current developments in hrm in australian organisations

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2006 44: 132Asia Pacific Journal of Human ResourcesCathy Sheehan, Peter Holland and Helen De Cieri

Current developments in HRM in Australian organisations

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132

Current developments in HRM in Australian organisations

Cathy Sheehan, Peter Holland and Helen De CieriMonash University, Melbourne, Australia

The aim of this paper is to report on current developments in the area of humanresource management (HRM) in Australia. The study analyses 1372 on-lineresponses to a survey of Australian Human Resources Institute (AHRI) members.Results of the research indicate that although human resources (HR) hasstrengthened its strategic positioning, HR professionals face several challengesincluding: the potential narrowing of their career base; the need for improvedHRM metrics; and a broader commitment to attraction and retention initiatives.Results also reveal that expectations of a more strategic business focus for HR aredeveloping in the context of an industrial relations climate that has increasedHR’s responsibility for employee relations in the workplace. In the face of thesecomplex expectations, Australian HR professionals report positive reactions to thechanges that have occurred within the HR function; they remain optimistic abouttheir future and their capacity to manage the shifting ground that HRM occupies.

Keywords: attraction and retention of employees, HRM in Australia, HR professionals, strategic role

The recognition of human resource management (HRM) as a key source ofcompetitive advantage provides professionals working in the human resources(HR) function with elevated organisational status (see Boxall and Purcell 2003;Wright, Dunford, and Snell 2001). The acknowledgement of HR howeverpresents professionals working in the area with a number of role changes andnew challenges (Cascio 2005; Meisinger 2005; Wright and Snell 2005). Forexample, the creation of more central strategic roles for the HR function bringswith it the expectation that it is not enough for HR to simply partner topmanagement, it has to drive business success (Cascio 2005; Roberts and Hirsch2005; Roehling et al. 2005). In Australia, significant changes to the industrialrelations legislation have also brought attention to the HR role. The decen-

Correspondence to: Dr Cathy Sheehan, Department of Management, Monash University,Caulfield campus, Victoria 3800, Australia; fax: + 613 9903 2718; e-mail:[email protected]

Asia Pacific Journal of Human Resources. Published by Sage Publications (London, Thousand Oaks, CA andNew Delhi; www.sagepublications.com) on behalf of the Australian Human Resources Institute. Copyright © 2006Australian Human Resources Institute. Volume 44(2): 132–152. [1038-4111] DOI: 10.1177/1038411106066391.

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tralised employer–employee relationship that promotes direct dealingsbetween employers and employees at the workplace level has further intensi-fied the focus on the HR professional as a key stakeholder in the successfulmanagement of the employer–employee relationship (see, for example,Research evidence about the effects of the ‘Work Choices’ Bill 2005).

These demands on HR are set against changing workforce demographicswhich include a shortfall in skilled labour worldwide and indications thatmore people are leaving the workforce than joining it (Critchley 2004). Theneed for HR to add real strategic value to the bottom-line, closely manage theemployee–employer relationship and deal with a diminishing workforcepresents a challenging environment for those working within the HR function.Indeed Meisinger (2005) contends that in reply to the expectations of HRM,successful HR professionals require increasingly complex technical skills andpersonal strengths including competence, curiosity, courage and a sense ofcaring for people. In order to provide insights into the response of the HRfunction in Australia to the range of HR responsibilities that the function isexpected to deal with, the primary aim of the current research is to review thedevelopments in HRM in Australian organisations through an examination ofboth the HR role and HRM policy initiatives.

The current study continues a unique line of research that has providedimportant ‘snapshots’ of the personnel/HR role in Australia. Initial attempts tocapture the extent and nature of personnel management work in Australiaoccurred in the late 1940s with a survey conducted by the Institute of IndustrialManagement in 1947 (Manufacturing and management 1947). Later surveyswere conducted by Kangan and Cook (1949), Cameron (1967), Draper (1977),and Dowling and Deery (1985). In 1995 Dowling and Fisher’s survey of AHRIhighlighted the profession’s acceptance of the shift away from the primarilyreactive role of personnel towards the proactive strategic approach offered byHRM (Dowling and Fisher 1997; Fisher and Dowling 1999). More currentresearch continues to track and confirm the development of a closer relation-ship between HRM and organisational strategy (Cleland, Pajo and Toulson2000; Khatri and Budhwar 2002; Michelson and Kramar 2003; Sheehan 2005;Teo 2002). This study adds to the ongoing monitoring of HRM approachesbeing used in Australian organisations by providing a current review of devel-opments both within the HR function and in HRM policy design. Thefollowing sections outline the key areas of investigation of the research.

Dowling and Fisher’s 1995 study revealed increasing levels of higher educationamong HR professionals (Dowling and Fisher 1997). The trend has attractedattention both from researchers in the area and from within the professionalbody. Scholars have identified the key competencies that should be covered in

HRM in Australian organisations 133

Who is working in the HR function?





the curricula in programs such as a masters degree in HRM (Langbert, 2005),and AHRI has developed its own accreditation process for Australian univer-sity HRM programs (see www.ahri.com.au). Although, as Langbert (2005)suggests, there is scope for greater balance in the programs and a more definedemphasis on change management and interpersonal skills, the commitment tofurther study indicates a willingness by those within the professional HR groupto gain a deeper understanding of the ideas and arguments that form the basisof the discipline. These additional qualifications may also provide an importantpotential source of credibility when these individuals are contributing tostrategic discussions (Dowling and Fisher 1997).

In the 1995 study, there was also a reported tendency for younger HRprofessionals to begin their careers within the HR area. As with increasedhigher degree training, the trend towards early HR career entry allows HRprofessionals to acquire a deep knowledge of the area and become fully skilledwithin the function. Concern was expressed in the 1995 research, however, thatalthough the choice allows strong development in the HRM field, thenarrowing of the career base may have negative implications for the acquisi-tion of broad-based business skills. In order to track these trends the researchquestions associated with the first area of investigation are:

RQ 1: Are educational levels of HR professionals continuing to increase?

RQ 2: Where are HR professionals beginning their careers?

The shift away from personnel to HRM has meant a change both in the struc-turing of people management initiatives and in who takes responsibility forthese activities. It is expected for example that greater care now be taken toensure that HRM policy supports business strategy and that HRM policy areascomplement each other. It is also expected that HRM becomes an organisa-tion-wide responsibility, with greater commitment and involvement from alllevels of management. The underlying unitarist approach to the employer–employee relationship further supports the notion of goal alignment betweenvarious stakeholders in the organisation (Storey 1995; Legge 2005).

For the HR professional the transition away from a primarily adminis-trative personnel function to a more strategic focus has meant a redesign ofthe nature and extent of the HR role. Ulrich (1997) has argued that the HRprofessional still has to offer expertise as an administrator and employeechampion as well as change agent and now strategic business partner. Hemakes the point however that while personnel may have dealt with these rolespreviously to a greater or lesser extent, within a HRM approach there is amuch clearer focus on how each of these roles ‘add value’ to the business

134 Asia Pacific Journal of Human Resources 2006 44(2)

HR’s role in strategic planning





despite the fact that the roles ‘they must perform are increasingly complex and,at times, even paradoxical’ (24).

One outcome of the role change for HR is that the function is nowexpected to assume a more prominent position at the senior decision-makinglevel and take a more proactive role in developing the organisation’s people asa source of competitive advantage (Cascio 2005; Roehling et al. 2005; Wrightand Snell 2005). There has been some evidence of an uptake of a more strategicHR decision-making role, but there is still some doubt about the extent of thetransition. Fisher and Dowling (1999) reported that senior HR managers had,at that time, internalised key features of a HRM approach and largely movedaway from the personnel mindset. Kane and Palmer (1995) and Wright (1995),however, have stated that the extent to which HRM has been adopted inAustralia is debatable. More recently Michelson and Kramar (2003) havereported evidence of the growing implementation of a HRM approach butsuggest that there is considerable variation across organisations. These authorsdescribe perceptions of HR’s contribution to strategic outcomes as ‘moderate’to ‘fair’ with evidence of remnants of the view of HRM as an administrativefunction. There is a lack of consensus therefore on the extent to which HR hasactually taken on strategic responsibilities and this raises questions about thestrategic content of the HR role: specifically, the extent to which HR profes-sionals prioritise strategic policy development and the involvement of HRmanagers in the senior decision-making process. The third research questionis designed to clarify aspects of the HR role as follows:

RQ 3: What are the current key elements of the HR role?

In addition to considering the strategic positioning of the HR function, recentresearch also discusses attempts to measure the contribution of HRM tocompany performance. A strategic approach to HRM measurement adopts abroad approach, including the development of systems to measure the effi-ciency, effectiveness and impact of HRM (Boudreau and Ramstad 2002, 2003,2005; Lawler, Levenson, and Boudreau 2004; Ulrich and Smallwood 2005).Efficiency metrics focus on the cost of an HRM practice, such as the adminis-trative cost per employee of a training program, to determine the return oninvestment (ROI). Effectiveness measures aim to provide an indication of thefit between HRM programs and the organisation’s business strategy, and thethird type of measure focuses on the real impact of HRM programs andpractices on organisational performance, by measuring the value added to anorganisation by an HRM practice.

It is important to note that there are numerous pitfalls of measurementfor HRM (Pfeffer 1997), such as measuring items that are easily available, or


Measurement of HR’s contribution





adopting a short-term focus. A key issue, raised by Lawler, Levenson andBoudreau (2004), is that HR functions often collect data on the first of the threetypes of measurement identified above, efficiency, but not on the impact ofprograms and practices on the business. While efficiency measures can beuseful, they reveal little about the value added by HRM practices; they focusonly on the cost. These measures do not address issues such as service qualityand the impact of HR services on organisational effectiveness. The second typeof measurement, effectiveness metrics, typically includes measures of thestrategic skills and core competencies in the workforce. They assess outcomessuch as whether HRM programs and practices have the intended effect onpeople. For example, an organisation might use an employee survey to measurethe degree to which employees are satisfied with a training program focusedon improving customer service behaviours. Measuring employee satisfactionwith HRM programs however does not reveal whether the programs have hadan impact on organisational performance. Accordingly, such measures areuseful but still have some limitations. The third set of measures tries to gobeyond simply showing that HR has reduced its administration costs andimproved the quality of the service by measuring the ability of the HR functionto show an impact of their activities on the bottom-line. For example, impactmeasures endeavour to demonstrate a link between training programs andtangible effects on the organisation’s competitive advantage, such as reduceddefects, increased production speed and improved service quality and retentionrates following training programs.

Lawler, Levenson and Boudreau (2004) have argued that it is the set ofimpact metrics that assist in developing the strategic role for the HR function.An impact focus in the measurement system benefits the HR function byenabling it to move from subjective and intuitive measures to objectivemeasures, to elevate the HR function to an equal footing with other functions,and to provide a valid justification for resource allocation (De Cieri, Kramar,Noe, Hollenbeck, Gerhart, and Wright 2005). Thus the research question asso-ciated with the fourth area of the research investigates the kinds of HR metricsthat are being used in Australian organisations and focuses on the third typeof metric as this area provides the HR function with the greatest strategicleverage.

RQ 4: To what extent are HR professionals measuring and providingfeedback about HR’s contribution to the bottom-line?

During the latter half of the twentieth century, population trends across OECDcountries revealed almost static populations and declining birthrates. In theperiod between 1990 and 2003 the population growth rates for all OECD


HR responses to the new workplace





countries averaged 0.6% per annum. From 1990 to 2000 average birthrates forthe OECD countries fell from 14.3 per 1000 population to 12.4 (OECD 2004).This has generated growing concern for the long-term labour market, with thefirst wave of baby-boomers reaching retirement, and for the foreseeable future,more people leaving the workforce than joining it under current employmentstrategies (Critchley 2004). A global study by the Boston Consulting Group(2003) estimates a shortfall in skilled labour worldwide of the order of 60million by 2020. The United States will face a shortage of 17 million workers;Japan 9 million; China 10 million; Russia 6 million; Germany 3 million; France3 million; Spain 3 million and the UK 2 million and Australia 500 000. Theimpact of these trends has been examined by several major consultancy groups.In 1998 research by McKinsey & Co., titled The war for talent, involved 77companies and almost 6000 managers and executives in the United States. Thestrategic overview report identified that the most important corporate resourceover the next 20 years will be talented employees (Michaels, Handfield-Jones,and Axelrod 2001). Accordingly, the report recommendations included afundamental change in HRM practices that focused on finding more imagina-tive ways to attract and retain employees. The report also emphasised thechanging psychological contract within the employment relationship notingthat employees will increasingly look for employability not employment andwill want to change jobs often.

These trends indicate that those organisations prepared to focus onattracting, developing, and retaining talent may be in a stronger position asthe so-called ‘war for talent’ intensifies. It is important to acknowledge thatCappelli (2005, 143) has queried these consultancy reports and the discourseabout the implications of a ‘skills shortage’. While recognising the substantialdemographic changes in the workforce, he argues that ‘HR challenges havemore to do with changes in employment relationships than a shortfall ofworkers caused by demographic changes’. Whether organisations are focusingon skill shortages or the quality of the employment relationship, these devel-opments focus attention on HRM policy initiatives that attract and retainvaluable staff. The research question posed therefore is:

RQ 5. Are Australian organisations placing emphasis on developing HRMpolicies and practices to attract and retain talent?

Questionnaire and procedure

The research was conducted in conjunction with AHRI. The questionnairewas based on the items used in both Dowling and Deery’s (1985) and Dowlingand Fisher’s (1997) studies. A number of academics and practitioners were also


Method





consulted to make changes to accommodate developments in the last ten years.The survey was clearly divided into two sections. The first section wasdesigned to include all HR professionals and covered a wide range of itemsrelated to the role of HR, the extent of the focus being given to different areasof policy design and measurement approaches to HR’s contribution to thebottom-line. The second section was designed to investigate HR’s involvementin strategic decision-making processes and included items developed fromsurveys conducted by Purcell (1995) and Buller and Napier (1993). The sectionwas restricted to respondents who were senior HR managers. If respondentsdid not identify themselves as the person who was the most senior HR repre-sentative in their organisation they were automatically redirected to astatement thanking them for their participation in the survey.

With respect to delivery mode, AHRI members were contacted via e-mailand invited to visit a website if they wished to complete the survey. As thequestionnaire was web-based, respondents were not requested to identifythemselves and they were also assured that their responses would only formpart of cumulative data. The e-mail was sent to 12 437 members with a requestto read a letter attachment. 5966 proceeded to open the letter and of that group,2803 opened the web link to the survey document and began to fill in the ques-tionnaire. A total of 1372 members completed the web-based survey andsubmitted a completed document. The response rate of members whoattempted to complete the survey therefore was 22.5% and the rate formembers who submitted completed surveys was 11%. There were a numberof reasons why members may not have completed the survey. First, theopening statement explained that only members who were currently respon-sible for HRM / personnel or employee relations matters (working either ‘inhouse’ or as a consultant) were required to proceed with filling out the survey.This meant that line managers, academics or other functional managers whomay be AHRI members would have opted out. Second, the survey did notallow for non-response to specific items so some members may have exited thesystem prior to completing the survey because they did not wish to completesome of the items.

Sample characteristics

Despite the diminished response rate, the 1372 members who did respondprovide a substantial sample size for statistical analysis. The sample charac-teristics include a reasonable spread across age with a slightly higher repre-sentation in the older age category: 28% of respondents fell into the 30–39 agegroup and 34% within the 40–49 age range. With respect to gender, 65% ofrespondents were female and 35% were male. All of the industry groups iden-tified by the Australian Bureau of Statistics were represented in the sample(ABS 2004). Key groups identified in the national data, such as manufacturing,health and community services and education, were almost equally well repre-






sented in the study sample. A total of 21.4% of the sample was also employedin the public sector. Respondents came from predominantly larger organisa-tions with 61% working in organisations with more than 500 employees inAustralia. Overall therefore respondents were relatively mature, more likely tobe female and working in larger companies. There was also a fair representa-tion of professionals from across the ABS industry groupings.

Education and career choices

The first two research questions are concerned with the education and careerchoices being made by HR professionals. Data indicates that 46% of respon-dents have completed some form of graduate degree. This compares with 23%in 1995 and 9% in 1985 (Dowling and Deery 1985; Dowling and Fisher 1997).HR professionals are taking the opportunity therefore to increasingly improvetheir educational qualifications. With respect to career entry points, a cross-tabulation provides support for a continuation for younger people to enter theprofession through the HR functional area (Phi = 0.33, p < 0.01). Specificallythe data indicate an upward creep in the number of younger HR professionals(20–29 years) who are starting their career in the HR department. In contrast,older respondents (40–49 years and 50–59 years) were more likely to begintheir careers in clerical positions and the areas of accounting and finance. Theimplications of these findings are that, although HR professionals may beestablishing credibility through improved educational qualifications, theirexposure to a broad range of business experiences may be reduced if theyrestrict their career path to movements within the HR department.

Sheehan (2005) found, in a series of case-studies that looked at the credi-bility given to HR professionals operating at the strategic decision-makinglevel, that HR professionals with broader business backgrounds were givenmore respect in strategic discussions. HR professionals who begin their careerin the HR area are less likely to gain career breadth and this may pose chal-lenges for HR professionals who are establishing roles in strategic businessdecision-making partnerships. HR incumbents who choose to move straightinto the HR function, therefore, could benefit from temporary placement inother areas such as finance or production.

The current HR role

The third research question of the study focuses on elements of the HR role.A number of items were included to measure perceptions across the sample ofthe uptake of HR’s strategic responsibilities. Respondents were asked, forexample, to identify which HRM activities best describe the primary emphasis


Results and discussion





of their position, with primary meaning 60% or more of their time. A total of20% of respondents identified HRM strategic development as their primaryarea of responsibility. On another item, when asked to rate on a 5-point Likertscale in the last five years, the level of importance of a range of HRM areas,strategic integration of HRM policies attracted the highest score, 47%, for ‘veryimportant’. Similarly when asked about the next five years, the area againattracted the highest number of responses, with 60% of respondents selectingthe ‘very important’ category.

In order to more fully investigate these reports of strategic HR involve-ment, responses were analysed from a subgroup of 472 senior HR managers.It is more likely that senior HR managers will be the group who will bedirectly involved in strategic processes and therefore will have more accurateknowledge of the involvement of HR in strategic decision-making processes.Using the distinction developed by Buller and Napier (1993), senior HRmanagers reported the following levels of involvement. As can be seen fromthe data reported in table 1, an encouraging number of senior HR managersreported high levels of involvement in the strategic decision-making processwith 49% reporting active involvement in all types of strategic decisions.

Table 2 reports on results from a 5-point Likert scale measuring perceivedlevels of involvement at each stage of the decision-making process as definedby Purcell (1995). The tabulated results are the summed frequencies of thenumber of people who indicated both high and moderately high involvementin all stages of the decision-making process. As can be seen from the table,consistent with the findings reported in table 1 related to overall involvementin strategic decisions, HR managers report quite high levels of involvementacross each of the stages in the decision-making process. It is interesting tonote, however, that the highest involvement was reported in what is primarilya reactionary role, the implementation of decisions made.

Results presented in table 3 are again drawn from the larger sample andindicate that full HR representation on boards of directors has increasedslightly since 1995 and there is greater recognition of HR’s role on senior


Table 1 Role of HR in strategic decision-making processes

n = 472%

The human resource area provides operational support, develops some internal programs to meet specific needs, but is generally viewed as a processor of paperwork and employment activities 8

The human resource area reacts to strategic directions and requests from top management 7

The human resource area provides input into and reacts to strategic directions set by top management, but only on personnel related matters 36

The human resource area is actively involved in all types of strategic decisions, whether or not they directly affect personnel matters 49





management committees. Overall then results indicate that HR professionalsare reporting increasing levels of strategic involvement both through their self-reports of strategic involvement and membership on the board of directors.

A further item in the survey of the larger sample of 1372 respondentsexplored the reactions of HR professionals to possible changes in their role. Thequestion that formed the basis for the results in table 4 asked respondents toindicate their level of agreement (on a 5-point Likert scale) with statementsabout possible reactions to the transition from personnel to HRM. Thefrequency data reveals that only 9% of respondents report no change in theirrole; 84% of respondents agreed that they have had to acquire a new set of skillsin response to the transition from personnel to HRM. A total of 80% of respon-dents also claim that the changes has made their job more rewarding. Reportingof negative implications was minimal, with only 6 % reporting role ambiguityand 15% agreeing that there has been a negative impact on important rolespreviously held.


Table 2 Extent of high involvement at each stage in the decision-making process

n = 472%

Drawing up proposals 58

Evaluating financial consequences 41

Taking the final decision 49

Implementation 83

Table 3 Senior committee representation of HR

1995 2005HR representation on n = 837 n = 1146the board of directors % %

No representation 55 42

HR representative 17 25

Representative with HR as part of their responsibility 28 33

HR representative on the senior management group n = 821 n = 1372at the enterprise level % %

Yes 56 68

No 44 32

Table 4 Reactions of HR professional to the change in their roles

% of respondents who agree or strongly agree with each statement

The transition to HRM demands a set of new skills. 84

The transition to HRM has made my job more rewarding. 80

I have difficulty developing skills for the strategic part of my role. 17

I have concern that a more ‘business focussed’ HR profession may have a negative impact on important roles that HR has previously held. 15

There seems to have been no change to my role. 9

I am now more confused about what my role is. 6





The report of negative impact is interesting in light of the potentialconflicts that may be emerging at a time when, as well as increased strategicmanagement roles, HR professionals are being called upon to assume moreemployee advocacy responsibilities. In the Australian context, the decline ofcentralised bargaining and the marginalisation of union involvement inemployer and employee negotiations have meant that HR may have to assumea more pivotal employee relations role. In order to explore this issue further,respondents were asked to identify how much responsibility is now beingtaken by HR professionals for a range of employee relations issues. Thequestion used the categories identified by the AWIRS 95 data (see Moreheadet al. 1997, 84, table 5.2). In the 1995 dataset, the analysis distinguished betweenrespondents whose area of responsibility was employee relations and comparedtheir involvement with professionals from other areas of management such asfinance, administration and sales. The current research is more specific anddistinguishes between the roles undertaken by HR, employee relations andindustrial relations professionals.

When compared with the reported involvement of these other two groupsof professionals, HR professionals report primary responsibility across a rangeof employee relations and industrial relations tasks including negotiating withunions, setting and negotiating wage levels, and preparing for industrialtribunal hearings. Within the ‘other’ classification, line managers were themost commonly listed category. Consistent with attempts to devolve traditionalpersonnel areas, this group reported relatively high levels of responsibility forthe induction of new employees (37%), recruitment and selection (29%) andOHS (30%) matters (table 5).

From the results it would seem that those working in the HR role arecontinuing to refine and develop their strategic focus. It is also clear, however,that ongoing changes to the industrial relations legislation and the resultant


Table 5 Responsibility for employee relations activities

Employee relationsHR professionals % professionals % IR professionals % Other %

Inducting new employees 59 4 0 37

Negotiating with unions 51 17 24 8

Setting/negotiating wage levels 55 12 16 17

Processing personnel records 78 4 0 18

Preparing for industrial tribunal hearings 53 16 26 5

Workplace training programs 79 3 1 17

Recruiting and selecting 69 3 0 29

EEO / AA 83 6 2 9

OHS 63 5 2 30





devolution of the employer–employee relationship to the level of the workplacehave resulted in increasing HR responsibility for employee–industrial relationsactivities. Thus, as well as becoming a more important strategic managementfunction, HR is being called upon to act as a key player in employee advocacymatters. It is important to consider, therefore, the potential impact of thesechanges on avenues for employee voice.

Specifically, those working in HR are now more likely to be expected totake on a strategic focus and become more aligned with management. Theevidence as identified above suggests that HR have accepted the challenge andreport positive reactions to the strategic demands of their new role. Althoughthis is an important step towards recognising the importance of people as asource of strategic competitive advantage, it may also cause conflict for thoseworking in the HR profession about their responsibilities as employeechampion versus strategic partner. As noted above, however, respondents donot agree that a more ‘business focused’ HR profession detracts from otherimportant HR roles. Indeed, although 84% of respondents report change intheir role, only 6% report confusion about what the role now actually involves.These results are consistent with Ulrich’s (1997) unitarist argument that thevarious HR roles are all driven by a common underlying commitment toensuring efficient performance of organisational processes.

A final item in our section examining aspects of the HR role sought thereactions of senior HR managers to the question ‘In your organisation, whatare the most limiting influences / factors upon the HR input into senior strategicbusiness decision?’ Responses are presented in table 6. Of the responses thatidentify limiting influences, poor understanding of the value of HRM to thebottom-line and a lack of acceptance of HR by other senior managers were themost dominant reasons given as barriers to HR integration. This brings ourdiscussion to research question four, which reviews the extent of attempts tomeasure HR’s contribution to the bottom-line.

Consistent with Lawler, Levenson and Boudreau’s (2004) prediction thatthe HR function often collects efficiency data but does not collect data on theimpact of HR programs on the bottom-line, results revealed high levels HR


Table 6 Limiting influences on HR strategic integration

n = 472%*

Poor understanding of the value of HRM to the bottom line 45

None, HR is fully integrated into the senior decision-making process 40

Lack of acceptance by other senior managers 22

Lack of CEO support 17

Unsympathetic company culture 15

*Respondents could tick more than one response





efficiency metrics: 68% of respondents reported measurements associated withheadcount, 67% measured employee turnover rates and 61% monitored OHSstatistics. With respect to effectiveness, 43% of respondents reported feedbackon financial measures of HRM operations such as cost -per-hire and trainingcosts, and 30% reported evaluations of specific HRM programs. Measures ofthe impact of HR, however, were weaker with only 25% of respondentsreporting that attempts were made to clearly connect the HR measurementapproach with organisational performance.

Finally, with respect to research question 5, respondents were asked toidentify, from a range of possible HRM activities, the areas where the HRfunction had developed important new policies, programs or systems in thelast five years. If the respondent were a consultant they were asked to identifywhere they had assisted organisations in the design of new HRM approaches.Results are reported in table 7.

The following discussion groups aspects of work policies, practices andsystems into the two broad categories of attraction and retention. In terms ofattraction, recruitment and selection were considered to be the key initialinterface between the individual and the organisation. Results confirm thatorganisations are working to attract talent with 76% of respondents developingrecruitment initiatives. A total 67% of the survey also identified selection as a


Recruitment 76

Performance appraisal (managers) 75

Performance appraisal (non-managers) 69

Selection 67

OHS 57

Work–life balance 55

Training 54

Family friendly policies 49

Values/ethics 48

Grievance procedures 47

Training efforts devoted to skill enhancement 47

Workforce planning 44

Employee discipline 43

Equal Employment Opportunities 43

Development 42

Performance related pay (managers) 41

Termination management 41

Team building 40

Career management 39

Diversity (e.g. age, ethnicity) 38

Skill development 37

Job analysis 33

Performance related pay (non-managers) 32

Job design 30

Job evaluation 29

Award/union coverage 26

Joint consultation/participation 24

Employee share ownership 13

Skill-based pay 10

Monitoring surveillance 9

Table 7 Current HRM policy development areas

n = 1372 n = 1372%* %*

*Respondents could select more than one response

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significant area of HR policy and practice development. This could be inter-preted as an increasing awareness of the importance of the person–organisa-tion fit (Dale, as cited in Keen 2005). Along with these primary areas ofrecruitment and selection, values and ethics may also act as important sourcesof attraction as employees are becoming increasingly discerning about who they work for. Macken (2005, 27), for example, notes the sophisticated use bypotential employees of blogs and websites to find out about the real organisa-tional culture. Organisations as large as Microsoft have expressed concern aboutinternal bloggers and their effect on the future workforce and clients. Potentialemployees are able to quickly attain information about the values of the organ-isation from both insiders and outsiders and this information may have negativeconsequences when companies are trying to attract talented people.

With respect to the area of values and ethics, far fewer organisations (48%)had policies in the area of values and ethics than in recruitment (76%) andselection (67%). Values and ethics therefore may be an area that needs to bemore closely considered, because, as noted above, organisational image islinked to potential employees’ decisions on whether to join the organisations.New employees are far more discerning with regard to their employers andthis will become increasingly important in an employee-orientated market.

The remaining policies and practices were considered to be mainly asso-ciated with retention. Job design, job analysis and team-building, for example,contribute to the day-to-day experience on the job; determining what jobsinvolve and how work is organised. Results indicate quite low attention tothese areas, with respondents reporting the following: 30% reported HRMinitiatives in job design; 33% in job analysis and 40% in team-building. Thereasons for this may be varied including resistance to change by employers.Boxall, Macky and Rasmussen (2003) have identified, however, in a review oflabour turnover and retention in New Zealand, that one of the main reasonswhy respondents left their employer was to pursue more interesting workelsewhere. In an environment characterised by a shifting workforce, it may beworthwhile, therefore, for employers to review more closely how jobs areconstructed and connected.

Another key factor in the retention of skilled workers is the provision oftraining and development. Edgar and Geare’s (2005, 372) study of aspects ofHRM that are important to employees, identified training and developmentto be of ‘paramount’ importance. Boxall, Macky and Rasmussen (2003) alsoidentified training opportunities as a determinant for the decision made byemployees to leave their employer. Results of our study indicate, however, thatalthough organisations were attending to training and development, the focuscould have been stronger. We found that, for general training, 54% of respon-dents indicated significant policy development. With respect to skill develop-ment, however, only 37% indicated they had initiated supporting HRMactivities. Low responses were also identified in the areas of career manage-ment (39%) and development (42%).






Organisational resistance to policy development in career developmentmay reflect the changing psychological contract between employers andemployees. Employees are increasingly choosing to manage their own careerby moving between organisations (Arthur and Rousseau 1996; Hall 1996;Handy 1995). Employers may, therefore, be questioning the value of investingheavily in training and development opportunities for employees who may notstay (Noon and Blyton 2002). Nevertheless, as Edgar and Geare (2005) pointout, training and development are still considered to be important issues inemployee retention and as such should be recognised as important lures in the‘war for talent’.

An area that employers are attending to is performance appraisal. NewHRM policy and practice developments were reported for both managers andnon-managers (75% and 69% respectively), which would suggest that organ-isations are seeing the importance of discussing and documenting employeeprogress at both a management and non-management level. The concern maybe, however, that the abovementioned lower level of commitment to initiativesrelated to skill development and career management suggests that the interestin performance appraisal may be related more to performance monitoring thanperformance development.

The areas of work–life balance, family-friendly policies and diversity canbe linked to both attraction and retention: these initiatives boost organisationalreputation, add to a firm’s standing as an ‘employer of choice’, and they affectretention by allowing employees to meet personal needs (Lansbury and Baird2004; Liddicoat 2003; Russell and Bourke 1999). Pocock (2005) makes thebusiness case for a link between work–life balance and worker attraction andretention and the ultimate competitive survival of a company. The increase in the number of women in the workforce coupled with an ageing populationbase that requires carers elevates the need for companies to support valuedemployees who have family responsibilities. Results of the current study indicatethat work–life balance initiatives were being developed in a little over half theorganisations (55%) surveyed and family-friendly policies were evident in 49%of responses. With respect to the area of diversity recognition, however, only38% of respondents reported HR initiatives. Again writers such as Murray andSyed (2005) and Richard (2000) highlight the negative impact of discouragingworkers from diverse backgrounds. This becomes especially evident whencompanies are operating in such a tight labour market.

Overall, the findings of our research reveal a strengthening of the strategicrole of the HR professional in Australia with nearly half of the senior managerrespondents reporting an active role in all strategic decisions and similarinvolvement at each stage of the decision-making process. HR representationon senior committees has also increased since 1995. These findings suggest thatorganisational structures are adapting and providing HR with an opportunityto participate at the senior level. It could be argued on the basis of the findings,however, that while there are now greater opportunities for HR to be strate-






gically involved, there are still gaps and challenges that members of the HRprofession have to manage.

First, with respect to the profile of the HR professional, although theresults of the study indicate that members of the profession are continuing toestablish credibility through education qualifications, they are also making thedecision to use the HR department as a HR career entry point. On the onehand the development reflects growing confidence and acknowledgement ofHR as a chosen career option but the trend also has implications for careerbreadth opportunities for those within the HR area. There is an expectationwithin senior management levels that HR professionals, especially those whoeventually attain strategic planning roles, have a varied business background(Sheehan 2005). The personal challenge for HR professionals then may becomeone of exploring business opportunities outside the chosen area of HR in orderto broaden their competency development.

A second issue that arises from the research is the need for HR to providemore detailed confirmation that HR involvement actually results in ‘bottom-line’ outcomes for business. The senior HR management group in the studyindicated that poor understanding of the value of HRM to the bottom-line wasthe most limiting factor on the strategic integration of HRM. Questionsrelating to the use of HR metrics, however, reveal that, while respondentsreport quite high levels of measurement of HRM activity, few respondentsreported efforts to connect HR measurement with organisational performance.The relatively low level effort to connect HR’s contribution to the bottom-linehas implications for the continuing justification that HR can give for itsstrategic role in Australia: other senior managers who have been urged toaccept HRM as a priority may be less willing to do this when they cannot seea clear connection between an investment in HRM initiatives and improve-ments for the business.

Another challenge identified by the research has been within the area ofHRM policy design. Our research indicates that HR initiatives have focused onthe initial contact points with the market through the areas of recruitment andselection. With the labour market expected to be in the employees’ favour forthe next decade, resource allocation is an important first step in gaining theattention of the external labour market. The results of the study also suggest,however, that more attention may need to be given to HRM approaches thatimpact on internal organisational mechanisms as a pathway to employeeretention. HRM initiatives connected with issues such as job design andtraining and development opportunities, for example, may need greaterattention. As Salt (2004, 17) observes, ‘if you build the job around the waypeople want to work, you are more likely to win the services of the best andbrightest’. Similarly HRM activities that improve employer reputation,including ethical and work–life initiatives, could also be given greater priority.Brown (2005) identifies the impact on attraction and retention in companiessuch as Henry Davis York, a Sydney-based law firm reporting flexible work






patterns, with indicators including an increase in return from maternity leave,low employee turnover and positive employee feedback.

In summary, there is a clear indication that the negotiating position ofskilled employees in the workplace is strengthening. A recent report by Haysindicates that skill shortages and the facilitation of skill development are majorpriorities for HR at present (Hays 2006). Our research has shown that inresponse, the main focus for HRM policy initiatives is in attracting potentialemployees from the external market (recruitment and selection). However, inthe areas that will become more closely scrutinised by discerning, sought-afteremployees, the survey indicates a lower level of resource allocation.

The results of the study show that the HR function continues to accept andadjust to the role of strategic partner. Results also indicate, however, that theshift to a more strategic position for HR involves further challenges that includethe development of business breadth in the HR career base, the need forimproved HR metrics and a broader commitment to attraction and retentioninitiatives. It is also evident from the research that an emerging challenge maybe the management of the range of roles expected of the HR professional. Whilemaintaining a strategic presence, for example, HR still needs to attend to tradi-tional employee advocacy roles and act as the steward of the social contract(Kochan 2004; Lansbury 2004). The issue of role diversity will become moreprominent as Australia enters a period when organisations are dealing withmajor changes in the industrial relations environment (Teicher, Lambert andO’Rourke 2006). The increased devolution of the management of theemployer–employee relationship to the level of the firm intensifies the focus onthe HR professional’s role as a key negotiator in the employer–employee rela-tionship, a role that needs to be performed while maintaining strength andcredibility as a strategic business partner. Ulrich (1997, 29) adopts a unitaristposition to resolve the dilemma by making the case that employee championswho understand the needs of employees and ensure that those needs are metwill improve overall employee commitment, competence and therefore theircontribution to business. Later he argues that resolution of the potential tensionrequires that ‘both sides trust the HR professional to achieve a balance betweenthe needs of these potentially competing stakeholders’ (45). The emergingcomplexity of the IR environment in Australia, however, suggests that for theHR professional this may be more of a balancing challenge than has previouslybeen the case. Furthermore, HR’s responsibility to ensure that an equitablebalance is maintained between the different stakeholders may become moredifficult in cases where the unitarist assumption of common goals is not evident.

Accordingly, Meisinger’s (2005) comments about increasing expectationsof the HR professional in the United States hold true for the situation in


Conclusions





Australia: HR professionals have to be competent, not only in their own field,but in the broader area of business and they have to also have the courage todo the right thing when they are under great pressure to comply with short-term initiatives that may be forwarded by other senior managers. It may bethe personal attributes of HR professionals, therefore, rather than their positionin senior decision-making fora alone, that add real value. In the face of thesecomplex expectations, it is encouraging that Australian HR professionalsreport positive reactions to the changes that have occurred within the HRfunction in the last ten years and remain optimistic about their capacity to dealwith the shifting ground that HR occupies.

Cathy Sheehan (PhD) is a senior lecturer within the Department of Management at Monash University

and an active member of the Australian Centre for Research in Employment and Work (ACREW). She

has taught across the areas of accounting, management and more recently HRM and international HRM.

Her research areas have included management information systems, strategic HRM, HR in call centres

and issues in international HRM and the global talent flow. A key research focus has been the status of

the role of the HR professional in Australia.

Peter Holland (PhD) is a senior lecturer in human resource management and employee relations in the

Department of Management and researcher in the Australian Centre for Research in Employment and

Work (ACREW) at Monash University. His major research interests include managing knowledge workers,

new pattern of work and monitoring and surveillance in the workplace. He has co-authored four books

and numerous journal articles, monographs and book chapters on a variety of human resource

management and employee relations issues.

Helen De Cieri (MA, PhD) is a professor of management and director of the Australian Centre for

Research in Employment and Work (ACREW) in the Department of Management, Monash University. Her

teaching experience includes appointments in Hong King, China, Malaysia and the United States. Her

research has been published in leading international refereed journals and she has co-authored an HRM

textbook (2005). Her current research interests include strategic HR, global mobility management,

work–life management and HR issues in China.

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