-learning ‘E-learning (or ‘electronic’ learning) may be defined as learning that is delivered, enabled or mediated using electronic technology for the explicit purpose of training, learning or development in organisations’ (CIPD, 2012b: 1). E-learning, online learning, or technology-enhanced learning has revolutionised the learning landscape generally, and at work has improved access and availability enormously. While many large organisations invest in an online learning platform to provide formal course-based learning (technical or managerial, professional development or legal compliance), a broader range of more informal activities and techniques fall under the umbrella of e-learning, for example: ●

group-based activities such as discussion boards, webinars and podcasts (to replace face-toface interactions in a classroom);

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individual activities such as blogging and micro-blogging (for developing reflective practice).

Moreover, easy access to free high-quality, university-led learning opportunities on the web (e.g. through the arrival of MOOCs – massive, open and online courses – see Corbyn, 2012; Parr, 2013) has transformed the landscape of learning more broadly. Social media platforms, open (Twitter, Pinterest) and closed (Blackboard, Moodle, Facebook), have also expanded the opportunities for co-creation and collaboration in learning, enabling links between learners with common interests and of learners to resources. A proliferation of ‘apps’ or programmes to support the process has emerged: for online reading (Kindle, Ibooks and Coursesmart), for connectedness (Facebook, LinkedIn, Twitter and Instagram), for working together (Wikispace, Mediawiki, Vocaroo, Wimba, Wordpress, Tumblr and Googledocs) and for sharing (Pinterest, Stumbleupon, Flickr, Youtube, Slideshare and Trapit). Some argue, however, that the proliferation of options in the technology of e-learning has sidelined the learner in the process (Colvin-Clark and Mayer, 2011). Designers of e-learning, then, need to take a learner-focused rather than a technology-focused approach. The processes and structures of e-learning give considerable autonomy to the learner, who will be able to select, usually in organisations, from a fixed platform such as a webinar or e-course, from a range of other activities or from links to further resources. This process of ‘guided discovery’ (Colvin-Clark and Mayer, 2011) can take learners through activities synchronously or asynchronously, together or alone. The boundaries or limits to the activities and focus of the e-learner are therefore far less well defined than traditional learning interventions. The degree and pace of change have set challenges in terms of: ●

understanding and regulation, as companies grapple with how to manage access to social media;

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quality, as easy access is no guarantee of veracity or value;

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security, as the easy sharing of material threatens traditional frameworks of ownership and privacy;

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capability, as a distinct set of skills is required to effectively facilitate e-learning and to effectively engage in it. The next sections consider the last point in detail.

The skills of e-facilitators Online learning has changed the nature of the activities in which facilitators are expected to engage. The 24/7, 365-day nature of online learning has an impact on expectations not only of

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Conferencing

R EA

Development Supporting Providing responding links outside closed conferences Knowledge construction Facilitating process

Information exchange Facilitating tasks and supporting use of learning Searching, materials personalising software

Sending and receiving messages

Online socialisation Familiarising and providing bridges between cultural, social and learning environments

Amount of interactivity

Access and motivation

Welcoming and encouraging Setting up system and accessing E-Moderating Technical support

Figure 7.6 Skills required by the e-moderator at different stages of e-learning. Source: From Salmon (2011), E-Moderating: The Key to Online Teaching and Learning, 3rd edn, p. 32.

technical skills of e-facilitators, but also in communication skills, time and resource management and learning design. Salmon’s work on matching the stages of learning online with the skills of e-facilitators (Sharpe, 2010; Salmon, 2011) has been highly influential in developing practice in the field. Each stage of engagement in e-learning requires the e-moderator to display different sets of skills (see Figure7.6). At the beginning of the process, e-moderators have a more hands-on and active role, withdrawing when participants’ confidence and capability have risen. The learners, by contrast, can be expected to interact with an increasing number of participants and at a higher frequency as time passes.

Explore

Look first at the right-hand side of Figure 7.6. ●

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During the processes and interactions involved in e-learning, what activities will the e-moderator be engaged in at each stage of the process? Think again about the description of e-learning as one of ‘guided-discovery’ (Colvin-Clark and Mayer, 2011). How does Salmon’s model help to understand this process?

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The skills of e-learners Learning theories (considered earlier in the chapter) still have relevance in the e-learning world, although they may be challenged by the new context in which learning is taking place. Cognitive theories, for example, involve selection, organisation and integration. Using this model, we can consider the skills required for e-learning (Mayer, 2005):

Explore

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Selection. Learners are much more active participants in shaping their own learning in the e-learning context (Sharpe, 2010). One of the challenges of e-learning for the learner is navigating the vast landscape of material that is potentially useful – there is ‘too much of a good thing’ (Colvin-Clark and Mayer, 2011: 19). Thus, establishing skills associated with selection (which resource is valid?) and choice of material for learning – such as establishing criteria for value and worth in the context of learning – should be included at the outset of any process.

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Organising. The mental and practical organisation of material discovered during the process of e-learning requires the learner not only to select appropriately, but also to link in a way that provides a coherent representation of what they have discovered. In addition to the activities that the e-facilitator undertakes to guide learning, the learner needs skills in navigating the landscape and organising what they have discovered. This may involve simply good IT skills, or encouragement in logging and recording activity through blogging.

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Remembering and integrating. Reusing learning in the context of work may be more challenging in the absence of physical manuals or instructions, if learning has taken place entirely in a virtual environment. Integrating the learning environment with the workplace can enhance learning – for the learner, this will involve understanding how devices in the workplace can enable access to previous learning and materials.

Revisit the earlier sections of this chapter that consider individual processes of learning. Which, for you, helps to explain the process of learning from the perspective of the e-learner? Can the theories adequately explain experience in this new context?

Summarising e-learning At its best, e-learning provides learning which is more accessible, and more flexible and adaptable to individual circumstances, and which provides a broader and cheaper range of alternatives. Itis attractive because of its flexibility and accessibility whereby learning is available when learners are available to learn. It allows for learning to be completed in ‘granules’ in the workplace during working hours, rather than through a fixed, inflexible traditional training course. However, its limitations lie in its use simply as a high-tech alternative to textbook learning where it plays down the social or interactive aspects of learning. The most successful and effective reports of e-learning come from businesses which use a ‘blended learning’ approach (CIPD, 2008)– e-learning combined with multiple additional routes that support and facilitate learning (Sloman and Rolph, 2003). This can be through e-learning supported by periodic face-to-face learning, or with the knowledge component delivered through e-learning and the skills component delivered face-to-face, perhaps supported by online discussions and resource links. Its possibilities and combinations are endless and changing, and it has been used by organisations as diverse as the National Health Service (Scott, 2008) and Councils (Phillips, 2008) and has demonstrable advantages for a diverse range of employees (Jarvis and Hooley,2004).

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Key controversy Some argue generational differences in engagement in e-learning. For example, Prensky (2001) sparked extensive debate with his metaphor of ‘digital natives and digital immigrants’. Prensky argues that ‘native’ young people who have grown up in a world of technology pose a challenge for ‘digital immigrants’ in adapting their methods of teaching and learning for a ‘new’ generation. Find out more about Prensky’s metaphor and why it has been so enduring. To what extent do you agree with his assertion? What are the consequences of your views for the development of your skills and those of others?

Off-the-job learning Off-the-job learning is simply learning that takes place away from the place of work of the employee. However, it is frequently pigeonholed as the ‘old’ way of doing things – and typified as teacher-centred, classroom-based, process-focused and providing learning that is difficult to transfer to the workplace. It is often criticised as wasteful of time and money, taking the employee away from the practical context in which he or she will have to apply the theoretical knowledge. Yet, learning that takes place away from the place of work gives the employee time and space to consider the new learning, and, if the event includes learners from other departments, workplaces or sectors, allows the cross-fertilisation of ideas and innovations, the chance to consider notions free from distractions, and the opportunity to network with like-minded individuals. Off-the-job learning is epitomised by formal education courses or instructor-led training delivered off the job. Formal education courses normally take place in further or higher education colleges or universities. Instructor-led training is usually delivered by training professionals either directly employed by the organisations or contracted to deliver the event as a training consultant.

Planning and implementation The planning and implementation stages of learning and development comprise a broad range of practical and specialist activities which include careful consideration of the learning theories explained in the early sections of this chapter. Planning Beavers and Rea (2010) suggest that the design stage of the learning and development process in organisations might include: ●

Clarifying factors that affect design, both: – individual – learning needs and how best to meet them, learning styles, previous experiences; – organisational – business priorities, resources, funding, culture, preferences, importance of external accreditation, regulations or rules, legal requirements.

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Identifying aims and objectives – taking into account best practice as well as stakeholder input and influence.

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Determining and sequencing learning content – taking into account the learning needs analysis and the depth of information, this provides information about what is essential, desirable and achievable in the time available.

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Selecting methods and designing learning materials – considering in detail learning theory which will enable the appropriate selection of different methods and approaches and encourage variety in delivery. (The initial sections of this chapter considered the individual experience of learning and development – pivotal in the design of activities.)

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Selecting assessment and evaluation activities – considering formative and summative assessment for individuals and groups, and the requirements of stakeholders in the design of evaluation (see later).

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Agreeing the plan with stakeholders and relating outcomes to strategy.

Implementation Given the extensive variation between learning interventions, similarly, there are variations in style of delivery. While ‘most people will conjure up the image of a trainer delivering a traditional classroom-based intervention’ (Mankin, 2009: 232), delivery can take many forms and require many different skill sets.

Explore

Consider the different sets of skills required in order to successfully deliver or effect training or development interventions in the following forms: Coach – for support in achieving goals and improving effectiveness Mentor – for advice on and support in career and development Facilitator – for outcome-based learning Trainer – for practice-based learning Online tutor – for e-learning Teacher – for theory-based learning Manager – for facilitating on-the-job learning, providing feedback, for career development Colleague – for learning by observation Individual – for self-directed learning There are some excellent online (e.g. www.cipd.co.uk) and paper resources (via popular online and high-street book retailers) for skills development in each of these areas. ●

Identify an area where you would like to develop your skills and ask colleagues, tutors or the author (via Twitter, @MairiWatson) for suggestions on suitable resources in each case.

Evaluating learning and development interventions Despite its strategic importance, the evaluation of HRD is rarely carried out in any organisationally useful way (Anderson, 2007). Two-thirds of workplaces that train their employees also formally assess the impact of training on their performance (Davies et al., 2011), leaving a significant number of organisations where evaluation is not undertaken. Often it is simply because organisations are not sure how to undertake evaluation beyond tried-and-tested approaches and techniques; or, if they are sure how to do it, they are not sure what to do with the results. There is also a fear that it will be expensive and time-consuming, and offer little in the way of results. Finally, because evaluation is often tagged on at the end of training, learning or development, the event or intervention will not have been designed with the end in mind (evaluation and feedback into the next intervention). However, there may be a more fundamental challenge in measuring the impact of learning and development, which compounds the challenges associated with evaluation. The assumption that HRD can add something to ‘the bottom line’ of a business, and that it can be measured, springs from the literature on high-performance work practices and the best-practice literature (see Chapter2 on strategic HRM). However, there are issues around the capability of current HR data to provide the type of information stakeholders require (King, 2010): HR data quantify a range of activities from which there may also be qualitative outputs. Green (1999) argues that businesses rarely give sufficient emphasis to researching the impact that specific interventions or tools can have on improved performance. He says that a business’s success will be achieved by asking challenging questions such as: Why is the organisation doing this activity? What difference does it make? Does the difference (return) justify the investment? Could we get the same results in a more cost-effective way? Does the

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difference anticipated align with our business strategy and objectives? These can be simplified to: Why should we do this? What difference do we want? How are we going to measure it? Is it cost-effective? The benefits of engaging in the process of measuring the value of HRD include improving its position as an employer of choice through a positive effect on motivation and morale; enhancing employee contribution; and supporting the delivery of company objectives by developing the skills in line with organisational needs. HRD is an aspect of the psychological contract in organisations, and potentially skills the workforce to be better than the competition. At the very least, HRD sometimes means a business can operate within legal requirements. Measurements should go beyond post-course evaluation to measuring wastage, error rates, cost benefit, customer satisfaction, staff opinions and motivation, and can attempt to link specific outcomes to the training delivered, analyse cost-effectiveness, demonstrate contribution to strategic objectives, and link HRD to performance via a performance management system. That said, evaluation is less of a calculation than it is a judgement (Kearns, 2005). A rigorous scientific approach to evaluation, though desirable in theory, is not practical. Therefore, it involves a number of subjective considerations – the measurement itself is subjective, the interpretation of the results is subjective, and the values and goals of the stakeholders in the process are different and potentially conflicting. Attaching a financial value to HRD, which means estimating the financial impact of employee behaviour, is at least challenging. However, one might argue, it is no less challenging than assessing the impact on the organisation of marketing efforts, such as advertising or networking. Isolating the impact of HRD is therefore not insurmountable: for example, alongside the many tools suggested in this section, one might establish a control group, consider the impact of other influences (e.g. market or financial changes in the environment) or use professional judgement. One remaining conundrum concerns what evaluation purports to measure: most models we consider here are concerned with intermediate outcomes, which may or may not lead to business success, for example, cost of training, reduction of turnover or absence, improved morale or motivation, all of which, it is hoped, will have some broader business impact. These performance indicators may not give the best information, as they measure only the specific outcome they purport to measure and nothing more. Writers still struggle to elevate the measures associated with HRD to a higher, strategic level. Such questions are at the heart of evaluation, and this section outlines some of the key models and approaches to judging the contribution HRD behaviour can make to organisational performance. Evaluation at its best flows throughout learning in the organisational context, and happens as events unfold using multiple methods of feedback and communication, rather than on a piece of paper at the end of a training course. Categorising evaluation Three themes are apparent in the development of measurement and evaluation in HRD (Wang and Spitzer, 2005): ●

Evaluating practice – typified by the seminal work of Kirkpatrick (1960 – see the next section) and considering the impact of (usually) training interventions.

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Evaluating process – typified by the return on investment (ROI) work seeking to justify training and HRD expenditure based on the measurements of benefits versus costs of training.

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Evaluating experience – based on an awareness of business reality and, by extension, of the strategic contribution that HRD can make, which is still an emerging field of analysis.

Evaluating practice This stage in the development of evaluation literature relies heavily on Kirkpatrick’s (1960) enduring work, which, while it has been criticised (Swanson, 2001), has had enviable staying power in the world of learning evaluation. Kirkpatrick proposed four levels of evaluation of

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learning and training. A close examination reveals that Kirkpatrick was more concerned with the transfer of learning to the workplace and organisational results than is often represented: 1. Reactions for Kirkpatrick are defined as ‘how well the trainees liked a particular training program’. Reactions are typically measured formally, and immediately, at the end of training, but can be measured informally by the trainer/facilitator during the event. Measures include: reaction questionnaires, observation of reactions, relationships, body language, participant interactions, questioning by trainer and questions asked by participants. 2. Learning is defined by Kirkpatrick as the ‘principles, facts, and techniques [that] were understood and absorbed by the conferees’. This has the purpose of measuring the change in the knowledge of the learner post-event, compared with the knowledge pre-event. Measures include: written, verbal and practical tests, interviews with participants and managers at pre-determined times after the event, self-assessment, performance-review procedures, questionnaires, interviews and peer group discussion. 3. Behaviour is about changes in on-the-job behaviour, which must be evaluated in the workplace itself. Measures include self-, peer and manager appraisals, observation, measurement of outputs/ results, interviews and product/service sampling. 4. Results. Kirkpatrick relied on a range of examples to make clear his meaning here: ‘Reduction of costs; reduction of turnover and absenteeism; reduction of grievances; increase in quality and quantity of production; or improved morale which, it is hoped, will lead to some of the previously stated results.’ Measures include: measurement of performance indicators, for example, absenteeism, grievances, production, customer satisfaction, turnover, targets, stakeholder feedback, return on investment (ROI) measures (see the following section). It is difficult to overestimate the popularity of Kirkpatrick’s model. Some 91 per cent of those surveyed in the CIPD’s Learning and Development Survey 2006 evaluated training, learning and development activities and 98 per cent of those used exercises to measure Kirkpatrick’s level 1 outcomes. Some 75 per cent used level 2 evaluation exercises, 62 per cent level 3 and 36 per cent go as far as level 4. Missing from Kirkpatrick’s model is any consideration of the pre-event state of affairs or an assessment of how level 4 results affect the business. Hamblin (1974, 2007) added this ‘ultimate level’ to consider the extent to which the event has affected the ultimate profitability and survival of the organisation. Kirkpatrick’s model has operational and practitioner appeal, and a role in demonstrating the value that learning and development activities can add to organisations. Even at this level, organisations identify that their efforts to measure the impact of learning and development activities do not go far enough, and while there is an increasing emphasis on evaluation, cost, time, lack of effective measures, organisational priorities and lack of knowledge and understanding act against the best attempts of those who seek to establish the contribution that learning and development make to business performance (CIPD, 2012c). Evaluating process As noted by Scott (2010:14): In difficult times, HR gets a mindless fixation on return on investment.... Everybody thinks they should measure the return on investment on training. But most people in learning and development don’t know what it means, or understand that it has specific technical requirements.

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An increasing awareness of the business reality of global competition, pressure from adverse economic conditions and increased demands for managerial accountability (Wang and Spitzer, 2005) and availability of advanced HR metrics (Scott, 2010) have contributed to the popularity of ROI approaches. These measures have stimulated much critical debate in the world of HRD (Phillips, 2005). At its simplest, ROI calculates the costs and benefits of training events, and it is usually represented as an (apparently) straightforward formula: Benefits from training - Costs of training Costs of training * 100%

= % ROI

There the simplicity ends, as measuring the costs and benefits of training is often far from straightforward. Thompson (2005) argues that to measure ROI effectively, training has to be divided into two categories: knowledge and technical skills (content or ‘hard’ training); and attitude and interpersonal skills (process or ‘soft’ training). The former is fairly easy to assess for ROI purposes, but the latter (often the larger proportion of companies’ training effort in terms of time, money or profile) is a ‘problem area of evaluation’. The usefulness or otherwise of the measure is dependent on the quality of the information that feeds it. Sophisticated models (Swanson, 2001; Phillips, 2002; Kearns, 2005) emphasise the importance of: ●

collecting information post-event or programme, including evaluation instruments that are purposeful, timely and multilevel;

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isolating the effects of the training or programme;

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converting the data to monetary value;

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calculating ROI;

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identifying other, intangible benefits.

Potentially, the sophisticated emphasis on financial and strategic measurement of outputs is at odds with the values-based practice of training and development, and Dee and Hatton (2006: 40) argue for an incremental approach: Learning and development should demonstrate a business benefit, but it is often impossible to go from training straight to ROI. A possible alternative is a staged process which focuses on improving the quality of programmes, increasing the transfer of learning to the workplace and measuring against specific metrics established from the outset.

Phillips (2012) suggests that the key to effectiveness in ROI measurements is in planning for them at the outset of learning and development activities. Moreover, ROI measures (or metrics) should be attempted at each level of Kirkpatrick’s model, which may include: ●

Measures of training activity – how much training and development take place? Percentage of payroll, training amount spent per employee per annum, average number of training days per employee/manager per annum and HRD staff per 100 employees.

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Measures of training results: – at reaction level: average percentage of positive course ratings; – at learning level: average percentage gain in learning per-course based on difference between pre- and post-course results; – at behaviour level: average percentage of improvement in on-the-job performance after training; – bottom line: profits per employee per year; – cost savings as a ratio of training expenses.

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Measures of training efficiency – training cost per delegate hour.

Despite the limitations, discussion of ROI has increased the awareness among HRD practitioners that, in order to justify the existence of HRD interventions, there has to be some attempt to measure the financial contribution it makes to the organisations, however challenging this is in practice (Thompson, 2005; Phillips, 2012).

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Thompson (2005) suggests five methods of gathering information to inform an ROI judgement: ●

Refining end-of-course ‘happy sheets’ to ask ‘What will you do/do differently as a result of this training?’ and ‘How exactly will each element of this course help you to do a better job?’

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Following up with line managers and participants at a later date, asking for feedback on the things they have used from the training.

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Emailing a sample of people, asking them about past ‘critical incidents’ (e.g. in management of communication), what skills they used to deal with them, and where they acquired those skills without hinting that training could be the primary source.

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Interviewing participants, their managers and other significant stakeholders before and after training.

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Asking participants to complete pre- and post-event evaluations.

Benchmarking can also provide information on the evaluation of process in HRD (see Box 7.2). Benchmarking is a set of related activities that support and enhance strategies of imitation or collaboration leading to a competitive advantage. Walton (1999: 303) notes that ‘some organisations have relied excessively on comparative performance data as a key plank in their competitive strategy.... [T]his may help a company meet competitors’ performance, but it is unlikely to reveal practices to beat them.’ Harrison (2009: 250) also argues that benchmarking measures best value or best practice and not the value added to the organisation by the training or learning intervention. To measure added value, Harrison argues, means asking and answering a different question: ‘What critical difference has the service made to the organisation’s capability to differentiate itself from other similar organisations, thereby giving it a leading edge?’

Box 7.2 Benchmarking For HRD, Walton (1999: 313) suggests three levels at which benchmarking can operate: ●

The level of organisational learning: – How have other organisations generated a learning climate?

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The level of organisation-wide HRD processes: – How have other organisations identified and developed competencies for staff? – How have other organisations balanced on- and off-the-job learning?

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The level of training and development activity and resource allocation: – What percentage of payroll is devoted to training and development in other organisations?

Questions 1

How can you use this model of benchmarking in your organisation to assess the effectiveness of HRD activity?

Where will you find the information you need to answer the questions successfully?

There are three types of benchmarking: competitive benchmarking, which assesses key parts of the organisation’s processes, systems and procedures against those of chosen competitors in the field; best-practice/functional benchmarking, which compares particular aspects of an organisation’s product or service with organisations considered to be ‘the best’ in this area, and which may involve collaboration; and internal benchmarking, which considers and compares similar processes within an organisation to achieve internal best practice, for example, induction and appraisal.

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Evaluating experience The evaluation of experience draws on a desire to demonstrate overall contribution to business performance (Anderson, 2007) in a way that goes beyond the previous section. For example, Brinkerhoff (2005) supports this view that traditional evaluation models and methods do little to improve organisational performance. His ‘success case method’ argues that the main challenge for organisations is how to leverage learning – consistently, quickly and effectivel

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