Employee Resourcing Notes @ Bec Doms MBA HR

EMPLOYEE-RESOURCING

MODULE 1

THE CONTEXT OF EMPLOYEE RESOURCING

INTRODUCTION: THE SCOPE OF ER ER or people resourcing is ‘that part of personnel and development which focuses on the recruitment and release of individuals from organisations, as well as the management of their performance and potential while employed by the organisation.’ ER involves staffing (recruitment, selection, retention, and dismissal), administration (policy development, procedural development, and documentation) and change management (the importance of the resourcing function as a change agent). There is general agreement on ‘recruitment and release’ areas, however there is less agreement on the boundaries of the ‘management of performance’ dimension of ER. There are factors such as diversity management, equal opportunities, selection and evaluation and performance management, exit management and also reward management. ER has played a key role in many influential models of HRM. It is seen as a crucial area of ‘policy choice’ in the Harvard model where ER policy choices revolve around human resource flows, i.e. the way people enter/move into, are placed/ move around, exit/ move out of the organisation. Depending on how the organisation assesses the interests of various stakeholders, the organisation looks at the situational characteristics of its workforce to determine its business strategy and management philosophy. Globalisation and diversity

Informatisation and ICT

Structure/labour market Knowledge/ skill/ talent management

Performance/ contract/ ethics

HR Strategy changes

Changes to ER strategy

ER Policies- HRP, R&S, PM, career/ talent management Changes in ER in context: the course framework

ER IN CONTEXT: THE CHANGING WORLD OF WORK AND ORGANISATIONS There are a number of contextual themes relevant to an understanding of the changing nature of ER such as; globalisation and privatisation the growing interest in environmental and ecological concerns the changing nature of customer expectations increasing competitiveness changing customer expectations the impact of demographic change in ER There are, according to the IPD, a number of driving forces that are seen as affecting the way organisations are responding, how this is affecting the way people are organised and managed and what this means for employees and managers. These are seen as; increasing demand for customised products and services; customer satisfaction standards increasingly established by global competition; reductions in international trade barriers; industrialisation of the Pacific Rim; slow growth in mature economies; new overseas competitors in production and service sectors; rapidly changing, easily transferable technology; public-sector constraints- higher value, finance, privatisation, market-testing; increasing concern for the environment and social well-being.

THE BUSINESS ENVIRONMENT Two major trends shaping the contemporary business environment are globalisation and informatisation. These have increased the unpredictability and dynamism of the business environment and many HR departments have sought to transform themselves in response to these challenges. THE IMPACT

OF

GLOBALISATION

Globalisation affects organisational viability through its impact on organisational fitness. It can refer to many different economic, political and social phenomena and when organisations are exposed to global competition, their survival and viability are brought into question. Enterprises can be transformed leading to enhanced viability or they can be pushed into restructuring due to increased competition. If they can respond to these two challenges, they will need to transform the management and HRM processes, including their ER processes. If they are successful in achieving this through enhanced efficiency and effectiveness, they enhance viability. Globalisation affects organisational fitness as they attempt to change their paradigms. ER and HRM practices are shaped by specific institutional features in their country of origin. It involves;

a stretching of social, political and economic activities across frontiers, regions and continents; an intensification, or the growing magnitude, of interconnectedness and flows of trade, investment, finance, migration, culture, etc.; a speeding up of global interactions and processes, as the development of worldwide systems of transport and communication increases the velocity of diffusion of ideas, goods, information, people and capital; a growing extensity, intensity and velocity of global interactions that can be associated with their deepening impact such that the effects of distant events can be highly significant elsewhere and boundaries between domestic and global affairs becomes more fluid. So globalisation can be thought of as ‘the widening, intensifying, speeding up and growing impact of worldwide interconnectedness.’

Organisational fitness

Viability

Globalisation

ORGANISATIONAL AND ER/HR

Competition

Enterprise

TRANSFORMATION

Effectiveness

Impact of ICT

Efficiency

The impact of globalisation and ICT on ER THE IMPACT OF INFORMATISATION This is the process through which information technologies have transformed economic and social relations such that cultural and economic barriers are reduced. The technological innovations will provoke radical cultural and social changes which will be fundamentally different from the status quo. In the post-industrial, information-based society, knowledge, or the production of information values, will be the driving force of society, rather than industrial technologies. The convergence of technologies will precipitate further changes that promise to fundamentally alter the human landscape. It is a process of change that features the use of informatisation and IT to such an extent that they are dominant forces in commanding economic, political, social and cultural development. It shapes cultural and civic discourse, including not just computers and the internet but other related technologies that involve the transfer of information such as film, satellite TV and telecommunications. As

societies and economies re-orient themselves around technologies, there are inevitable consequences for ER.

GLOBALISATION AND CHANGING ER PRACTICES One example of the impact of globalisation on ER is provided by China and by the way in which its HR policies and ER strategies have been affected by the impact of ICT and by its entry to the WTO. The impact of WTO accession includes; it helps to encourage effective competition in organisations; it brings challenges; it encourages international cooperation; there will be more privatisation and reduction in state trading; it brings internationalisation in product standards; there will be rights to invest and establish subsidiaries; companies will have the right to choose their own joint venture partners; cultural conflicts will appear as China’s enterprises balance political and commercial connections; there will be changes in the effectiveness and efficiencies of companies; there will be a greater failure rate for companies that do not understand the meaning and implication of new regulations; The significant impacts for ER include; enhanced competition and efficiency in Chinese companies; increased pressure on companies to select and recruit highly skilled staff and encouraging performance management growth and the sacking of less productive workers; putting a greater premium on talent management and career development; allowing inefficient companies to fail increasing pressure on welfare systems; encouraging greater FDI and IJV in China and encouraging Chinese companies to acquire Western companies and invest abroad; Transformational change leads to a new and uncharted future. Recent enterprise and property ownership have affected state-owned enterprises but these are still subject to an array of local, regional and national regulations. There is little evidence to suggest that countries such as China, Japan and South Korea are converging to an ‘East Asian’ HRM/ER model. China can be said to be moving towards a Western model especially in terms of IJV, FIE and larger SOE and entry into the WTO is likely to lead to downsizing and restructuring. MNCs in developed East Asian countries are often engaged in transferring production to China and Malaysia based on a common HRM/ER model of Taylorism- low trust, commitment, investment relationships. Firms are characterised by low-skilled workers, mass-production, insecure employment with rudimentary training given to workers. CHANGING PATTERNS OF ER IN CHINA Before the open-door policy of 1979, China’s model of ER was heavily associated with a command economy and a centrally planned system of public ownership and limited autonomy granted to enterprises; the Iron Rice Bowl of lifetime employment and lack of enterprise control over hiring and firing. It can be argued

that HRM and ER in China has now moved to a hybrid model where the aspects of the old model permeate to within pure Western HRM and ER models, in particular, in some IJVs and FIEs. Pre 1982, the government was heavily involved in enterprise management, the provision of lifetime employment, central fixing of wages but post 1982 there has been increasing moves to a market-oriented system. In the 1980s and 1990s, very significantly, employment contracts were introduced but over-staffing and low labour turnover is still evident. Informal recruiting is still common and interviews predominate over other methods of assessment with harmonious relationships still being a priority. Employee dismissal is easier but still rare. Pay differences are determined primarily by nepotism, seniority and political orientation and welfare benefits are often provided as well as pensions and insurance funds. Changing paradigms of ER in China have affected recruitment, selection and firing; appraisal and promotion; training; pay and benefits; communication; welfare provision; HR planning. It is still premature to state that strategic HRM in China has moved towards a Western model but there has been a marked move away from the previous centrally planned system. Change has been slow and there are widespread variations in the pace of change. HR functions in China is underdeveloped, reactive and operationally oriented. Guanxi still needs to be considered and is an important facet of career development as well as status and ‘face’. Unemployment is still high at approximately 10% but entry into the WTO may help. The WTO is seeking to shape the rules of the game to help globalisation and many private sector employers are evading their social protection responsibilities. So even though China has undergone radical economic reforms it cannot simply transfer HRM and ER from Western models. WTO entry

Informatisation

Economic reforms Operational reforms

Ownership reforms

Enterprise reforms

HR/ER strategy

ER policies and practices

Changes in Chinese ER in context

ER IN A CROSS-CULTURAL CONTEXT : THE CASE OF MAURITIUS Mauritius is a small island and a one-time UK colony and is an interesting case of ER in a cross-cultural context in terms of the Western ‘transfer’ of ER policies and practices. Its exports include textiles and clothing and growing financial and tourism services. It is conventionally linked to countries in S Africa and is a

regional player in the political and economic arena. With Western multinationals and IJVs, it is exposed to global influences on management and HRM practices. It has a varied community which is now exploiting its geographical, religious, family and ancestral ties to Asia to aid development. It also has a varied religious and linguistic picture with English, the official language, being spoken as well as French and many other Asian languages. Despite harmony within (endogamous) groups, ethnic tension and rioting is still an underlying issue. Various government posts are occupied through nepotism and there is a commitment to a Western-style parliamentary democracy with coalition tendencies and an official ideology of ethnic appeasement. The civil service practices a merit-based, bureaucratic HRM/ER practice with a belief that ethnic nepotism and political favouritism is pervasive. Task forces have been set up that advocate ‘reform’ but recent studies have shown the service is mostly unreformed and that ER is largely non-strategic with many colonial-era features still present. Promotion is based on confidential reports and is based on seniority and written explanations are required for ‘over the head’ promotions. PRP systems are absent and ethnic and political patronage is believed to be pervasive in all areas of ER. What are the implications of this case? The case raises the question of the limits of the successful transfer of ER practices in a cross-cultural context. There is no political will to bring about change to a strategic ER. Discretionary powers that are a tool of abuse will have to be devolved. Commissions and focus groups may act positively to contain nepotism and favouritism. The transfer of HRM and ER practices would need to be adjusted to take into account the specific needs of Mauritians. Globalisation impacts on enterprise reforms and ER policies. As an upper-middle-income country, it no longer enjoys preferential treatment in international trade and has to rely on innovation to increase wealth and employment creation. One government-inspired way is Cyber Island and it is now moving forward with skills and knowledge improvement. But how much up to the challenge are the Mauritian HR practitioners? HR individuals and graduates doubt that changes in the workplace will be successful when senior managers are unexcited about any such change or because political, and other, interference block initiatives to improving personnel practices. A survey of HRM alumni reported low levels of competence in many areas of HRM and key areas considered poor or average included; the use of IT; establishing credibility as HR professionals; the ability to speak confidently before an audience; the ability to link the HR function to the bottom line of the organisation; financial acumen; knowledge of how to set up international HRM programmes; Also, an impoverished HR function may not stem from the calibre of trained professionals but may be indicative of other structural and cultural ills. So even though the government may have recognised the challenges of globalisation, ICT and the knowledge economy may bring, company bosses and HR practitioners may not have the vision/skills to respond to these ER challenges.

THE IMPLICATIONS OF GLOBALISATION FOR EMPLOYEE RESOURCING IN MNCS Because of the global nature of business, new demands are being placed on organisational performance and ER. International assignments are now being used

for staffing and control etc. as vehicles for improving managers’ skills and knowledge. Many managers are involved in managing IJVs, mergers, acquisitions and are operating in diverse environments with multicultural teams. HR and ER strategies have a key role to play in ensuring that; organisational structures and systems enhance international effectiveness to achieve global integration and local responsiveness; organisational cultures are fostered that value diversity while creating a sense of unified mission; HR/ER systems are installed to attract, place, retain and develop managers with the knowledge, skills and attitudes required to perform effectively in a global environment. GLOBALISATION, D IVERSITY AND CHANGING TRADITIONAL MINDSETS AT IBC In 1987, Bedford Commercial Vehicles (part of Vauxhall, GM) was facing closure. Poor labour relations and intense foreign competition was resulting in £2million per month. In 1987, GM undertook an IJV with Isuzu which took a 40% stake and appointed a Japanese executive as CEO. It gave Isuzu a strategic foothold into the European market and several years later, IBC was profitable. So what were the commercial and cultural adaptations that were made to allow the Anglo-Japanese venture with American parents to expand into Europe and global markets? The strategic changes revolved around several structural initiatives which were supported by T&D. The combined impact resulted in an unprecedented change of culture in one of the traditional heartlands of British car manufacturing. The turnaround strategy consisted of; a new employee agreement where the workforce were all on the same terms and conditions guaranteeing an uninterrupted production line; a new inventory production system to eliminate waste; organising the entire workforce into teams to devolve decision making; setting up of skills training and development opportunities to facilitate these changes; At the start of the venture there was suspicion and ‘sweatshop’ perception among British employees was rife. Effective meetings, feedback and a Westernised attitude was required. A chance for workers to contribute to strategic changes was given. Initial fears were allayed and there was constant improvement and development. MANAGING D IVERSITY IN MULTICULTURAL TEAMS This is likely to be of growing importance to international enterprises as ‘the central operating mode for a global enterprise is the creation, organisation and management of multicultural teams and this is the key to future global competitiveness.’ Many organisations, especially parochial and ethnocentric ones, have tried to ignore or suppress multicultural teams. Initially, cultural differences present difficulties, but if managed actively, they can be an asset and a resource and can lead to greater flexibility and openness and to the avoidance of ‘groupthink’. Homogeneous and cohesive teams suppress new or challenging ideas. To use cultural differences effectively, members need to display cultural self-awareness and cross-cultural awareness. Employees are attracted to organisations who work

in this way and many international organisations recognise this and operate this manner. THE CASE OF D IVERSITY IN BA IN 1992 BA made attempts to change its bureaucratic culture in the 1980s and was ‘privatised’ in 1982 after receiving regular government subsidies. In terms of Lewin’s model of change, unfreezing- i.e. increasing receptivity to change- was precipitated by downsizing, devolution of autonomy to operating units, appointment of a new management team and CEO. A range of development programmes was introduced all aimed at identifying dysfunctional management styles and introducing a more participative style. Various structural changes such as cross-functional, multi-level diagonal task forces with a more bottom-up, less-centralised budgeting process. Staff support mechanisms were introduced alongside a bonus systems and a user-friendly management system. Refreezingi.e. embedding/institutionalising change- was achieved through management commitment and promotion and PRP. The transition phase help by a management transition team was successful and despite various problems, BA has consistently registered as one of the most profitable airlines and can be considered as truly ‘global’. Customer service has been seen as crucial with an emphasis on training and development promoting a customer-oriented image. An ultimately more productive approach was to use the dimension of valuing difference, building on gender difference, equal opportunity and diversity with workshops held to explore these business imperatives. BA has seen this as a source of competitive advantage. But care needed to be taken in identifying the specific culture of the target audience. BA IN 2008 This case illustrates how ER and HR models and paradigms can change under the impact of competition and corporate strategy. After BA’s attempts to move to a more strategic ‘soft’ HRM, it then sought to regroup and move back to a traditional ‘personnel management’ approach fused with aspects of HRM. There were attempts at restructuring, industrial relations problems, strikes and competition from no-frills airlines. It entered into the Oneworld Alliance in 1999 but was still affected by problems. Its new CEO was ruthless and there were plans to reform employment practices. There were planned withdrawals from regional airports acknowledging its failure to compete. In 2006, BA launched a radical overhaul of its regional network with significant price cuts to compete with intense European competition. ‘BA Connect’ was introduced and in 2006, it began making a profit. No jobs were axed but management reductions were planned in a separate move to increase competitiveness.

MANAGING DIVERSITY AND ITS IMPLICATIONS FOR ER Demographic changes in the population are mirrored in the demographic changes in the workforce increasing diversity in organisations. Organisations need to appreciate the potential benefits of diversity so that a positive climate for diversity is created and maintained. MANAGING D IVERSITY AND E QUAL OPPORTUNITY In the UK, a way of addressing diversity is through the legal and social frameworks that formed the basis of the Equal Opportunities paradigm. Partly

derived from the US, it diverged in some aspects such as age discrimination and affirmative action. Discriminating against age or qualifications still needs to be addressed. The EO paradigm was seen in terms of two perspectives; the liberal and the radical. The liberal approach tended to see inequality with regard to race and gender as a distortion of an otherwise rational labour market which would be corrected by rational ER procedures and positive action in recruitment and training leading to procedural justice (but not US-style affirmative action or positive discrimination in favour of under-represented groups). More radical critics saw the liberal approach as ineffective in promoting change with formal procedures. The use of quotas and preferential selection was called for to secure distributive justice. However a concern over favouritism and reverse discrimination ensured that radical approaches did not become mainstream. Managing diversity (MD) has been argued to confer business benefits as compared with the perception that EO costs money. MD was seen as signifying a more strategic, proactive, ,long-term and corporate-wide approach whereas EO is seen as piecemeal, tactical reactions to external triggers such as legislation and not really focussing on culture or values. However, as some countries do not see people as resources in some countries, MD may not be culturally appropriate in all societies. It has also been argued that MD may ignore social justice and ethical arguments and that it may be driven by senior white men as a way of de-grouping people and individualising initiatives in a way that dilutes the aims and philosophy of EO. THE BUSINESS CASE FOR M ANAGING DIVERSITY Fairness and equity can be regarded as reasons enough for organisations to implement MD policies. MD’s strength comes from its business case. Employees of organisations will soon be from all areas of under-represented groups and with people having more economic independence, they have become important customers. and wish to have the same opportunities as white employees but to also be able to do things ‘their own way’. If diversity is not managed effectively, the costs can be high. If managed effectively, labour turnover and absenteeism and their costs will be reduced. Other reasons why effective MD is an organisational asset include; easier to recruit people with qualities an organisation requires; as ethnic and minority groups grow, they will buy from organisations who are diverse and support diversity; diversity leads to organisations becoming creative and innovative, which will... improve organisational problem-solving; effective MD will enhance organisational flexibility Archival studies in the US financial sector have shown positive relationships between top-team heterogeneity and strategic change but heterogeneity has been defined in terms of age, education and functional experience rather than in terms of race, gender or nationality. As well as inhibiting groupthink, it has been suggested that diversity may have positive impacts on performance such as better listening skills from women. However there is little empirical evidence that effective MD impacts positively on job or organisational performance and more longitudinal research is required.

MD has been seen by some as a way of changing organisational rules from and exclusive concept based on white men to a more heterogeneous organisational culture or an inclusive concept. At the apex of the organisation, it may still be white men making the rules. Therefore MD is supported on the merits of a business case whereas EO is seen as an add-on to the organisation’s culture and not as an integral part of it. Most organisations who adopt MD do so because it makes good business sense. It is seen as an effective method of recruiting good-calibre staff as not off-putting to potential high-calibre employees from traditional groups.

MODULE 2 THE STRATEGIC SIGNIFICANCE OF EMPLOYEE RESOURCING INTRODUCTION: ER, PRODUCTIVITY AND PERFORMANCE In recent years attention has been paid in the UK to issues of productivity or workforce efficiency with a concern that it has fallen. Productivity growth fell to 0% in 2006 with output per hour dropping. Employment continued to grow faster than the economy dragging down productivity. In 2004 productivity in Germany, Italy and the US was 20% higher than that of the UK and output per hour was about 15% lower than in France and the US. Low productivity has been blamed on low levels of skill while economists have blamed such issues as taxation, public spending and pension-fund deficits. The Work Foundation in the UK argues that instead of focussing on economic issues a more useful focus on the productivity gap is to look at performance rather than productivity. A high-performance index which assesses the difference between high and low performers, identifies 5 key areas that organisations need to manage for high performance; customers and markets shareholders and governance stakeholders people innovation and creativity

HUMAN CAPITAL MANAGEMENT The DTI has pointed to the importance of human capital and to the need for companies to report on their human capital management to their shareholders as well showing how HCM contributes to business performance and strategy. Human capital decisions can inform business decisions and enable better judgements about growth potential and performance. A key issue is how to analyse, measure and evaluate the contribution of people practices to the creation of value. Various data is used such as CSR, diversity, demographics. ER data is also useful such as recruitment figures, employee turnover, appraisal data and tracking of talent flows.

THE STRATEGIC SIGNIFICANCE OF HRM AND ER IN PARTICULAR In the late 1980s, as part of the move away from personnel management to HRM, many US and European organisations began thinking of their ER processes as major levers to support strategic and cultural change. With the rise of skill-based competition, competitive advantage was increasingly seen as developing and exploiting ‘core competencies’ of the organisation’s knowledge assets. As a way of delivering behaviours necessary to support organisational strategies, ER initiatives have become increasingly important. ER processes can ensure that employees with requisite skills are assessed, placed in appropriate job, appraised, developed and rewarded against relevant competency criteria. A significant development has been the increasing importance given by academics, consultants and management to HRM. HRM is often seen as a philosophy of people management based on the premise that human resources are uniquely important to sustain business success. Due to the recognition of people’s skills, knowledge, motivation and commitment, the personnel department of Harvard University became known as HRM. The new direction for HR is now often called

business partnering in the UK with some senior practitioners seeing their role as dominantly that of a strategic business partner and many also seeing themselves as change agents. There has been some regret that these new definitions suggest a move away from employee-facing or employee advocates with employee issues subordinated to business issues.

HRM, ER AND ORGANISATIONAL PERFORMANCE In recent years there have been articles claiming to measure and demonstrate the link between an organisation’s HRM and its performance. Researchers view the organisation as a ‘black box’ and to unlock this box, the focus has been on what bundles of HR make an impact on performance. One target has been high-performance work systems (HPWS) also termed high commitment, high involvement or high road practices. In this view, ER plays a key role. The list of HPWS includes; personnel selection attitude assessment performance appraisal labour-management participation incentive compensation intensive recruiting job design intensive training grievance procedures promotion criteria information sharing The assumption is that these affect employee attitudes such as commitment and motivation and enhances competence. Much emphasis has been placed on motivation. One view emphasises discretionary effort which is composed of motivation, skills and opportunities to participate which are enhanced by HPWS leading to discretionary effort and higher performance, commitment, trust and communication. But managers need to motivate employees using facilitative techniques such as coaching and mentoring but many are failing to provide this. Another view is the importance of the 3Rs- relationships, respect, recognition and the exchanges between managers and employees are often leader-member exchanges. A study has seen the causal chain between HRM and organisational performances in terms of 5 linkages; intended policies to actual practices actual practices to experienced practices experienced practices to employee reactions employee reactions to employee outcomes employee outcomes to unit-level outcomes The study showed that good quality management leadership behaviour was associated with higher levels of organisational commitment and a positive job experience. The combined effect of leadership behaviour and satisfying perceived HR practices had a greater impact than either by itself.

FLEXIBILITY AND LABOUR MARKETS The ‘labour market’ refers to the way work is distributed within a society consisting of workers looking for paid jobs and employers looking to fill vacant positions. An organisation’s employment system is the outcome of the combined

effects of firms’ labour requirements, organisational constraints, pressure from workers, the labour market environment and the wider institutional environment. There are 3 types of labour market; i. the open or unstructured external labour market ii. the occupational labour market iii. the internal labour market E XTERNAL LABOUR M ARKETS Employers hire employees from outside the organisation and are not interested in long-term employment relations with them. Firms are more interested in numerical flexibility. The labour market is often unstructured and consists of manual and unskilled workers. Employment rights are limited with trade union representation very weak. In contemporary Britain, most of these jobs are performed by migrant workers. Employees are exposed to market forces and are considered as disposable commodities. Organisations follow a low-cost strategy and pay minimum wages. The external labour market has an impact on an organisation’s training and development strategy and those that follow a cost-reduction strategy will employ people who already have the skills they desire or provide core or basic training. However, focussing entirely on the external labour market can have drawbacks such as disruption to the production process in case of high levels of unplanned turnover, time spent on repetitive recruitment and selection for the same positions, induction training costs, etc. OCCUPATIONAL LABOUR MARKETS When workers have skills that can be transferred from one firm to another, this gives rise to an occupational labour market. The skills and knowledge are acquired through formal education, training and certification. The assumption is that the labour already possesses the skills needed by the company when they are recruited. The occupational labour market is structured on an occupational basis by the qualifications and skills acquired. This market has institutional regulation and trade unions have power to prevent members from facing competition as well as more negotiating rules that can restrict workers from joining an occupation. I NTERNAL LABOUR MARKETS In this case, the terms and conditions of employment are determined internally by the organisation rather than by external competitive forces. The employment relationship is internal and recruitment is limited to lower levels and junior positions. This market is highly structured with hierarchical progression and job ladders enabling management to retain and motivate its labour force through relational psychological contracts where employees expect job security, deferred benefits and job ladders and internal promotion. This market is highly valued by management and receives institutional regulations with set rules such as pay structures, job descriptions and specifications. Management is more willing to invest in training but these may be firm-specific and untransferable. Management may use internalisation as a retention tool as well as promotion rather than incurring costs on external recruitment. Management encourage employees to exercise responsible autonomy and uses positive policies to build trust, encourage empowerment and commitment as well as enhancing flexibility and team-working. Focussing solely on the internal market can have its drawbacks such as high training costs, level of experience being limited to within the

organisation and ‘seniority rules’ in promotion which may expose organisations to the high-calibre staff being poached.

EMPLOYMENT RELATIONS AND FLEXIBILITY IN ER Other institutional and environmental factors influence the employment relations system in an organisation. These factors can be constraints such as size, financial and managerial resources. Larger companies can offer better terms and conditions of employment, more job ladders and better opportunities than smaller firms. Large firms are more likely to internalise their employment systems and to use functional flexibility- multiskilling and multitasking. Importantly, employees can exert pressure and influence on how the employment system develops. Trade unions can be used as a bargaining tool between employees and management. Another aspect influencing the employment system is the financial return to the company. In some countries, short-term financial performance is important and so managers may not consider long-term training investment as cost-effective. These firms may not provide long-term employment security and look at using shift patterns and linking wages to individual and team performance. UK organisations are increasingly making use of temporal and financial flexibility. In this case, the employment system is more externalised than internalised. Other countries do not have pressure on short-term profit maximisation and there is more scope to internalise employment systems. These firms invest more costs and time in training and provide employment security. The employment relationship is defined more in terms of the internal production requirements of the firm and also external conditions such as low unemployment, economic growth and trade unions. An organisation’s employment system is also influenced by non-labour market factors such as the family. The man is normally seen as the bread-winner and dynamics such as social divisions and demographics play a role and it has still not been possible to eliminate discrimination completely. Technology has also played a role as Western countries move from manufacturing to services economies. Skills in manufacturing are firm-specific whereas in services, employment has been concentrated at two poles- management at one end and low-skilled jobs at the other and these changes have blurred the distinction between the use of internal and external labour. Offshoring work as a means of cheaper production has weakened trade unions and left employees more vulnerable to management decisions. In the UK, where short-term profitability is important, a well-used strategy is downsizing and then externalising the labour market. Also delayering and devolution are common responses by organisations putting pressure on reducing costs. On the other hand, some organisations such as Nike are becoming virtual organisations where cheap production sites are dispersed globally. The employee relationship is external, there are few hierarchies and there is a performance-based control. so organisational boundaries are becoming blurred. Thus, in the UK, externalising the employment system is done to reduce costs and morale is often overlooked. A simple approach to understand internal and external labour systems is by looking at Atkinson’s flexible firm model where he uses terms such as numerical, financial and functional flexibility and workers who are either core or peripheral. Transferring this model from theory to practice is difficult and it reflects management contradictions in reducing costs and

maintaining flexibility. Demarcation between core and peripheral workers creates friction and conflict. Some organisations adopt different strategies such as focussing on skills, knowledge and attitudes. Also, recognising that employees are best source of competitive advantage, even in turbulent times, has a dramatic effect on strategy thinking. An organisation that focuses on its internal labour market must be willing to invest heavily in T&D. Delayering and flatter organisations has meant that job ladders are reduced but organisations must think about other career options such as horizontal and lateral career moves, project work and secondment. Removing strict pay structures in favour of PRP, ensuring employee commitment through profit-sharing and share ownership is also necessary. By moving towards a soft HRM approach, firms can retain high-calibre individuals as their core workers while outsourcing low-skilled employees goes in some to applying the flexible firm model.

HR OUTSOURCING AND SHARED SERVICE CENTRES This is the use of a third-party service provider to perform an activity usually performed in-house. It is the transfer of a distinct business function from inside the business to an external third party. Some advocate costs as the main reason and others point to the adverse effects of layoff. Outsourcing involves transfer of staff to enable an organisation to specialise in core activities and exposing the process to market disciplines, so driving down costs. Periodic renewal of the outsourcing contract acts as an incentive and offers greater flexibility in employment practice. It gives firms the opportunity to make use of services that are at the desired level and quality without having to achieve them themselves. Human resources outsourcing (HRO) is driven by a desire to save money, access to innovative IT solutions and enhanced focus on performance and service measurement. HRO is defined as placing responsibility for various elements of the HR function with a 3rd party provider. HR staff are also in a position where they are employee champions or strategic partners. HR services are being more technologically advanced allowing closer relationships between provider and client. A growing number of outsourcing agencies provide services ranging from payroll, training, performance management, selection and recruitment. There has also been a growth of HR shared services, often in two forms. Firstly, large organisations set up shared services to provide HR services to their own departments and subsidiaries and also external client organisations- a form of HRO. Secondly, large or multi-establishment organisations may set up shared service centres (SSCs) as a way of recentralising their HR and creating an internal market in HR. So this is a form of HRO where it involves services to external clients but not where it serves internal clients. Also, the provision of consulting services to client organisations can be seen to be HRO as the setting up of SSCs is popular in large MNCs. THE EFFECTIVENESS OF HRD At a time where labour costs can be identified as controllable costs, some companies may feel that if some of their ER activities were outsourced to HR specialists, it would result in cost savings. Savings on not investing in new HR technology, responsibility being passed to provider, savings in infrastructure as

well as reduction in HR staffing levels all seem attractive. Using temporary workers to cover workload fluctuation may enhance workforce flexibility and productivity. HRO may appear to be a choice of governance that makes sense. There has been increasing concern about the quality of HR functions in organisations. HRO may be seen as enabling a greater service quality: according to agency theory, the interests between principal and agent may be misaligned and HRO may overcome this problem and improve client satisfaction. Joint alliances create opportunities for mutual learning and knowledge transfer which can then be brought back in-house. HRO for small and medium sized companies can be seen as a way of minimising risks and obtaining objective advice untainted by organisational politics. It is often argued that the strategic parts of HR should remain in-house with non-core or peripheral routines being outsourced. The non-core work is highly vulnerable to outsourcing but it is sometimes difficult to determine which is core and which is non-core as well as knowing the criteria for evaluating this. Routine data processing and administrative tasks, payroll and selection and recruitment (skilled and non-skilled or casual) are particularly suitable for outsourcing. However, HRO may result in downsizing which leads to low morale and loss of commitment and even loss of information and knowledge, disrupting the organisational culture. Outsourcing may not lead to cost savings but organisations may see improvement and flexibility as more important. The costs that are associated with outsourcing include; legal costs problems of trust poor levels of service poor communications loss of skilled employees loss of corporate memory Before a firm outsources and finds an outsourcing partner, it needs to decide on what functions will be outsourced and this is a strategic decision taken by senior management. The popularity of outsourcing, especially selection and recruitment, means that CV reviewing is given to specialists and not line managers, a bigger pool of candidates is available, reduction in organisational costs of hiring the wrong person. By outsourcing certain HR functions, the HR department can focus on strategic issues. Talent management, succession planning, leadership development are often neglected and these issues can have a long-term impact on business. HR is promoted from a provider of services to strategic business partner. Therefore, HRO can be seen as a way of paying lower wages and, at the same time, gaining better HR services. Technological obsolescence is removed and up-to-date, integrated IT in the form of HRIS is provided as well as professional expertise. HRO does not automatically signify cost savings. Many organisations have found costs have gone up but trying to save costs at the expense of lower quality is not in any organisation’s interest. It is essential that the right provider who has the right cultural fit is found. Contract preparation is a time-consuming process spelling out every aspect of the service provided. Trust is an important issue as some organisations use the

provider to draw up the legal contract as well. So when things go wrong, costs can go far beyond what was previously budgeted. Different organisations operate their HR differently and may even disregard HR as giving them a strategic advantage. HR specialists who lose their jobs as a result of downsizing HR departments or outsourcing may go to service providers with their experience. HRO providers may end up becoming call-centres with no job ladders or promotion prospects. There may be no motivation to upgrade skills or get broader organisational experience and there is a danger of moving into a ‘silo mentality’. The problems linked to scientific management return as jobs become repetitive, mundane and routine resulting in loss of corporate memory that some of the experts may bring with them. But this can result in HRO staff becoming specialised, albeit in routine tasks. This means that the HR department will have staff experts in specific aspects of HR functions. Associated with this is the difficulty of staff keeping up to date with a vastly changing HRIS but this is more easily done in HRO firms where HR departments and HR employees can take advantage of technological advances from HRO providers. Firms are now under more increasing pressure to demonstrate effectiveness and efficiency and need to achieve internal transformation in order to be treated as strategic partners in business. HR will gain credibility, as ‘line management want people advising them who have already sat in the operational chair and therefore understand the way their people think and work.’ Therefore HRO will help HR get to high levels of performance by eliminating its operational aspect and keeping those aspects that are critical for survival. OTHER OPTIONS Outsourcing HR does not involve the erasure of an organisation’s HR department. Companies have options available to them such as; keeping the entire HR function internal (Shared Service Centres) keeping it internal with some external support from consultants keeping it mainly internal plus some external outsourcing of routine functions making HR mainly an external function with strategic aspects kept inside the organisation Even if the last option is adopted, there are several different models including; HRO to a technology-led specialist supplier setting up a joint venture company with an IT specialist to handle HR administration with possible external expansion later outsourcing HR and other services to a service provider setting up a ‘virtual HR department’ to handle routine HR Internal functions may be able to deliver similar levels of service at lower cost. Each firm takes into account its unique factors in order to reach a solution and these factors include; size strategy- e.g. pursuing innovation or cost reduction, ‘prospectors’ may outsource more than ‘defenders’ environmental uncertainty

internal HR capabilities coherence or internal integration of HR activities- e.g. supportive ‘bundles’ of practices whether the organisation is dealing with core or non-core employees In particular, resource-based theory indicates that core skills should be developed and maintained internally rather than being outsourced. Non-strategic activities are ideal for HRO and careful thought has to be given on outsourcing as this can have a great impact on HRM. Consultation with stakeholders about the feasibility of outsourcing is required. Even though HRO can facilitate technological change at minimum investment and can give HR focus and pace, there needs to be a ‘partnership’ with the supplier and HRO needs to be considered as a change management programme. Extensive consultation and communication is required to ensure that each party knows who owns what.

MODULE 3:

APPROACHES TO EMPLOYEE RESOURCING

INTRODUCTION: APPROACHES TO ER The CIPD Standards for People Resourcing set out three paradigms for addressing resourcing issues; the traditional paradigm the contingency-based paradigm new paradigms The traditional paradigm as it is applied to selection is also called the psychometric objective paradigm. There are also newer and alternative paradigms called the knowledge/power paradigm, the knowledge management paradigm and the customer-service paradigm. THE TRADITIONAL PARADIGM Taylor argues that the traditional (text-book, professional, good practice) approach to ER assumes; organisations are large or medium sized and traditionally structured, with a hierarchy, clear lines of accountability, and well-defined roles for employees. ER is a chronological process mirroring employment: HRP, job analysis, recruitment, selection, performance management, dismissal and resignation. organisations exercise control over and implied stable environment allowing policy documents and job descriptions to be created. people work under employment contracts. organisations operate in competitive environments. CONTINGENCY-BASED PARADIGMS This approach accepts that there should be different approaches to ER in different situations. Factors that would affect this are size, structure, type of workforce, type of organisation and is also applicable to ‘virtual’ organisations where the work is contracted out. Contingency-based ER is often associated with strategic ER and is also linked to strategic management. The strategic process emerges within the organisation and cascades down the line. ER processes are seen as major levers to support strategic and cultural changes. Once core competencies are identified, ER and HRM processes can be installed to ensure that employees with the requisite skills are appraised, developed and rewarded against the relevant competency criteria. The HRM agenda emphasises the link between people policies and business strategies, unlike personnel management which ignores it. This interpretation of strategic HRM owes much to the Michigan Business School Model which is harder and less-humanistic than the Harvard model and considers employees as resources in the same way as other business resources. People must be; obtained as cheaply as possible used sparingly developed and exploited as much as possible

People should be matched to business needs- the model is strongly influenced by strategic management literature. Therefore, HRM is seen as a strategic process making the most effective use of an organisation’s resources. This approach stresses the quantitative, calculative and business-strategic aspects of managing the headcount resource in a rational way. It focuses on the importance of strategic fit where human resource policies and practices are linked to the strategic objectives of the organisation with the aim being increased competitive advantage. In this model, ER plays a key role in driving performance: selection and appraisal play major roles. A matching model of ER is often implicit or explicit depending on the strategic implication for the nature, role and importance of RM and selection. ER are usually seen as secondary processes reacting to business strategy. Other recent models such as the resource-based views offer promise in developing better ER models. HRM-inspired change encourages a focus on the organisational change lever of ER. This interest in strategic HRM led to an interest in vertical integration (the alignment of HR policies with corporate strategy), horizontal integration (the alignment of HR practices such as R&S, training, appraisal in a coherent and connected way), and devolution (making line managers responsible for many HR practices such as R&S, performance management systems, T&D).

ER, KNOWLEDGE AND POWER PERSPECTIVES Most treatments of ER tend not to focus on the wider perspectives or on the interests of multiple or competing stakeholders. However this approach does not just focus on advice, prescription and best practice. It consciously seeks to acknowledge that there are multiple stakeholders with an interest in HRM and, in particular, ER, including line managers, contractors, search consultants and recruiting agencies who may have conflicting or competing demands, values, expectations and agendas. The question of power, politics, ethics, knowledge, equal opportunities is raised within the ER process because it is inextricably linked to the mechanism of assessing, grading, tracking and shifting of employees/individuals. The CIPD has set out three approaches to ER: traditional, new and contingency-based paradigms. It is unclear as to whether these are competing, or even incommensurable, paradigms or that they are complementary with no approach being the right or best one. ER is part of the government of organisations and the regulation of individuals and, in particular, the assessment/appraisal instrument is seen as part of the technology of power and regulation. In fact, governmentality is a concept used to draw attention to the diverse and various processes and techniques that are sought to administer the lives of individuals and associations through links to political objectives. For example, ‘knowing’ individuals in terms of a set of qualities or competencies which can reveal much of organisations as well as people. It has been argued that changes in assessment and appraisal processes and criteria are associated with the emphasis, within HRM-style change on the increased emphasis on flexibility which are associated with moves towards Japanisation or flexibility and a move away from bureaucratic procedures.

KNOWLEDGE MANAGEMENT AND ER Knowledge is increasingly bring claimed to be a key critical resource and source of competitive advantage in the modern global economy. Research in the UK has

shown that knowledge-intensive sectors account for over 40% of employment, higher than the EU average. Knowledge-intensive sectors include IT, finance, education and health care. This is a key to Britain’s success attributed to the flexibility of the labour market. Much recent work on knowledge management (KM) has come from information management (IM) perspectives. If HRM/ER is to set the agenda for KM and adequately respond to the challenges set for it, a more robust model of KM and HRM needs to be developed to guide research in this area. The concept of intellectual capital has also become important for KM as success goes to those who manage their intellectual capital wisely. The knowledge society can be defined as one in which intellectual capital is consciously developed to provide competitive advantage that reflects managerial and operational changes required to succeed in a global economy. The nature of work has changed from an industrial society to the knowledge economy or knowledge-driven society. FROM STRATEGIC MANAGEMENT TO KNOWLEDGE MANAGEMENT In popular and academic literature, it is said that we are moving towards becoming a knowledge society. Knowledge is an important commercial and social commodity that explicitly features in decision making. The belief that knowledge is of primary importance is part of the knowledge management paradigm: a shift from the dominant paradigm of strategic management. This new paradigm supports openness, empowerment and individual creativity as opposed to the rational strategic paradigm which supports distortion, disempowerment and managerial discipline and therefore shows a more positivist perspective. In the knowledge management perspective, individuals are encouraged to be more knowledgeable for the benefit of the organisation. Seen from the perspective of the strategic management paradigm, this can be viewed as a possible weakening of role power for senior managers and as a consequence, the new paradigm may not be totally embraced by those corporations whose power brokers feel threatened by this change. THE NATURE

OF

KNOWLEDGE MANAGEMENT

Knowledge management is the creation of knowledge and its interpretation, dissemination and application, retention and refinement. It is a critical source of competitive advantage and it creates intellectual capital. Within psychology and educational research on expertise, researchers have distinguished formal or declarative knowledge (knowing that) from procedural knowledge (knowing how) and conditional knowledge (knowing when and where, or under what conditions). A general framework for the understanding of KM is referring to the terms tacit knowledge- experiential, and explicit knowledge, expressed and transferable knowledge that includes cognitive and technical elements. These definitions are included in the well-known SECI model for knowledge creation.

Tacit knowledge

Tacit knowledge Externalisation Reflective; peer-to-peer Creates conceptual knowledge through knowledge articulation using language. Dialogue and collective reflection needed.

Internalisation Collective; on-site

Explicit knowledge Socialisation Existential; face-to-face Creates sympathised knowledge through sharing experiences, and development of mental models and technical skills. Language unnecessary.

Combination Systematic; collaborative

Conversion involves four processes, all of which convert between tacit and/or explicit knowledge. Socialisation is the process by which synthesised knowledge is created through the sharing of experiences between people as they develop shared mental models and technical skills. Since it is fundamentally experiential, it connects people through their tacit knowledge. Externalisation comes next, as tacit knowledge is made explicit. The creation of conceptual knowledge occurs through knowledge articulation in a communication process that uses language in dialogue and collective reflection. The use of expressions of communication is often inadequate, inconsistent, and insufficient. They leave gaps between images and expression, while promoting reflection and interaction. This therefore triggers dialogue. The next process is combination. Explicit knowledge is transformed through its integration by adding, combining and categorising knowledge. This integration of knowledge is also seen as a systemising process. Finally explicit knowledge is made tacit by its internalisation. This is a learning process and occurs through the behavioural development of operational knowledge. It uses explicit knowledge, such as manuals or storytelling, where appropriate.

ER AND MANAGING KNOWLEDGE WORKERS KM can be seen to be closely related to ER and HRM especially if HRM incorporates information and communication technologies (ICT) as support mechanisms in the human interaction process. Typical ‘KM arenas’ are activities associated with, among others; ascertaining that effective work is delivered educating and developing employees capturing, transferring and organising knowledge motivating, facilitating and empowering employees creating cultural and knowledge-sharing conditions The implications for HR professionals are not insignificant and need to deal with such issues as; how to build a talent pool how to set up and run diversity management programmes how to harness tacit knowledge how to increase flexibility and manage change

As knowledge becomes the key strategic resource of the future its creation, transfer and deployment processes need to be fully understood. Opportunities will need to be offered for employees’ personal and professional growth and in some organisations, this may take place without an HR department. A resource-based view of the firm provides support to both configurations since what is essential is that human resources are viewed as a pool of knowledge, skills and insight that can provide a source of sustained competitive advantage. Not only is attracting the right high-calibre individuals, developing and retaining them as well, but organisations should develop the systems, structures and cultures that are responsive to the opportunities presented by ICT. Daily tasks of human resource development in building a learning organisation are; assisting employees in creating and using knowledge establishing appropriate networks engaging in double-loop learning Managing knowledge is recognised as a key organisational asset and its creation, dissemination and application as a critical source of competitive advantage. It can be seen as requiring a blend of core skills and competences in information management as well as HRM and ER, including the structures and cultures that facilitate organisation, team and individual learning and the sharing of knowledge and information. Attracting, developing, rewarding, motivating and rewarding these knowledge workers is the responsibility of HRM and ER. The growing importance of KM is seen as a consequence of moving from an industrialised to an information-based economy and the rise of knowledge workers and symbolic analysts in advanced (post-)industrial society with knowledge and expertise being used to solve organisational problems. Knowledge formation and acquisition, knowledge absorption and knowledge retention are key processes. Technology cannot fully capture and manage innovative thinking and HRM/ER needs greater attention in promoting information sharing. A technology-driven view is now becoming dominant with HR being sidelined. However, KM is a process and not a technology linked to the way people work and a supportive culture is necessary such as performance management, good practice in selection and recruitment and an appropriate HR role in overcoming resistance to sharing information. It appears that only KM initiatives grounded in organisational culture are likely to succeed and it is imperative that KM be integrated with ER, HRM, IM, and competitive strategy. Employees may be reluctant to share that which is seen to be vital to their value, job security and identity. KNOWLEDGE IN THE COMPUTER G AMES INDUSTRY Computer and video games are probably the first new cultural industry to emerge from the microelectronics revolution. Computer and video games are increasingly organised into a core of publishers with global distribution networks who finance the development of games through advances against royalties as well as their marketing, development studios that undertake programming, design and testing with specialists inputting music, sound, licensing, recruitment and legal services. Relationships with distribution and retail etc. are handled by publishers, the core relationship with publishers and developers being tense. Publishers engage in vertical integration (acquisition of developers) to control the flow of products that feed their distribution network while developers have tended to split from

acquired studios to gain greater creative and financial freedom. A good example of splitting to create new studios is Atomic Planet. According to research, the UK entertainment market generated £934m in 2000, expected to grow to £1017m in 2003. The European and world markets were expected to reach $8b and $27b respectively. British game developers are major players in the global market with about 35% share and employed around 21500 people in 1999. In 2001, there were about 250 small developmental studios in the UK with small teams of about 5 to 15 people. More sophisticated studios employ more people. Growth is expected with companies, such as Sony, providing more powerful and creative technology. KM AND THE FUTURE

OF

ER

It is asserted that new policies and practices are required when taking a KM perspective on ER. There is little agreement on what specific changes are required in organisational structure and culture and ER roles. KM has attracted much attention as the global economy becomes more knowledge-driven but little attention has been given to the implications it will have on ER and career management. External knowledge must be sought to enable a competitive advantage based around knowledge creation and development. The knowledge supply chain must be managed effectively and this chain may be more important than labour supply. The implications to employment are profound as the mechanisms to secure knowledge from contracting, performance assessment and reward management may need to be very different from the mechanisms needed to secure labour. Self-employment and portfolio careers will become more important as knowledge becomes viewed as ‘personal equity’. Different organisations will therefore pursue different strategies. In baseball team organisations, HR’s role in KM may be seen predominantly as servicing the knowledge needs of star performers and coordinating changing knowledge specialism. In clubs, there may be greater emphasis on group contribution, the development of systems for codifying and disseminating collective knowledge and translating knowledge into collective assets. In academies, there may be a mixture of KM policies, differentiated according to employment position. In fortresses, there is likely to be an absence of a policy or only a weak policy or a constantly fluctuating policy. PSYCHOLOGICAL CONTRACT TYPES, ORGANISATIONAL STRATEGIES, KNOWLEDGE MANAGEMENT POLICY AND CAREER TYPE

BUSINESS TYPE

STRATEG Y

ER STRATEGY

Make, Small promote and number of develop from Defender stable internal products labour market

Prospect or

First to market

CAREE R TYPE

Club

CONTRA CT

Relational

ANCHOR Security, stability, life-style, general managerial, dedication

CLUSTER

FOCUS

KM POLICY

Basic, formal Collective Career manageme distribution active nt planning s

Technical, Buy/hire functional, expertise as entrepreneuria Basebal Transaction Multidirection needed from l creativity, al al l team external challenge, labour market autonomy, independence

Career planning

Individual services

Analyser

Reactor

Blend of above

Inconsiste nt hybrid

Blend of above

Inconsistent hybrid

Acade my

Both, differentiate d

Fortres Inconsistent hybrid s

General managerial, technical, functional, challenge

Active management , active planning,

Challenge

Formal basic

Mutual

Differentiate d

Unclear

Weak/abse nt

multidirection al

Increasingly, individuals may come to manage their own careers with limited reliance on organisations. Knowledge-based technical speciality, cross-functional, international experience, collaborative leadership and self-management skills, continuous learning and personal traits may become key attributes of successful careers in organisations comprised of ‘cellular coalitions of self-employed knowledge workers’. The increasing importance of KM allows employees to satisfy their personal aspirations of their career anchors and increases their internal and external knowledge market. The individual levels within career anchors become to take more prominence as KM becomes increasingly significant to HRM, ER and in particular, career management. There are distinctions made between human, structural and customer capital which are of vital importance to ER. Human capital refers to skills, knowledge and abilities of personnel focussing on skill-building by organisations and people. Structural capital refers to the way in which individuals and organisations are connected with knowledge, expertise and data through technologies and processes as well organisational structures, culture, systems and procedures, especially communication flows and channels. ER is central in protecting intellectual capital and enhancing collaborative activity. Customer capital, the value of the franchise and its ongoing relationships with those o whom it sells, is normally the most poorly managed asset and one strategy is to engage customers in selection, recruitment or career management to enhance commitment and increase corporate value from the interaction of these 3 components of intellectual capital, especially in the transformation of tacit knowledge. Focussing on HRM and ER adds financial value whether using accounting or perceptual measures of performance. However financial valuation systems often fail to see the investments value of ER, only looking at their costs. Responding to the challenges of KM may help ER overcome this problem as KM involves the recognition of tacit and explicit knowledge residing in stakeholders.

A CUSTOMER SERVICE APPROACH TO ER Customer service (CS) involves addressing customers’ needs and concerns and satisfying them as quickly as possible. Organisations are now focussing on CS because it is easier to keep existing customers than to acquire new ones. Customers have more choice from competitors and organisations can now differentiate products and services in terms of CS rather than price. To succeed with a customer service strategy (CSS) concept, organisations start by building a customer orientation within the company.

A CS culture needs to be developed where the company is educated about the importance of CS. It is then possible to foresee a culture shift. The essential stage involves understanding customer needs and 5 crucial attributes are; reliability empathy assurance responsiveness tangibles A key issue in any CSS involves ensuring service quality. Quality management (QM) is important and quality and a successful CSS can be enhanced by customer relationship management (CRM) which can be seen as the management of customer relations from a marketing perspective. CRM takes a long-term relationship perspective focussing on customers and return on customer investment instead of market share. For CRM to be effective, it will involve identifying and establishing relationships with customers in order to maintain and enhance (or even terminating) relationships through mutual exchange and fulfilment of promises. Only then can an effective CSS be successful. Integrate CS with company culture

Promote CS culture

Gain top management support

Continuous improvement and quality management

Set standards for delivering CS

Understand customer needs

A corporate customer service model A PPLYING THE CUSTOMER SERVICE M ODEL TO ER The CS model can be applied to ER and shows how the CSS can help HR in the process of moving from point A to point B. The human resources departments have the capabilities to input to all stages of a CS programme. ER Customer Service Strategy

Point A ER Present

Oriented Developing an ER customer service Operational strategy Reactive Administrative

Developing an ER customer service strategy

Point B ER Future

Proactive Strategic Business Partner

PROMOTING A CS CULTURE ER/HR needs to build a customer orientation and educate people about CS and its valuable differentiator of service quality in all levels of the organisation. All employees should be involved in the planning process to instil a feeling of ownership and commitment. HR/ER must take a lead in promoting a change in shifting attitudes and at the same time recognise that it also has to change. GAINING TOP M ANAGEMENT SUPPORT HR/ER needs to gain top management support and explain how CS can help in the retention of loyal customers. This is crucial as changes would have to be led from the top. ER/HR must ensure that support is continuing and senior management commitment can have dramatic results. CUSTOMERS AND ER One way of enhancing CS and developing a CSS is to conceptualise the organisation in terms of its internal and external customers. The concept of customer is expanding. The growing trend now is to enlarge the CS aspect to incorporate people from within the organisation, whereby internal CS will lead to a greater number of satisfied internal customers, reflecting on the service they provide to delight external customers therefore leading to repeat investment in the company and higher profits. The list is not exhaustive and can be broken down to include senior managers, line managers etc. Each of these customers receives service from ER and react according to the perception of how good the CS from that department is. ER must ensure that CS is fully understood and must sell itself to ensure that customers know that its job is not just to recruit but to provide value-added service. It does this by giving individual attention to its customers and ensuring it delivers the right service.

Top management Shareholders

IT managers

Trade unions

ER processes

Production managers

Finance managers

Marketing managers Employees

Identifying the customers of ER

UNDERSTANDING CUSTOMER NEEDS Customers’ needs can be assessed through research mechanisms such as; customer surveys staff attitude surveys focus groups database analysis informal meetings To ensure that CSS does not fail before starting, action needs to be taken on this research. Meetings with various stakeholders for example or keeping a database of customers to know them well are important and the key to success is to understand the specific needs of each customer. ER AND CUSTOMER RELATIONSHIP M ANAGEMENT (CRM) From a CRM perspective, ER needs to define itself as a service business, take a process management perspective and, where required, collaborate with others in partnership, alliances and networks. ER has to locate its customer base and know which customers are crucial for its survival. ER needs to raise its profile considerably through regular contact. It can act as an internal consultant and be proactive and a problem-solver. It must be seen as delivering so that customers will not look elsewhere and, for example, to outsource ER/HR services. CRM will help ER/HR maintain a common network of satisfied customers. One important benefit from this is that HR can tackle any problem from its infancy and thus save on resources. SETTING STANDARDS FOR DELIVERING CS Standards can be in relation to the appearance of personnel, the physical layout of the company or procedural issues such as time lines- ER/HR agrees standards with customers and makes sure a response is given as and when promised (reliability), and a prompt and efficient response is given (responsiveness). These standards have to be realistic with staff involvement (empowerment) being important. Standards should achievable and also be regularly reviewed and updated. ER, CONTINUOUS IMPROVEMENT AND QUALITY M ANAGEMENT Quality management (QM) and continuous improvement (CI) are closely linked. QM emphasises quality in everything that is undertaken and CI suggests that there is always room for improvement. There is never a finishing point. CI can be assessed through quality circles where employees come up with the solutions to problems themselves and go to superiors to get approval to action the solution. ER/HR can act as facilitator, encouraging participation through, for example, the intranet, internal mail or a suggestions box. ER/HR then look at suggestions and propose rewards to the employees suggesting useful ideas. I NTEGRATING ER CUSTOMER SERVICE WITH COMPANY CULTURE

ER/HR has to make sure that there is a vertical fit when implementing a CSS. The ER/HR strategy of CS needs to be aligned with the organisation’s mission, vision and values. There should be horizontal integration through the levers of HR functions including ER and HR must continually prove its actions and services that employees are the most important assets.

MODULE 4:

HUMAN RESOURCE PLANNING

INTRODUCTION Human resource planning (HRP), or workforce planning can provide organisations with a strategic basis for making workforce decisions. It is a means of taking today’s decisions with tomorrow in mind ensuring that organisations have the right people in the right places with the right skills at the right times. It ensures that HR requirements are defined and that plans are made for satisfying those requirements. HRP is one of the fundamental processes that form the basis for HRM. In the stable and predictable years following WWII, manpower planning, as it was termed (linked to manpower control and manpower modelling) played a major role in ER/HRM. Manpower specialists and not HR were in charge of this ‘mechanistic’ process which took a ‘hard’, quantitative perspective outlined in 4 phases; investigating (analysing the external environment, external and internal labour markets), forecasting (future and projected requirements, demand, and internal and external supply) planning (of HR plans) utilisation (comparing plans against success and performance criteria or ‘evaluation’) In the 1970s, the phase was more technical and statistical. In the 1980s and 1990s, emphasis was placed on flexibility and manpower planning was seen as bureaucratic, rigid and even irrelevant. The word ‘planning’ denoted predictability and control which was not applicable to people management. Companies are not just interested in numbers but the knowledge, skills and abilities and this means that HRP is not just concerned with having the right numbers in place, which was the key concern of earlier models. Competition, scarcity of skilled personnel necessitate greater planning and sound resource management which must work in both the local and global talent markets. HRP can enable organisations to control labour costs and reduce numbers to protect long-term employment security of the workforce. It allows firms to consider alternative forms of contract, or to subcontract and outsource. There are 4 main reasons why HRP is important; it encourages employers to develop clear an d explicit links between business and HR plans and so integrate both more efficiently it allows for better control over staffing costs; supply and demand can be matched and rational decision-making over recruitment, relocation of staff, transfer of risk, etc. it enables employers to make more informed assessments of the skills and attitudes of their staff and therefore, helps to prepare for integrated HR strategies it provides a profile of current staff such as age, gender, race and disability which is important for equal opportunities employers and also statistics/data collection.

The primary purpose of developing a workforce plan is to enable a coordinated approach to addressing the HR priorities of the organisation. HRP has been given renewed impetus because of; the increasing availability and use of HRIS allowing the development of future scenario approaches renewed skills shortages in several areas the increasing demand for knowledge workers a greater understanding of both supply and demand issues HRP seeks to forecast whether there is likely to be a mismatch between supply and demand of labour and to plan appropriately. In order to derive HR plans, several sets of issues need to be considered which are all conducted in the light of corporate strategic plans. demand forecasting; forecasts of future demand for labour (organisational requirements) supply forecasting (a); forecasts of internal supply (internal availability) supply forecasting (b); forecast of external supply (external availability) productive forecasting; taking planned or potential performance improvements into account HR requirement forecasting; determining HR requirements by taking the demand forecast into account and adjusting it to take into account labour wastage, working hours, productivity improvements, etc. action planning; developing plans to address identified imbalances such as recruiting, training, productivity, retention, redundancy, etc.

THE HRP PROCESS AND ITS LIMITATIONS There are several steps involved in the HRP process that must be included in any comprehensive HR planning effort if the organisation is to accomplish its mission, goals and objectives; identification of competences needed in the future an analysis of the present workforce and its competences a comparison of future needs with present workforce capabilities to identify competency gaps and surpluses an evaluation process to ensure that the workforce competency plan remains valid and that objectives are being met The process below suggests that the HRP consists of separate activities which it does not. In reality, HRP is not as tidy or sequential but consists of gathering and analysing relevant information in order to make informed decisions.

Environment

Business objective

Project demand for HR Assess internal supply

Gap? Reconcile

Assess external supply

Human resource plans An overview of the HRP process

FORECASTING FUTURE D EMAND This is the process of estimating the future needs of the organisation by reference to corporate and functional plans and forecasts of future activity levels. Objective methods involve the projection of past trends (taking account of areas like technology and organisational strategies) using time trends, work-study methods and ratio analysis. Subjective methods simply reflect managerial judgement (top-down or bottom-up) and succession planning, supervisor estimates, charts and statistics all play a role here. Problems such as ‘empire building’ and ‘organisational politics’ may inflate estimates. Forecasting demand relies on product market projections and their implications on numbers, types, skills of employees. This could involve activities such as; identifying key business issues (e.g. EU expansion, new technology, mergers, competition) determining the HR implications of these developments. Methods available here include; managerial judgement: managerial estimates ratio-trend analysis: calculating a ratio between activity levels and staff numbers, and/or a ratio of one staff group to another econometric models: statistical analysis of relationships between relevant variables such as sales or investment, movements in these variables, and supply variables such as labour wastage, promotions, transfers. Accuracy of results will depend on the accuracy of the assumptions. work-study methods: measuring work operations in order to calculate the length of operations and required staff numbers to complete tasks. A SSESSING INTERNAL SUPPLY Once forecasting is complete, HRP moves on to assessing the internal supply of human resources and factors that affect their usage. This may involve estimates of wastage/turnover and internal job movements such as; an analysis of the status quo o an analysis of statistics relating to current staff o attitude surveys of current staff an analysis of future trends o analysis of absence figures o analysis of turnover o analysis of retirement trends an analysis of company policy and procedures In forecasting the internal supply of human resources, organisations need to; analyse existing resources by way of occupation, level of skills, length of service, status, etc. analyse wastage assess the impact of working conditions such as working hours, holidays, overtime, retirement, absenteeism, shift systems and flexible working, etc. forecast the outputs of T&D schemes

explore utilisation strategies such as multiskilling, new technology and job redesign A NALYSIS

OF

TURNOVER

This refers to ‘all terminations not formally initiated by the employer’ or ‘voluntary cessation of membership of an organisation by an employee’. Research has shown that organisations see turnover as having a negative effect or organisational performance. Where the turnover is above 10%, most organisations report a negative effect. Some organisations though, may want to increase turnover as it may be functional in providing; new blood into the organisation removal of poorly performing employees greater opportunities for promotion for current new energy for the organisation employees the opportunity to engage in enhanced wage control strategic poaching of staff from opportunities competitors the avoidance of complacency However, turnover may be dysfunctional in increasing; costs of reappointment loss of (tacit) knowledge loss of key, valued staff low morale loss of productivity and quality disruption of teamwork So a certain level of turnover can be beneficial by avoiding stagnation and inbreeding therefore introducing new ideas and experimentation. It can create promotion opportunities, increase motivation and control wages in slack periods by not replacing people who leave (natural wastage). The major costs to include when calculating turnover costs include; administration of the resignation recruitment costs administration of recruitment and selection selection costs induction costs costs of cover The minimum figure can then be multiplied by an estimate of turnover rate to arrive at the annual cost of turnover. Turnover might be measured by a wastage index or labour turnover index. This is a useful index for comparative purposes for internal and external benchmarking. Another measure is a stability index, which focuses on stability rather than wastage. It can discount high turnover in the early days and provides a good indicator on the proportion of long-term staff or the extent to which turnover problems are specific to new entrants (induction crises). Other measures include survival rates, which establish how many recruits are still in post after a specified time period, and half-life of a cohort, which is the interval required for the recruited cohort to decay through turnover, to half its original size. Other qualitative measures include exit interviews and leaver questionnaires which are conducted soon after resignation. Turnover can be affected by a range of factors, some at organisational or individual level and some at a national or economic level. These include;

external factors: unemployment rate, wage differentials, availability of alternative jobs organisational factors: technology, goals, values, policies, practices, rewards, supervision, size work-group, job content sectoral factors: image, reputation, growth, etc. occupational factors: hierarchical level, status, professionalism, skill levels individual/ psychological factors: age, tenure, interests, family responsibilities, job satisfaction, commitment, motivation FORECASTING E XTERNAL SUPPLY Organisations often pay less attention to forecasting external supply and are then surprised by skills shortages and events such as a demographic time-bomb which is a drop in the numbers of young people and the relative rise in proportion of older workers as society ages. Forecasting external supply may require analysis of; demographic and social trends skills bank in the area, and local unemployment levels likely competitors for similar labour, and the opening or closure of workplaces local, regional, national, international government policies such as working hours and EO employer reputations cost/availability of housing, transport/travel to work patterns number of graduates in specific fields and educational institutional output government and industry training schemes Factors that have affected labour supply include declining birth rates, labour shortages, a changing gender mix with more women working, impact of new technology, reduced demand for low-level skills, increased demand for high-level skills and professionals/managers. Environment scanning is useful to increase knowledge of the external market in which organisations may need to recruit from. The assessment of demographic profile meant noting age and gender but now includes other dimensions such as religion or ethnicity. OUTPUTS

OF

HRP

A critical issue occurs if there is an imbalance between supply and demand and decisions will be required on action needed to fill the gap. These decisions will form the organisation’s human resource plan. The likely outputs of the HRP process include actions in such areas as; HR supply plans: e.g. recruitment utilisation plans such as flexible activities, PR and branding working practices HRD initiatives arising from retention strategies supply and utilisation initiatives downsizing, release and reward management programmes outplacement strategies PM activities diversity initiatives Organisations can make various responses to labour shortages. They can react tactically or strategically and can either try to increase the supply of labour or reduce the demand for it. In Atkinson’s original model, based on the analysis of

responses to the demographic downturn, some organisations showed a ‘do nothing’ response, perhaps by letting entry standards slip. Some ‘competed’, reactively intensifying recruitment and pay; some ‘substituted’ looking at untapped sources of supply and perhaps retraining available staff while some ‘acted’ by improving pay and company image, for example. TACTICAL ‘ON THE CHIN’ DO NOTHING STANDARDS DECLINE OVERTIME Reduce demand

SUBSTITUTE RETAIN OLDER STAFF

COMPETE INTENSIFY RECRUITMENT

School liaison Increase pay Increase supply

C REATE TRAINING

Reduce wastage

Improved development

STRATEGIC Attitude surveys, whether quantitative or qualitative, or focus groups may be used RESPONSES TO LABOUR to assess employee satisfaction and commitment. There may be many reasons SHORTAGES why employees leave, some of which may be within the control of the employer. Reasons include lack of training and career development, management style, lack of information about performance requirements. However, it is not enough to have a static picture of how many people are employed at any one time. The organisation needs to see how the workforce is changing over time and much data is needed by HRP for it to be effective such as; who is leaving and why? Factors would include job type, grade, length of service, gender. the type of organisational response is of strategic importance: should more effective training be introduced, or job redesign or perhaps cultural changes are required? data can be held in individual or aggregated form to give fuller pictures of groups or departments HR policies will need to be introduced covering redundancies, retirement, flexible working, union agreements. Some of these responses may or may not be appropriate depending on the problem or cause. There will not always be just ‘one right answer’ and the organisational choice is not just about hiring and firing employees. The effectiveness of HRP can be evaluated using 3 criteria. These are the extent to which; outputs continue to meet changing circumstances they achieve cost and productivity objectives they are re-planned to meet changing circumstances

HRP AT THE SECTORAL LEVEL Context for firm strategy and rivalry Factor (input) conditions

A local context that encourages appropriate forms of investment and sustained upgrading Vigorous competition

Demand conditions

The Porter Diamond Model for the competitive advantage of nations offers a model that can help understand the comparative position of a nation in global competition. The model can also be used for major geographic regions. Traditionally, economic theory mentions the following factors for comparative advantage for regions or countries: land natural resources (minerals, energy) location labour local population size Because these five factors can hardly be influenced, this fits in a rather passive (inherited) view regarding national economic opportunity. The Porter diamond also makes use of the term ‘clusters’. Clusters are geographic concentrations of interconnected companies, specialised suppliers, service providers, and associated institutions in a particular field. They grow on locations where enough resources and competences accumulate and reach a critical threshold, giving it a key position in a given economic branch of activity, with a decisive, sustainable, competitive advantage over others places, or even a world supremacy in that field. Clusters can influence competition in three ways: They can increase the productivity of the companies in the cluster. They can drive innovation in the field. They can stimulate new businesses in the field. The role of government in the model is to act as a catalyst and challenger; it is to encourage- or even push- companies to raise their aspirations and move to higher levels of competitive performance.

ADVANTAGES, DISADVANTAGES AND LIMITATIONS OF HRP Manpower planning tended to focus on statistics, techniques and modelling methodologies, often used reactively, with labour seen as a cost, and with an emphasis on numbers and quantity rather than on skills and quality. As with most strategic planning, HRP assumes that planning is a rational process yet organisations have to act on an imperfect knowledge and in a complex and

dynamic political, social, cultural and interpersonal context. The environment is turbulent and constantly changing and the organisation has to operate within many constraints. This suggests that the HRP process model is inherently weak as a representation of how mangers go about HRP and is not reflect reality. Rather than being a top-down, logical, linked and systematic approach controlled by senior managers, it is often a reconstruction or rationalisation ‘after the event’. In addition, the HRP planning model often; ignores the possibility that knowledge about organisational requirements may reside elsewhere such as the frontline, and downplays the possibility of bottom-up HRP minimises the difficulties of gathering accurate data overemphasises managers’ decision-making as rational when it may be biased downplays the point that it is not always easy (or possible) to make the required changes even if they have been reliably identified However, though HRP does not always generate the outcome benefits claimed for it, it may deliver process benefits. It may be very helpful to give staff the opportunity to go through the planning process and scenario planning and also if plans are viewed as adaptable rather than cast in stone. In reality, there is limited involvement of the HR function and accurate forecasting may not be possible. Problems may include; it is virtually impossible to make accurate forecasts in the current dynamic, global business climate the statistical approach often relies heavily on the continuing relevance of past trends HR specialists have little involvement in the HRP process managers may resist a statistical approach, preferring intuition, muddling through or ad hoc reactive responses to perceived crises. THE ROLE OF HR I NFORMATION SYSTEMS HR information systems (HRIS) can support the decision-making process in HRP. HRP involves volumes of data that need collection, storage, manipulation, integration and analysis which would be immensely time-consuming without HRIS. Information can help to reduce uncertainty and can be used to evaluate existing performance of the organisation, to recognise existing problems, to determine or evaluate alternative strategy and to monitor results of previous decisions. Information can help to determine that a problem exists and also, what kind of problem it is together with the appropriate solution. The use of IT in HRIS is important because technology can; underpin and enable every function of HRM, including HRP be the differentiator between competing organisations in recruitment and in training for example allow integration of HR with the rest of the organisation Many HRIS are changed repeatedly because they fail to deliver what they were purchased for. This can be due to poor management, implementation failure or incomplete implementation of the current system by staff. There are many choices with HR technology such as Enterprise Resource Planning (ERP), niche or

mainstream products, integration with other systems or applications or stand-alone. There are several problems in choosing a new HRIS. The organisation; may replace one technological non-solution with another non-solution may suffer from ‘system compliance’ (‘we can’t do that as the system won’t allow it’) may not think about transforming its HR function until after buying the system may not anticipate future organisational needs such as mergers and acquisitions may not explore existing technology and utilise that and so saving the cost of a user licence may use IT to draw up the specification without it being approved by the HR function HRIS are often claimed to generate the following benefits for organisations; operational: they may help routine, high-volume decisions, in areas such as: absence control labour turnover accident reports productivity measurements cost reductions through automation tactical: they improve expert decisions over time in areas such as: identifying candidates for promotion evaluating recruitment sources identifying training needs strategic: they enable exploratory analysis of ‘fuzzy’ problem areas such as: the impacts of salary increases the balance between setting sales and recruitment targets PROVISION OF DATA FOR D ECISION M AKING The most obvious benefit of HRIS is the ability to give HR decision makers reports in different forms to inform decision making. At the operational level, HRIS can be used to plan and control processes such as recruitment and selection or keeping to a training budget. It can keep track of all stages of preparation along with costs at each point to ensure the function does not go over budget. Taking a long-term view, an HRIS can be used to give better management control such as approaching retirements, looking at performance ratings, skills, promotion potential and career track record. The level of sophistication is likely to be present only in large companies and more importantly, organisations need the personal systems to provide the information in the first place. Various factors affect the use of HRIS; the structure of the personnel function the drive to introduce HRIS is likely to come from personnel specialists and therefore, their needs may dominate the decision-making process. the presence of personnel specialists

personnel specialists’ expertise in dealing with IT systems may be a factor HR’s influence on the system specification the system is likely to be more effective if HR can influence this HR’s ability to demonstrate cost-reduction potential if it can do this, senior managers are more likely to give the go-ahead an organisational preference for quantitative rather than qualitative data if this is the case, organisations are more likely to invest in an HRIS the willingness of personnel specialists to allow line managers to use the system if this is the case, the system is more likely to be used. HRIS can help in devolving decision-making to line managers giving them information about their staff. Personnel specialists may have their power reduced and also, line managers may not want, or be trusted with, the information. M ONITORING AND A UDITING FOR E QUALITY AND D IVERSITY It is argued that the collection, analysis and interpretation of data relating to the employment experiences of all groups in a workforce will serve several purposes. These relate to baseline data that is good-quality, detailed and precise information, which will allow the identification of issues which need to be addresses and provide a basis for planning and a benchmark for progress and future impact evaluation. Frameworks for effective auditing and monitoring specify several target areas. These include dimensions that would differentiate between disadvantaged and dominant groups as well as processes that mediate entry into and progression through an organisation such as selection, recruitment, performance management, promotion and also mechanisms such as parental leave, child care, flexible working, harassment and grievance procedures and any initiative that could contribute to a supportive environment. The act of collating and analysing such information sends out a positive message that the organisation takes issues such as discrimination seriously. However, it may be possible that the only action to be taken is the collection and storage of data with a report produced every now and again. Quantitative measure may also not be as significant as subjective measures- ‘how employees feel’. The importance of capturing how people feel about their experiences is also significant as knowing your organisation in terms of culture, attitude, opinion, and systems and procedures through attitude surveys is an important requirement.

MODULE 5:

RECRUITMENT AND SELECTION

INTRODUCTION: THE PURPOSES OF RECRUITMENT AND SELECTION In all areas of life, people are constantly making decisions and this is also true for organisations; who to employ, promote, train or dismiss. Unless suitable people are assessed and selected, the organisation will fail to achieve its strategic objectives and will run into a variety of personnel problems: high turnover, low productivity and high rates of absenteeism. Jobs offered by organisations will differ in their skill and ability demands and the differences between people will be relevant to these resourcing decisions. Therefore, recruitment and selection are of great interest in HRM theory, research and practice. In the best practice model of selection and assessment, a matching model is explicit- to match the right people with the right jobs, that is, attracting candidates that have the required skills while putting off those who do not, so as not to overload the process. The selection process is selecting those whose performance best predicts future job performance and suitability for the job. This requires that the job be analysed in terms of its requirements, a process called job analysis which is the identification of the vital features of the job. Once job tasks have been identified, a job description can be drawn up stipulating tasks, duties and responsibilities as well as minimum standards of competence. From this, a person (or personnel) specification can be drawn up and this is a definition of the kind of person being looked for to perform the job effectively and is usually described in terms of the knowledge, skills and abilities/attributes (KSAs) necessary for successful job performance but is now expressed in terms of competencies or competences. This enables applicants to be assessed in some way, through tests, interviews or their predictors to enable the best match between job and person. Increasingly, organisations are more interested in the fit with the team or organisation rather than matching the job alone. This has led organisations towards a social process or exchange model and selection and recruitment is now a much more subjective, political process. The process of resourcing an organisation is often termed staffing. It is a formal process of ensuring that organisations have qualified workers at all levels to meet short- and long-term business objectives. This is one of the critical functions of effective HRM and it is rare to match the requirements of a job perfectly with the skills and abilities of people available. HRM places great emphasis on the selection process. Recruitment is the process of attracting qualified candidates to apply for vacant positions within an organisation and depends upon factors such as company image, salary, perks and career potential. An important component of this process is writing the job description which must be specific and exact to attract the right candidates. The core of the JD includes the nature of the job, its scope, job title, its authority and responsibilities as well as indications of educational backgrounds and perhaps salary ranges. Recruitment leads to the next stage of the process- staff selection where decisions are made as to who will be chosen to fill the position. The logical action would be to recruit internally from the organisation and first preference is to promote internally to reduce turnover and increase staff morale. If there are no

suitable internal candidates, external recruitment channels need to be activated. These channels include referrals, agencies, media advertising in newspapers or internet. The process of staff selection involves evaluating candidates through application forms, CVs and interviews and then shortlisting the best candidates. Further (written) tests, interviews and background/ reference checks are carried out and if all the criteria are fulfilled, the individual may be offered the job. However, successful hiring is also a very intuitive act which involves risk and the objective/best practice model is to reduce and mange that risk.

RECRUITMENT Recruitment begins by attempting to answer the question: “How do we know what employees we need?” In order to ensure an adequate answer, the following should be considered; carrying out a job analysis drawing up a job description devising a person specification JOB A NALYSIS Jobs are the building blocks of organisations. For the psychometric-objective model, the focus is on the job and of matching people to the job. The job is analysed to generate a person specification to allow appropriate people to be attracted to the organisation through the recruitment process. Applicants are assessed in terms of how closely their profiles match the specification and candidates are selected in terms of closeness of fit. However, jobs are dynamic and can change because of internal and external forces. The model assumes there is ‘one best way’ to do the job and that the job is static and unchanging which is questionable and these assumptions are questioned in the social process or social exchange model of recruitment, assessment and selection. All job analysis (JA) methods comprise of two components; the job description (JD) which outlines the job’s tasks, duties and responsibilities, and the job specification (JS) which is a list of things that people need to bring with them to the job. Questions that need to be answered in order to determine what needs to included in the JD or JS; the purpose of the job or more precisely, the contributions of the job towards the overall organisational objectives the essential functions that are critical to the performance of the job. Next, the job settings and work conditions must be analysed looking at safety, location of work, number of employees and physical conditions of the job. Finally, the organisation must determine the job qualification or minimum skill required to perform essential functions of the job. The JD needs to be translated into a person specification to define what kind of person is needed to perform the job effectively. After a JA, the organisation should develop evaluative performance criteria to help validate the selection system. These should be relevant in terms of immediate level criteria (behaviours), intermediate criteria (performance results) and ultimate criteria (organisational contribution). The last criteria may take several years to gather due to influences of organisational constraints.

Performance criteria may be composed of production data, judgemental data or personal data but none of these is satisfactory on its own as a measure of performance. So behaviourally anchored rating scales, or BARS (giving clear definitions of the attribute to be evaluated, and descriptions of observable behaviour that reflect that characteristic) and behavioural observation scales, or BOS, have been developed to minimise observer errors in rating performance and enhance inter-rater agreement. JA therefore involves a systematic process of collecting facts about the tasks, responsibilities and contexts of a job and can be done in several ways; observation of the job-holder (difficult for intellectual work) self-description by the job-holder (prone to self-inflation) questionnaire survey (position analysis questionnaire, job components inventory or work profiling system) interviews with job-holders the critical incident technique where job-holder provide incidents of effective and ineffective performance allowing the interviewer to assess the KSAOs that make a real difference to performance hierarchical task analysis other methods such as repertory grid analysis to elicit the constructs that people use in thinking about jobs and performance, and diary methods Job design is the specification of the contents, methods and relationships to other jobs to satisfy organisational requirements and the personal needs of the job-holder. Job design helps organisations design jobs that are satisfying for employees and provide clear career paths and facilitate short- and long-term achievement. The mental state of the employee is the primary consideration and successful changes in job design/specification is employee acceptance of the changes. Job analysis may appear to be time-consuming but the consequences of not doing it need to be considered. The outcome is a specification of; the job title the job objectives the actions necessary to complete the task the tools, equipment and aids used the required performance standards PERSON-JOB ( ORGANISATION) FIT This involves questions of person-job fit (does the person match job requirements?) person-organisation fit (will the person ‘fit in’ with the team, company, organisational culture?) There are different kinds of matching or ‘fit’ that organisations might look for in recruitment and selection. They may wish to assess ‘job-fit’, the traditional occupational psychology area or use psychometric tests to assess attitudes and skills. Job fit Skills Abilitie s

Organisational fit Personality Value

Goals Selection, socialisation and fit

Higher

Lower

Satisfaction Commitmen t Performance

Stress Turnover Absence

Attributes RECRUITMENT PRACTICES: ATTRACTING CANDIDATES It should not be automatically assumed that the organisation needs to recruit a direct replacement for a vacancy: the necessity for the post should be reviewed and whether job redesign is required or job-holders reallocated to other duties as well as internal promotion or training of existing staff is required. Through HRP, as a review of organisational requirements, a new position may need to be developed. CHANGING RECRUITMENT PRACTICES There is currently a war for talent making it hard for organisations to attract suitable candidates. It is in the interest of organisations to attract as large a number of suitable candidates while discouraging unsuitable ones. Vehicles for attraction include advertising, recruitment agencies, headhunters, internal advertising (either before or during external advertising), or word of mouth (which may be unfair for certain groups). Realistic job previews (RJP) give the candidates realistic job information which can reduce turnover but can also deter good applicants and reduce applicant numbers. Application forms can make screening easier and well-structured forms can enhance reliability (yielding same results under similar conditions). Internet use is widely used with online applications. Also selection tests or biodata forms may be used with processing being carried out by the organisation or an external agencies. Emerging areas of interest in R&S have been the increasing importance of ‘employer branding’, becoming ‘employers of choice’ and ‘talent management’.

SELECTION Selection attempts to answer the question: How do we choose the best person? There are a variety of selection techniques with no ‘one right way’ although there are evaluative criteria or evaluative standards against which we can test a candidate’s suitability. Evaluative standards are the standards by which the quality of a selection procedure is assessed such as reliability, validity, interpretability and practicality. Utility is also a term used to assess the benefit-cost ration associated with a particular course of action. Reliability essentially refers to consistency of which there are several kinds; test-retest (consistency of measurement at different time points) tester (two different assessors arrive at the similarly consistent measurements) test (whether the test shows consistency in relation to item distance) Reliability is expressed in terms of a correlation coefficient r, which measures the relationship of scores obtained from the test at different times, between two testers using the same test, or of two items purporting to measure the same dimension or construct. Validity is a complex construct composed of; face validity: does the test feel valid to the candidates (affecting candidate reactions)?

content validity: the degree to which the content matter matches the purpose intended construct validity: does the test measure what it is supposed to measure? criterion-related validity: probably the most important aspect of validity, especially ‘predictive validity’, it measures the relationship between scores on predictor, such as tests or interviews, and criterion such as job performance, performance appraisal, promotion, output and turnover. A problem with these measures is that it may not measure real job performance as a job holder may do well at job level but do poorly at the team or organisational level. The relationship between predictor and criterion is expressed as a correlation coefficient. The purpose is to avoid false positives (people who score highly on tests but poorly on criterion) and false negatives (people who perform poorly on tests but highly on criterion). Validation strategies require large numbers of candidates and much research has been done with governments and the military. Ideally, to do the calculations, organisations must also recruit poor performers at the point of testing and to get round this, analysts adopt a concurrent validation strategy, testing existing staff and exploring correlations with concurrent performers and assuming that current staff are motivated to do well on tests as well as applicants. Range restriction is also an important issue: it is unlikely that applicants for a CEO position will have an IQ of less than 100, or janitor positions, much above 100.

SELECTION TECHNIQUES Applicants are often pre-selected using information obtained from CVs or biodata. It is possible to classify selection techniques in terms of whether they seek to assess past, present or future behaviour. The logic of past methods is that ‘past behaviour predicts future behaviour’. Past (e.g. track record, experience) o references o biodata o peer observation o structured/criterion-related or o astrology behavioural interviews Present (e.g. current performance) o graphology o ability tests o aptitude tests o self-assessment

o o o o

Future (e.g. future intentions) o situational interviews

o hypothetical interviews

personality inventories unstructured interviews work samples assessment centres

Research has sought to establish the validity of such assessment techniques, the principle being that on a range of 0 to 1, 0 is ‘chance prediction’ and 1 is ‘perfect prediction’.

Perfect prediction

1.0 0.9 0.8 0.7 0.6 0.5 0.4

Chance prediction

0.3 0.2 0.1 0.0

Accuracy of predictors compared

{ {

Structured interviews Ability test Work sample Assessment centre Biodata Personality assessment Unstructured interview References

Techniques such as references, graphology and astrology do poorly while others do well and some moderately well. Interviews have received bad press with psychometricians viewing it as lacking reliability and validity. Information gathered is prone to a number of biases such as horn/halo effects, recency and stereotypes errors but these are typically found in unstructured interviews. There are several types of structured interview ranging from the situational interview where future-oriented responses are sought from hypothetical

situations (derived from job analyses) to the patterned behaviour description interview where questions are posed on the basis of a job analysis which enquire as to how candidates dealt with situations in the past (initiative, leadership, judgement). PSYCHOMETRIC TESTS Occupational psychologists are concerned with consistent patterns of differences displayed by people, especially those of personality (differences in temperament) and cognitive ability (capacity to process information). Such differences are assessed by psychometric tests which include; general and specific ability tests (i.e. manual dexterity, aptitude, numerical, verbal, spatial) tests of occupational preferences tests of personality General intelligence

Verbal: educational

Verbal

Vernon’s ability

model

Spatial: mechanical

Numerical

of

Mechanical

Manual

cognitive

Personality construct

Big five: Emotional stability Agreeableness Extroversion Openness to experience Conscientiousness Genetic and environmental factors

Situational factors

Work competencies

Overall performance

Analysis and judgement Decision-making Interpersonal sensitivity Resilience Energy and initiative etc.

Work proficiency

Job demands

Links between personality, competence and performance Jung (1923) first postulated a basic difference between extroverts (who are sociable and talkative) and introverts (who prefer solitude). More recently, a five-factor theory (Big Five) of personality has become generally accepted. The dimensions are;

extroversion- introversion neuroticism- stability (related to anxiety) agreeableness (warm) conscientiousness (well-organised, concerned with goals and plans) openness to experience (imaginative and flexible) These dimensions were empirically based with theory assigned post hoc. Research has shown that there are some important relationships between personality factors and job performance. A SSESSING EMOTIONAL INTELLIGENCE People vary in their capacity to process information. Emotional intelligence (EI) is the ability to perceive accurately, appraise, and express emotion; the ability to understand emotion and emotional knowledge; and the ability to regulate emotions to promote emotional and intellectual growth. This can be taken further and associated with leadership and business success. Cognitive processes are influenced by emotional factors and these affect success in all areas of life. EI is seen as a bedrock for emotional competencies. The best managers are seen to make decisions based on combinations of self-management and relationship skills and an awareness of how their behaviour affects others. Goleman developed the Emotional Competence Inventory which is meant to be filled in by the individual and also peers, superiors, customers, subordinates, etc. It covers; self-awareness self-confidence and accuracy of emotional self-assessments and recognition of emotions, being open to feedback and knowing strengths and weaknesses self-management self-control, self-regulation, adaptability, initiative, being focussed, trustworthy, ethical, responsible, persistence, comfortable with new ideas, commitment social awareness empathy, organisational awareness, anticipating needs of others, coaching and mentoring, unbiased respect, understanding power relations and networks relationship management social skills, aspirations, influence, developing others, fostering teamwork, leading by example, championing change, negotiation, building bonds/ synergy Dulewicz and Higgs developed an EI scale in the UK that measures EI in terms of the emotional intelligence quotient (EIQ). EI consists of 7 dimensions; self-awareness: awareness of feelings, can manage them emotional resilience: can maintain performance under pressure motivation: has drive/ energy to attain challenging goals/ targets interpersonal sensitivity: shows sensitivity, empathy to others influence: can influence/ persuade others intuitiveness: can make decisions on reason/ intuition conscientiousness and integrity: is consistent in words/ action, ethical standards EI is important in leadership becoming more important the higher up one is in a company. Leaders who often ‘derail’ show deficiencies in emotional competence. However, others have distinguished trait EI, assessed through psychometrics and correlated with personality factors, from ability EI, assessed through ability, not

self-report, measures. An important question is whether EI is an ability construct, like intelligence, or whether it is a trait concept, like personality. I NTEGRITY TESTS There is increasing interest in integrity: behaving in ways that reflect broadly shared values in areas such as trustworthiness, honesty, unwillingness to take advantage of others. Integrity is often associated with EI and almost everyone will show integrity in some situations and almost everyone will show dishonesty or untrustworthiness in others. The situation and norms that operate in the workplace such as ethics, lateness, stealing will all influence how much ‘integrity’ is displayed. Honest people show more integrity across a wide range of behaviours than dishonest people. Integrity seems to be a product of both personal factors (values, attitudes) and situational factors (norms, opportunities, rewards and sanctions). To influence integrity at work, a solution would be to change the situation: better monitoring and security procedures, publicising efforts to reduce dishonesty, ensuring ethical leadership. Another route is to ‘change the person’ through, say, training, or investigation and dismissal and also through recruitment, assessment and screening. ‘Recruiting for integrity’ may be very important in situations where there are many opportunities for dishonest acts. Some organisational norms may also tolerate some degree of dishonesty, for example, corrupt police forces. Integrity tests are advocated as a strategy to minimise ‘counter-productive’ behaviour and are used more in retail and banking, but, rarely used for managerial and executive staff! There are basically two types of integrity test; Overt, where scales such as customer relations or drug avoidance seek to assess admissions of dishonesty and individuals’ perceptions of their own or others’ dishonesty, as well as their perceptions of norms regarding counterproductive behaviour. Tests more closely resembling personality-based tests where individuals are presented with items describing characteristic behaviours, interests and activities. Tests often contain ‘normal’ personality dimensions and reliability scales. They measure dimensions such as thrill-seeking, resistance to authority and aspects of the Big 5. Scores on such tests are correlated with sabotage, theft, drug abuse and measures of shrinkage. The two tests show similar levels of validity for predicting future performance, comparable to other kinds of psychometric tests, with few major group differences, except for women scoring higher on integrity tests than men. Overt tests tend to be validated against polygraph tests and indices of theft; personality tests are validated against supervisory ratings or personnel data. Alternatives to integrity tests include; integrity interviews references polygraph tests background checks However, none of these has been shown to be more effective than integrity tests. Honest but anxious people may fail such tests and dishonest but calm people may pass them. Some states and countries have outlawed their use. Current employees may have their behaviour monitored through surveillance and can raise considerations of invasion of privacy. However, organisational factors such as loose norms where there is no clear expectations on, say, theft, socialisation of new recruits to tolerate theft, lack of accountability for ethical behaviour, scapegoating, etc. usually have a stronger impact on dishonesty than personal variables: bad barrels have more impact than bad apples!

I PSATIVE TESTS

OF

PERSONALITY AND STYLE

Unlike psychometric tests and inventories, ipsative tests, seek to avoid the ‘social desirability’ problems inherent in many psychometric tests- where individuals may intentionally present a distorted, socially desirable picture- by using a different test structure requiring a choice between two statements or adjectives that appear equally desirable or undesirable, instead of answering ‘true’ or ‘false’. Ipsative tests are more useful for personal and team development than for selection and many psychometricians have suggested their suspect reliability and validity. Popular tests include the Belbin team role profiling and the Myers-Briggs approach to personality and learning styles; BELBIN TEAM ROLE PROFILING This profiling instrument has developed over the years and takes the form of a simple questionnaire, completed by the individual and then by their peer group for the purpose of assessing preferred behaviours and therefore characteristics that are either beneficial or detrimental to a team. The test tries to define an individual’s current preferences (snapshot) identify their typical team behaviour assess their suitability for a team role, chosen from 1 of 9 types Team role type

Description

Team contribution

Plant

Creative, imaginative, unorthodox

Solves difficult problems

Resource investigator

Extrovert, enthusiastic, Explores opportunities communicative

Coordinator

Mature, confident, a good chairperson

Shaper Monitor evaluator Teamworker

Implementer

Completer

Specialist

Challenging, dynamic, thrives on pressure Sober, strategic and discerning, sees all options Cooperative, mild, perceptive and diplomatic Disciplined, reliable, conservative and efficient Painstaking, conscientious, anxious, searches out errors

Clarifies goals, promotes decision making, delegates well Drive and courage to overcome obstacles

Allowable weaknesses Ignores incidentals. Too preoccupied to communicate effectively Over-optimistic. Loses interest once initial enthusiasm has passed Can be seen as manipulative. Offloads personal work Prone to prevarication. Offends people’s feelings

Judges accurately

Lacks drive and ability to inspire others

Listens, builds, averts friction

Indecisive in crunch situations

Turns ideas into practical actions

Somewhat inflexible. Slow to respond to new possibilities

Delivers on time

Inclined to worry unduly. Reluctant to delegate

Provides knowledge Single-minded, and skills in rare self-starting, dedicated supply

Contributes on a narrow front only. Dwells on technicalities

Until 2001, the analysis was based on a questionnaire made up of 7 sections of 10 descriptive statements. Originally, the profile was a self-scoring one called the Self-Perception Inventory (SPI) but has now been replaced by the Belbin Interplace computer system which can more reliably; improve self-awareness and personal effectiveness

foster mutual trust and understanding between work colleagues match people to jobs for the purpose of selection and career planning enhance team building and team development SPI is no longer recommended by Belbin Associates as it lacks the balance of peer/observer input and does not offer responsible advice. Observer assessment has been added to provide feedback and is intended to give a more robust profile than assessment based purely on self-reporting. Belbin assessments are not strictly psychometric personality tests because they measure preferred behaviour. 9 clusters of behaviour are assessed, called team roles. Certain types of profile combinations are potentially likely to result in tensions and conflicts. Belbin uses the 9 team roles to create 4 work roles- a mix of tasks and responsibilities undertaken by individuals or within a team. It has a colour classification system to clearly differentiate between 4 work roles. This avoids ambiguities and misunderstandings by allocating ‘colour-coded’ tasks to a ‘colour-coded’ personality which is a system finding great favour in a time-constrained environment. Membership of any team should not remain static as this is dysfunctional and facilitating career moves within a company is one way of furthering perspectives and offers the advantage of becoming a ‘bigger person’. Another way is to swap members with other team members to widen and deepen understanding. There remains doubts as to the psychometric properties of the Belbin inventory. It is claimed that the model displays adequate convergent validity (the degree to which an operation is similar to other operations that it theoretically should be similar to), alongside weak discriminant validity (the degree to which an operation is not similar to other operations that it theoretically should not be similar to). THE MYERS-BRIGGS/MBTI APPROACH TO PERSONALITY In 1923, Jung developed his influential model of personality as a dynamic and organised set of characteristics possessed by a person which uniquely influences his/her cognitions, motivations and behaviours in various situations. Cognitions is the capacity for information processing through psychological and/or related conceptual connections, and behaviour is the actions/reactions of individuals in relation to their environment. The behaviour may be conscious or unconscious, overt or covert, voluntary or involuntary. Jung articulated the following proposition; past experience and expectations about the future influences behaviour and personality individuals are capable of constant and creative development personality is an open system which is receptive to inputs and exchanges. Behaviour is a subsystem of personality which can change as a result of inputs from, or interactions with, the individual’s external environment. So the influence of others can have a significant impact on an individual’s behaviour. Jung’s theory postulates two attitudinal orientations and four basic psychological functions. The attitudinal orientations comprise extroversion and introversion, which relate to the focus of attention and flow of psychic energy of an individual.

Attitudes and functions are often presented through 3 enantiomer (pair-wise interactive) dimensions of the human psyche; extrovert and introvert as attitudes sensing and intuition as perception functions thinking and feeling as judgement functions These were integrated by Myers and Briggs into the Myers-Briggs Type Indicator and its purpose is to make the theory of psychological types, described by Jung, understandable and useful. Attribute

Function

Nature

Function

Nature

Are flexible in a spontaneous way, seeking to experience and understand Need planned processes phenomena rather than to control and regulation. Highly Perceivin them. Structure Judging structured lives, g Energised by resourcefulness. More adhering to plans interested in others’ intentions than in their own Involves logical Involves evaluating information and is consequences for associated with emotional responses. choices of action. Connects with purely subjective Decision Thinking Feeling Connects to judging perspective of rather than intake of situations. Oriented towards personal simple information values Connected to the unconscious. Comes Involves perception from complex integration of much rather than judging information. Consequence is to see the information. Preference bigger picture, focussing on the Information Sensing Intuition structured relationships and connection is for sensing relating to the tangible and between facts and finding patterns. manifest Tends to accommodate the abstract and conceptual Focus on the inner world of ideas and World-orie experiences, reflecting Extrovert Introvert nted on thoughts, memories and feelings

Focus on the external world and participatory activities and actions within it. It is based on the internal world.

The theory declares that seemingly random variation in behaviour is quite orderly and consistent being due to perception and judgemental preferences of individuals. Perception involves ways of becoming aware cognitively and phenomenally, while judgement involves reaching conclusions about what is perceived. The 4 preference dimensions of the MBTI accumulate into a set of 16 permutations of dichotomies that result in 16 personality types. These form the basis of the model and so, the MBTI.

DICHOTOMIES EXTRAVERSION

INTROVERSION

SENSING

INTUITION

THINKING

FEELING

J UDGING

PERCEIVING

To code these types, the MBTI adopts a set of ordered letters: The first letter (E or I) indicates the person’s most favoured energy source. The second letter (S or N) indicates the person’s most favoured perceiving mental process. The third letter (T or F) indicates the person’s most favoured judging mental process. The fourth letter (J or P) indicates the person’s kind of mental process that leads to an outside world orientation. The tendency is to understand each of the 16 types as the sum of its essential parts, for example, ESTJ = E + S + T + J. But, it is the interaction of the 4 preferences that is important and the unique mental patterns that these interactions determine. Thus, INTJ is seen to be the most independent minded of the 16 types, and ISTP is seen as having an intuitive, investigatory aptitude. LEARNING STYLES Honey and Mumford’s personality inventory is a development of Kolb’s earlier work on learning styles and his 4 stage learning cycle. Theirs is a measure of style or preference, rather than of level. Attribut e

Function

Nature

Function

Activist

Theorists

Accommodat or

Likes doing things, carrying out plans and experiments, being involved in new experiences

Activist

Reflector

Diverger

Theorist

Pragmatis t

Converger

Theorist

Reflector

Assimilator

Adopts unconventional attitudes; emotionally inhibited and innovative

is

Holds conventional attitudes; demonstrates practical application of ideas; is emotionally inhibited and adopts conventional logic Has ability to create theoretical models; interested in theoretical soundness rather than its practical application

INTERNET TESTING Internet testing has increased in popularity over the years (5% of large UK companies in 2006 were using it). It is expected to increase rapidly in future years. It is possible to not only recreate a computerised test but to add audio and video enhancements as well as virtual reality. In addition, social networking sites and organisational-based sites may be important developments for recruitment and selection. Social networking technology is presenting unforeseen challenges and to an extent, unknown threats and opportunities to organisations, HR functions and ER.

The use of the internet for marketing, sales, b2b, etc. is well-established though not fully understood. The experience and understanding are of limited value in Web 2.0 applications which are new phenomena and which have key and critical characteristics in providing power and control over content and processes to independent people and groups. This characteristic shows the importance and interest Web 2.0 to HR and ER professionals. The dichotomy, though, that is presented in the potential implications to ER is the threats and opportunities presented by internal and ‘controllable’ use of Web 2.0 technology versus the threats and opportunities presented by external and ‘uncontrolled’ use of Web 2.0 technology. Implications include control of, and use of, the internet at work, monitoring internet content/social networking, and ER processes such as recruitment, selection, PM, talent management, brand management, and learning and development. ASSESSMENT CENTRES Assessment centres, unlike their close relatives, development centres, are used primarily for selection purposes, though they may have an element of development attached to them. A slight variation of assessment centres is that of an extended interview, written exercises and led group activities. The term ‘assessment centre’ as used here refers to; a process and not a place the use of structured combinations of techniques the assessment of people in groups the assessment of participants by groups of trained observers the use of situational tests the assessment of candidates on multiple dimensions (as derived from a thorough JA) Key questions that need to be addressed include such issues as; what is the centre’s essential purpose? how will participants be selected? who runs the centre? how does the centre integrate with existing policies and practices? how will long-term effects be evaluated? By focussing on these and other questions, many of the pitfalls can be avoided that afflict assessment and development centres such as; poor planning and inadequate JA unqualified/ poorly trained facilitators poorly designed exercises inadequate participant insufficient pre-centre work preparation misuse of data One of the keys to creating a successful centre is to develop the necessary competencies which are a range of criteria traditionally known as dimensions, skills, characteristics, abilities, attributes or qualities. The concept of competencies evolved from the notion of core competencies, which moved from individual level to organisational level. The concept of competency has been criticised for entrenching organisational power by reducing personal characteristics to quantifiable units, but the concept has proved resilient and has

even flourished in both the public and private sector. Competencies clearly differ between roles and job descriptions but it is generally agreed that managerial competencies can be generalised to about 30 generic competencies. However, the key to using a competency-based approach in a centre is simplicity: they should be easily understood and interpreted with explicit explanations on the competencies that are being sought to develop. One way to differentiate between competencies is by using critical incidents analysis and then to identify specific behaviours that reflect these. Problem-solving competencies monitoring developments gathering information analysing information gathering alternative approaches making effective decisions

Self-management competencies

managing own work managing stress developing own competencies

Task management competencies showing concern for excellence setting and prioritising goals planning and organising work delegating responsibilities controlling the work of others coordinating the work of others People competencies

management

establishing effective relations developing the competence of others persuading and influencing of others initiating group activity developing commitment

Williams and Dobson’s (1991) management competency model Once competencies have been identified, they can be used to match up organisational outputs to show which competencies are important to different sections of an organisation. More usually, they are matched up with tasks and roles that performed by centre participants. Finally and most importantly, competencies for the basis for the competency matrix that is used to create the tasks that will be utilised within the centre. They must also be matched up with suitable centre exercises which will have a mix of role-play and written exercises that can be further subdivided into individual or group exercises. Some of the dimensions on which participants may be assessed and some of the exercises used to reveal performance against these dimensions could be; Business sense

decisiveness organisation and planning energy oral communications

Personality questionnaire

leaderless group discussion in-basket exercise interview simulation

resilience impact social sensitivity

business presentation

DEVELOPMENT CENTRES A development centre consists of multiple participants undertaking multiple activities with multiple observers assessing their performance. Their strengths and weaknesses are assessed against a profile of behaviours or competencies that are identified as critical to job/role performance through a critical incident interviews with job-holders. The stages include; identify the criteria against which performance will be assessed; e.g. through JA, CIA or repertory grids, (an interview method identifying ways a person construes their experience identify activities that post-holders engage in; e.g. a sequential activities devising a matrix indicating which dimensions are to be assessed against which exercise as not all dimensions will be assessed in each activity training the assessors in the use of the matrix, how to score and how to give feedback running the centre and ensuring that each person is assessed by at least 2 assessors during the day the assessors meeting to agree an assessment for each participant, giving feedback on performance to mutually identify training needs, organisational development needs that seem to run against the cohort and might apply organisation-wide. The difference between a development centre and an assessment centre is the centre’s focus and in what the centre’s results are used for. An assessment centre gives pass/fail decisions, a development centre gives recommendations on development/promotion options and decisions. In both, behaviour is observed, detailed performance feedback provided, and dimensions observed are keyed to competences. However, in a development centre, the output is used to inform a personal development plan and enable development activities to be more focussed. Define objectives, gain commitment Define competencies Select and develop exercises, design programme Train assessors Run pilot Implementation Review and evaluation

Stages of development/assessment centre design

Development and assessment centres can be placed on a continuum from ‘pure development’ to ‘pure assessment’ with many organisations running ‘hybrid’ centres mixing both. Developmen t

Assessment

100% assessment centre 100% development 50/50 assessment centre centre for potential >75% assessment centre 75% assessment centre for internal for career development selection/promotion

The assessment centre continuum

SEQUENCING ASSESSMENT AND SELECTION PROCESSES It is likely that a company will sequence its selection process using different techniques at various points in time. For example, initial applicants may be asked to fill in a scored, competency-based application form and those who score highly may be invited to an assessment centre and those who score highly on this may be invited to a structured, competency-based interview. The ones who score highly on this may then be offered positions within the company.

AN ALTERNATIVE MODEL OF SELECTION AND ASSESSMENT Recruitment and selection is a two-way, decision-making process: the candidate is also making a decision as to whether to enter into an ongoing relationship with the organisation and this decision can be terminated at any stage. Questions will be flowing through the candidate’s mind and both sides are continually engaged in impression management. This is explicitly recognised by the social process or social exchange model of assessment and selection which sees assessment as a two-way decision-making with the applicant as an active decision maker. Both parties have expectations but neither party is seen as fixed; both are dynamic and changing. If the process is successful, expectations will be congruent and a viable social contract emerges. The fit is also one of expectations, culture and values. Selection is seen as applicant socialisation and if the applicant is made to feel ‘too special’ in the selection process, expectations of employment may be unrealistically high. It may be difficult for each party to assess how much is image management or deliberate falsification. The candidate can try and project a different personality for the purposes of interview and recruiters may not give a full picture about the job, prospects, salary, management style etc. Such deception can have negative outcomes- the work can be more demanding than expected or a promised open culture can be one of distrust. Each party is trying to influence the image it presents to the other party. This is seen as an inevitable factor in the social process model- not to be eliminated as in the psychometric-objective model, but explicitly made part of the selection process.

EVALUATING THE RECRUITMENT AND SELECTION PROCESS Two important questions to ask are “How do we hang on to them once we get them?” and “How do we know that we made the right decision?”. The issues here are those of retention of candidates and how to assess the value of the selection system to the organisation. The personal and organisational costs of poor selection decisions may be significant, reducing organisational efficiency. The roles of validity of different selection procedures and accurate JA are important and utility theory has helped give ER specialists the methodology to identify S&R financial benefits. Utility modes provide a framework to compare the outcomes of different options and to assess ROI obtainable from recruiting high performers using valid procedures compared with using less accurate selection methods. It is better in cost-benefit terms to use a good method of recruitment and a poor selection method than to use a poor recruitment source and a good selection method.

MODULE 6 PERFORMANCE MANAGEMENT INTRODUCTION Recent interest in HRM research has been in exploring the relationships between aspects of HRM and organisational performance. In terms of ER, this has meant a move away from contracts of employment to contacts for performance. Effective performance management (PM) can clarify roles, identify training needs and makes staff feel valued. A comprehensive PM will incorporate the performance appraisal (PA) alongside initiatives such as coaching, counselling and PRP. It usually involves; performance agreement: defining objectives, identifying development needs performance monitoring: reviewing performance performance reinforcement: recognising and rewarding performance performance enhancement: coaching, counselling, T&D This module will concentrate on the first 2 steps; that is, performance appraisal (PA) leading to performance agreement, leading to performance planning and performance evaluation.

PERFORMANCE APPRAISAL DEFINED PA is the cornerstone of PM which is the systematic procedure for assessing job performance on a regular basis. At a minimum, it involves an interview between employee and manager and completion of an appraisal form. More effective systems involve regular feedback on performance, regular discussions as well as involvement of other stakeholders in reviewing and enhancing performance. Writers maintain that when an organisation’s is designed and applied correctly, ‘it is a key mechanism for aligning the efforts of individuals with the aims and goals of the organisation, and for identifying and rewarding those employees who best exemplify, model and contribute to organisational goals’. However, evidence suggests that there are problems with the implementation of PA with high levels of dissatisfaction with PM. Much work on PM has concentrated on seeking to understand employee attitude and perception towards the appraisal and PM system and in identifying the factors that explain the lack of satisfaction in it. One approach is to use an organisational justice perspective (Module 5).

THE IMPORTANCE OF PERFORMANCE MANAGEMENT IN ER PM plays a critical role in many HRM models. The influential Michigan or matching model sees the goal of HRM as driving performance (as defined by corporate strategy). Selection focuses on selecting people for performance, and development focuses on enhancing performance. Appraisal of performance plays a crucial role in this model by focussing on the assessment of current performance. The link to reward management is then used to reward high performance and also to provide incentives to encourage higher performance. It is claimed that PM is often seen as the cornerstone of strategic HRM. Appraisal information also helps in strategy implementation, for example, by specifying and defining what needs to be done, and to what level, to implement a strategy successfully. PA also helps organisations to facilitate cultural change as staff are appraised against a set of organisational core competencies which are

framed in behavioural terms. PA is arguably the most contentious and least popular activity in HRM and managers do not appear to like doing it, employees see no point in it and it is left to the ‘guardians’ of organisational appraisal policy and procedures (HR managers), to see their work fall into disrepute. Appraisal is seen as central to management control through its use of measuring and monitoring behaviour which can point towards reasons of its contentiousness.

TRENDS IN PERFORMANCE MANAGEMENT Research in the UK has shown that virtually all organisations have used PA to identify training needs but have used it less to make reward decisions. PA has been extended to many public services in the UK such as schools and universities. There is also the use of balanced scorecards which focus not just on financial measures, but also on customer service, internal business processes, and innovation and learning measures. Other models have added employee satisfaction as a fifth dimension and this recognises that different stakeholders have different perceptions about which potential measures of performance are important. There has also been a shift towards using input as well as output measures: measures of the ‘how’ as well as the ‘what’ of job performance. Linked to this is the shift away from job-related criteria to person-related criteria. A further trend has been to encourage employees to be more responsible for assessing their own performance and goal achievement with greater reliance on responding to feedback, self-assessment and commenting on one’s own performance. In addition, the time focus of PM has shifted away from current performance (the focus of management by objectives) to recent past performance (the focus of performance-related pay) and to future performance (the focus of development efforts and concerns over competencies). Despite thorough and rigorous PM schemes being implemented, many organisations and individuals remain sceptical over the value of performance appraisal, and unhappy with the way it is practised. Appraisees’ satisfaction with their PA system can be influenced by the extent of their; participation in setting goals involvement in the interview discussion feedback on performance received knowledge of appraisers’ expectations knowledge of the PM system They also expect PA evaluations to be linked specifically to the job they do and PA systems therefore need to adequately allow for and recognise differences in employees, their contributions and their performance.

AN APPROPRIATE MODEL OF PERFORMANCE MANAGEMENT There is a body of research in the universalist ‘best practice’ tradition that seeks to demonstrate the extent to which particular bundles of best-practice HRM explain the variation in companies’ profitability and performance levels. However, others in the contingency or best-fit schools claim that universal, rigid prescriptions fail to acknowledge organisational differences in size, design and operation and the ‘one size fits all’ is only a useful guidance tool or providing the broad principles of system architecture of HRM. Two main approaches to PA can be identified which advocate either developmental or judgemental approaches to appraisal. Developmental

approaches are concerned with motivating an employee and agreeing aims and objectives (in line with organisational goals) for a forthcoming period. Judgemental approaches are concerned with providing evaluations and assessments of employees’ (past) performance. This normally involves deciding on levels of pay or reward and should, if undertaken effectively, be fair, consistent, based on objective observation of individuals’ behaviour at work. Difficulties occur when these two approaches are confused. The conventional view of appraisal is focussed on a developmental approach and development-oriented approaches are generally preferred by appraisees. However, many organisations confuse this by linking pay awards to PA outcomes and hence confound developmental and judgemental approaches. This implies that when organisations want to link pay and performance through appraisal, they should adopt a genuinely judgemental approach. The nature of the PM system and the individuals being appraised are key factors influencing PA effectiveness. The organisation is important because it acts as a major constraint an so, PM systems are therefore unique to their contexts. ORGANISATION

INDIVIDUALS

Development of individuals via coaching, counselling, career planning

Where do I stand? Where can I go? Valid performance feedback

Conflic t Basis for reward and other personnel decisions

Conflic t Conflic t

Conflic t What can I get out of this? Reward and maintenance of self-image

Conflicts in performance appraisal The organisation may be trying to use PA for both development and for reward purposes and these two functions may come into conflict. The individual may be trying to gain accurate information on where they stand and where they can realistically go, while also trying to present themselves in a possibly unrealistic light in order to gain monetary and other rewards. Often in PA the appraiser is acting both as a judge- rating behaviour and making decisions on pay, promotion, and training and development, for example, and also as a counsellor- trying to understand the reasons for apparently poor performance, to motivate the appraisee to try harder and to help support the appraisee. In different organisations, there will be different mixes of judge-like and counsellor-like evaluations. If the focus is on past performance and results, the system is heavily reliant on documentation and led by the manager, then the outcome is likely to be defensiveness, resistance and at best compliance by the appraisee. If, however, the focus is on future growth rather than past performance, on skills (‘how’ of achievement) rather than on results (the ‘what’ of achievement), and is part of a shared dialogue between manager and employee, the outcome is more likely to be energy, commitment and enthusiasm on the part of the employee instead of compliance.

The relationship between manager and employee is not static and simple, but dynamic and complex. Cost of revamping PM systems may disillusion and confuse employees and managers may lack the time and skills to make appraisal more effective. The appraisal balance between evaluation and development in an organisation is likely to be related to its culture and structure. Hierarchical, authoritarian organisations may not welcome peer feedback whereas in a matrix organisation, appraisees may not be committed to the appraisal process if their project colleagues are not involved in the process. How wide the span of control is also likely to affect who appraises whom. Managers can underrate or overrate subordinates for various reasons and may also be subject to biases similar to those of selection interviewers. Managers need to also manage conflicts within PA such as the balance between; people and processes input (skills, competencies, behaviours) and output (internal business measures) individual and team performance assessment and development (‘you can’t grow a cow by weighing it’) In many jobs, there are many intangibles qualities that cannot be measured and the pursuit of quantifiable, tangible measures may be at the expense of these intangibles. Much work is done within groups and their work is not observed. Evaluators have mixed motives for evaluating performance and social processes enter all phases of the rating process. Organisations are often recommended to use multiple raters, reviews and ratings and also to provide better appraisal training and more objective frameworks such as BARS or competence frameworks. In addition, forced distribution may be used to reduce ‘leniency’ error. Others argue that because ‘performance’ is not knowable, observable objective reality cannot be accurately represented. Appraisal may serve primarily as a tool for management control, legitimising managerial authority. WHAT SHOULD BE A PPRAISED? Some PA schemes assess competences or competencies such as job knowledge and reliability while other organisations have sought to assess results (outputs) rather than skills or competencies (inputs), usually expressed in terms of objectives or targets. Some hybrid schemes seek to assess both target achievement and the competences/behaviour used to achieve them. I S 360

A PPRAISAL THE PANACEA?

Some organisations use 360 or multi-source, multi-rater (MSMR) appraisal systems to overcome some of the inherent problems in traditional top-down appraisal systems. Different observes are involved each with their distinctive assessment of performance. 360

feedback

Skip one level superior Immediate superior

Internal clients SELF-REVIEW

Peers, colleagues, co-workers

External clients Subordinates

In part, the move away from traditional top-down assessments seems related to changes towards flatter and more fluid structures, autonomous work units and wider, supervisory spans of control and all of this legitimises the involvement of subordinates and peers. Using the 360 appraisal is a way of overcoming problems identified in the traditional appraisal method. Internet and web-based technology is also likely to make the rating/feedback process less cumbersome and time-consuming and this is likely to grow. Factors which can affect MSMR feedback is development versus reward, confidentiality/anonymity of raters, frequency and timeliness of feedback and how feedback is provided. Organisational factors such as an organisation’s climate, managerial style and hierarchical levels are also important. The 360 system is often seen as being more appropriate to flatter structures, teamwork and greater involvement.

ALTERNATIVE APPROACHES TO PERFORMANCE MANAGEMENT An alternative approach that attempts to go beyond the descriptive or prescriptive approaches has been developed and this contingency model distinguishes between the ability of the organisation to measure output and behaviour. If the organisation has a high ability to measure outputs and a high knowledge of the transformational process, it may base appraisal on behaviour or outputs. However, it may be able to appraise only outputs, lacking knowledge of the transformation process (e.g. sales); it may be able to observe behaviour but not assess outputs (e.g. research) or it may have imperfect knowledge on the transformation process or a poor ability to measure outputs. This can lead to experimenting with other forms of appraisal such as self-assessment, peer appraisal and customer appraisal. PERFORMANCE M ANAGEMENT IN KNOWLEDGE-BASED ORGANISATIONS Intellectual capital is often the principal asset of knowledge-based organisations and their PMS seeks to maintain and enhance the value of this human asset base. There is increased recognition of the value of intellectual and human capital to the importance of information and knowledge in the new economy and this is an important determinant of competitiveness. Bundles of HR practices confirm the importance of linking PA to organisation strategy as well as ensuring congruence with complementary HR practice through the concepts of vertical and horizontal integration. This means that if PA acts within a wider PMS instead of forming a part of a comprehensive HR bundle, it will have a positive impact. PA can also facilitate meaningful exchanges between knowledge workers and managers, which contributes to a greater employee ‘voice’ which in turn is an essential complement to high-commitment work practices. Traditional PA sits uneasily with the characteristics of many professional job roles and a particular type of PA is therefore required for knowledge-based organisations that have flatter hierarchies and need to maximise employee flexibility due to competitive dynamics.

‘MANAGERIAL AND I NDIVIDUALISTIC’

OR

‘D EVELOPMENTAL AND COLLEGIAL ’?

There is a dilemma of achieving a suitable balance between the aims of control and commitment, or judge and helper. A hierarchy of objectives is incorporated into many contemporary PM approaches that emphasise control and stipulate and assess an individual’s contribution to the organisation. The performance improvement cycle within these appraisal schemes requires employees to justify their development needs by demonstrating their relevance to the attainment of organisational objectives and reward decisions are based strongly by an evaluation of an employee’s success in achieving them. This approach is often seen as unwarranted and workable in knowledge-based institutions. In contrast, a developmental approach to PA is to give professionals themselves the primary responsibility to identify aspects of their roles in which development is desired and possible. This more collegial system is based on trust, self-evaluation and peer review and is deliberately separated from the processes of reward and promotion. EFFECTIVE PERFORMANCE A PPRAISAL SYSTEMS IN UNIVERSITIES AND COLLEGES Various perspectives on appraisal have described it as unnecessary, as counter-productive, as failing to deliver what it promises or as a surveillance technique for asserting management control. Organisations best able to avoid such scenarios should be academic institutions running programmes in business strategy and HRM. As a proportion of core staff in such institutions- professionals whose attributes are these organisations’ key strength- will be much higher than in most other organisations, this should give the motivation and development of these knowledge workers particular importance in PM. However, anecdotal evidence and literature all suggest that such confidence is misplaced. The apparent disparity between what is taught and what is practised in HE and FE stimulate research to obtain expert witness perspectives in PA from those most centrally involved in the activity. The way in which people management strategies are formulated and implemented may be more important in achieving competitive advantage than the nature of the strategy itself. Indeed, researchers have neglected the political aspects of the appraisal process. One method of developing an effective and ethical PMS seeks to achieve stakeholder synthesis by involving key stakeholders in the development of performance objectives and measures. Many organisations have powerful stakeholder groups, operating in their own ethos and all with their own objectives. Staff within each type of organisations are archetypal professionals- potentially mobile and not easily controlled by non-specialist managers or administrators. Moreover, such organisations are all striving to identify and operate effective PMS that their stakeholder groups will ‘buy into’. Appropriate performance measures were identified via a consensus-seeking process, embedding them within an organisation’s aims and culture in a way that engaged commitment from all stakeholders. The process involved; identifying key stakeholder groups conducting structured interviews with key stakeholders to agree strategic objectives using SWOT and PEST analysis using the Delphi technique to obtain and analyse the views of different stakeholders relating results to senior stakeholder groups for further analysis

If, after this process, genuinely different interests remain, these competing interests are transformed into competing claims so that each group’s requirements are viewed openly in relation to the resources available and rival claims. So those responsible for PA in academic institutions utilise a stakeholder synthesis approach. System designers could realise that an imposed PA system may achieve enforced compliance with the bickering and guerrilla warfare that may follow in its wake, or it is a mock bureaucracy, where PA is just a ‘ritual dance’ carried out for external audiences and for the unfortunate participants, it is a ‘zero sum game’. The stakeholder synthesis method may be time-consuming to some or a challenge to management control, but it can produce an effective and robust PA system that recognises the interests of all stakeholders while, at the same time, giving importance to the concerns of the knowledge workers whose commitment is central to organisation success. In this way, universities and colleges that practice what they preach can use relevant, valid and developmental performance criteria, and above all are seen as within lecturers’ control by those assessed by them.

MODULE 7

CAREER AND TALENT MANAGEMENT

INTRODUCTION Careers have often been seen in terms of movement with hierarchical structures or jobs with metaphors such as career ladder, path or track. Career management is associated with efforts of an organisation to develop and retain ‘key’ employees through individual career plans. Some organisations use individual career planning to help individuals identify personal drivers and values, develop networks, and build transferable competencies and capabilities and apply those to their personal and career development (such career planning may include self-managed learning). These initiatives are often aimed at graduates and other new entrants and is now under the banner of talent management (TM). The traditional approach of careers was formulated in the mid-20th century, founded chiefly on assumptions of steady upward or vertical movement within a relatively stable hierarchy of jobs. Organisations and employees face many challenges including globalisation, technological change, growth of networks and ‘virtual’ organisations, and downsizing, which all generate career unpredictability and uncertainty. In this context, there is focus on the boundaryless career, the boundaryless organisation: careers now are much less predictable, involving more functional, national and organisational boundaries, as well as more lateral movement. Individuals are becoming ‘agents of their own career’ and employability security, not employment security, is seen as the new driver of many careers. These models are not necessarily new- protean careers- a career that is driven by the person and not the organisation is a concept that has been around for some time. In addition, there are a number of conceptual problems with such terms as a psychological contract. Who are the parties to the contract and if it is implicit, is it a contract? How does the concept of the ‘career model’ apply to unskilled workers? Also, in practice, the old ‘employment security contract’ was often restricted to male managers and skilled, unionised staff in large bureaucracies. There is also an emerging partnership model of careers emerging based on adult-adult relationships rather the paternalistic parent-dependent child model of earlier employment security careers. This model emphasises importance of staff showing high performance, commitment, flexibility, growth orientation, and challenge in exchange for the organisation offering growth and enhanced marketability/ employability, both internally and externally. In this model, organisations need to demonstrate continued support for employee career development and to take responsibility with employees, managers and HR functions, for building and rebuilding trust and common purpose to facilitate the renegotiation of psychological contracts. Therefore, organisations need to provide opportunities for self-assessment, benchmarking, development, and lateral and other moves, as well as training managers as career coaches and career counsellors. Organisations need to also provide career resource centres and learning centres as well as other career management practices.

CAREER MANAGEMENT AND CAREER PLANNING PRACTICES This involves mechanisms to identify potential (e.g. appraisal schemes, development centres, one-to-one counselling) as well as to share information

about career possibilities (job postings, career workshops, online information on vacancies). They involve processes to develop career potential, such as coaching and mentoring programmes, in-house training and educational programmes. Research has shown that most career management practices can be classified into 5 groups; developmental assignments such internal/external secondment, job shadowing, international assignments career information and advice such as career counselling, coaching and workshops initiatives aimed at specific groups such as ‘high-potentials’, succession planning, graduate entry schemes use of internal job markets such as online-vacancy boards and open internal markets basic career support such as setting development objectives, providing formal/ internal development reviews, and providing informal support from HR

CAREER PLANNING AND CAREER RESILIENCE Some companies adopt this approach which encourages employees to take individual responsibility for their career development, continuously reassessing their skills, interests, values and goals, developing career strategies, and implementing a development plan to broaden their experience in support of career objectives. SETTING AND E VALUATING CAREER G OALS A key part of career resilience is being able to set career goals. Possible options to consider include; Vertical movement- up is normally considered as the traditional route that people have taken but there are other ways to move within an organisation that can provide satisfaction and success Lateral movement- moving across an organisation or taking a different job at the same level, maybe without changing status or pay. It is an excellent way to broaden skill bases and experience. Job enrichment- an option available to everybody at any time. Every job can be enriched by expanding or changing responsibilities, adding additional challenge. Realignment/ downward movement- is taking a job at a lower level and is a good move for people who move from, say, a technical position to a managerial position. It can be a way of changing career direction in an organisation. Exploration/ external- this involves leaving the organisation perhaps because your needs and the company’s needs do not match, or perhaps you want to become entrepreneurial. In addition, it is also important to benchmark one’s skills against what the market requires and this is the mark of a career resilient person. Benchmarking is the practice of comparing your skills with a standard of excellence, and with what the market is currently requiring. In order to stay ahead of the pace of change, the process of regular benchmarking enables a person to determine which skills to develop next. The objectives of benchmarking are to; measure competitiveness in the marketplace identify potential gaps in skills, knowledge and experience

gather information for career development plans

CAREER AND MANAGEMENT DEVELOPMENT PRACTICES IN THE UK In the 1980s, three influential reports into education, training and development of British managers were published. Each report identified several major weaknesses in the system of career and management development (CMD) in the UK especially in comparison to major competitors. Implications for Britain’s economic efficiency and relative economic decline included; the late split between organisational ownership and management control low status of managers compared with financiers, professionals, and civil servants a poorly developed link between technical and managerial functions slow development of managerial identity in the UK the prevailing assumptions that managers were born and not made lack of linkage between education and managerial training Events in the 1980s that led to an increased interest in CMD including the recession, a greater government interest, turnaround of companies (such as BA) attributed to training, and the growth of university activity in MBA programmes and other management courses. Factors that are likely to stimulate CMD activity are; the ability to manage complexity internal labour markets with open career structures HRD aiding recruitment Factors that are likely to inhibit CMD include; a preoccupation with immediate tasks a lack of background qualifications perception of training as a low-status activity

TALENT MANAGEMENT IN ER Now, more than ever, it is imperative that organisations manage people well. Talent and talent management are at the top of the corporate agenda. The dynamic nature of global business is putting an ever-increasing pressure on companies to be constantly on the lookout for exceptional talent in the market. The war for talent is a strategic business challenge and a critical driver of corporate performance with talent management being critical to every company’s success. 3 fundamental forces are fuelling the war for talent; Irreversible shift from the industrial to the information age- the increasing impact of technology has changed the face of ER and made boundaries between organisations permeable, enhancing collaboration and intensifying competition. As technology infiltrates every facet of the workplace, the implications for talent management become more profound. Intensifying demand for high-calibre talent- over the next decade or so, the demand for talented people will far exceed the availability of skilled workers at all levels and in all industries. This is referred to as a talent war, a skill shortage, or a seller’s market.

Growing propensity to switch companies- demographic trends, an increasing need and a shortage of skilled labour, greater geographic mobility of labour, and the concept of a ‘job for life’ have placed more power in the hands of workers with transferable skills. Skilled workers are increasingly moving from job to job as a deliberate choice to increase and enhance their knowledge base and, therefore, their future employability and earnings potential. Attracting and recruiting key workers is only half the battle in the war on talent; the other half is keeping them. The war on talent not only provides a helpful human perspective on human capital development, it will be one of the main problems that businesses will have to confront in the 21st century. TM is now seen as a key ingredient of organisational success because the value of an enterprise is directly related to its success in talent management and the growth of human capital as an asset. Organisations need to pay attention to the strategic importance of managing talent flows through the company. Terms used include talent pool and the talent pipeline.

THE ORIGINS OF TALENT MANAGEMENT TM as a systems concept in ER had its origins in the US where client-server technology, OCR and EO opportunity reporting made applicant tracking possible and necessary for most large firms. Broadly speaking, TM refers to; identification engagement and retention development deployment of those employees who are particularly valuable to an organisation, either in terms of their high potential for the future or because they are fulfilling business/ operation-critical roles. TM has in the past linked to recruitment, PM or performance development but these were seen in a narrow focus and as separate components rather than a common approach underpinning all three activities. The phrase has worked its way up the HR agenda and also the priorities of the organisation as a whole. It is not new and has been around for a long time but it is a concept whose time has.

DEFINING TALENT TM is concerned with having the right people in the right roles in the right environment with the right manager to enable maximum performance. There are several definitions of TM. For example, it is defined as ‘the integrated set of processes, programmes and technologies designed to develop, deploy and connect key talent and critical skill sets to drive business priorities’. In general terms, talent is seen as ‘the sum of a person’s abilities- his or her intrinsic gifts, skills, knowledge, experience, intelligence, judgement, attitude, character and drive and includes the ability to learn and grow’. Opportunity needs to be added to the definition as employees may have the abilities but may not be given the opportunity to display them in the workplace. Talent is an attribute that needs direction for it to be used constructively and effectively to give individuals, who have the capability, to make a significant difference to the current and future performance of the company. Some organisations may develop behavioural frameworks to identify and assess talent and to assist in developing a shared language and understanding, including achievements of targets.

In general terms, talent refers to individuals who can make the greatest difference to organisational performance either through their immediate contribution or through their potential, or both.

DRIVERS OF TALENT MANAGEMENT New technologies, changing business models, market globalisation have all increased the demand for talented people. Meanwhile, the aging workforce is leaving many organisations with their critical workforce approaching retirement and perhaps with an inadequate supply of younger talent. Workforce reduction has temporarily slowed down the major battles for talent but it has added a premium on ensuring that the talent remaining is high-performing and well-suited to the strategic needs of business. This means that organisations, if they are not doing so, should be reviewing their approaches to talent management. TM therefore involves individual and organisational development in response to a changing and complex operating environment, and includes the creation and maintenance of a supportive, people-oriented organisation culture. The concept of TM is based on the conscious, deliberate approach undertaken by an organisation to attract, develop, deploy and retain people with aptitude and abilities to meet current and future organisational needs, with a key objective being to ensure that there is a supply of talent in the ‘talent pool’ or ‘talent pipeline’ to meet those needs. OBJECTIVES

OF

TALENT M ANAGEMENT

There is a distinctive difference between individual talent needs and organisational requirements. From the perspective of talent, career advancement and personal concern are of most concern, and from the perspective of the organisation, improved performance and succession planning will be the target of TM. Also, succession planning, the planned replacement of key staff, is conducive to the success of an organisation. In some companies, TM may be limited to succession planning while in others, it may involve a comprehensive set of strategies. Some companies have an inclusive, egalitarian approach, giving opportunities for all employees to be included in the talent pool, and other companies may have an exclusive or closed and elitist approach, restricting membership to certain groups or grades. COMPONENTS

OF

TALENT M ANAGEMENT

There are several models, all fairly similar, of TM that have been put forward. One model (Morton) depicts 6 categories of activities of TM, based on the experiences of 30 organisations; recruitment professional development leadership/ high-potential development workforce planning and culture retention performance management, feedback/ measurement Another model (Fitz-enz) argues that TM encompasses 6 human resource services; staffing succession planning leadership development performance management

training and education

retention

The perspective developed in this module sees TM as involving 4 ER processes; attracting talent retaining talent developing talent transitioning talent ATTRACTING TALENT Under this section, two ER activities should be integrated into the TM management process; employee attraction and recruitment and selection. The situation is made difficult when local and international labour markets are problematic. The ability to recruit external talent is influenced by the image of the industry, sector of the organisation, alignment of individual and organisational culture and perhaps the offering competitive reward packages. Employee attraction: when attracting talent, it is helpful to have a strong and easily identifiable brand image that reflects core values of the organisation. The organisation’s talent requirements must be clear and accurate to enable a ‘fit’ between organisation, individual and role. When creating a brand, an organisation must think about the type of talent it wishes to attract as people are attracted to organisations and roles for differing reasons. Recruitment and selection: when considering any form of R&S, it is important to have a defined process that is visible across the firm to clarify the responsibility and activity of each R&S process. This process will need to be flexible enough to ensure that talent is not overlooked during a particular recruitment process simply because the individual does not meet the specific requirements of the role. Using competency-based recruitment and having visibility in terms of competency requirements for all roles can help, as can recruiting managers with an open and flexible mindset so that they are constantly searching for talent that will benefit the organisation. RETAINING TALENT Talented people will stay with a company only if they feel it has the right culture and provides them with self-fulfilment, a sense of accomplishment and fun. Without the right mix of values, attitudes, terms and benefits, managers may leave. An important factor that should be considered is emotional attachment. The challenge of managing talent from an employee’s viewpoint is not just managing quantitative solutions such as more money and golden hellos, as these are easily matched and topped by competitors. Although these are important, long-term commitment to an organisation is driven by some kind of emotional attachment and this is, in essence, a variation of the old psychological contract. A sense of emotional attachment can be achieved by; recruiting and developing employees who share the same values, attitudes and beliefs that the organisation’s success is built upon developing those employees so that they have true commitment and sense of belonging ensuring talented individuals achieve a sense of accomplishment and fulfilment in their roles fostering relationships through coaching/ mentoring and encouraging inter-departmental networks

By undertaking such activities, organisations will develop an employee’s emotional attachment, thereby protecting them from leaving, either by headhunters or of their own accord. They are then more likely to apply and develop their talents in the long-term interests of the organisation. DEVELOPING TALENT People-related activities that fall under this heading involve the following; Training and development: a fundamental part of TM as it rarely arrives fully developed. Talent reviews and selection and recruitment processes identify potential in individuals which needs to be maximised through focussed T&D Coaching and mentoring: this is key to developing and retaining talent. Development of talent is not restricted to training courses. Much individual development occurs through stretching people’s roles, using coaching and mentoring supported by well-designed training interventions. Line managers need to understand the principles of coaching and mentoring. Performance management: regardless of the focus of talent management activity- whether it is about developing specific pools of talent or a broader approach aimed at developing organisational capability- there needs to be a transparent PMS that supports the provision and continuous development of talent. Basing the performance management process on the assessment and development of competencies greatly assists this aspect. Succession planning: traditional succession planning has become less effective because organisations have become ‘flatter’ and because traditionally, succession planning lacked transparency and occurred ‘behind closed doors’. With the focus being on past performance rather on future potential, few people were asking questions about the talent that their organisations required for the future. The move to consider all employees as having the potential to show talent will have a significant impact on succession planning, creating a need for it to be responsive to the business-planning process. It can no longer focus on a small pool of employees who may have demonstrated early on in their careers that they had potential: it needs to incorporate individuals from every level of an organisation who are able to demonstrate talent. In future, the succession planning process will be based on how organisations use information about talent to plan ahead. In some companies, TM seem to be a new name for succession planning but TM is much broader than succession planning. TRANSITIONING TALENT The benefits of offering exiting employees quality transition programmes far outweigh the costs and risks of not providing them. If talented individuals leave on good terms, and there is an opportunity to stay in touch, there may be possibilities for them to rejoin in the future, having perhaps broadened and deepened their experience in the meantime. In addition, employees who leave may put business in the way of their former company. It is important that any TM initiative is aligned vertically with corporate strategy and horizontally with other HR processes such as recruitment, appraisal and reward, and, in particular, career development and performance management. Key questions for PM include whether those in a talent pool should be appraised more

closely, whether appraisal should play a major role in selection for a talent pool, and what the role of ongoing appraisal should be. In some sectors such as banking, one form of demarcation of staff is between those employees who are seen as direct revenue generators (the front office) and those who support them (the middle and back offices). Two ER challenges faced in managing front-office personnel in this sector are managing stars and the development of player-managers. Front office personnel are often very visible, well paid, and sought after by firms’ competitors. Stars are the men and women in critical jobs whose performance is crucial to their organisation’s success, especially in professional service firms. Their ranks include younger professionals as well as seasoned executives with the potential to continue contributing to their firm’s success. This means that they are also the individuals who have the highest future value to their organisation. Player-managers are managers who are also players, where for example, they manage a team of investment bankers but also still do it themselves. As well as generic human capital, the other form of human capital is firm-specific. This second type of human capital reflects the value of employees who are unique to a single firm.

MODULE 8

THE CHANGING CONTEXT OF ER: BEYOND BOUNDARIES

INTRODUCTION This module is concerned with how ER is evolving. In particular, attention is drawn to ‘extended’ or networked organisational forms and the ways ER ‘goes beyond boundaries’, as well as the various contexts in which ER now operates. ER BEYOND BOUNDARIES The acquisition of organisations and the coming together of two or more organisations to form a new entity, often from different countries, is becoming more common in an increasing global and competitive landscape. Sometimes the acquired business continues as a separate entity with little change to its HR/ER, with only gradual changes in structures, processes and personnel whilst others may involve changes, including ER changes that are more dramatic and rapid. Many mergers and acquisitions ‘fail’ in the terms of not delivering on their initial objectives: often due to misunderstanding of people and ER issues, resulting in low commitment, job insecurity, stress and cultural conflict. Expectations need to be managed and information given, with the new ‘vision’, being communicated well. Some sort of pre-merger cultural analysis of both parties may be useful to identify tension points and this can be an excellent starting point as a major issue is cultural compatibility. ER IN NETWORKED ORGANISATIONS Inter-organisational relationships in national and global supply chains have become increasingly important in manufacturing and public service delivery. Organisations have increasingly become embedded in networks of strategic alliances, insourcing and outsourcing, partnerships and joint ventures. The large organisation of today is often described as ‘boundaryless’. The classic networked organisation involves a web of inter-related business processes where collaboration and competition are in creative tension, enabled by sophisticated ICT processes. Formal, bureaucratic, vertical structures (Fordism) are replaced by horizontal linkages and mutual dependencies and, to some degree, coercive tactics may be in operation. Core employees may be seconded to multi-employer project teams, giving a major role to ER in areas such as career and TM, PM and R&S. In this context, dynamic organisations (DO) have arisen. These seeks to gain a series of temporary competitive advantages that add up to, over time, a sustainable competitive advantage that requires marketplace agility. These are seen as a bundle of allied ventures rather than the traditional ‘bounded’ organisation, such as Google. Dos require a core meta-competence on which their strategy depends: a bundled set of specific competences to create an ever-changing portfolio of ventures steered around a cycle of exploration, exploitation, adaptation and exit. Exploration involves generating and testing new idea. Exploitation involves transforming these to a marketable solution before competitors, and to generate revenue. Adaptation involves spotting emerging threats early and mounting immediate responses. Exit involves abandoning unpromising ideas and

cannibalising marketplace offerings through endless reallocation of resources, resource alignment and resource fluidity. Constantly transitioning from one HR configuration to another to keep human resources aligned in an ongoing way to achieve sustainable competitive advantage is referred to as workforce scalability. This involves the evolution of the human resource configuration on four dimensions: headcount, competence mix, deployment pattern and contribution. Headcount refers to full-time equivalents (number of employees x number of hours worked). Competitive mix refers to how knowledge and skills are distributed and deployment pattern reflects their assignments across organisational and/ or physical locations. Contribution refers to the organisational value of the tasks performed. Scalability refers to meeting these challenges successfully and refers to alignment and fluidity and for a DO, alignment is a constantly moving target which makes fluidity crucial- the speed and ease with which transitions are made from configuration to another. It involves classic ER processes such as the accession of new recruits, internal allocation of employees and release of redundant or non-performing ones as well the having an adaptable organisational culture with supportive HR and ER systems and functions. Alignment can be achieved by avoiding having too few or too many employees, competence mismatches, person-task misallocation which can pursued top down (through HRP) or bottom-up (developing a shared mindset so that employees sense environmental shifts and initiate salient, strategic moves themselves). This involves creating a common cause (vision and purpose) and contextual clarity (people and role fit). Fluidity can be achieved by facilitating external staffing and internal transitions simultaneously. Externally, this involves acquiring talent through various channels, including the contracting and partnering strategies discussed above (e.g. partnering with universities to streamline effective recruitment). In addition, releasing employees through outplacement (providing counselling, job search assistance and generous and fair severance packages) may be necessary. Internally, capability may be enhanced through enriching the talent pool and facilitating connectivity. Enrichment may involve selecting employees for diversity and cultural fit, looking at career resilience and extensive employee T&D. Connectivity might be fostered by building social capital, trust and cooperation so that employees share information about where talent is needed and form teams quickly. Barriers to communication need to be broken down and infrastructures that develop such things as CoPs and social practices need to be developed. Opportunities need to be provided to staff through expanded role orientations so that assignments are not seen as out of bounds. This can be achieved through discretionary-based work design where instead of a rigid job description, core tasks and responsibilities are specified with zones of discretion giving employees empowerment over certain tasks. This enriches the talent pool and release talent from one activity to another and minimises turf wars. Motivation to make moves quickly and easily may be enhanced through incentives such as profit-sharing and stock options, increasing pay without promotion as well as 360 evaluation.

INTERNATIONAL AND COMPARATIVE ER How ER is managed across borders in different countries (comparative ER) has become more important due to increasing globalisation and the rise of countries

such as China and India. How international enterprises manage their employee resources (international ER) has also become a related topic of increasing interest. COMPARATIVE ER ER is performed differently in different countries. In Europe, there may be similarities in interviewing techniques and in some countries, candidates are more likely to be faced with psychometric tests than in others. Hand-written applications may be preferred in some countries so that graphologists can assess them while in some, references are still taken up, a process that is lacking in validity. The globalisation thesis argues that a truly global economy is emerging or has emerged. National economies and their management models (including HR and ER models), are losing their distinctiveness: the convergence thesis. Trade liberalisation and restrictions have been eased. Various trading blocs have been established such as the EU, the Triad, NAFTA and APEC. At the firm level, firms have adopted a common response to the international demands of the competitive environment and a new organisational model is emerging: the transnational firm. This model enables firms to manage simultaneously the competitive drivers of global efficiency, multinational responsiveness and worldwide learning. Some authors argue that there is one best way that firms should follow if they wish to be successful in the global economy. MNCs are being transformed into transnational companies, which are footloose capital, without specific nationality but with a strong corporate identity. Others argue that nations remain important and ER policy and practice remain diverse across the globe. They argue that globalisation has been overstated: most trade is not global, but uneven, mostly regional and conducted between relatively distinct national economies. MNCs are not transnational, but national companies with international business operations where major decisions are still rooted in their home country. Institutionalists argue for the importance of different national institutions or business systems in explaining comparative differences in HRM and ER. Culturalists argue for the continuing importance of national culture in explaining such difference. The claim is that organisational patterns and processes, and managerial beliefs and behaviours, are driven by shared understandings and ideas. The institutional approaches will be discussed here in more detail. Institutionalists claim that organisations are socially constituted and reflect national difference rooted in institutional setting. They analyse their interaction with business and management (national business systems). The interaction of the state, financial and educational systems, the industrial relations system with HR and ER processes may be seen as collaborative business environments (e.g. Germany and Japan), or competitive (e.g. US and UK). To understand ER, it is necessary to not only look at the institutionalist and culturalist perspective but also to see that individuals and organisations can, within parameters, make different strategic choices. NATIONAL CULTURE AND ER Culture is often seen as the commonly held and relatively stable set of beliefs, attitudes and values that exist within an organisation or society and this influences the way that it undertakes and implements its decision-making, resolves its problems, and the way it behaves in general. Culture is embodied in symbols, rituals, heroes that are reflected in organisational communication: manners, dress code, social rules, norms and role models. Like

macroscopic (national) culture, microscopic (organisational) culture also comprises corporate values, norms, feelings, hopes and aspirations. There has been much interest in understanding and how to differentiate between culture ever since Hofstede performed his work. A number of other approaches have been proposed such as Trompenaars’ and Schwarz’s approaches. Hofstede’s model classifies cultures across five dimensions of measurement based on cultural value. This derives from his view that culture is a collective program of the minds of a group that differentiates them from other groups. It results in a computing metaphor that sees culture as the software of the mind. His principal purpose was to differentiate between the assumed shared values held in organisations (microscopic culture), and the unique values that could be identified as specific to national (macroscopic) cultures. His five dimensions are; individual versus collective orientation power-distance orientation uncertainty avoidance orientation masculinity-femininity, or dominant-values orientation short-term versus long-term orientation, or ‘Confucian dynamism’ Hofstede integrated these dimensions into national models; village market- low uncertainty avoidance, individualism, low power distance (UK) well-oiled machine- high uncertainty avoidance and power distance (Germany) pyramid- high power distance family- high collectivism and power distance (India, Middle East, some Asian countries) These typologies are related to ER in that the recruitment and selection criteria will systematically vary. In the UK, the stress will be in negotiation, communication skills perhaps assessed through assessment centres and psychometric tests; in Germany, the stress will be on technical knowledge assessed through the education/ apprenticeship system; in France, a stress on analytical skills and on ‘elite’ potential assessed through education systems and elite institutions; in much of Asia, a stress on family connections; in Nordic countries, with their high ‘femininity’ scores, both genders are more likely to pursue more personally satisfying rather that hierarchically oriented careers. In addition, these cultural dimensions seem associated with other dimensions of ER, with countries that are high on uncertainty avoidance (e.g. Japan and Germany) making more use of expatriates (parent-country nationals) to control overseas operations than organisations from countries with low uncertainty avoidance (e.g. USA, UK and the Nordic countries). Schwarz built on Hofstede’s approach and listed 56 different values believed to be comprehensive and recognised in all cultures, using both individual and culture-level analyses. He believed that there were difficulties with Hofstede’s classifications; for instance, collectivism and individualism have values that are in common but the dichotomy implies a polar distinction. His main model includes these seven dimensions; conservatism affective autonomy hierarchy mastery

intellectual autonomy

egalitarian commitment harmony

Trompenaars may be seen as developing Hofstede’s model and also identifying a number of dimensions through a different, dilemma-based, methodology. These are; universalism (rules and procedures) versus pluralism (relationships) individualism versus communitarianism specific (superficial relationships) versus diffuse (deep relationships) neutrality (concealing emotions) versus affectivity (showing emotions) inner directed versus outer (environment) directed achieved status (who one is) versus ascribed status (what one does) sequential time versus synchronic time This model is closely related to Hofstede’s model. Of these seven dimensions, two are directly related with Hofstede’s dimensions, namely, collectivism/ individualism and to a lesser extent, power distance. Communitarianism/ individualism also seem to be identical to Hofstede’s collectivism/ individualism. Achievement/ ascription which describes how status is accorded, appears to be linked to Hofstede’s power distance index if it is accepted that status is accorded by nature rather than achievement; it also reflects a greater willingness to accept power distances. However, Hofstede’s power index relates not only to how status is accorded, but also to the acceptable power distance within a society, an area not looked on by Trompenaars whose other dimensions appear to focus on some resulting effects of underlying value dimensions. So, the neutral/ emotional dimension describes the extent to which feelings are openly expressed, a normative behaviour rather than value. Universalism/ particularism describes a preference for rules rather than trusting relationships and this could be interpreted as part of Hofstede’s uncertainty avoidance dimension on one side and on the other, and to some extent, the collectivist/ individualist dimension. The Trompenaars diffuse/specific value classification that describes range of involvement would appear to be new. However, the human-time relationship would appear to be Hall’s polychromic/ monochronic time perceptions. Finally, the human-nature relationship appears to be closely connected with the human-nature relationship in Kluckhohn and Strodbeck’s theory of value. The four principal variables identified by Hofstede can be compared with the related set of variables from Schwartz.

Cultural variable

Nature

Hofstede’s variables Power distance

Degree of acceptance as legitimate that power is unequally distributed in institutions

Uncertainty avoidance

Masculinity/femininity Individualism/collecti vism

Degree of discomfort with uncertainty and ambiguity, leading to the support of beliefs that promise certainty and the maintenance of institutions that protect conformity A preference for accomplishment, heroism, severity and material success as opposed to a preference for relationships, modesty, and attention to the weak qualities of life A preference for socially closed surroundings where individuals care for themselves and immediate kin, as opposed to dependencies on groups of others

Schwartz’s variables Conservation

Security, conformity and tradition are priorities, and maintaining the established order of things.

Hierarchy

Legitimacy of ascription of roles and fixed resources such as social power, authority, humility, and wealth

Intellectual autonomy

Values that stimulate autonomy to pursue goals and intellectual interests, including curiosity, open-mindedness, creativity

Affective autonomy

Promotion and protection of attainment in positive affective experiences such as pleasure, excitement, and variety

Competency

Values that polarise the dominance of surroundings through self-affirmation, such as ambition, success and risk

Harmony

Concepts relating to being ‘one with’, as in unity with nature, and protection of the environment

Egalitarian compromise

Includes concepts such as equality, social justice, and responsibility.

Characteristics of culture for Hofstede and for Schwarz Although Hofstede’s work has received much criticism, many researchers continue to rely on his work even in studies that do not include countries covered in the early research. CHINESE CULTURE AS AN E XEMPLAR

OF THE I NFLUENCE OF

CULTURE

ON

ER

Hofstede assumes that national territory corresponds to cultural homogeneity but China is not homogenous. There are strong regional differences with many religious and ethnic cultures and sub-cultures. Problems with his use of the words ‘individualism’ and ‘collectivism’ have different meanings to different countries. For instance, employee loyalty- Japanese employees may be loyal to their organisations and Chinese employees may be more loyal to their families. But both adopt the principle of collectivism which differs from Western individualism. The fifth dimension of Confucian dynamism, or long-term orientation, was identified much later than his original work and China and other Confucian-influenced countries scored very highly on this dimension than other parts of the worlds. Other studies of Chinese culture take different approaches using Confucianism directly which is seen as influencing the way employees perceive the organisation

as a symbolic family, amplified by early Maoist ideology that emphasised group rewards. This implies a stress on hierarchy, order, authority and mutual obligations. Harmony and benefits in exchange for loyalty with a concern for face, respect and integrity and the avoidance of direct criticism being important. Confucianism is an important and influential foundation for Chinese culture and behaviour providing the moral doctrine of human relationship, social structures, personal behaviour and ethics. Its principles extol loyalty, love, obedience, obligation and submission, seniority and trust. A recent focus on efficiency, productivity and performance-based rewards have threatened these traditions and values leading to sub-cultural generational differences. Studies reveal that dominant constructs included respect for seniority, communication efficiency and selfless contribution and analysis showed 8 critical sets of relationships; hierarchy harmony bureaucracy security equality loyalty family aspects stability Factor analysis of this data revealed 5 themes; equality security loyalty

harmony bureaucracy

Culture arguments, such as those of Hofstede, linking Chinese economic performance to Confucian values, neglect the ways culture changes: cultures interact and influence each other. Confucianism stresses holism, realism, pragmatism. Chinese culture flourished more when open to other cultures (Tang dynasty) than when culturally closed (Qing dynasty). Ideas have been blended with foreign ideas, indigenous elements reinterpreted and cultural elements refocused. An about-face on Confucian values may occur if li (profit) is put ahead of yi (justice). Guanxi (networks, connections) which may once have been good for business and efficient financial channels may now be seen as developing into ‘cosy’ relationships. Ethnic overseas Chinese family business emphasises interpersonal or relational trust rather than institutional trust, paternalistic authority, and personal ties, accessing capital through social networks. Differences from Western cultural values emerge in terms of trust (personal versus institutional), identity (e.g. individual versus collectivism), and authority (hierarchy versus autonomy as reflected in power distance) These effect organisational structure and inter-organisational relationships. Simple structures such as centralised decision-making, paternalism, nepotism, focus on cash flow and specialisation based on owner’s expertise are common features of business. Firms are adaptive and opportunistic, sharing information that is hard to obtain, often accessed through inside information, contacts, bribery and Guanxi relationships. drawbacks to this model include limitation of growth, nepotism and a lack of integration with professional ‘outsiders’. Chinese culture is very distinct from Western culture, primarily as a result of its community nature as opposed to what is referred to as the utility paradigm of the West (Newell).

Characteristics

Utility paradigm

Community paradigm

Nature of knowledge

Objectively defined concepts Tacit and socially and facts constructed

Knowledge acquisition

Can be captured and codified

Best practice for organisational improvement

Objective rules universally applied to all organisations

Knowledge migration

Transfer through formal explicit processes (e.g. notes) enhanced by exposure to exemplars

Developed through group-based knowledge sharing Principles that organisations use to locally define their own rules Personal/ local knowledge developed through group learning processes that create experience

Dominant metaphor

Memory

Group processes

Critical success factors

Identified by Western narrative

Trust and belonging

Relating the Western commodity and the Chinese community paradigm of culture Guanxi, or personal networks and interpersonal relations are of key importance when conducting business and authority is based on interpersonal relations rather than legal rationality. Guanxi is essential if approval is to be granted to access any kind of business in China, producing personal obligations such as responses to requests for assistance by someone in the network. Another cultural attribute is loss of face. Chinese do not attempt to convince others that they know best and so dialogue and encouragement are more important than linear communication and persuasion. A study showed that about 70 values affect the Chinese belief system which run across 8 categories; national traits business philosophy interpersonal relations personal traits family/ social orientation time orientation work attitude relationship with nature Of particular interest are 6 generic categories; respect honour synergy allegiances learning sensibility ER AND CULTURE IN THE MIDDLE E AST The ME is the birthplace of monotheism and the conduit for the transfer of much Chinese, Indian and classical knowledge to the West during the European Middle Ages. In recent years there has been a lot of investment from MNCs and with its

strategic importance in the energy sector (gas and oil), it has given rise to significant actors in finance, tourism and property (e.g. Turkey, Iran, GCC countries). One issue is in actually defining what constitutes the ME with some including Cyprus, Turkey. It is a diverse area in terms of religion, language, governance, economy, and labour, with some countries reliant on external labour and some being major importers of labour. Literacy and education levels vary but common themes run across the region; the influence of national and international politics on ER the impact of religion, ethnicity and culture on ER the influence of Western multinationals on ER the significance of gender in ER In most of the region, there is widespread gender inequality in career paths, especially in rural areas, though in other countries, upper class women are afforded better career opportunities than in most Western countries. For example, reported discrimination in Turkey is lower than the EU average with women playing an active, economic roles, including senior level. In Iran, gender segregation has opened up many career opportunities for university-educated women, even with the role of women reduced due to the Islamic Revolution. In addition, economic nationalism such as ‘Arabisation’ has restricted the autonomy of HRM, where locals may see public-sector employment as a right, resulting in Western or Asian expatriates filling all levels within the private sector, often with little employment security. It has been pointed out that perhaps there is no such thing as the ‘Middle Eastern HRM model’, i.e. a model with Middle Eastern characteristics. There is a mosaic of policies and practices developed in different historical contexts. For example, North African organisations are more influenced by European countries, in particular, French policies in relation to gender equality and the right to strike. Public sector HRM is based on extensive legal foundations, detailed regulations and centralised decision making. There is little evidence of strategic HRM and explicit HR strategy links between HR activity and corporate strategic planning and integration of HR practices. This is partly because an Anglo-Saxon concept such as HRM is unfamiliar and partly because real power lies with a powerful ruling elite or monarchy. Israel is partly influenced by European (British) practice such as EO laws and US concepts of HRM strategy. There is also evidence of convergence between public and private sector HR practice. Some have characterised management styles in the Arab world, especially in the Gulf states, as distinctive and constituting a fourth paradigm where the style is held to consist of; family businesses autocratic but consultative ownership a rhetoric of consultative decision making within an essential hierarchical structure where joint decision making may be seen as a weakness, and one-to-one consultation is preferred. From Hofstede’s perspective, Arab cultures are seen as masculine, relatively long-term in orientation, middling on individualism, uncertainty avoidance and power distance.

Some have noted that HRM often reflects Islamic values and that an Islamic work ethic can be identified, influencing a range of attitudes towards organisational change and commitment. A distinctive feature of Arab HRM is held to be the role of networks. Like the Chinese Guanxi, interpersonal connections are rooted in family and kinship, but also extend into business life. This phenomena is often termed wasta (or piston in French-influenced North Africa). In the Arab world, this is often ‘professionalised’ with ‘mediators’ interceding on behalf of clients to obtain advantages in jobs, tax breaks, information, and favours. In public-sector organisations, this embraces R&S, compensation, promotion and other ER activities. Wasta is less-publicly acknowledged and many condemn such activities as illegal or unethical, unlike the guanxi in China, while these same critics seek wasta benefits for themselves and relatives. In Iran, nepotism is common and in Turkey, favouritism is still an issue. However, HRM policies in the ME are adopted and implemented within specific national contexts that are influenced by culture, political ideology, economic conditions, the legal system as well as confessional differences in religion. The public sector remains dominant with some countries such as Turkey and Jordan embarking on privatisation programmes. This is accompanied by a change in HR practice away from a centralised service model towards the expansion of T&D, PM and ER initiatives. There has been government intervention to reduce layoffs, replace expatriates and develop local managers. Job security in the public sector has been reduced resulting in high unemployment. generally, MNC apply ‘strategic’ HRM more than local firms though with greater pressure on performance. Large private-sector firms tend to offer higher pay, though lower job security than many public-sector organisations. In Gulf countries, pay is higher in the public sector with employees reluctant to take up private-sector employment; public sector jobs are perceived by some locals as a ‘right’. Here, T&D and appraisal programmes are far more extensive in the public sector. The public sector gives locals priority in recruitment, whereas the private sector often employs expatriates; public organisations tend to use written procedures, rules, job analyses and structured training programmes. The ME public sector faces significant challenges, including declining real incomes, political interference, poor management and difficult working conditions all of which lead to demoralisation and demotivation. Problems of moonlighting, retention and corruption are also common. HRM systems are outdated and ineffective with low salaries, inability to fire low performers, no performance standards, no rewards for performance, difficulty in attracting talented people, promotion based on seniority and nepotism and ineffective management. Some countries are reforming their HR infrastructure but due to a lack of professional HR players, long-term strategies are absent. ER in the ME, as well as elsewhere, needs to enforce impartiality, transparency and openness in its decision making and can learn from regional and global experiences ER IN RUSSIA Few books have explored HRM in Russia as it has generally been treated as ‘Eastern Europe’. However, the size, multi-ethnic composition, fast-growing economy and increasing international collaboration with foreign companies demand a deeper, more complex analysis of business in Russia, in particular, of HRM and ER.

National politics continue to influence ER/HR. Challenges for ER and for HRM in general, include seeking out the best expertise, committing significant resources to ER, overcoming the lack of evaluation of HR activities, and addressing the lack of specific skills. HRM practices can affect performance of employees and enhance organisational performance in general. Recruitment channels in Russia consist of the internal labour market, and the ‘extended internal labour market’ or the social network of the firm’s current workers which both deliver different costs and benefits to the firm. In the Russian context, former employees maintain contact and may return after employment elsewhere, and firms prefer to recruit from the extended internal labour market rather than the external one. Deriving from the Soviet era, and perhaps deeper Russian cultural traditions, personal, particularistic relationships influence paternalistic recruitment practices, and loyalty to the boss is a major selection criterion. This contrasts with the meritocratic criteria often regarded in the West as good practice. Recruitment is often highly centralised in the hands of the CEO, with informal criteria dominating, and the HR function reduced to administering paperwork. ER IN M ULTINATIONAL E NTERPRISES Internationalisation and the effective use of international employee resources located outside the home/parent country are major issues affecting firms in an increasingly global economy. A key question is: Why do multinational enterprises (MNEs) adopt different ER policies and practices in such areas as recruitment and selection, performance management, talent management and career development? A MNE’s ER policies and practices can be seen as the product of the interaction between three factors; Home (parent) country factors relating to its HRM system; e.g. American, British or Japanese systems. MNEs often remain deeply rooted in the national business systems of their country of origin (rather than being global, rootless and footloose entities) Host country (local) factors: cultural context, local regulations and practices Firm-specific factors: e.g. senior management’s attitudes towards internationalisation, the international strategy, structure and corporate culture of the firm It has been argued that an MNE can choose four generic orientations to ER, depending on its orientation to ‘foreign people, ideas and resources’; Ethnocentric the international approach where the MNE exports the home system, making strategic decisions at headquarters (mother-daughter relationship with subsidiaries) and filling key positions with parent-country nationals Polycentric the multinational or multi-domestic approach where an MNE adapts its ER policies to the local ER system (e.g. the role of guanxi in China, wasta in the ME, loyalty and extended internal labour market of Russia). Foreign, local, subsidiaries enjoy autonomy as ‘sisters’ and HCN occupy key positions. This strategy is common in places where local responsiveness is important such as advertising and food industries. This strategy minimises standardisation as each subsidiary goes its own way and can lead to innovation and creativity remaining more localised instead of dispersed throughout the global ‘firm’.

Geocentric the global approach and through global sourcing of talent, promotes employees to positions and subsidiaries regardless of nationality. It is likely to employ TCNs. This approach is designed to maximise global standardisation as well as global learning and global ‘dispersal’ of innovation and creativity (through seminars, international transfer of employees, and training) and also maximises local responsiveness by using HCNs or ‘cosmopolitan’ TCNs instead of ‘ethnocentric’ PCNs. This orientation is characteristic of transnational companies which seek to maximise global efficiency, national responsiveness and worldwide learning. A subsidiary may therefore create a new HR/ER system that is different from both the home and local systems. Regiocentricthe regional approach where the MNC employs managers from a particular region (e.g. EU, US, East Asia), enjoying regional (but not global) autonomy with common ER policies being developed across a region (but not globally). Global staffing is a key aspect of HRM in the global firm and is seen as a key ER practice in controlling and coordinating dispersed global operations. One reason for this is the continuing problematic performance of expatriates which is costly in human and financial terms for the individual and organisation with indirect costs involved such as reputation and loss of business. So talent management has emerged as a key issues for organisations and is crucial to MNEs as they seek to internationalise their operations, resulting in greater international diversity in workforces. Cultural distance between countries is also an issue: where subsidiaries are located in ’distant’ countries, MNCs seem to prefer to deploy PCNs even though these people may be less than willing to go to these locations. Also, the age of the subsidiary affects choice: the longer a subsidiary has been in operation, the fewer PCNs may be used as the need for control diminishes in long-standing, successful affiliations. Companies have several motives for using international transfers; to fill positions with technically qualified staff to facilitate management development to facilitate organisation development through knowledge transfer and standardising corporate structure, culture and policy In addition, companies may use PCNs for various purposes, often mixed for any one assignment, believing that; they have a better understanding of, and commitment to, corporate strategies; they will accept HQ-determined rules more easily liaison with corporate HQ will be easier, sharing a common language and social connections they are more likely to exercise control on behalf of the company Expatriates may experience, however, various degrees of ‘failure’: early return and underperformance (more likely for US than European expatriates). They may struggle to adapt to culture, language, family separation or, if families are with them, their failure to adapt. These adjustment/ adaptation problems may be reduced if careful attention is paid to systematic ER. The recruitment method of the PCN is important (formal or informal recruitment), the selection criteria (loyalty, commitment, performance, competence) needs to be considered.

Rarely is the nature of the ‘job’ taken into account. Is it to: fill a position? open a new branch or process? operate in a joint venture? transfer knowledge to locals? or a mix of these? Rarely is the subsidiary taken into account: doing so, though, may build trust. The person’s motives for going are also not often considered. Is it: to travel? to have fun and enjoy an adventure? to escape a job, career or personal difficulty? to pursue an interest in international issues? to pursue an interest in the specific country or culture? to advance a career? In addition, whether these motives are aligned with company expectations or are in conflict with them is important, but again, it is not often considered. If the assignment is long-term, it is worth investing in a more systematic process of ER. For example, does the candidate: have experience of living or being educated abroad? speak more than language? demonstrate openness to new experiences, have a lack of ethnocentrism, and show empathy and respect? show good communication skills, including non-verbal communication? show an interest in an international career, or the specific job, company, and/ or culture? show a tendency to avoid over-narrow stereotyping? show adaptability, flexibility, and tolerance of ambiguity? The organisation will also need to take EO and diversity issues into account when recruiting, selecting and monitoring and national laws need to be considered. In addition, pre-assignment and post-assignment training needs to be considered as these investments can save time and money. It is important to maintain appraisals for the expatriate, though this raises difficulties; as much of the performance is ‘out of sight’, how much input should the local boss have? to whom should s/he show loyalty and commitment: the HQ, the local subsidiary, or both? is the date on which the performance is based comparable given global volatility and variance conditions, laws, technology, market maturity? how much weight should be given to ‘non-job’ factors: acting as ambassador, engaging in knowledge transfer, mentoring, dealing with local officials, managing family issues? Approaches such as 360 feedback and the use of balanced scorecards are useful in these situations. Because of these issues, companies may seek alternative strategies to employing PCNs as expatriates. Their cost, and the

‘localisation’ pressures put on them by some governments to employ locals mean that they may seek to employ HCNs. These have distinct advantages; they are often cheaper to employ (in terms of salaries, travel, accommodation, and family costs) they are familiar with the language, local laws, culture, and government officials, allowing the company to present a ‘local’ face which may help its reputation with key stakeholders However, the company may doubt their loyalty or commitment to act in the interests of corporate control- they may find communication with corporate HQ difficult, not knowing the language fluently or the people well; and they may be blocking ‘developmental’ international opportunities for talented, promising, high-potential PCNs. Another alternative is to use TCNs as a compromise between seeking global (PCNs) and local (HCNs) advantage. They may be cheaper than PCNs, and are often cosmopolitan ‘career internationals’ with good international experience and good linguistic skills. Local resentment may occur with TCNs being seen as blocking HCN opportunity. Other alternatives may be to practise inpatriation by bringing subsidiary staff, TCNs and HCNS to HQ to transfer knowledge or perhaps to build multicultural teams. Virtual assignments through international collaboration on projects through videoconferencing, email, and telephone rather than physical travel are becoming more common. In addition, the use of a greater variety of shorter assignments (troubleshooting, contractual assignments, rotational assignments, knowledge transfer activities, training, personal development) is also increasing. So in the ER processes of MNEs, both transfer (of home to affiliates) and adaptation (of ER to local practices) processes are occurring. These transfer processes are often over knowledge transfer, whether of technology or of ER processes. I NTERNATIONAL KNOWLEDGE TRANSFER AND ER Three factors have been found to affect knowledge transfer; a knowledge-sharing environment information and communication technologies organisational structure These three elements are prerequisites for any organisation keen to pursue knowledge transfer. The process of transfer is often seen as covering several stages from identifying the knowledge to the actual process of transferring the knowledge to its final utilisation by the receiving unit. This route normally occurs as a transfer from headquarters to overseas subsidiary although it could be reverse transfer the other way. A firm’s ER processes may constitute a significant source of competitive advantage over local, indigenous firms. The movement of knowledge between different geographical locations is central to the process of adding value in MNEs. Terms used to describe this process include knowledge diffusion and knowledge transfer (export sales and new product development discuss knowledge transfer across cultural and linguistic boundaries). Another term is the phrase mutual knowledge creation as it refers to the negotiation of new understanding. Within joint ventures, one-way transplant programmes are often less successful than more collaborative process-oriented

approaches that make use of local expertise to help in delivery that suits local conditions. A more constructivist term is knowledge migration which occurs from a knowledge source, the knowledge base, often in the West, such as the corporate HQ, to a knowledge destination or sink, often in the ‘South’ or ‘East’, such as an affiliate or joint venture in China, Russia or Middle East. The process may be facilitated by a knowledge intermediary such as a consultant, project team or expatriates.

Knowledge source

Knowledge migration between 2 actors, one operating as source and the other as a sink via knowledge intermediaries

Knowledge

Environment

Knowledge sink Environment

intermediary Actor 1,2 Knowledge

Parent country business system Parent country culture Parent country ER system Learning orientation

Note: an actor may be an individual or a coherent group

Cultural distance Motivation Willingness

Actor 2,1 Knowledge

Host country business system Host country culture Host country ER system Absorptive capacity

Knowledge migration in MNEs and international joint ventures Knowledge can diffuse in both directions, which occurs when a destination becomes a source and vice versa. A knowledge intermediary or knowledge broker may work in partnership with the source and sink to assist in knowledge migration across, for example, cultural boundaries. This person may be an expatriate manager and the effectiveness of this depends on their willingness and their ability, which in turn depends on the learning orientation of the source and its strategic objectives. Effectiveness of transfer is also affected by parent-country and host-country characteristics such as culture, national institutional/business systems, including the ER system, and also the cultural difference between the source and the sink. In addition, the learning capacity or absorptive capacity of the sink affects how well transfer occurs. TRANSFERRING ER KNOWLEDGE: THE CASE OF CHINA Much of the knowledge base in China has been imported in a linear fashion from the West through textbook translation and the use of Western teachers, trainers and education of foreign Chinese students in western universities. An alternative model of knowledge is one of social construction, knowledge sharing, participation in social networks and interaction between Chinese and western ideas and people. Mental models are developed by people to make sense of their experiences, and the difficulty of articulating and transferring tacit knowledge, essential to effective management. Knowledge has to be continually reinterpreted, recreated or

reconstituted rather than transferred to ‘create a unique bundle of management knowledge, deeply embedded in the unique social, political, cultural and economic context of China’. Western management can also have much to learn from China in terms of its emphasis on networks and stakeholders: knowledge flows are not simply one way from West sources to Eastern destinations. Expatriates are the key to transferring knowledge to subsidiaries. The transfer of knowledge involves three parties; HR expatriates, Chinese HR personnel, and the subsidiary itself and to achieve successful transfer, these parties have different tasks to perform in the knowledge migration process. The ability and willingness of Chinese HR personnel to learn will determine how well they acquire HRM knowledge. Equally, the ability and motivation of HR expatriates to share their knowledge can determine how well they transfer it. The transfer process is affected by a number of factors such as cultural difference, language and communication, working relationships, motivation and willingness, and also the absorptive capacity of the sink. The subsidiary operates in a multicultural environment in which cultural differences flow back and forth. For a Chinese subsidiary, three levels of cultural differences exist- national, organisational and individual. National, because of the size and, therefore, regional differences in the people, and organisational because of the difference between corporate culture and the culture of the subsidiary. The subsidiary operates in the host nation and is suffused with local influences. Thirdly, because the subsidiary is made up of an international workforce, there are differences in the personal values between expatriates and local personnel in terms of management styles and attitudes. Expatriates consider cultural adaptation to culture shock a key factor which determines whether an international assignment will succeed or fail. Cultural adaptation is not the sole responsibility of the expatriate however, Chinese employees should be aware of these differences and adapt to them accordingly. Effective communication is vital for the transfer of ER knowledge. Language is the most important factor in improving communication and many studies have shown that deficient language skills can hinder transfer: expatriates with proficient language skills are better able to succeed in assignments and the ability to speak the Chinese dialect can greatly enhance the expatriate to adjust to a multicultural environment. Communication can be improved further when language skills are linked to an understanding of cultural background. A good working relationship is also important in stimulating trust and creating bonds. An important factor in Chinese business is guanxi and being connected through this network allows people to be members of this group. Chinese employees are more willing to share information within the group than outside the group. Motivation is also a critical factor in knowledge transfer because without it, actual transfer could be compromised. Personal growth, job satisfaction and monetary rewards are also required. For example, Chinese HR personnel can draw motivation from job satisfaction and from increased employability and career advancement after having gained ER knowledge and experience. HR expatriates, on the other hand, can draw motivation from task achievement and job satisfaction, as well as career development. I NTERNATIONAL JOINT VENTURES AND ER

Many international companies have entered into a variety of strategic partnerships, ranging from mergers and acquisitions through joint ventures to limited projects such as co-production. Issues that need to be addressed range from a clash of national and corporate cultures to ‘Trojan Horse’ fears- potential competitors being allowed access to home markets, core competencies and advanced technologies. Some see alliances as inferior to firms in knowledge integration due to the absence of a common language, social norms, organisational routines and institutionalised modes of decision making that limits the capacity to conduct the low-cost knowledge-integration activities that characterise firms. International joint ventures (IJVs) are different in structure from mergers, acquisitions and intricate partnerships as they are legally distinct organisations formed by two or more sponsoring partners originating in two or more countries. Alliances are generic forms of cooperation, and equity joint ventures a special case cemented by ownership sharing through equity holdings. IJVs have become very popular allowing organisations to deal with complex environments more ably. They have become common in Central and Eastern Europe (post-Soviet Union era) and also China. Partners seek access to geographic or product markets and know that using the IJF route creates more value than going in on their own. China has more established IJVs than any other country being an important emerging market. They were the first form of FDIs sanctioned by the Chinese government, receiving preferential treatment and protective rules shielding them from uncertainty. Although joint ventures are an increasingly popular form of voluntary cooperation between organisations of different sizes, sectors, geographical locations, joint ventures and, in particular, IJVs, often fail. Such failures are associated with cultural differences in the main, HRM practices and differing management styles. The strategic motivation for IJV varies depending on the organisations involved and with their interests: Horizontal alliances occur between competitors in an industry through functional need. This can reduce costs and risks by sharing expertise. Another form of collaboration is cross-licensing agreements to enable risks across international markets to be reduced Vertical alliances occur between organisations sharing the control of operations, e.g. a supply-delivery chain Diagonal alliances occurs across organisations in different sectors pooling knowledge, expertise, resources, or technology

IJV situation

Interest (which may diverge or be misinterpreted)

Purpose (which may differ or be differently expressed)

Knowledge migration and transfer

Cooperation in research and development

Share cost of innovation

Lead time to development

Share basic knowledge of innovation

New markets

Joint working with host-country organisation to develop market

Developing joint control processes with host-country organisation

Share product and market knowledge

Accessing segmented specialist local market Guide technical knowledge to keep up with development in technology Expand market share in stagnant or crowded markets

Help in facilitating access to local markets

Help by facilitating market access to new markets

Share product knowledge

Develop new goals

Share technical knowledge

Develop market share

Share marketing knowledge for given sectors

Example IJV situations and their characteristics The table shows examples of different IJV situations and their characteristic interests, purposes and knowledge transfer focus. Firms lack complete control over strategy and structure in IJVs and these need continual negotiation and renegotiation. As many of half of all IJVs fail with cultural differences being cited as the main cause as well as managerial styles which is a manifestation of culture. A major issue for research in IJVs has been partner selection as the outcomes will be influenced by the nature of the chosen partner. Each partner is likely to have different strategic objectives which will influence the skills and resources available. They are more likely to succeed if the partners have complimentary missions, resource and managerial capabilities, as well as other attributes which help to create a strategic fit. Another focus is that of strategic choice especially the strategic interests of foreign MNCs. The interests of local partners is often overlooked which is surprising as the partner's strategic objectives also impact on the choice of both IJV partner and structure. Over time, changes will alter a partner’s incentive to continue the IJV strategy, necessitating restructure, otherwise the IJV may fail. Owing to the high interaction of HR/ER practices, IJVs constitute complex entities. There are different corporate and national backgrounds to consider who may also be HCNs, TCNs and PCNs, from the collaborating partner. Clearly HR and ER play a significant role in the success of IJVs. Of importance are; the appropriate selection of IJV personnel the use of experienced PCNs cross-cultural training joint training of HCNs and PCNs providing special compensation to expatriates using HCNs in key positions building a unique IJV culture, taking elements of both host and home culture as well as new elements not found in either 5 issues seem particularly crucial for HRM/ER in IJVs; who controls a particular manager the trade-off in time spent between operational and strategic tasks the appraisal of performance in the IJV loyalty issues over identification with the IJV or parent how to achieve career progression through an IJV

Other issues of particular importance to ER in IJVs include; using experienced HCNs familiar with local market and culture minimising expatriation costs using high-quality, experienced PCNs at the start of IJV operations to promote inter-partner learning and bridge cultural differences using local partners to deal with corruption and bureaucracy overcoming ER-related problems by utilising local partner’s experience and familiarity with local ER practices Partners may limit the status, number and tenure of people engaged in a venture, minimising opportunities for sustained learning. Some managers may be assigned to a venture over its lifetime whereas others may assign more time-limited expatriates. Clearly, alliances and partnerships involve more than just sharing money, technology and products; they also involve sharing people and HR/ ER practices. IJVs often generate a collision or blending or national or corporate cultures and styles. As well as team building and two-way communication, projects may require initial ‘dating’ and trust-building on smaller scale projects. They may also require attention to issues such as job design and ER, such as; whose technologies will be used? attention to issues of recruitment selection and HRP, e.g. what numbers, skills, mix or responsibilities are to be selected? who do staff work for? how are disagreements and grievances handled? if the venture fails, who do its employees work for? how will T&D be applied? in appraisal issues, whose standards will be used (e.g. subjective, long-term goals, team appraisal, indirect feedback)? IJVs provide significant opportunities for organisational learning and especially the transfer of culturally embedded knowledge. A vital part of the learning infrastructure includes HRM/ ER policies supporting the protection of competitive advantage and influencing the direction of IJVs, in particular, the transfer and accumulation of knowledge. ER failures that may limit how much learning takes place, or how much knowledge is transferred, include; HR planning activities may fail to communicate strategic intent short-term and static planning horizons may give such activities low priority insufficient lead time is allowed for staffing decisions a resource-poor strategy is adopted low-quality staff are assigned to the IJV the IJV depends on the partner for staffing The knowledge sink and source may exist as the ‘parents’ of the alliance and for Schuler, this interactive process enables crucial alliance learning. It enables parents to learn; more about each other

more from each other more from the alliance itself Some ‘rules’ for successful international ventures include; Characteristics interests

should be long-term and mutual

purposes

strategic aims and objectives should be compatible and complementary

influence and knowledge transfer

should be sharing, facilitated by relevant ER practices

the whole

the competencies of the alliance should be greater than that of any one partner

culture

cultural compatibility is important

trust

trust between organisations is essential, reducing need for elaborate procedures

interconnections

open communications between organisations is important

relational change

change in partner relationships can be volatile and require restructuring

ETHICS, INTEGRITY AND ER Most discussions of ethics and HRM see the issues involved as developing codes of governance, fairness, performance indicators and ‘best practice’ guidelines. Other concerns include child labour, health and safety standards, and environmental pollution. Ethics has a major role to play in ER as it relates to such issues as EO, diversity discrimination in employment, R&S, appraisal and PM, and talent/ career development; all issues where the interests of the individual may come into conflict with those of the organisation. Ethics also plays a major role in international and comparative ER. In a global organisation, what should a manger do if a practice seen in the home country is seen as legal and acceptable in the host country? Should a manager in China or the ME use guanxi or wasta as an ER tool? Do these culturally-acceptable host country actions raise ethical issues for Western managers? In addition, problems of corruption and bribery remain in many countries including Western industrialised ones. Here, companies may take advantage by employing low-wage workers, by moving operations ‘off-shore’, or by outsourcing work to low-wage economies. Such practices are not unknown in Western countries where exploitation of migrant labour, use of sweat-shops, and home-working may occur. A recent development is the principle of corporate social responsibility (CSR) and an appreciation of the role that HR can play in developing CSR initiatives.

Company websites and reports routinely include sections on CSR which cover a variety of local and global concerns. CSR is an evolving but disputed concept with potentially far-reaching implications for ER. However, its practice is very uneven, with codes of practice being poorly monitored and poorly enforced. Ethics is a nuanced arena of debate that leaves itself open to broad range of interpretations. Probably the most important factor to note is that employees may operate from completely different ethical perspectives. Consequentialists will look to the moral value of the outcomes of their actions. Deontologists will focus more on the motivation behind their actions. ETHICAL ISSUES IN ER IN THE M IDDLE EAST In much of the ME, the influence of often family-based ‘connection’ (wasta or piston) affects much of ER, especially in such areas as recruitment, selection, promotion, and performance management. This raises ethical issues over nepotism, bribery and corruption. If one adopts a relativist ethical position, one may feel relaxed about this; it fits in with Arab or Islamic culture. People are expected to put their families and friends first which ‘harmonises’ and ‘humanises’ the workplace. Connections to rich and powerful families may ‘force’ managers to promote or fail to discipline poor performers, and of course, this is not just an issue in the ME. However, many people in the ME and outside have challenged these practices in the name of more universalist principles such as fairness, transparency, meritocracy, as well as more utilitarian principles such as enhancing efficiency and effectiveness. These challenges have often been raised with regard to government service employment. Ethical challenges across much of the public sector in the ME include; limiting the size and fiscal weight of the civil service restructuring the civil service setting and implementing anti-corruption and integrity standards making institutional/ procedural anti-corruption frameworks effective improving scrutiny over government and civil service action Some countries such as Tunisia, Yemen and Dubai, have reformed and modernised their civil services introducing flexibility and incentives but in many other countries, the public-sector pay structures encourage bribery and (petty) corruption, especially in agencies that deal with the public. Many countries lack effective ethics regimes and integrity provisions to control discretion and prevent conflicts of interest, allowing favouritism and nepotism to flourish. Public-sector ER and HRM policies and practices in the ME can therefore be deficient in various ways; The overall institutional framework may not state or enforce basic ethical/ integrity principles, or limit political and personal influences on ER decisions such as R&S, promotion, performance management and career development. A lack of HR planning data and an overall ER policy that fails to emphasise merit and competence may lead to the exclusion or disproportionate representation of certain religious or ethnic groups, or of women.

An absence of a fair, equal and transparent recruitment policy (Module 5) may lead to favouritism, nepotism, and corruption, and a tarnishing of the image of public-sector employment. An absence of sound selection and placement policies based on merit and competence may lead to invalid and biased selection criteria, subjectivity, favouritism, and discrimination, and an absence of diversity or equal opportunity. A weak PMS may reduce accountability through ill-defined jobs, reducing fairness in assignments and inhibiting monitoring and measurement. Discrimination in rewards based on personal or political factors, such as personal, family or clan loyalty, may be widespread. Training and development may also be subject to abuse and corruption through bribery, non-competitive contracts, and favouritism in training nominations. Promotions and career advancement may also be based on personal or political criteria, or offered to those who provide ‘inducements’. Disciplinary procedures may be subject to corruption and malpractice, with a lack of fairness or transparency. After officials leave employment, they may still seek to advance personal interest through bids for business, use of information and influence, and re-engagement as consultants or contractors. Of course, many of these challenges also exist in many developing countries, as well as many advanced industrial countries, and local HR researchers and practitioners have begun to recognise and address them. To avoid or minimise unethical practice, HRM strategy generally needs to adopt integrated approaches based on competence, merit and professionalism, balancing ministerial and organisational autonomy and accountability in HRM, as decentralisation may lead to increased discretion for corruption and favouritism. Alternative approaches to developing ethics/ integrity regimes may need to be developed in culturally appropriate ways, not just the transfer of Western models. It may also be useful to benchmark initiatives against best practices worldwide, perhaps complemented by religious-based integrity efforts where appropriate (e.g. Islamic-based ethical initiatives).