employee resourcing notes @ bec doms mba hr

8/3/2019 Employee Resourcing Notes @ Bec Doms MBA HR

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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 focuseson the recruitment and release of individuals from organisations, as well as themanagement of their performance and potential while employed by theorganisation.’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 changeagent). There is general agreement on ‘recruitment and release’ areas, howeverthere is less agreement on the boundaries of the ‘management of performance’dimension of ER. There are factors such as diversity management, equalopportunities, selection and evaluation and performance management, exitmanagement and also reward management.ER has played a key role in many influential models of HRM. It is seen as a crucialarea of ‘policy choice’ in the Harvard model where ER policy choices revolvearound human resource flows, i.e. the way people enter/move into, are placed/move around, exit/ move out of the organisation. Depending on how theorganisation assesses the interests of various stakeholders, the organisation looksat the situational characteristics of its workforce to determine its businessstrategy and management philosophy.

Globalisation anddiversity Informatisationand ICT

Structure/labourmarket

HR Strategy changes

Changes to ERstrategy

ER Policies- HRP, R&S, PM,career/ talentmana ement

Knowledge/ skill/talent management

Performance/contract/ ethics

Changes in ER in context: the course



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 privatisationthe growing interest in environmental and ecological concernsthe changing nature of customer expectationsincreasing competitivenesschanging customer expectationsthe impact of demographic change in ER

There are, according to the IPD, a number of driving forces that are seen asaffecting the way organisations are responding, how this is affecting the way

people are organised and managed and what this means for employees andmanagers. These are seen as;increasing demand for customised products and services;customer satisfaction standards increasingly established by globalcompetition;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 areglobalisation and informatisation. These have increased the unpredictability anddynamism of the business environment and many HR departments have sought totransform themselves in response to these challenges.

THE IMPACT OF GLOBALISATION

Globalisation affects organisational viability through its impact on organisationalfitness. It can refer to many different economic, political and social phenomenaand when organisations are exposed to global competition, their survival andviability are brought into question. Enterprises can be transformed leading toenhanced viability or they can be pushed into restructuring due to increasedcompetition. If they can respond to these two challenges, they will need totransform the management and HRM processes, including their ER processes. If they are successful in achieving this through enhanced efficiency andeffectiveness, they enhance viability.Globalisation affects organisational fitness as they attempt to change theirparadigms. 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 andflows of trade, investment, finance, migration, culture, etc.;a speeding up of global interactions and processes, as the developmentof 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 canbe associated with their deepening impact such that the effects of distant events can be highly significant elsewhere and boundariesbetween 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.’

THE IMPACT OF INFORMATISATION

This is the process through which information technologies have transformedeconomic and social relations such that cultural and economic barriers arereduced.

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 theproduction of information values, will be the driving force of society,rather than industrial technologies.The convergence of technologies will precipitate further changes thatpromise to fundamentally alter the human landscape.

It is a process of change that features the use of informatisation and IT to such anextent that they are dominant forces in commanding economic, political, socialand cultural development. It shapes cultural and civic discourse, including not just

computers and the internet but other related technologies that involve thetransfer of information such as film, satellite TV and telecommunications. As

Globalisation

Viability Enterprise

Impact of ICT

ORGANISATIONAL AND

ER/HRTRANSFORMATION

Organisational Competition

Effectiveness Efficiency

The impact of globalisation and ICT on



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

GLOBALISATION AND CHANGING ER PRACTICES

One example of the impact of globalisation on ER is provided by China and by theway 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 andcommercial connections;

there will be changes in the effectiveness and efficiencies of companies;there will be a greater failure rate for companies that do not understandthe 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 careerdevelopment;allowing inefficient companies to fail increasing pressure on welfaresystems;encouraging greater FDI and IJV in China and encouraging Chinesecompanies to acquire Western companies and invest abroad;

Transformational change leads to a new and uncharted future. Recent enterpriseand property ownership have affected state-owned enterprises but these are stillsubject to an array of local, regional and national regulations. There is littleevidence to suggest that countries such as China, Japan and South Korea areconverging 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 entryinto the WTO is likely to lead to downsizing and restructuring.MNCs in developed East Asian countries are often engaged in transferringproduction to China and Malaysia based on a common HRM/ER model of Taylorism- low trust, commitment, investment relationships. Firms arecharacterised by low-skilled workers, mass-production, insecure employmentwith 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 associatedwith a command economy and a centrally planned system of public ownership and

limited autonomy granted to enterprises; the Iron Rice Bowl of lifetimeemployment 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 inenterprise management, the provision of lifetime employment, central fixing of wages but post 1982 there has been increasing moves to a market-orientedsystem.

In the 1980s and 1990s, very significantly, employment contracts were introducedbut over-staffing and low labour turnover is still evident. Informal recruiting isstill common and interviews predominate over other methods of assessment withharmonious relationships still being a priority. Employee dismissal is easier butstill rare. Pay differences are determined primarily by nepotism, seniority andpolitical orientation and welfare benefits are often provided as well as pensionsand insurance funds.Changing paradigms of ER in China have affected recruitment, selection and firing;appraisal and promotion; training; pay and benefits; communication; welfareprovision; 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 previouscentrally planned system. Change has been slow and there are widespreadvariations in the pace of change. HR functions in China is underdeveloped,reactive and operationally oriented. Guanxi still needs to be considered and is animportant facet of career development as well as status and ‘face’. Unemploymentis still high at approximately 10% but entry into the WTO may help. The WTO isseeking to shape the rules of the game to help globalisation and many privatesector employers are evading their social protection responsibilities. So eventhough China has undergone radical economic reforms it cannot simply transferHRM and ER from Western models.

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 andtourism services. It is conventionally linked to countries in S Africa and is a

WTO entry Informatisation

Economic reforms

Enterprise reforms

HR/ER strategy

ER policies and practices

Operationalreforms

Ownership reforms

Changes in Chinese ER in context



regional player in the political and economic arena. With Western multinationalsand IJVs, it is exposed to global influences on management and HRM practices. Ithas a varied community which is now exploiting its geographical, religious, familyand ancestral ties to Asia to aid development. It also has a varied religious andlinguistic picture with English, the official language, being spoken as well asFrench and many other Asian languages. Despite harmony within (endogamous)

groups, ethnic tension and rioting is still an underlying issue. Various governmentposts are occupied through nepotism and there is a commitment to aWestern-style parliamentary democracy with coalition tendencies and an officialideology of ethnic appeasement. The civil service practices a merit-based,bureaucratic HRM/ER practice with a belief that ethnic nepotism and politicalfavouritism is pervasive. Task forces have been set up that advocate ‘reform’ butrecent studies have shown the service is mostly unreformed and that ER is largelynon-strategic with many colonial-era features still present. Promotion is based onconfidential reports and is based on seniority and written explanations arerequired for ‘over the head’ promotions. PRP systems are absent and ethnic andpolitical 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 limitsof the successful transfer of ER practices in a cross-cultural context. There is nopolitical will to bring about change to a strategic ER. Discretionary powers that area tool of abuse will have to be devolved. Commissions and focus groups may actpositively to contain nepotism and favouritism. The transfer of HRM and ERpractices would need to be adjusted to take into account the specific needs of Mauritians. Globalisation impacts on enterprise reforms and ER policies. As anupper-middle-income country, it no longer enjoys preferential treatment ininternational trade and has to rely on innovation to increase wealth andemployment creation. One government-inspired way is Cyber Island and it is now

moving forward with skills and knowledge improvement. But how much up to thechallenge are the Mauritian HR practitioners? HR individuals and graduates doubtthat changes in the workplace will be successful when senior managers areunexcited about any such change or because political, and other, interferenceblock initiatives to improving personnel practices. A survey of HRM alumnireported low levels of competence in many areas of HRM and key areasconsidered 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 trainedprofessionals but may be indicative of other structural and cultural ills. So eventhough the government may have recognised the challenges of globalisation, ICTand the knowledge economy may bring, company bosses and HR practitionersmay 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 onorganisational performance and ER. International assignments are now being used



for staffing and control etc. as vehicles for improving managers’ skills andknowledge. Many managers are involved in managing IJVs, mergers, acquisitionsand are operating in diverse environments with multicultural teams. HR and ERstrategies have a key role to play in ensuring that;

organisational structures and systems enhance internationaleffectiveness to achieve global integration and local responsiveness;

organisational cultures are fostered that value diversity while creating asense of unified mission;HR/ER systems are installed to attract, place, retain and developmanagers with the knowledge, skills and attitudes required to performeffectively in a global environment.

GLOBALISATION, DIVERSITY 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 £2millionper month. In 1987, GM undertook an IJV with Isuzu which took a 40% stake andappointed a Japanese executive as CEO. It gave Isuzu a strategic foothold into theEuropean 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 weresupported by T&D. The combined impact resulted in an unprecedented change of culture in one of the traditional heartlands of British car manufacturing. Theturnaround strategy consisted of;

a new employee agreement where the workforce were all on the sameterms 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 facilitatethese changes;

At the start of the venture there was suspicion and ‘sweatshop’ perception amongBritish employees was rife. Effective meetings, feedback and a Westernisedattitude was required. A chance for workers to contribute to strategic changes wasgiven. Initial fears were allayed and there was constant improvement anddevelopment.

MANAGING DIVERSITY 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 toignore or suppress multicultural teams. Initially, cultural differences presentdifficulties, but if managed actively, they can be an asset and a resource and canlead to greater flexibility and openness and to the avoidance of ‘groupthink’.Homogeneous and cohesive teams suppress new or challenging ideas. To usecultural differences effectively, members need to display cultural self-awarenessand cross-cultural awareness. Employees are attracted to organisations who work



in this way and many international organisations recognise this and operate thismanner.

THE CASE OF DIVERSITY 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- wasprecipitated by downsizing, devolution of autonomy to operating units,appointment of a new management team and CEO. A range of developmentprogrammes was introduced all aimed at identifying dysfunctional managementstyles and introducing a more participative style. Various structural changes suchas cross-functional, multi-level diagonal task forces with a more bottom-up,less-centralised budgeting process. Staff support mechanisms were introducedalongside a bonus systems and a user-friendly management system. Refreezing-i.e. embedding/institutionalising change- was achieved through managementcommitment and promotion and PRP. The transition phase help by a managementtransition 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 trainingand development promoting a customer-oriented image. An ultimately moreproductive approach was to use the dimension of valuing difference, building ongender difference, equal opportunity and diversity with workshops held to explorethese 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 targetaudience.

BA IN 2008

This case illustrates how ER and HR models and paradigms can change under theimpact of competition and corporate strategy. After BA’s attempts to move to amore strategic ‘soft’ HRM, it then sought to regroup and move back to atraditional ‘personnel management’ approach fused with aspects of HRM. Therewere attempts at restructuring, industrial relations problems, strikes andcompetition from no-frills airlines. It entered into the Oneworld Alliance in 1999but was still affected by problems. Its new CEO was ruthless and there were plansto reform employment practices. There were planned withdrawals from regionalairports acknowledging its failure to compete. In 2006, BA launched a radicaloverhaul of its regional network with significant price cuts to compete with

intense European competition. ‘BA Connect’ was introduced and in 2006, it beganmaking a profit. No jobs were axed but management reductions were planned in aseparate move to increase competitiveness.

MANAGING DIVERSITY AND ITS IMPLICATIONS FOR ER

Demographic changes in the population are mirrored in the demographic changesin the workforce increasing diversity in organisations. Organisations need toappreciate the potential benefits of diversity so that a positive climate for diversityis created and maintained.

MANAGING DIVERSITY AND EQUAL OPPORTUNITY

In the UK, a way of addressing diversity is through the legal and socialframeworks that formed the basis of the Equal Opportunities paradigm. Partly



derived from the US, it diverged in some aspects such as age discrimination andaffirmative action. Discriminating against age or qualifications still needs to beaddressed. The EO paradigm was seen in terms of two perspectives; the liberaland the radical. The liberal approach tended to see inequality with regard to raceand gender as a distortion of an otherwise rational labour market which would becorrected by rational ER procedures and positive action in recruitment and

training leading to procedural justice (but not US-style affirmative action orpositive discrimination in favour of under-represented groups). More radicalcritics saw the liberal approach as ineffective in promoting change with formalprocedures. The use of quotas and preferential selection was called for to securedistributive justice. However a concern over favouritism and reversediscrimination ensured that radical approaches did not become mainstream.Managing diversity (MD) has been argued to confer business benefits as comparedwith the perception that EO costs money. MD was seen as signifying a morestrategic, proactive, ,long-term and corporate-wide approach whereas EO is seenas piecemeal, tactical reactions to external triggers such as legislation and notreally 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 allsocieties. It has also been argued that MD may ignore social justice and ethicalarguments and that it may be driven by senior white men as a way of de-groupingpeople and individualising initiatives in a way that dilutes the aims and philosophyof EO.

THE BUSINESS CASE FOR MANAGING DIVERSITY

Fairness and equity can be regarded as reasons enough for organisations toimplement MD policies. MD’s strength comes from its business case. Employeesof organisations will soon be from all areas of under-represented groups and with

people having more economic independence, they have become importantcustomers. and wish to have the same opportunities as white employees but toalso 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 absenteeismand their costs will be reduced. Other reasons why effective MD is anorganisational asset include;

easier to recruit people with qualities an organisation requires;as ethnic and minority groups grow, they will buy from organisations whoare diverse and support diversity;diversity leads to organisations becoming creative and innovative, whichwill...

improve organisational problem-solving;effective MD will enhance organisational flexibility

Archival studies in the US financial sector have shown positive relationshipsbetween top-team heterogeneity and strategic change but heterogeneity has beendefined in terms of age, education and functional experience rather than in termsof race, gender or nationality.As well as inhibiting groupthink, it has been suggested that diversity may havepositive 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 andexclusive concept based on white men to a more heterogeneous organisationalculture or an inclusive concept. At the apex of the organisation, it may still bewhite men making the rules. Therefore MD is supported on the merits of abusiness case whereas EO is seen as an add-on to the organisation’s culture andnot as an integral part of it.

Most organisations who adopt MD do so because it makes good business sense. Itis seen as an effective method of recruiting good-calibre staff as not off-puttingto 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 orworkforce efficiency with a concern that it has fallen. Productivity growth fell to 0%in 2006 with output per hour dropping. Employment continued to grow fasterthan 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 wasabout 15% lower than in France and the US. Low productivity has been blamed onlow levels of skill while economists have blamed such issues as taxation, publicspending and pension-fund deficits. The Work Foundation in the UK argues thatinstead of focussing on economic issues a more useful focus on the productivitygap is to look at performance rather than productivity. A high-performance indexwhich 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 governancestakeholderspeople

innovation and creativity

HUMAN CAPITAL MANAGEMENT

The DTI has pointed to the importance of human capital and to the need forcompanies to report on their human capital management to their shareholders as

well showing how HCM contributes to business performance and strategy. Humancapital decisions can inform business decisions and enable better judgementsabout growth potential and performance. A key issue is how to analyse, measureand evaluate the contribution of people practices to the creation of value. Variousdata is used such as CSR, diversity, demographics. ER data is also useful such asrecruitment figures, employee turnover, appraisal data and tracking of talentflows.

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-basedcompetition, competitive advantage was increasingly seen as developing andexploiting ‘core competencies’ of the organisation’s knowledge assets. As a wayof delivering behaviours necessary to support organisational strategies, ERinitiatives have become increasingly important. ER processes can ensure thatemployees 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 uniquelyimportant to sustain business success. Due to the recognition of people’s skills,knowledge, motivation and commitment, the personnel department of HarvardUniversity 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 asdominantly that of a strategic business partner and many also seeing themselvesas change agents. There has been some regret that these new definitions suggesta move away from employee-facing or employee advocates with employee issuessubordinated to business issues.

HRM, ER AND ORGANISATIONAL PERFORMANCE

In recent years there have been articles claiming to measure and demonstrate thelink between an organisation’s HRM and its performance. Researchers view theorganisation as a ‘black box’ and to unlock this box, the focus has been on whatbundles of HR make an impact on performance. One target has beenhigh-performance work systems (HPWS) also termed high commitment, highinvolvement or high road practices. In this view, ER plays a key role. The list of HPWS includes;

personnel selectionperformance appraisal

incentive compensation job designgrievance proceduresinformation sharing

attitude assessmentlabour-managementparticipationintensive recruitingintensive trainingpromotion criteria

The assumption is that these affect employee attitudes such as commitment andmotivation and enhances competence. Much emphasis has been placed onmotivation.One view emphasises discretionary effort which is composed of motivation, skillsand opportunities to participate which are enhanced by HPWS leading to

discretionary effort and higher performance, commitment, trust andcommunication. But managers need to motivate employees using facilitativetechniques such as coaching and mentoring but many are failing to provide this.Another view is the importance of the 3Rs- relationships, respect, recognition andthe exchanges between managers and employees are often leader-memberexchanges.A study has seen the causal chain between HRM and organisational performancesin terms of 5 linkages;

intended policies to actual practices

actual practices to experienced practices

experienced practices to employee reactionsemployee reactions to employee outcomesemployee outcomes to unit-level outcomes

The study showed that good quality management leadership behaviour wasassociated with higher levels of organisational commitment and a positive jobexperience. The combined effect of leadership behaviour and satisfying perceivedHR 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 vacantpositions. An organisation’s employment system is the outcome of the combined



effects of firms’ labour requirements, organisational constraints, pressure fromworkers, the labour market environment and the wider institutional environment.There are 3 types of labour market;

i. the open or unstructured external labour marketii. the occupational labour market

iii. the internal labour market

EXTERNAL LABOUR MARKETS

Employers hire employees from outside the organisation and are not interested inlong-term employment relations with them. Firms are more interested innumerical flexibility. The labour market is often unstructured and consists of manual and unskilled workers. Employment rights are limited with trade unionrepresentation very weak. In contemporary Britain, most of these jobs areperformed by migrant workers. Employees are exposed to market forces and areconsidered as disposable commodities. Organisations follow a low-cost strategyand pay minimum wages. The external labour market has an impact on anorganisation’s training and development strategy and those that follow a

cost-reduction strategy will employ people who already have the skills they desireor provide core or basic training. However, focussing entirely on the externallabour market can have drawbacks such as disruption to the production processin case of high levels of unplanned turnover, time spent on repetitive recruitmentand 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, thisgives rise to an occupational labour market. The skills and knowledge areacquired through formal education, training and certification. The assumption isthat the labour already possesses the skills needed by the company when they arerecruited. The occupational labour market is structured on an occupational basisby the qualifications and skills acquired. This market has institutional regulationand trade unions have power to prevent members from facing competition as wellas more negotiating rules that can restrict workers from joining an occupation.

INTERNAL LABOUR MARKETS

In this case, the terms and conditions of employment are determined internally bythe organisation rather than by external competitive forces. The employmentrelationship is internal and recruitment is limited to lower levels and juniorpositions. This market is highly structured with hierarchical progression and job

ladders enabling management to retain and motivate its labour force throughrelational psychological contracts where employees expect job security, deferredbenefits and job ladders and internal promotion. This market is highly valued bymanagement and receives institutional regulations with set rules such as paystructures, job descriptions and specifications. Management is more willing toinvest in training but these may be firm-specific and untransferable. Managementmay use internalisation as a retention tool as well as promotion rather thanincurring costs on external recruitment. Management encourage employees toexercise responsible autonomy and uses positive policies to build trust,encourage empowerment and commitment as well as enhancing flexibility andteam-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 tothe high-calibre staff being poached.

EMPLOYMENT RELATIONS AND FLEXIBILITY IN ER

Other institutional and environmental factors influence the employment relationssystem in an organisation. These factors can be constraints such as size, financial

and managerial resources. Larger companies can offer better terms andconditions of employment, more job ladders and better opportunities than smallerfirms. Large firms are more likely to internalise their employment systems and touse functional flexibility- multiskilling and multitasking. Importantly, employeescan exert pressure and influence on how the employment system develops. Tradeunions can be used as a bargaining tool between employees and management.Another aspect influencing the employment system is the financial return to thecompany. In some countries, short-term financial performance is important andso managers may not consider long-term training investment as cost-effective.These firms may not provide long-term employment security and look at usingshift patterns and linking wages to individual and team performance. UKorganisations are increasingly making use of temporal and financial flexibility. Inthis case, the employment system is more externalised than internalised. Othercountries do not have pressure on short-term profit maximisation and there ismore scope to internalise employment systems. These firms invest more costsand time in training and provide employment security.The employment relationship is defined more in terms of the internal productionrequirements of the firm and also external conditions such as low unemployment,economic growth and trade unions. An organisation’s employment system is alsoinfluenced by non-labour market factors such as the family. The man is normallyseen as the bread-winner and dynamics such as social divisions and

demographics play a role and it has still not been possible to eliminatediscrimination completely.Technology has also played a role as Western countries move from manufacturingto services economies. Skills in manufacturing are firm-specific whereas inservices, employment has been concentrated at two poles- management at oneend and low-skilled jobs at the other and these changes have blurred thedistinction between the use of internal and external labour.Offshoring work as a means of cheaper production has weakened trade unionsand left employees more vulnerable to management decisions. In the UK, whereshort-term profitability is important, a well-used strategy is downsizing and thenexternalising 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 virtualorganisations where cheap production sites are dispersed globally. The employeerelationship is external, there are few hierarchies and there is aperformance-based control. so organisational boundaries are becoming blurred.Thus, in the UK, externalising the employment system is done to reduce costs andmorale is often overlooked. A simple approach to understand internal andexternal labour systems is by looking at Atkinson’s flexible firm model where heuses terms such as numerical, financial and functional flexibility and workers whoare either core or peripheral. Transferring this model from theory to practice isdifficult and it reflects management contradictions in reducing costs and



maintaining flexibility. Demarcation between core and peripheral workers createsfriction 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 strategythinking. An organisation that focuses on its internal labour market must be

willing to invest heavily in T&D. Delayering and flatter organisations has meantthat job ladders are reduced but organisations must think about other careeroptions such as horizontal and lateral career moves, project work andsecondment. Removing strict pay structures in favour of PRP, ensuring employeecommitment through profit-sharing and share ownership is also necessary. Bymoving towards a soft HRM approach, firms can retain high-calibre individuals astheir core workers while outsourcing low-skilled employees goes in some toapplying the flexible firm model.

HR OUTSOURCING AND SHARED SERVICE CENTRES

This is the use of a third-party service provider to perform an activity usuallyperformed in-house. It is the transfer of a distinct business function from insidethe business to an external third party. Some advocate costs as the main reasonand others point to the adverse effects of layoff.Outsourcing involves transfer of staff to enable an organisation to specialise incore activities and exposing the process to market disciplines, so driving downcosts. Periodic renewal of the outsourcing contract acts as an incentive and offersgreater flexibility in employment practice. It gives firms the opportunity to makeuse of services that are at the desired level and quality without having to achievethem themselves.Human resources outsourcing (HRO) is driven by a desire to save money, access

to innovative IT solutions and enhanced focus on performance and servicemeasurement.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 employeechampions or strategic partners. HR services are being more technologicallyadvanced allowing closer relationships between provider and client. A growingnumber of outsourcing agencies provide services ranging from payroll, training,performance management, selection and recruitment. There has also been agrowth of HR shared services, often in two forms.Firstly, large organisations set up shared services to provide HR services to theirown departments and subsidiaries and also external client organisations- a form

of HRO.Secondly, large or multi-establishment organisations may set up shared servicecentres (SSCs) as a way of recentralising their HR and creating an internal marketin HR. So this is a form of HRO where it involves services to external clients butnot where it serves internal clients. Also, the provision of consulting services toclient organisations can be seen to be HRO as the setting up of SSCs is popular inlarge MNCs.

THE EFFECTIVENESS OF HRD

At a time where labour costs can be identified as controllable costs, somecompanies 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 HRtechnology, responsibility being passed to provider, savings in infrastructure as



well as reduction in HR staffing levels all seem attractive. Using temporaryworkers to cover workload fluctuation may enhance workforce flexibility andproductivity. HRO may appear to be a choice of governance that makes sense.There has been increasing concern about the quality of HR functions inorganisations. HRO may be seen as enabling a greater service quality: accordingto agency theory, the interests between principal and agent may be misaligned

and HRO may overcome this problem and improve client satisfaction. Jointalliances create opportunities for mutual learning and knowledge transfer whichcan then be brought back in-house.HRO for small and medium sized companies can be seen as a way of minimisingrisks and obtaining objective advice untainted by organisational politics. It is oftenargued that the strategic parts of HR should remain in-house with non-core orperipheral routines being outsourced. The non-core work is highly vulnerable tooutsourcing but it is sometimes difficult to determine which is core and which isnon-core as well as knowing the criteria for evaluating this.Routine data processing and administrative tasks, payroll and selection andrecruitment (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 theorganisational culture.Outsourcing may not lead to cost savings but organisations may see improvementand flexibility as more important. The costs that are associated with outsourcinginclude;

legal costsproblems of trustpoor levels of service

poor communicationsloss of skilled employeesloss of corporate memory

Before a firm outsources and finds an outsourcing partner, it needs to decide onwhat functions will be outsourced and this is a strategic decision taken by seniormanagement.The popularity of outsourcing, especially selection and recruitment, means thatCV reviewing is given to specialists and not line managers, a bigger pool of candidates is available, reduction in organisational costs of hiring the wrongperson.By outsourcing certain HR functions, the HR department can focus on strategicissues. Talent management, succession planning, leadership development areoften neglected and these issues can have a long-term impact on business. HR ispromoted 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, gainingbetter HR services.Technological obsolescence is removed and up-to-date, integrated IT in the formof HRIS is provided as well as professional expertise. HRO does not automaticallysignify cost savings. Many organisations have found costs have gone up but tryingto 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 theservice 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 cango far beyond what was previously budgeted.Different organisations operate their HR differently and may even disregard HR asgiving 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 theirexperience. HRO providers may end up becoming call-centres with no job ladders

or promotion prospects. There may be no motivation to upgrade skills or getbroader organisational experience and there is a danger of moving into a ‘silomentality’. The problems linked to scientific management return as jobs becomerepetitive, mundane and routine resulting in loss of corporate memory that someof the experts may bring with them. But this can result in HRO staff becomingspecialised, albeit in routine tasks. This means that the HR department will havestaff experts in specific aspects of HR functions.Associated with this is the difficulty of staff keeping up to date with a vastlychanging HRIS but this is more easily done in HRO firms where HR departmentsand HR employees can take advantage of technological advances from HROproviders.

Firms are now under more increasing pressure to demonstrate effectiveness andefficiency and need to achieve internal transformation in order to be treated asstrategic partners in business.HR will gain credibility, as ‘line management want people advising them who havealready sat in the operational chair and therefore understand the way their peoplethink and work.’ Therefore HRO will help HR get to high levels of performance byeliminating its operational aspect and keeping those aspects that are critical forsurvival.

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 consultantskeeping it mainly internal plus some external outsourcing of routinefunctionsmaking HR mainly an external function with strategic aspects kept insidethe 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 HRadministration with possible external expansion lateroutsourcing HR and other services to a service providersetting 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 andthese factors include;

size

strategy- e.g. pursuing innovation or cost reduction, ‘prospectors’ may

outsource more than ‘defenders’environmental uncertainty



internal HR capabilitiescoherence or internal integration of HR activities- e.g. supportive ‘bundles’of practiceswhether 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 activitiesare ideal for HRO and careful thought has to be given on outsourcing as this canhave 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 andcan give HR focus and pace, there needs to be a ‘partnership’ with the supplierand HRO needs to be considered as a change management programme.Extensive consultation and communication is required to ensure that each partyknows who owns what.



MODULE 3: APPROACHES TO EMPLOYEE RESOURCING

INTRODUCTION: APPROACHES TO ER

The CIPD Standards for People Resourcing set out three paradigms for addressingresourcing issues;

the traditional paradigmthe contingency-based paradigmnew paradigms

The traditional paradigm as it is applied to selection is also called thepsychometric objective paradigm. There are also newer and alternative paradigmscalled the knowledge/power paradigm, the knowledge management paradigm andthe 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 ahierarchy, 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 allowingpolicy 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 differentsituations. Factors that would affect this are size, structure, type of workforce,type of organisation and is also applicable to ‘virtual’ organisations where thework is contracted out. Contingency-based ER is often associated with strategicER and is also linked to strategic management . The strategic process emergeswithin the organisation and cascades down the line. ER processes are seen asmajor levers to support strategic and cultural changes. Once core competenciesare identified, ER and HRM processes can be installed to ensure that employees

with the requisite skills are appraised, developed and rewarded against therelevant competency criteria. The HRM agenda emphasises the link betweenpeople policies and business strategies, unlike personnel management whichignores it. This interpretation of strategic HRM owes much to the MichiganBusiness School Model which is harder and less-humanistic than the Harvardmodel and considers employees as resources in the same way as other businessresources. People must be;

obtained as cheaply as possibleused sparinglydeveloped and exploited as much as possible



People should be matched to business needs- the model is strongly influenced bystrategic management literature. Therefore, HRM is seen as a strategic processmaking the most effective use of an organisation’s resources. This approachstresses the quantitative, calculative and business-strategic aspects of managingthe headcount resource in a rational way. It focuses on the importance of strategicfit 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 appraisalplay major roles.A matching model of ER is often implicit or explicit depending on the strategicimplication for the nature, role and importance of RM and selection. ER are usuallyseen as secondary processes reacting to business strategy. Other recent modelssuch 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 (thealignment of HR policies with corporate strategy), horizontal integration (thealignment of HR practices such as R&S, training, appraisal in a coherent and

connected way), and devolution (making line managers responsible for many HRpractices 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 theinterests of multiple or competing stakeholders. However this approach does not

just focus on advice, prescription and best practice. It consciously seeks toacknowledge that there are multiple stakeholders with an interest in HRM and, inparticular, ER, including line managers, contractors, search consultants andrecruiting 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 inextricablylinked to the mechanism of assessing, grading, tracking and shifting of employees/individuals.The CIPD has set out three approaches to ER: traditional, new andcontingency-based paradigms. It is unclear as to whether these are competing, oreven incommensurable, paradigms or that they are complementary with noapproach being the right or best one. ER is part of the government of organisations and the regulation of individuals and, in particular, theassessment/appraisal instrument is seen as part of the technology of power andregulation. In fact, governmentality is a concept used to draw attention to the

diverse and various processes and techniques that are sought to administer thelives of individuals and associations through links to political objectives. Forexample, ‘knowing’ individuals in terms of a set of qualities or competencieswhich can reveal much of organisations as well as people.It has been argued that changes in assessment and appraisal processes andcriteria are associated with the emphasis, within HRM-style change on theincreased 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



Externalisation

Reflective; peer-to-peerCreates conceptual knowledge through

knowledge articulationusing language. Dialogueand collective reflectionneeded.

Internalisation

Collective on-site

Tacit knowledge Explicit

Socialisation

Existential; face-to-faceCreates sympathised knowledge through

sharing experiences, anddevelopment of mentalmodels and technicalskills. Languageunnecessary.

Combination

S stematic collaborative

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 theflexibility of the labour market. Much recent work on knowledge management (KM)has come from information management (IM) perspectives. If HRM/ER is to set theagenda 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 successgoes to those who manage their intellectual capital wisely.The knowledge society can be defined as one in which intellectual capital isconsciously developed to provide competitive advantage that reflects managerialand operational changes required to succeed in a global economy. The nature of work has changed from an industrial society to the knowledge economy orknowledge-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 socialcommodity that explicitly features in decision making. The belief that knowledgeis of primary importance is part of the knowledge management paradigm: a shiftfrom the dominant paradigm of strategic management. This new paradigmsupports openness, empowerment and individual creativity as opposed to therational strategic paradigm which supports distortion, disempowerment andmanagerial discipline and therefore shows a more positivist perspective. In theknowledge management perspective, individuals are encouraged to be moreknowledgeable 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 maynot be totally embraced by those corporations whose power brokers feelthreatened 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 andeducational research on expertise, researchers have distinguished formal ordeclarative 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 tacitknowledge- experiential, and explicit knowledge, expressed and transferableknowledge that includes cognitive and technical elements. These definitions areincluded in the well-known SECI model for knowledge creation.



Conversion involves four processes, all of which convert between tacit and/orexplicit knowledge. Socialisation is the process by which synthesised knowledge iscreated through the sharing of experiences between people as they develop

shared mental models and technical skills. Since it is fundamentally experiential, itconnects 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 communicationprocess 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 andinteraction. This therefore triggers dialogue.The next process is combination. Explicit knowledge is transformed through itsintegration 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 learningprocess and occurs through the behavioural development of operationalknowledge. It uses explicit knowledge, such as manuals or storytelling, whereappropriate.

ER AND MANAGING KNOWLEDGE WORKERS

KM can be seen to be closely related to ER and HRM especially if HRM incorporatesinformation and communication technologies (ICT) as support mechanisms in thehuman interaction process. Typical ‘KM arenas’ are activities associated with,among others;

ascertaining that effective work is deliverededucating and developing employeescapturing, transferring and organising knowledgemotivating, facilitating and empowering employees

creating cultural and knowledge-sharing conditions

The implications for HR professionals are not insignificant and need to deal withsuch issues as;

how to build a talent poolhow to set up and run diversity management programmeshow 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 professionalgrowth 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 retainingthem as well, but organisations should develop the systems, structures andcultures 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 knowledgeestablishing appropriate networksengaging 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 canbe seen as requiring a blend of core skills and competences in informationmanagement as well as HRM and ER, including the structures and cultures thatfacilitate organisation, team and individual learning and the sharing of knowledgeand information.Attracting, developing, rewarding, motivating and rewarding these knowledgeworkers is the responsibility of HRM and ER. The growing importance of KM isseen 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, knowledgeabsorption and knowledge retention are key processes. Technology cannot fullycapture and manage innovative thinking and HRM/ER needs greater attention inpromoting information sharing. A technology-driven view is now becomingdominant with HR being sidelined. However, KM is a process and not a technologylinked to the way people work and a supportive culture is necessary such asperformance management, good practice in selection and recruitment and anappropriate HR role in overcoming resistance to sharing information.It appears that only KM initiatives grounded in organisational culture are likely tosucceed and it is imperative that KM be integrated with ER, HRM, IM, andcompetitive 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 GAMES INDUSTRY

Computer and video games are probably the first new cultural industry to emergefrom the microelectronics revolution. Computer and video games are increasinglyorganised into a core of publishers with global distribution networks who financethe development of games through advances against royalties as well as theirmarketing, development studios that undertake programming, design and testingwith specialists inputting music, sound, licensing, recruitment and legal services.Relationships with distribution and retail etc. are handled by publishers, the corerelationship with publishers and developers being tense. Publishers engage invertical integration (acquisition of developers) to control the flow of products thatfeed their distribution network while developers have tended to split from



acquired studios to gain greater creative and financial freedom. A good exampleof 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 wereexpected to reach $8b and $27b respectively. British game developers are majorplayers 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 theUK with small teams of about 5 to 15 people. More sophisticated studios employmore people. Growth is expected with companies, such as Sony, providing morepowerful and creative technology.

KM AND THE FUTURE OF ER

It is asserted that new policies and practices are required when taking a KMperspective on ER. There is little agreement on what specific changes are requiredin organisational structure and culture and ER roles. KM has attracted muchattention as the global economy becomes more knowledge-driven but littleattention has been given to the implications it will have on ER and career

management.External knowledge must be sought to enable a competitive advantage basedaround knowledge creation and development. The knowledge supply chain mustbe managed effectively and this chain may be more important than labour supply.The implications to employment are profound as the mechanisms to secureknowledge from contracting, performance assessment and reward managementmay need to be very different from the mechanisms needed to secure labour.Self-employment and portfolio careers will become more important as knowledgebecomes viewed as ‘personal equity’. Different organisations will therefore pursuedifferent strategies.

In baseball team organisations, HR’s role in KM may be seen predominantly asservicing the knowledge needs of star performers and coordinating changingknowledge specialism. In clubs, there may be greater emphasis on groupcontribution, the development of systems for codifying and disseminatingcollective knowledge and translating knowledge into collective assets. Inacademies, there may be a mixture of KM policies, differentiated according toemployment position. In fortresses, there is likely to be an absence of a policy oronly a weak policy or a constantly fluctuating policy.

PSYCHOLOGICAL CONTRACT TYPES, ORGANISATIONAL S TRATEGIES, KNOWLEDGE MANAGEMENT POLICY AND CAREER TYPE

TYPE

BUSINESS

STRATEGY

ERSTRATEGY

CAREE

R TYPE

CONTRA

CT ANCHOR CLUSTER FOCUS

KMPOLICY

Defender

Smallnumber of

stableproducts

Make,promote anddevelop from

internallabour market

Club Relational

Security,stability,

life-style,general

managerial,dedication

Basic, formalactive

planning

Careermanageme

nt

Collectivedistribution

s

Prospector

First tomarket

Buy/hireexpertise asneeded from

external

labour market

Baseball team

Transactional

Technical,functional,

entrepreneurial creativity,challenge,

autonomy,independence

Multidirectional

Careerplanning

Individualservices



AnalyserBlend of

aboveBlend of

aboveAcade

my

Both,differentiate

d

Generalmanagerial,

technical,functional,challenge

Activemanagement

, activeplanning,

multidirectional

MutualDifferentiate

d

Reactor Inconsistent hybrid Inconsistenthybrid Fortress Inconsistenthybrid Challenge Formal basic Unclear Weak/absent

Increasingly, individuals may come to manage their own careers with limitedreliance 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 successfulcareers in organisations comprised of ‘cellular coalitions of self-employedknowledge workers’.The increasing importance of KM allows employees to satisfy their personal

aspirations of their career anchors and increases their internal and externalknowledge market.The individual levels within career anchors become to take more prominence asKM becomes increasingly significant to HRM, ER and in particular, careermanagement.There are distinctions made between human, structural and customer capitalwhich are of vital importance to ER.Human capital refers to skills, knowledge and abilities of personnel focussing onskill-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 andprocesses as well organisational structures, culture, systems and procedures,especially communication flows and channels. ER is central in protectingintellectual capital and enhancing collaborative activity.Customer capital, the value of the franchise and its ongoing relationships withthose o whom it sells, is normally the most poorly managed asset and onestrategy is to engage customers in selection, recruitment or career managementto enhance commitment and increase corporate value from the interaction of these 3 components of intellectual capital, especially in the transformation of tacitknowledge.Focussing on HRM and ER adds financial value whether using accounting or

perceptual measures of performance. However financial valuation systems oftenfail to see the investments value of ER, only looking at their costs. Responding tothe challenges of KM may help ER overcome this problem as KM involves therecognition of tacit and explicit knowledge residing in stakeholders.

A CUSTOMER SERVICE APPROACH TO ER

Customer service (CS) involves addressing customers’ needs and concerns andsatisfying them as quickly as possible. Organisations are now focussing on CSbecause it is easier to keep existing customers than to acquire new ones.Customers have more choice from competitors and organisations can nowdifferentiate products and services in terms of CS rather than price. To succeedwith a customer service strategy (CSS) concept, organisations start by building acustomer orientation within the company.



A CS culture needs to be developed where the company is educated about theimportance of CS. It is then possible to foresee a culture shift. The essential stageinvolves understanding customer needs and 5 crucial attributes are;

reliabilityassurancetangibles

empathyresponsiveness

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 customerrelationship management (CRM) which can be seen as the management of customer relations from a marketing perspective . CRM takes a long-termrelationship perspective focussing on customers and return on customerinvestment instead of market share.For CRM to be effective, it will involve identifying and establishing relationshipswith customers in order to maintain and enhance (or even terminating)relationships through mutual exchange and fulfilment of promises. Only then canan effective CSS be successful.

APPLYING THE CUSTOMER SERVICE MODEL TO ER

The CS model can be applied to ER and shows how the CSS can help HR in theprocess of moving from point A to point B. The human resources departmentshave the capabilities to input to all stages of a CS programme.

Integrate CS withcompany culture

Gain topmanagement support

Promote CS culture

Continuousimprovement and

quality management

Understand customerneeds

Set standards fordelivering CS

A corporate customer service model

Developing an ER customer service

Developing an ER customer service

ER Customer Service Strategy

Point B ER Future

Point AER Present

Oriented Operational Reactive Administrative

Proactive Strategic Business



PROMOTING A CS CULTURE

ER/HR needs to build a customer orientation and educate people about CS and itsvaluable 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 thesame time recognise that it also has to change.

GAINING TOP MANAGEMENT SUPPORT

HR/ER needs to gain top management support and explain how CS can help in theretention of loyal customers. This is crucial as changes would have to be led fromthe top. ER/HR must ensure that support is continuing and senior managementcommitment can have dramatic results.

CUSTOMERS AND ER

One way of enhancing CS and developing a CSS is to conceptualise theorganisation in terms of its internal and external customers. The concept of customer is expanding. The growing trend now is to enlarge the CS aspect toincorporate people from within the organisation, whereby internal CS will lead to agreater number of satisfied internal customers, reflecting on the service theyprovide to delight external customers therefore leading to repeat investment inthe 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 reactaccording 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 thatcustomers 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 itdelivers the right service.

Shareholders Tradeunions

Financemanagers

Topmanagement

Marketingmanagers

Productionmanagers

ITmanagers

Employees

ER processes

Identifying the customers of



UNDERSTANDING CUSTOMER NEEDS

Customers’ needs can be assessed through research mechanisms such as;customer surveysstaff attitude surveysfocus groupsdatabase analysisinformal meetings

To ensure that CSS does not fail before starting, action needs to be taken on thisresearch. Meetings with various stakeholders for example or keeping a databaseof customers to know them well are important and the key to success is tounderstand the specific needs of each customer.

ER AND CUSTOMER RELATIONSHIP MANAGEMENT (CRM)

From a CRM perspective, ER needs to define itself as a service business, take aprocess management perspective and, where required, collaborate with others inpartnership, alliances and networks. ER has to locate its customer base and knowwhich customers are crucial for its survival.ER needs to raise its profile considerably through regular contact. It can act as aninternal consultant and be proactive and a problem-solver. It must be seen asdelivering so that customers will not look elsewhere and, for example, tooutsource 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 infancyand 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 standardswith customers and makes sure a response is given as and when promised(reliability), and a prompt and efficient response is given (responsiveness). Thesestandards have to be realistic with staff involvement (empowerment) beingimportant. Standards should achievable and also be regularly reviewed and

updated.ER, CONTINUOUS IMPROVEMENT AND Q UALITY MANAGEMENT

Quality management (QM) and continuous improvement (CI) are closely linked.QM emphasises quality in everything that is undertaken and CI suggests thatthere is always room for improvement. There is never a finishing point. CI can beassessed through quality circles where employees come up with the solutions toproblems themselves and go to superiors to get approval to action the solution.ER/HR can act as facilitator, encouraging participation through, for example, theintranet, internal mail or a suggestions box. ER/HR then look at suggestions andpropose rewards to the employees suggesting useful ideas.

INTEGRATING ER CUSTOMER SERVICE WITH COMPANY CULTURE



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



MODULE 4: HUMAN RESOURCE PLANNING

INTRODUCTION

Human resource planning (HRP), or workforce planning can provide organisationswith a strategic basis for making workforce decisions. It is a means of takingtoday’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 ensuresthat HR requirements are defined and that plans are made for satisfying thoserequirements. HRP is one of the fundamental processes that form the basis forHRM. In the stable and predictable years following WWII, manpower planning, as itwas termed (linked to manpower control and manpower modelling) played amajor role in ER/HRM. Manpower specialists and not HR were in charge of this‘mechanistic ’ process which took a ‘hard’, quantitative perspective outlined in 4phases;

investigating (analysing the external environment, external and internallabour markets),forecasting (future and projected requirements, demand, and internal andexternal 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 and1990s, emphasis was placed on flexibility and manpower planning was seen as

bureaucratic, rigid and even irrelevant. The word ‘planning’ denoted predictabilityand control which was not applicable to people management. Companies are not just interested in numbers but the knowledge, skills and abilities and this meansthat HRP is not just concerned with having the right numbers in place, which wasthe key concern of earlier models.Competition, scarcity of skilled personnel necessitate greater planning and soundresource management which must work in both the local and global talentmarkets.HRP can enable organisations to control labour costs and reduce numbers toprotect long-term employment security of the workforce. It allows firms toconsider 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 betweenbusiness and HR plans and so integrate both more efficientlyit allows for better control over staffing costs; supply and demand can bematched and rational decision-making over recruitment, relocation of staff,transfer of risk, etc.it enables employers to make more informed assessments of the skills andattitudes of their staff and therefore, helps to prepare for integrated HRstrategiesit provides a profile of current staff such as age, gender, race and disability

which is important for equal opportunities employers and alsostatistics/data collection.



The primary purpose of developing a workforce plan is to enable a coordinatedapproach to addressing the HR priorities of the organisation. HRP has been givenrenewed impetus because of;

the increasing availability and use of HRIS allowing the development of future scenario approaches

renewed skills shortages in several areasthe increasing demand for knowledge workersa greater understanding of both supply and demand issues

HRP seeks to forecast whether there is likely to be a mismatch between supplyand 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 (organisationalrequirements)

supply forecasting (a); forecasts of internal supply (internal availability)supply forecasting (b); forecast of external supply (external availability)

productive forecasting; taking planned or potential performanceimprovements into accountHR requirement forecasting; determining HR requirements by taking thedemand forecast into account and adjusting it to take into account labourwastage, working hours, productivity improvements, etc.action planning; developing plans to address identified imbalances such asrecruiting, 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 anycomprehensive HR planning effort if the organisation is to accomplish its mission,goals and objectives;

identification of competences needed in the futurean analysis of the present workforce and its competencesa comparison of future needs with present workforce capabilities to identifycompetency gaps and surplusesan evaluation process to ensure that the workforce competency planremains valid and that objectives are being met

The process below suggests that the HRP consists of separate activities which itdoes not. In reality, HRP is not as tidy or sequential but consists of gathering andanalysing relevant information in order to make informed decisions.

Environment Business objective

Project demand for HR

Gap?

Reconcile

Assessinternalsupply

Assessexternalsupply



An overview of the HRP process

Human resource plans



FORECASTING FUTURE DEMAND

This is the process of estimating the future needs of the organisation by referenceto 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-studymethods 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 rolehere. Problems such as ‘empire building’ and ‘organisational politics’ may inflateestimates.Forecasting demand relies on product market projections and their implicationson 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 estimatesratio-trend analysis: calculating a ratio between activity levels and staff numbers,and/or a ratio of one staff group to anothereconometric models: statistical analysis of relationships between relevantvariables such as sales or investment, movements in these variables, and supplyvariables such as labour wastage, promotions, transfers. Accuracy of results willdepend 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.ASSESSING 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 estimatesof wastage/turnover and internal job movements such as;

an analysis of the status quoo an analysis of statistics relating to current staff o attitude surveys of current staff

an analysis of future trendso analysis of absence figures

o analysis of turnovero 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 wastageassess 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 jobredesign

ANALYSIS 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 ororganisational performance. Where the turnover is above 10%, most organisationsreport a negative effect. Some organisations though, may want to increaseturnover as it may be functional in providing;

new blood into the organisationgreater opportunities forpromotion for currentemployeesenhanced wage controlopportunities

removal of poorly performingemployeesnew energy for the organisationthe opportunity to engage instrategic poaching of staff fromcompetitorsthe avoidance of complacency

However, turnover may be dysfunctional in increasing;costs of reappointmentloss of key, valued staff loss of productivity and quality

loss of (tacit) knowledgelow moraledisruption of teamwork

So a certain level of turnover can be beneficial by avoiding stagnation andinbreeding therefore introducing new ideas and experimentation. It can createpromotion opportunities, increase motivation and control wages in slack periods

by not replacing people who leave (natural wastage). The major costs to includewhen calculating turnover costs include;administration of the resignation

recruitment costsselection costscosts of cover

administration of recruitment andselectioninduction costs

The minimum figure can then be multiplied by an estimate of turnover rate toarrive at the annual cost of turnover. Turnover might be measured by a wastageindex or labour turnover index. This is a useful index for comparative purposesfor internal and external benchmarking. Another measure is a stability index,which focuses on stability rather than wastage. It can discount high turnover inthe 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 (inductioncrises). Other measures include survival rates, which establish how many recruitsare still in post after a specified time period, and half-life of a cohort, which is theinterval required for the recruited cohort to decay through turnover, to half itsoriginal size. Other qualitative measures include exit interviews and leaverquestionnaires 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 jobsorganisational factors: technology, goals, values, policies, practices, rewards,supervision, size work-group, job contentsectoral 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 EXTERNAL SUPPLY

Organisations often pay less attention to forecasting external supply and are thensurprised by skills shortages and events such as a demographic time-bomb whichis 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 trendsskills bank in the area, and local unemployment levels

likely competitors for similar labour, and the opening or closure of workplaceslocal, regional, national, international government policies such as workinghours and EOemployer reputationscost/availability of housing, transport/travel to work patternsnumber of graduates in specific fields and educational institutional output

government and industry training schemes

Factors that have affected labour supply include declining birth rates, labourshortages, a changing gender mix with more women working, impact of new

technology, reduced demand for low-level skills, increased demand for high-levelskills and professionals/managers.Environment scanning is useful to increase knowledge of the external market inwhich organisations may need to recruit from. The assessment of demographicprofile meant noting age and gender but now includes other dimensions such asreligion or ethnicity.

OUTPUTS OF HRP

A critical issue occurs if there is an imbalance between supply and demand anddecisions will be required on action needed to fill the gap. These decisions willform the organisation’s human resource plan. The likely outputs of the HRP

process include actions in such areas as;HR supply plans: e.g. recruitmentactivities, PR and brandingHRD initiatives arising fromsupply and utilisation initiativesreward management programmes

utilisation plans such as flexibleworking practicesretention strategiesdownsizing, release andoutplacement strategiesPM activitiesdiversity 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 orreduce the demand for it. In Atkinson’s original model, based on the analysis of



responses to the demographic downturn, some organisations showed a ‘donothing’ response, perhaps by letting entry standards slip. Some ‘competed’,reactively intensifying recruitment and pay; some ‘substituted’ looking atuntapped sources of supply and perhaps retraining available staff while some‘acted’ by improving pay and company image, for example.

Attitude surveys, whether quantitative or qualitative, or focus groups may be usedto assess employee satisfaction and commitment. There may be many reasonswhy employees leave, some of which may be within the control of the employer.Reasons include lack of training and career development, management style, lackof information about performance requirements. However, it is not enough tohave a static picture of how many people are employed at any one time. Theorganisation needs to see how the workforce is changing over time and muchdata 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 moreeffective training be introduced, or job redesign or perhaps cultural changesare required?data can be held in individual or aggregated form to give fuller pictures of groups or departmentsHR 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 theproblem or cause. There will not always be just ‘one right answer’ and theorganisational choice is not just about hiring and firing employees.

The effectiveness of HRP can be evaluated using 3 criteria. These are the extent towhich;

outputs continue to meet changing circumstancesthey achieve cost and productivity objectives

they are re-planned to meet changing circumstances

HRP AT THE SECTORAL LEVEL

TACTICAL

STRATEGIC

‘ON THE CHIN’ COMPETE

SUBSTITUTE CREATE

DO NOTHING

STANDARDS DECLINE

OVERTIME

Reduce demand

INTENSIFY

RECRUITMENT

School liaisonIncrease pay

RETAIN OLDER STAFF

Reduce wastage

TRAINING

Improved development

RESPONSES TO LABOUR

Context forfirm

strategyand rivalr

Demandconditions

Factor(input)

conditions

A local context thatencourages appropriateforms of investment andsustained upgradingVi orous com etition



The Porter Diamond Model for the competitive advantage of nations offers amodel that can help understand the comparative position of a nation in globalcompetition. The model can also be used for major geographic regions.Traditionally, economic theory mentions the following factors for comparativeadvantage for regions or countries:

land

location

natural resources (minerals,energy)labourlocal population size

Because these five factors can hardly be influenced, this fits in a rather passive(inherited) view regarding national economic opportunity. The Porter diamondalso makes use of the term ‘clusters’. Clusters are geographic concentrations of interconnected companies, specialised suppliers, service providers, andassociated institutions in a particular field. They grow on locations where enoughresources and competences accumulate and reach a critical threshold, giving it akey 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 toencourage- or even push- companies to raise their aspirations and move tohigher levels of competitive performance.

ADVANTAGES, DISADVANTAGES AND LIMITATIONS OF HRP

Manpower planning tended to focus on statistics, techniques and modellingmethodologies, often used reactively, with labour seen as a cost, and with anemphasis on numbers and quantity rather than on skills and quality. As with most

strategic planning, HRP assumes that planning is a rational process yetorganisations have to act on an imperfect knowledge and in a complex and



dynamic political, social, cultural and interpersonal context. The environment isturbulent and constantly changing and the organisation has to operate withinmany constraints. This suggests that the HRP process model is inherently weak asa representation of how mangers go about HRP and is not reflect reality. Ratherthan being a top-down, logical, linked and systematic approach controlled bysenior 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 requirementsmay reside elsewhere such as the frontline, and downplays the possibility of bottom-up HRPminimises the difficulties of gathering accurate data

overemphasises managers’ decision-making as rational when it may bebiaseddownplays the point that it is not always easy (or possible) to make therequired changes even if they have been reliably identified

However, though HRP does not always generate the outcome benefits claimed forit, it may deliver process benefits. It may be very helpful to give staff theopportunity 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 limitedinvolvement 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 climatethe statistical approach often relies heavily on the continuing relevance of past trendsHR specialists have little involvement in the HRP process

managers may resist a statistical approach, preferring intuition, muddlingthrough or ad hoc reactive responses to perceived crises.

THE ROLE OF HR INFORMATION 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 existingperformance of the organisation, to recognise existing problems, to determine orevaluate 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 isimportant because technology can;

underpin and enable every function of HRM, including HRPbe the differentiator between competing organisations in recruitment and intraining for exampleallow integration of HR with the rest of the organisation

Many HRIS are changed repeatedly because they fail to deliver what they werepurchased for. This can be due to poor management, implementation failure orincomplete 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 orstand-alone.There are several problems in choosing a new HRIS. The organisation;

may replace one technological non-solution with another non-solutionmay suffer from ‘system compliance’ (‘we can’t do that as the system won’tallow it’)

may not think about transforming its HR function until after buying thesystemmay not anticipate future organisational needs such as mergers andacquisitionsmay not explore existing technology and utilise that and so saving the costof a user licencemay use IT to draw up the specification without it being approved by the HRfunction

HRIS are often claimed to generate the following benefits for organisations;

operational: they may help routine, high-volume decisions, inareas such as:absence controllabour turnoveraccident reports

productivity measurementscost reductions through automationtactical: they improve expert decisions over time in areas

such as:identifying candidates for promotionevaluating recruitment sourcesidentifying training needs

strategic: they enable exploratory analysis of ‘fuzzy’ problemareas such as:

the impacts of salary increasesthe balance between setting sales and recruitment targets

PROVISION OF DATA FOR DECISION MAKING

The most obvious benefit of HRIS is the ability to give HR decision makers reportsin 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 allstages of preparation along with costs at each point to ensure the function doesnot go over budget.Taking a long-term view, an HRIS can be used to give better management controlsuch 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 andmore importantly, organisations need the personal systems to provide theinformation in the first place. Various factors affect the use of HRIS;

the structure of the personnel functionthe drive to introduce HRIS is likely to come from personnel specialists andtherefore, their needs may dominate the decision-making process.the presence of personnel specialists



personnel specialists’ expertise in dealing with IT systems may be a factorHR’s influence on the system specificationthe system is likely to be more effective if HR can influence thisHR’s ability to demonstrate cost-reduction potentialif it can do this, senior managers are more likely to give the go-aheadan organisational preference for quantitative rather than qualitative data

if this is the case, organisations are more likely to invest in an HRISthe willingness of personnel specialists to allow line managers to use thesystemif this is the case, the system is more likely to be used. HRIS can help indevolving decision-making to line managers giving them information abouttheir staff. Personnel specialists may have their power reduced and also,line managers may not want, or be trusted with, the information.

MONITORING AND AUDITING FOR EQUALITY AND DIVERSITY

It is argued that the collection, analysis and interpretation of data relating to theemployment experiences of all groups in a workforce will serve several purposes.These relate to baseline data that is good-quality, detailed and preciseinformation, which will allow the identification of issues which need to beaddresses and provide a basis for planning and a benchmark for progress andfuture impact evaluation. Frameworks for effective auditing and monitoringspecify several target areas. These include dimensions that would differentiatebetween disadvantaged and dominant groups as well as processes that mediateentry into and progression through an organisation such as selection, recruitment,performance management, promotion and also mechanisms such as parentalleave, child care, flexible working, harassment and grievance procedures and anyinitiative that could contribute to a supportive environment. The act of collating

and analysing such information sends out a positive message that theorganisation takes issues such as discrimination seriously. However, it may bepossible that the only action to be taken is the collection and storage of data witha report produced every now and again. Quantitative measure may also not be assignificant as subjective measures- ‘how employees feel’. The importance of capturing how people feel about their experiences is also significant as knowingyour organisation in terms of culture, attitude, opinion, and systems andprocedures 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 fororganisations; who to employ, promote, train or dismiss. Unless suitable peopleare assessed and selected, the organisation will fail to achieve its strategicobjectives and will run into a variety of personnel problems: high turnover, lowproductivity and high rates of absenteeism. Jobs offered by organisations willdiffer in their skill and ability demands and the differences between people will berelevant 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 isexplicit- to match the right people with the right jobs, that is, attractingcandidates 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 analysedin terms of its requirements, a process called job analysis which is theidentification 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 aswell 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 beinglooked for to perform the job effectively and is usually described in terms of theknowledge, skills and abilities/attributes (KSAs) necessary for successful job

performance but is now expressed in terms of competencies or competences. Thisenables applicants to be assessed in some way, through tests, interviews or theirpredictors to enable the best match between job and person. Increasingly,organisations are more interested in the fit with the team or organisation ratherthan matching the job alone. This has led organisations towards a social processor 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 formalprocess of ensuring that organisations have qualified workers at all levels to meetshort- 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 selectionprocess.Recruitment is the process of attracting qualified candidates to apply for vacantpositions within an organisation and depends upon factors such as companyimage, salary, perks and career potential. An important component of this processis writing the job description which must be specific and exact to attract the rightcandidates. 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 backgroundsand perhaps salary ranges.Recruitment leads to the next stage of the process- staff selection wheredecisions 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 topromote 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 orinternet.The process of staff selection involves evaluating candidates through applicationforms, 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 theobjective/best practice model is to reduce and mange that risk.

RECRUITMENT

Recruitment begins by attempting to answer the question: “How do we know whatemployees we need?” In order to ensure an adequate answer, the following shouldbe considered;

carrying out a job analysisdrawing up a job descriptiondevising a person specification

JOB ANALYSIS

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 isanalysed to generate a person specification to allow appropriate people to beattracted to the organisation through the recruitment process. Applicants areassessed in terms of how closely their profiles match the specification andcandidates are selected in terms of closeness of fit.However, jobs are dynamic and can change because of internal and externalforces. 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 arequestioned 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 jobspecification (JS) which is a list of things that people need to bring with them tothe job. Questions that need to be answered in order to determine what needs toincluded in the JD or JS;

the purpose of the job or more precisely, the contributions of the jobtowards the overall organisational objectivesthe 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 requiredto perform essential functions of the job. The JD needs to be translated into aperson specification to define what kind of person is needed to perform the jobeffectively.After a JA, the organisation should develop evaluative performance criteria to helpvalidate the selection system. These should be relevant in terms of immediatelevel criteria (behaviours), intermediate criteria (performance results) and ultimate

criteria (organisational contribution). The last criteria may take several years togather due to influences of organisational constraints.



Selection, socialisation and fit

Performance criteria may be composed of production data, judgemental data orpersonal data but none of these is satisfactory on its own as a measure of performance. So behaviourally anchored rating scales, or BARS (giving cleardefinitions of the attribute to be evaluated, and descriptions of observablebehaviour that reflect that characteristic) and behavioural observation scales, orBOS, 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 componentsinventory or work profiling system)interviews with job-holdersthe 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 performancehierarchical task analysis

other methods such as repertory grid analysis to elicit the constructs thatpeople 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 foremployees and provide clear career paths and facilitate short- and long-termachievement. The mental state of the employee is the primary consideration andsuccessful 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 objectivesthe actions necessary to complete the taskthe 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 inrecruitment and selection. They may wish to assess ‘job-fit’, the traditionaloccupational psychology area or use psychometric tests to assess attitudes andskills.

Job fit Organisationalfit

Higher Lower

Skills Personality Satisfaction StressAbilitie

s

Value Commitmen

t

Turnover

Goals Performance Absence



Attributes

RECRUITMENT PRACTICES: ATTRACTING CANDIDATES

It should not be automatically assumed that the organisation needs to recruit adirect 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 aswell as internal promotion or training of existing staff is required.Through HRP, as a review of organisational requirements, a new position mayneed to be developed.

CHANGING RECRUITMENT PRACTICES

There is currently a war for talent making it hard for organisations to attractsuitable candidates. It is in the interest of organisations to attract as large anumber 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) givethe candidates realistic job information which can reduce turnover but can alsodeter good applicants and reduce applicant numbers. Application forms can makescreening easier and well-structured forms can enhance reliability (yielding sameresults under similar conditions). Internet use is widely used with onlineapplications. Also selection tests or biodata forms may be used with processingbeing 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 thereare evaluative criteria or evaluative standards against which we can test acandidate’s suitability. Evaluative standards are the standards by which the qualityof a selection procedure is assessed such as reliability, validity, interpretabilityand practicality.Utility is also a term used to assess the benefit-cost ration associated with aparticular 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 consistentmeasurements)test (whether the test shows consistency in relation to item distance)

Reliability is expressed in terms of a correlation coefficient r, which measures therelationship of scores obtained from the test at different times, between twotesters using the same test, or of two items purporting to measure the samedimension or construct.

Validity is a complex construct composed of;

face validity: does the test feel valid to the candidates (affecting candidatereactions)?



content validity: the degree to which the content matter matches thepurpose intendedconstruct 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 scoreson 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 performanceas a job holder may do well at job level but do poorly at the team ororganisational level.The relationship between predictor and criterion is expressed as a correlationcoefficient. The purpose is to avoid false positives (people who score highly ontests but poorly on criterion) and false negatives (people who perform poorly ontests but highly on criterion).Validation strategies require large numbers of candidates and much research hasbeen done with governments and the military. Ideally, to do the calculations,organisations must also recruit poor performers at the point of testing and to getround this, analysts adopt a concurrent validation strategy, testing existing staff and exploring correlations with concurrent performers and assuming that currentstaff 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 CEOposition 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 toassess past, present or future behaviour. The logic of past methods is that ‘past

behaviour predicts future behaviour’.Past (e.g. track record, experience)

o referenceso peer observationo astrology

o biodatao structured/criterion-related or

behavioural interviews

Present (e.g. current performance)o graphologyo ability testso aptitude testso self-assessment

o personality inventorieso unstructured interviewso work sampleso assessment centres

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

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

Techniques such as references, graphology and astrology do poorly while othersdo well and some moderately well. Interviews have received bad press withpsychometricians viewing it as lacking reliability and validity. Informationgathered is prone to a number of biases such as horn/halo effects, recency andstereotypes errors but these are typically found in unstructured interviews.

There are several types of structured interview ranging from the situationalinterview where future-oriented responses are sought from hypothetical

1.0

0.90.80.70.60.5

0.4

0.3

0.20.10.0

{{

Accuracy of predictors compared

Perfect

Chance

StructuredinterviewsAbility testWork sampleAssessment centreBiodataPersonality

assessmentUnstructuredinterview

References



situations (derived from job analyses) to the patterned behaviour descriptioninterview where questions are posed on the basis of a job analysis which enquireas to how candidates dealt with situations in the past (initiative, leadership,

judgement).

PSYCHOMETRIC TESTS

Occupational psychologists are concerned with consistent patterns of differencesdisplayed by people, especially those of personality (differences in temperament)and cognitive ability (capacity to process information). Such differences areassessed by psychometric tests which include;

general and specific ability tests (i.e. manual dexterity, aptitude, numerical,verbal, spatial)tests of occupational preferencestests of personality

Jung (1923) first postulated a basic difference between extroverts (who aresociable and talkative) and introverts (who prefer solitude). More recently, a

five-factor theory (Big Five) of personality has become generally accepted. Thedimensions are;

Personality construct Overall performance

Big five:Emotional stability

AgreeablenessExtroversionOpenness toexperienceConscientiousness

Work competencies

Analysis and judgement

Decision-makingInterpersonalsensitivityResilienceEnergy and initiativeetc.

Work proficiency

Genetic andenvironmental factors

Job demands

Situational factors

Links between personality, competence and performance

Vernon’s model of cognitive

General

intelligence

Verbal:educational

Spatial:mechanical

Verbal MechanicalNumerical Manual



extroversion- introversionneuroticism- 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 personalityfactors and job performance.

ASSESSING EMOTIONAL INTELLIGENCE

People vary in their capacity to process information. Emotional intelligence (EI) isthe ability to perceive accurately, appraise, and express emotion; the ability tounderstand emotion and emotional knowledge; and the ability to regulateemotions to promote emotional and intellectual growth. This can be taken furtherand associated with leadership and business success. Cognitive processes areinfluenced by emotional factors and these affect success in all areas of life. EI isseen as a bedrock for emotional competencies. The best managers are seen tomake decisions based on combinations of self-management and relationshipskills and an awareness of how their behaviour affects others. Goleman developedthe Emotional Competence Inventory which is meant to be filled in by theindividual and also peers, superiors, customers, subordinates, etc. It covers;

self-awareness self-confidence and accuracy of emotionalself-assessments and recognition of emotions, being open to feedback andknowing strengths and weaknessesself-management self-control, self-regulation, adaptability, initiative, beingfocussed, trustworthy, ethical, responsible, persistence, comfortable withnew ideas, commitment

social awareness empathy, organisational awareness, anticipating needs of others, coaching and mentoring, unbiased respect, understanding powerrelations and networksrelationship management social skills, aspirations, influence,developing others, fostering teamwork, leading by example, championingchange, 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 thememotional resilience: can maintain performance under pressure

motivation: has drive/ energy to attain challenging goals/ targetsinterpersonal sensitivity: shows sensitivity, empathy to othersinfluence: can influence/ persuade othersintuitiveness: can make decisions on reason/ intuition

conscientiousness and integrity: is consistent in words/ action, ethicalstandards

EI is important in leadership becoming more important the higher up one is in acompany. 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.

INTEGRITY TESTS

There is increasing interest in integrity: behaving in ways that reflect broadlyshared values in areas such as trustworthiness, honesty, unwillingness to take

advantage of others. Integrity is often associated with EI and almost everyone willshow integrity in some situations and almost everyone will show dishonesty oruntrustworthiness in others. The situation and norms that operate in theworkplace 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 bothpersonal factors (values, attitudes) and situational factors (norms, opportunities,rewards and sanctions). To influence integrity at work, a solution would be tochange the situation: better monitoring and security procedures, publicisingefforts 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 bevery important in situations where there are many opportunities for dishonest acts.Some organisational norms may also tolerate some degree of dishonesty, forexample, corrupt police forces. Integrity tests are advocated as a strategy tominimise ‘counter-productive’ behaviour and are used more in retail and banking,but, rarely used for managerial and executive staff! There are basically two typesof integrity test;Overt, where scales such as customer relations or drug avoidance seek to assessadmissions 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 arepresented with items describing characteristic behaviours, interests and activities.Tests often contain ‘normal’ personality dimensions and reliability scales. Theymeasure 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 andmeasures of shrinkage. The two tests show similar levels of validity for predictingfuture performance, comparable to other kinds of psychometric tests, with fewmajor group differences, except for women scoring higher on integrity tests thanmen. 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 interviewspolygraph tests

referencesbackground 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 maypass them. Some states and countries have outlawed their use.Current employees may have their behaviour monitored through surveillance andcan raise considerations of invasion of privacy . However, organisational factorssuch as loose norms where there is no clear expectations on, say, theft,socialisation of new recruits to tolerate theft, lack of accountability for ethicalbehaviour, scapegoating, etc. usually have a stronger impact on dishonesty thanpersonal variables: bad barrels have more impact than bad apples!



IPSATIVE TESTS OF PERSONALITY AND STYLE

Unlike psychometric tests and inventories, ipsative tests, seek to avoid the ‘socialdesirability’ problems inherent in many psychometric tests- where individualsmay intentionally present a distorted , socially desirable picture- by using adifferent test structure requiring a choice between two statements or adjectivesthat appear equally desirable or undesirable, instead of answering ‘true’ or ‘false’.Ipsative tests are more useful for personal and team development than forselection and many psychometricians have suggested their suspect reliability andvalidity. Popular tests include the Belbin team role profiling and the Myers-Briggsapproach to personality and learning styles;

BELBIN TEAM ROLE PROFILING

This profiling instrument has developed over the years and takes the form of asimple questionnaire, completed by the individual and then by their peer groupfor the purpose of assessing preferred behaviours and therefore characteristicsthat are either beneficial or detrimental to a team. The test tries to

define an individual’s current preferences (snapshot)identify their typical team behaviourassess their suitability for a team role, chosen from 1 of 9 types

Team roletype

Description Team contribution Allowable weaknesses

PlantCreative, imaginative,unorthodox

Solves difficultproblems

Ignores incidentals. Toopreoccupied to communicateeffectively

Resourceinvestigator

Extrovert, enthusiastic,communicative

Explores opportunitiesOver-optimistic. Loses interestonce initial enthusiasm haspassed

CoordinatorMature, confident, agood chairperson

Clarifies goals,

promotes decisionmaking, delegates well

Can be seen as manipulative.Offloads personal work

ShaperChallenging, dynamic,thrives on pressure

Drive and courage toovercome obstacles

Prone to prevarication. Offendspeople’s feelings

Monitorevaluator

Sober, strategic anddiscerning, sees alloptions

Judges accuratelyLacks drive and ability to inspireothers

TeamworkerCooperative, mild,perceptive anddiplomatic

Listens, builds, avertsfriction

Indecisive in crunch situations

ImplementerDisciplined, reliable,conservative and

efficient

Turns ideas intopractical actions

Somewhat inflexible. Slow torespond to new possibilities

CompleterPainstaking,conscientious, anxious,searches out errors

Delivers on timeInclined to worry unduly.Reluctant to delegate

SpecialistSingle-minded,self-starting, dedicated

Provides knowledgeand skills in raresupply

Contributes on a narrow frontonly. Dwells on technicalities

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

improve self-awareness and personal effectiveness



foster mutual trust and understanding between work colleaguesmatch people to jobs for the purpose of selection and career planningenhance 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 profilethan assessment based purely on self-reporting. Belbin assessments are notstrictly 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 tensionsand conflicts. Belbin uses the 9 team roles to create 4 work roles- a mix of tasksand responsibilities undertaken by individuals or within a team. It has a colourclassification system to clearly differentiate between 4 work roles. This avoidsambiguities and misunderstandings by allocating ‘colour-coded’ tasks to a‘colour-coded’ personality which is a system finding great favour in atime-constrained environment. Membership of any team should not remain staticas this is dysfunctional and facilitating career moves within a company is one wayof furthering perspectives and offers the advantage of becoming a ‘bigger person’.Another way is to swap members with other team members to widen and deepenunderstanding.There remains doubts as to the psychometric properties of the Belbin inventory. Itis claimed that the model displays adequate convergent validity (the degree towhich an operation is similar to other operations that it theoretically should besimilar to), alongside weak discriminant validity (the degree to which an operationis 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 andorganised set of characteristics possessed by a person which uniquely influenceshis/her cognitions, motivations and behaviours in various situations. Cognitions isthe capacity for information processing through psychological and/or relatedconceptual connections, and behaviour is the actions/reactions of individuals inrelation to their environment. The behaviour may be conscious or unconscious,overt or covert, voluntary or involuntary. Jung articulated the followingproposition;

past experience and expectations about the future influences behaviour and

personalityindividuals are capable of constant and creative developmentpersonality 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. Sothe influence of others can have a significant impact on an individual’sbehaviour.

Jung’s theory postulates two attitudinal orientations and four basic psychologicalfunctions. 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-wiseinteractive) dimensions of the human psyche;

extrovert and introvert as attitudes

sensing and intuition as perception functionsthinking and feeling as judgement functions

These were integrated by Myers and Briggs into the Myers-Briggs Type Indicatorand its purpose is to make the theory of psychological types, described by Jung,understandable and useful.

Attribute Function Nature Function Nature

Structure Judging

Need planned processesand regulation. Highly

structured lives,adhering to plans

Perceiving

Are flexible in a spontaneous way,seeking to experience and understand

phenomena rather than to controlthem.

Energised by resourcefulness. Moreinterested in others’ intentions than in

their own

Decision Thinking

Involves logicalconsequences forchoices of action.

Connects to judgingrather than intake of simple information

Feeling

Involves evaluating information and isassociated with emotional responses.

Connects with purely subjectiveperspective of

situations. Oriented towards personalvalues

Information Sensing

Involves perceptionrather than judging

information. Preferenceis for sensing relating to

the tangible andmanifest

Intuition

Connected to the unconscious. Comesfrom complex integration of much

information. Consequence is to see thebigger picture, focussing on the

structured relationships and connection

between facts and finding patterns.Tends to accommodate the abstractand conceptual

World-oriented

Introvert

Focus on the innerworld of ideas and

experiences, reflectingon thoughts, memories

and feelings

Extrovert

Focus on the external world andparticipatory activities and actions

within it.It is based on the internal world.

The theory declares that seemingly random variation in behaviour is quite orderlyand 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 isperceived. The 4 preference dimensions of the MBTI accumulate into a set of 16permutations of dichotomies that result in 16 personality types. These form thebasis of the model and so, the MBTI.

DICHOTOMIES

EXTRAVERSION INTROVERSION

SENSING INTUITION

THINKING FEELING



JUDGING 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 mentalprocess.The fourth letter ( J or P) indicates the person’s kind of mental process thatleads to an outside world orientation.

The tendency is to understand each of the 16 types as the sum of its essentialparts, for example, ESTJ = E + S + T + J . But, it is the interaction of the 4preferences that is important and the unique mental patterns that theseinteractions 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 earlierwork on learning styles and his 4 stage learning cycle. Theirs is a measure of style or preference , rather than of level.

Attribute

Function Nature Function

Activist TheoristsAccommodat

or

Likes doing things, carrying out plans andexperiments, being involved in newexperiences

Activist Reflector DivergerAdopts unconventional attitudes; isemotionally inhibited and innovative

TheoristPragmatis

tConverger

Holds conventional attitudes;demonstrates practical application of ideas; is emotionally inhibited and adoptsconventional logic

Theorist Reflector AssimilatorHas 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 UKcompanies 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 videoenhancements as well as virtual reality. In addition, social networking sites andorganisational-based sites may be important developments for recruitment andselection. Social networking technology is presenting unforeseen challenges and

to an extent, unknown threats and opportunities to organisations, HR functionsand ER.



The use of the internet for marketing, sales, b2b, etc. is well-established thoughnot fully understood. The experience and understanding are of limited value inWeb 2.0 applications which are new phenomena and which have key and criticalcharacteristics in providing power and control over content and processes toindependent people and groups. This characteristic shows the importance andinterest Web 2.0 to HR and ER professionals. The dichotomy, though, that is

presented in the potential implications to ER is the threats and opportunitiespresented by internal and ‘controllable’ use of Web 2.0 technology versus thethreats and opportunities presented by external and ‘uncontrolled’ use of Web 2.0technology. Implications include control of, and use of, the internet at work,monitoring internet content/social networking, and ER processes such asrecruitment, selection, PM, talent management, brand management, and learningand development.

ASSESSMENT CENTRES

Assessment centres, unlike their close relatives, development centres, are usedprimarily 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 placethe use of structured combinations of techniquesthe assessment of people in groupsthe assessment of participants by groups of trained observersthe use of situational teststhe assessment of candidates on multiple dimensions (as derived from athorough 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 avoidedthat afflict assessment and development centres such as;

poor planning and inadequate JA

poorly designed exercisesinsufficient pre-centre work

unqualified/ poorly trainedfacilitatorsinadequate participantpreparationmisuse of data

One of the keys to creating a successful centre is to develop the necessarycompetencies 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 fromindividual level to organisational level. The concept of competency has been

criticised for entrenching organisational power by reducing personalcharacteristics to quantifiable units, but the concept has proved resilient and has



even flourished in both the public and private sector. Competencies clearly differbetween roles and job descriptions but it is generally agreed that managerialcompetencies can be generalised to about 30 generic competencies. However, thekey to using a competency-based approach in a centre is simplicity : they shouldbe easily understood and interpreted with explicit explanations on thecompetencies that are being sought to develop. One way to differentiate between

competencies is by using critical incidents analysis and then to identify specificbehaviours that reflect these.

Problem-solving competencies Task management competencies

monitoring developmentsgathering informationanalysing informationgathering alternative approachesmaking effective decisions

showing concern for excellencesetting and prioritising goalsplanning and organising workdelegating responsibilitiescontrolling the work of others

coordinating the work of others

Self-management competencies People managementcompetencies

managing own workmanaging stressdeveloping own competencies

establishing effective relationsdeveloping the competence of otherspersuading and influencing of othersinitiating group activitydeveloping commitment

Williams and Dobson’s (1991) management competency model

Once competencies have been identified, they can be used to match uporganisational outputs to show which competencies are important to differentsections of an organisation. More usually, they are matched up with tasks androles that performed by centre participants. Finally and most importantly,competencies for the basis for the competency matrix that is used to create thetasks 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 exercisesthat can be further subdivided into individual or group exercises. Some of thedimensions on which participants may be assessed and some of the exercisesused to reveal performance against these dimensions could be;

Business sense Personalityquestionnaire

decisivenessorganisation andplanning

energyoral communications

leaderless groupdiscussion

in-basket exerciseinterview simulation



resilienceimpactsocial sensitivity

business presentation

DEVELOPMENT CENTRES

A development centre consists of multiple participants undertaking multipleactivities with multiple observers assessing their performance. Their strengthsand weaknesses are assessed against a profile of behaviours or competencies thatare identified as critical to job/role performance through a critical incidentinterviews 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 aperson construes their experienceidentify activities that post-holders engage in; e.g. a sequential activitiesdevising a matrix indicating which dimensions are to be assessed againstwhich exercise as not all dimensions will be assessed in each activitytraining the assessors in the use of the matrix, how to score and how togive feedbackrunning the centre and ensuring that each person is assessed by at least 2assessors during the daythe assessors meeting to agree an assessment for each participant, givingfeedback on performance to mutually identify training needs, organisationaldevelopment needs that seem to run against the cohort and might applyorganisation-wide.

The difference between a development centre and an assessment centre is thecentre’s focus and in what the centre’s results are used for. An assessment centregives pass/fail decisions, a development centre gives recommendations ondevelopment/promotion options and decisions.In both, behaviour is observed, detailed performance feedback provided, anddimensions observed are keyed to competences. However, in a developmentcentre, the output is used to inform a personal development plan and enabledevelopment activities to be more focussed.

Stages of development/assessment centre

Define objectives, gain

Define competenciesSelect and develop exercises, design

Train assessors

Run pilot

Implementation

Review and evaluation



Development and assessment centres can be placed on a continuum from ‘puredevelopment’ to ‘pure assessment’ with many organisations running ‘hybrid’centres mixing both.

Development

Assessment

75% assessment centrefor career development

100% developmentcentre

50/50 assessment centrefor potential

>75% assessment centrefor internal

100% assessment centre

The assessment centre continuum



SEQUENCING ASSESSMENT AND SELECTION PROCESSES

It is likely that a company will sequence its selection process using differenttechniques at various points in time. For example, initial applicants may be askedto 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 maybe invited to a structured, competency-based interview. The ones who scorehighly 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 candidateis also making a decision as to whether to enter into an ongoing relationship withthe organisation and this decision can be terminated at any stage. Questions willbe flowing through the candidate’s mind and both sides are continually engagedin impression management. This is explicitly recognised by the social process orsocial exchange model of assessment and selection which sees assessment as a

two-way decision-making with the applicant as an active decision maker. Bothparties have expectations but neither party is seen as fixed; both are dynamic andchanging. If the process is successful, expectations will be congruent and a viablesocial 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 ‘toospecial’ in the selection process, expectations of employment may beunrealistically high. It may be difficult for each party to assess how much is imagemanagement or deliberate falsification. The candidate can try and project adifferent personality for the purposes of interview and recruiters may not give afull picture about the job, prospects, salary, management style etc. Such

deception can have negative outcomes- the work can be more demanding thanexpected or a promised open culture can be one of distrust. Each party is trying toinfluence the image it presents to the other party. This is seen as an inevitablefactor in the social process model- not to be eliminated as in thepsychometric-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 getthem?” and “How do we know that we made the right decision?”. The issues hereare those of retention of candidates and how to assess the value of the selectionsystem to the organisation. The personal and organisational costs of poor

selection decisions may be significant, reducing organisational efficiency. Theroles of validity of different selection procedures and accurate JA are importantand utility theory has helped give ER specialists the methodology to identify S&Rfinancial benefits. Utility modes provide a framework to compare the outcomes of different options and to assess ROI obtainable from recruiting high performersusing valid procedures compared with using less accurate selection methods. It isbetter in cost-benefit terms to use a good method of recruitment and a poorselection method than to use a poor recruitment source and a good selectionmethod.



MODULE 6 PERFORMANCE MANAGEMENT

INTRODUCTION

Recent interest in HRM research has been in exploring the relationships betweenaspects of HRM and organisational performance. In terms of ER, this has meant amove away from contracts of employment to contacts for performance . Effectiveperformance management (PM) can clarify roles, identify training needs andmakes staff feel valued. A comprehensive PM will incorporate the performanceappraisal (PA) alongside initiatives such as coaching, counselling and PRP. Itusually involves;

performance agreement: defining objectives, identifying development needsperformance monitoring: reviewing performanceperformance reinforcement: recognising and rewarding performanceperformance 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 andperformance evaluation .

PERFORMANCE APPRAISAL DEFINED

PA is the cornerstone of PM which is the systematic procedure for assessing jobperformance on a regular basis. At a minimum, it involves an interview betweenemployee and manager and completion of an appraisal form. More effectivesystems 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, ‘itis a key mechanism for aligning the efforts of individuals with the aims and goalsof the organisation, and for identifying and rewarding those employees who bestexemplify, model and contribute to organisational goals’. However, evidencesuggests that there are problems with the implementation of PA with high levelsof dissatisfaction with PM. Much work on PM has concentrated on seeking tounderstand employee attitude and perception towards the appraisal and PMsystem and in identifying the factors that explain the lack of satisfaction in it. Oneapproach is to use an organisational justice perspective (Module 5).

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



framed in behavioural terms. PA is arguably the most contentious and leastpopular activity in HRM and managers do not appear to like doing it, employeessee no point in it and it is left to the ‘guardians’ of organisational appraisal policyand procedures (HR managers), to see their work fall into disrepute. Appraisal isseen as central to management control through its use of measuring andmonitoring 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 toidentify training needs but have used it less to make reward decisions. PA hasbeen 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 financialmeasures, but also on customer service, internal business processes, andinnovation and learning measures. Other models have added employeesatisfaction as a fifth dimension and this recognises that different stakeholdershave different perceptions about which potential measures of performance areimportant. There has also been a shift towards using input as well as outputmeasures: measures of the ‘how ’ as well as the ‘what ’ of job performance. Linkedto this is the shift away from job-related criteria to person-related criteria. Afurther trend has been to encourage employees to be more responsible forassessing their own performance and goal achievement with greater reliance onresponding to feedback, self-assessment and commenting on one’s ownperformance. In addition, the time focus of PM has shifted away from currentperformance (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 performanceappraisal, and unhappy with the way it is practised. Appraisees’ satisfaction withtheir PA system can be influenced by the extent of their;

participation in setting goalsinvolvement in the interview discussionfeedback on performance received

knowledge of appraisers’ expectationsknowledge of the PM system

They also expect PA evaluations to be linked specifically to the job they do and PAsystems therefore need to adequately allow for and recognise differences inemployees, their contributions and their performance.

AN APPROPRIATE MODEL OF PERFORMANCE MANAGEMENT

There is a body of research in the universalist ‘best practice’ tradition that seeksto demonstrate the extent to which particular bundles of best-practice HRMexplain the variation in companies’ profitability and performance levels. However,others in the contingency or best-fit schools claim that universal, rigidprescriptions fail to acknowledge organisational differences in size, design andoperation and the ‘one size fits all’ is only a useful guidance tool or providing thebroad principles of system architecture of HRM.

Two main approaches to PA can be identified which advocate eitherdevelopmental or judgemental approaches to appraisal. Developmental



approaches are concerned with motivating an employee and agreeing aims andobjectives (in line with organisational goals) for a forthcoming period.

Judgemental approaches are concerned with providing evaluations andassessments of employees’ (past) performance. This normally involves decidingon 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 isfocussed on a developmental approach and development-oriented approaches aregenerally preferred by appraisees. However, many organisations confuse this bylinking pay awards to PA outcomes and hence confound developmental and

judgemental approaches. This implies that when organisations want to link payand performance through appraisal, they should adopt a genuinely judgementalapproach. The nature of the PM system and the individuals being appraised arekey factors influencing PA effectiveness. The organisation is important because itacts as a major constraint an so, PM systems are therefore unique to theircontexts.

The organisation may be trying to use PA for both development and for rewardpurposes and these two functions may come into conflict. The individual may betrying to gain accurate information on where they stand and where they canrealistically go, while also trying to present themselves in a possibly unrealisticlight in order to gain monetary and other rewards. Often in PA the appraiser isacting both as a judge- rating behaviour and making decisions on pay, promotion,

and training and development, for example, and also as a counsellor- trying tounderstand the reasons for apparently poor performance, to motivate theappraisee to try harder and to help support the appraisee.In different organisations, there will be different mixes of judge-like andcounsellor-like evaluations. If the focus is on past performance and results, thesystem is heavily reliant on documentation and led by the manager, then theoutcome is likely to be defensiveness, resistance and at best compliance by theappraisee. 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 ismore likely to be energy, commitment and enthusiasm on the part of theemployee instead of compliance.

ORGANISATION INDIVIDUALS

Development of individualsvia coaching, counselling,

career planning

Where do I stand? Wherecan I go? Valid performance

feedback

Basis for reward and other

personnel decisions

What can I get out of this?

Reward and maintenance of self-image

Conflic Conflic

Conflic

Conflic

Conflicts in performance appraisal



The relationship between manager and employee is not static and simple, butdynamic and complex. Cost of revamping PM systems may disillusion and confuseemployees and managers may lack the time and skills to make appraisal moreeffective.The appraisal balance between evaluation and development in an organisation islikely to be related to its culture and structure.

Hierarchical, authoritarian organisations may not welcome peer feedback whereasin a matrix organisation, appraisees may not be committed to the appraisalprocess 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 mayalso be subject to biases similar to those of selection interviewers. Managers needto also manage conflicts within PA such as the balance between;

people and processesinput (skills, competencies, behaviours) and output (internal businessmeasures)individual and team performanceassessment and development (‘you can’t grow a cow by weighing it’)

In many jobs, there are many intangibles qualities that cannot be measured andthe pursuit of quantifiable, tangible measures may be at the expense of theseintangibles. Much work is done within groups and their work is not observed.Evaluators have mixed motives for evaluating performance and social processesenter all phases of the rating process. Organisations are often recommended touse multiple raters, reviews and ratings and also to provide better appraisaltraining 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 objectivereality cannot be accurately represented. Appraisal may serve primarily as a toolfor management control, legitimising managerial authority.

WHAT SHOULD BE APPRAISED?

Some PA schemes assess competences or competencies such as job knowledgeand 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 targetachievement and the competences/behaviour used to achieve them.

IS

360 APPRAISAL THE

PANACEA

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

Skip one level superior

Immediatesuperior

Peers,colleagues,

-

Internalclients

Externalclients

Subordinates

360 feedback

SELF-REVIEW



In part, the move away from traditional top-down assessments seems related tochanges towards flatter and more fluid structures, autonomous work units andwider, supervisory spans of control and all of this legitimises the involvement of subordinates and peers. Using the 360 appraisal is a way of overcomingproblems identified in the traditional appraisal method. Internet and web-basedtechnology is also likely to make the rating/feedback process less cumbersomeand time-consuming and this is likely to grow. Factors which can affect MSMRfeedback 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 prescriptiveapproaches has been developed and this contingency model distinguishesbetween the ability of the organisation to measure output and behaviour. If theorganisation has a high ability to measure outputs and a high knowledge of thetransformational process, it may base appraisal on behaviour or outputs. However,

it may be able to appraise only outputs, lacking knowledge of the transformationprocess (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 processor a poor ability to measure outputs. This can lead to experimenting with otherforms of appraisal such as self-assessment, peer appraisal and customerappraisal.

PERFORMANCE MANAGEMENT IN KNOWLEDGE-BASED ORGANISATIONS

Intellectual capital is often the principal asset of knowledge-based organisationsand 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 animportant determinant of competitiveness. Bundles of HR practices confirm theimportance of linking PA to organisation strategy as well as ensuring congruencewith complementary HR practice through the concepts of vertical and horizontalintegration. This means that if PA acts within a wider PMS instead of forming apart of a comprehensive HR bundle, it will have a positive impact.PA can also facilitate meaningful exchanges between knowledge workers andmanagers, which contributes to a greater employee ‘voice’ which in turn is anessential complement to high-commitment work practices.Traditional PA sits uneasily with the characteristics of many professional job rolesand a particular type of PA is therefore required for knowledge-based

organisations that have flatter hierarchies and need to maximise employeeflexibility due to competitive dynamics.



‘MANAGERIAL AND INDIVIDUALISTIC’ OR ‘DEVELOPMENTAL AND COLLEGIAL’?

There is a dilemma of achieving a suitable balance between the aims of controland commitment, or judge and helper.A hierarchy of objectives is incorporated into many contemporary PM approachesthat emphasise control and stipulate and assess an individual’s contribution tothe organisation. The performance improvement cycle within these appraisalschemes requires employees to justify their development needs by demonstratingtheir relevance to the attainment of organisational objectives and rewarddecisions are based strongly by an evaluation of an employee’s success inachieving them. This approach is often seen as unwarranted and workable inknowledge-based institutions.In contrast, a developmental approach to PA is to give professionals themselvesthe primary responsibility to identify aspects of their roles in which developmentis desired and possible.This more collegial system is based on trust, self-evaluation and peer review andis deliberately separated from the processes of reward and promotion.

EFFECTIVE PERFORMANCE APPRAISAL SYSTEMS IN UNIVERSITIES AND COLLEGES

Various perspectives on appraisal have described it as unnecessary, ascounter-productive, as failing to deliver what it promises or as a surveillancetechnique for asserting management control. Organisations best able to avoidsuch scenarios should be academic institutions running programmes in businessstrategy and HRM. As a proportion of core staff in such institutions- professionalswhose attributes are these organisations’ key strength- will be much higher thanin most other organisations, this should give the motivation and development of these knowledge workers particular importance in PM. However, anecdotalevidence and literature all suggest that such confidence is misplaced.

The apparent disparity between what is taught and what is practised in HE and FEstimulate research to obtain expert witness perspectives in PA from those mostcentrally involved in the activity. The way in which people management strategiesare formulated and implemented may be more important in achieving competitiveadvantage than the nature of the strategy itself. Indeed, researchers haveneglected the political aspects of the appraisal process. One method of developing an effective and ethical PMS seeks to achieve stakeholder synthesis byinvolving key stakeholders in the development of performance objectives andmeasures. Many organisations have powerful stakeholder groups, operating intheir own ethos and all with their own objectives. Staff within each type of organisations are archetypal professionals- potentially mobile and not easilycontrolled by non-specialist managers or administrators. Moreover, suchorganisations are all striving to identify and operate effective PMS that theirstakeholder groups will ‘buy into’.Appropriate performance measures were identified via a consensus-seekingprocess, embedding them within an organisation’s aims and culture in a way thatengaged commitment from all stakeholders. The process involved;

identifying key stakeholder groupsconducting structured interviews with key stakeholders to agree strategicobjectives using SWOT and PEST analysisusing the Delphi technique to obtain and analyse the views of different

stakeholdersrelating results to senior stakeholder groups for further analysis



If, after this process, genuinely different interests remain, these competinginterests are transformed into competing claims so that each group’srequirements are viewed openly in relation to the resources available and rivalclaims. So those responsible for PA in academic institutions utilise a stakeholdersynthesis approach. System designers could realise that an imposed PA system

may achieve enforced compliance with the bickering and guerrilla warfare thatmay follow in its wake, or it is a mock bureaucracy, where PA is just a ‘ritualdance’ carried out for external audiences and for the unfortunate participants, it isa ‘zero sum game’.The stakeholder synthesis method may be time-consuming to some or achallenge to management control, but it can produce an effective and robust PAsystem that recognises the interests of all stakeholders while, at the same time,giving importance to the concerns of the knowledge workers whose commitmentis central to organisation success. In this way, universities and colleges thatpractice what they preach can use relevant, valid and developmental performancecriteria, 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 structuresor jobs with metaphors such as career ladder, path or track. Career managementis associated with efforts of an organisation to develop and retain ‘key’ employeesthrough individual career plans. Some organisations use individual careerplanning to help individuals identify personal drivers and values, developnetworks, and build transferable competencies and capabilities and apply those totheir personal and career development (such career planning may includeself-managed learning). These initiatives are often aimed at graduates and othernew 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 manychallenges including globalisation, technological change, growth of networks and‘virtual’ organisations, and downsizing, which all generate career unpredictabilityand uncertainty.In this context, there is focus on the boundaryless career, the boundarylessorganisation: 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 modelsare not necessarily new- protean careers- a career that is driven by the personand 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 apsychological contract. Who are the parties to the contract and if it is implicit, is ita contract? How does the concept of the ‘career model’ apply to unskilled workers?Also, in practice, the old ‘employment security contract’ was often restricted tomale managers and skilled, unionised staff in large bureaucracies.There is also an emerging partnership model of careers emerging based onadult-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, andchallenge 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 careerdevelopment and to take responsibility with employees, managers and HRfunctions, for building and rebuilding trust and common purpose to facilitate therenegotiation of psychological contracts. Therefore, organisations need to provideopportunities for self-assessment, benchmarking, development, and lateral andother moves, as well as training managers as career coaches and careercounsellors. Organisations need to also provide career resource centres andlearning 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 onvacancies). They involve processes to develop career potential, such as coachingand mentoring programmes, in-house training and educational programmes.Research has shown that most career management practices can be classified into5 groups;

developmental assignments such internal/external secondment, job

shadowing, international assignmentscareer information and advice such as career counselling, coaching andworkshopsinitiatives aimed at specific groups such as ‘high-potentials’, successionplanning, graduate entry schemesuse of internal job markets such as online-vacancy boards and openinternal marketsbasic career support such as setting development objectives, providingformal/ internal development reviews, and providing informal support fromHR

CAREER PLANNING AND CAREER RESILIENCE

Some companies adopt this approach which encourages employees to takeindividual responsibility for their career development, continuously reassessingtheir skills, interests, values and goals, developing career strategies, andimplementing a development plan to broaden their experience in support of career objectives.

SETTING AND EVALUATING CAREER GOALS

A key part of career resilience is being able to set career goals. Possible options toconsider include;

Vertical movement- up is normally considered as the traditional route that peoplehave taken but there are other ways to move within an organisation that canprovide satisfaction and successLateral movement- moving across an organisation or taking a different job at thesame level, maybe without changing status or pay. It is an excellent way tobroaden skill bases and experience.

Job enrichment- an option available to everybody at any time. Every job can beenriched by expanding or changing responsibilities, adding additional challenge.Realignment/ downward movement- is taking a job at a lower level and is a goodmove for people who move from, say, a technical position to a managerialposition. It can be a way of changing career direction in an organisation.

Exploration/ external- this involves leaving the organisation perhaps becauseyour needs and the company’s needs do not match, or perhaps you want tobecome entrepreneurial.

In addition, it is also important to benchmark one’s skills against what the marketrequires and this is the mark of a career resilient person. Benchmarking is thepractice of comparing your skills with a standard of excellence, and with what themarket is currently requiring. In order to stay ahead of the pace of change, theprocess of regular benchmarking enables a person to determine which skills todevelop next. The objectives of benchmarking are to;

measure competitiveness in the marketplaceidentify 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 weaknessesin the system of career and management development (CMD) in the UK especially

in comparison to major competitors. Implications for Britain’s economic efficiencyand relative economic decline included;the late split between organisational ownership and management control

low status of managers compared with financiers, professionals, and civilservantsa poorly developed link between technical and managerial functionsslow development of managerial identity in the UK

the prevailing assumptions that managers were born and not madelack of linkage between education and managerial training

Events in the 1980s that led to an increased interest in CMD including therecession, a greater government interest, turnaround of companies (such as BA)attributed to training, and the growth of university activity in MBA programmesand other management courses.

Factors that are likely to stimulate CMD activity are;the ability to manage complexityinternal labour markets with open career structuresHRD aiding recruitment

Factors that are likely to inhibit CMD include;

a preoccupation with immediate tasksa lack of background qualificationsperception 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. Thedynamic nature of global business is putting an ever-increasing pressure oncompanies 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’ssuccess.3 fundamental forces are fuelling the war for talent;

Irreversible shift from the industrial to the information age- the increasingimpact of technology has changed the face of ER and made boundariesbetween organisations permeable, enhancing collaboration and intensifyingcompetition. As technology infiltrates every facet of the workplace, theimplications for talent management become more profound.Intensifying demand for high-calibre talent- over the next decade or so, thedemand for talented people will far exceed the availability of skilled workersat 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, anincreasing need and a shortage of skilled labour, greater geographicmobility of labour, and the concept of a ‘job for life’ have placed morepower in the hands of workers with transferable skills. Skilled workers areincreasingly moving from job to job as a deliberate choice to increase andenhance 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 helpfulhuman perspective on human capital development, it will be one of the mainproblems 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 thegrowth of human capital as an asset. Organisations need to pay attention to thestrategic importance of managing talent flows through the company. Terms usedinclude 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-servertechnology, OCR and EO opportunity reporting made applicant tracking possibleand necessary for most large firms. Broadly speaking, TM refers to;

identificationdevelopment

engagement and retentiondeployment

of those employees who are particularly valuable to an organisation, eitherin 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 orperformance development but these were seen in a narrow focus and as separatecomponents rather than a common approach underpinning all three activities. Thephrase has worked its way up the HR agenda and also the priorities of theorganisation as a whole. It is not new and has been around for a long time but itis a concept whose time has.

DEFINING TALENT

TM is concerned with having the right people in the right roles in the rightenvironment with the right manager to enable maximum performance. There areseveral 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 generalterms, 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 addedto the definition as employees may have the abilities but may not be given theopportunity to display them in the workplace. Talent is an attribute that needsdirection for it to be used constructively and effectively to give individuals, whohave the capability, to make a significant difference to the current and futureperformance of the company. Some organisations may develop behavioural

frameworks to identify and assess talent and to assist in developing a sharedlanguage and understanding, including achievements of targets.



In general terms, talent refers to individuals who can make the greatest differenceto organisational performance either through their immediate contribution orthrough 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 isleaving many organisations with their critical workforce approaching retirementand perhaps with an inadequate supply of younger talent.Workforce reduction has temporarily slowed down the major battles for talent butit has added a premium on ensuring that the talent remaining is high-performingand well-suited to the strategic needs of business. This means that organisations,if they are not doing so, should be reviewing their approaches to talentmanagement.TM therefore involves individual and organisational development in response to achanging and complex operating environment, and includes the creation andmaintenance of a supportive, people-oriented organisation culture.The concept of TM is based on the conscious, deliberate approach undertaken byan organisation to attract, develop, deploy and retain people with aptitude andabilities to meet current and future organisational needs, with a key objectivebeing to ensure that there is a supply of talent in the ‘talent pool’ or ‘talentpipeline’ to meet those needs.

OBJECTIVES OF TALENT MANAGEMENT

There is a distinctive difference between individual talent needs andorganisational requirements. From the perspective of talent, career advancementand 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 conduciveto the success of an organisation. In some companies, TM may be limited tosuccession planning while in others, it may involve a comprehensive set of strategies. Some companies have an inclusive, egalitarian approach, givingopportunities for all employees to be included in the talent pool, and othercompanies may have an exclusive or closed and elitist approach, restrictingmembership to certain groups or grades.

COMPONENTS OF TALENT MANAGEMENT

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 experiencesof 30 organisations;recruitmentprofessional developmentleadership/ high-potential development

workforce planning and cultureretentionperformance management, feedback/ measurement

Another model (Fitz-enz) argues that TM encompasses 6 human resource services;staffingleadership development

succession planningperformance management



training and education retention

The perspective developed in this module sees TM as involving 4 ER processes;attracting talentretaining talentdeveloping talent

transitioning talent

ATTRACTING TALENT

Under this section, two ER activities should be integrated into the TMmanagement process; employee attraction and recruitment and selection. Thesituation is made difficult when local and international labour markets areproblematic. The ability to recruit external talent is influenced by the image of theindustry, sector of the organisation, alignment of individual and organisationalculture and perhaps the offering competitive reward packages.Employee attraction: when attracting talent, it is helpful to have a strong andeasily identifiable brand image that reflects core values of the organisation. Theorganisation’s talent requirements must be clear and accurate to enable a ‘fit ’between organisation, individual and role. When creating a brand, an organisationmust think about the type of talent it wishes to attract as people are attracted toorganisations and roles for differing reasons.Recruitment and selection: when considering any form of R&S, it is important tohave a defined process that is visible across the firm to clarify the responsibilityand activity of each R&S process. This process will need to be flexible enough toensure that talent is not overlooked during a particular recruitment processsimply 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 andflexible mindset so that they are constantly searching for talent that will benefitthe organisation.

RETAINING TALENT

Talented people will stay with a company only if they feel it has the right cultureand provides them with self-fulfilment, a sense of accomplishment and fun .Without the right mix of values, attitudes, terms and benefits, managers mayleave. An important factor that should be considered is emotional attachment. Thechallenge of managing talent from an employee’s viewpoint is not just managingquantitative solutions such as more money and golden hellos, as these are easily

matched and topped by competitors. Although these are important, long-termcommitment to an organisation is driven by some kind of emotional attachmentand 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, attitudesand beliefs that the organisation’s success is built upondeveloping those employees so that they have true commitment and senseof belongingensuring talented individuals achieve a sense of accomplishment andfulfilment in their roles

fostering relationships through coaching/ mentoring and encouraginginter-departmental networks



By undertaking such activities, organisations will develop an employee’semotional attachment, thereby protecting them from leaving, either byheadhunters or of their own accord. They are then more likely to apply anddevelop 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 fullydeveloped. Talent reviews and selection and recruitment processes identifypotential in individuals which needs to be maximised through focussed T&DCoaching and mentoring: this is key to developing and retaining talent.Development of talent is not restricted to training courses. Much individualdevelopment occurs through stretching people’s roles, using coaching andmentoring supported by well-designed training interventions. Linemanagers need to understand the principles of coaching and mentoring.Performance management: regardless of the focus of talent managementactivity- whether it is about developing specific pools of talent or a broaderapproach aimed at developing organisational capability- there needs to be atransparent PMS that supports the provision and continuous development of talent. Basing the performance management process on the assessment anddevelopment of competencies greatly assists this aspect.Succession planning: traditional succession planning has become lesseffective because organisations have become ‘flatter’ and becausetraditionally, succession planning lacked transparency and occurred ‘behindclosed doors’. With the focus being on past performance rather on futurepotential, 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 willhave a significant impact on succession planning, creating a need for it to beresponsive to the business-planning process. It can no longer focus on a smallpool of employees who may have demonstrated early on in their careers that theyhad potential: it needs to incorporate individuals from every level of anorganisation who are able to demonstrate talent.In future, the succession planning process will be based on how organisations useinformation about talent to plan ahead. In some companies, TM seem to be a newname for succession planning but TM is much broader than succession planning.

TRANSITIONING TALENT

The benefits of offering exiting employees quality transition programmes faroutweigh the costs and risks of not providing them. If talented individuals leaveon good terms, and there is an opportunity to stay in touch, there may bepossibilities for them to rejoin in the future, having perhaps broadened anddeepened their experience in the meantime. In addition, employees who leavemay put business in the way of their former company.It is important that any TM initiative is aligned vertically with corporate strategyand horizontally with other HR processes such as recruitment, appraisal andreward, and, in particular, career development and performance management. Keyquestions 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 betweenthose employees who are seen as direct revenue generators (the f ront of fice) andthose who support them (the middle and back off ices). Two ER challenges facedin 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 theirorganisation’s success, especially in professional service firms.Their ranks include younger professionals as well as seasoned executives with thepotential to continue contributing to their firm’s success. This means that they arealso the individuals who have the highest future value to their organisation.Player-managers are managers who are also players, where for example, theymanage 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 uniqueto 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 drawnto ‘extended’ or networked organisational forms and the ways ER ‘goes beyondboundaries’, 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 moreorganisations to form a new entity, often from different countries, is becomingmore common in an increasing global and competitive landscape. Sometimes theacquired business continues as a separate entity with little change to its HR/ER,with only gradual changes in structures, processes and personnel whilst othersmay involve changes, including ER changes that are more dramatic and rapid.

Many mergers and acquisitions ‘fail’ in the terms of not delivering on their initialobjectives: often due to misunderstanding of people and ER issues, resulting inlow commitment, job insecurity, stress and cultural conflict. Expectations need tobe managed and information given, with the new ‘vision’, being communicatedwell. Some sort of pre-merger cultural analysis of both parties may be useful toidentify tension points and this can be an excellent starting point as a major issueis cultural compatibility.

ER IN NETWORKED ORGANISATIONS

Inter-organisational relationships in national and global supply chains havebecome increasingly important in manufacturing and public service delivery.

Organisations have increasingly become embedded in networks of strategicalliances, insourcing and outsourcing, partnerships and joint ventures. The largeorganisation of today is often described as ‘boundaryless’.The classic networked organisation involves a web of inter-related businessprocesses where collaboration and competition are in creative tension, enabled bysophisticated ICT processes. Formal, bureaucratic, vertical structures (Fordism)are replaced by horizontal linkages and mutual dependencies and, to somedegree, coercive tactics may be in operation. Core employees may be seconded tomulti-employer project teams, giving a major role to ER in areas such as careerand TM, PM and R&S.In this context, dynamic organisations (DO) have arisen. These seeks to gain aseries of temporary competitive advantages that add up to, over time, asustainable competitive advantage that requires marketplace agility. These areseen as a bundle of allied ventures rather than the traditional ‘bounded’organisation, such as Google . Dos require a core meta-competence on which theirstrategy depends: a bundled set of specific competences to create anever-changing portfolio of ventures steered around a cycle of exploration,exploitation, adaptation and exit.Exploration involves generating and testing new idea. Exploitation involvestransforming these to a marketable solution before competitors, and to generaterevenue. 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 humanresources aligned in an ongoing way to achieve sustainable competitive advantageis referred to as workforce scalability. This involves the evolution of the humanresource 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 aredistributed and deployment pattern reflects their assignments acrossorganisational and/ or physical locations. Contribution refers to the organisationalvalue of the tasks performed. Scalability refers to meeting these challengessuccessfully and refers to alignment and fluidity and for a DO, alignment is aconstantly moving target which makes fluidity crucial- the speed and ease withwhich transitions are made from configuration to another. It involves classic ERprocesses such as the accession of new recruits, internal allocation of employeesand 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 employeessense environmental shifts and initiate salient, strategic moves themselves). Thisinvolves creating a common cause (vision and purpose) and contextual clarity(people and role fit).Fluidity can be achieved by facilitating external staffing and internal transitionssimultaneously. 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 searchassistance and generous and fair severance packages) may be necessary.Internally, capability may be enhanced through enriching the talent pool andfacilitating connectivity. Enrichment may involve selecting employees for diversityand cultural fit, looking at career resilience and extensive employee T&D.Connectivity might be fostered by building social capital, trust and cooperation sothat employees share information about where talent is needed and form teamsquickly. Barriers to communication need to be broken down and infrastructuresthat 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 throughdiscretionary-based work design where instead of a rigid job description, coretasks and responsibilities are specified with zones of discretion giving employeesempowerment over certain tasks. This enriches the talent pool and release talentfrom one activity to another and minimises turf wars.Motivation to make moves quickly and easily may be enhanced through incentivessuch as profit-sharing and stock options, increasing pay without promotion aswell as 360 evaluation.

INTERNATIONAL AND COMPARATIVE ER

How ER is managed across borders in different countries (comparative ER) hasbecome more important due to increasing globalisation and the rise of countries



such as China and India. How international enterprises manage their employeeresources (international ER) has also become a related topic of increasing interest.

COMPARATIVE ER

ER is performed differently in different countries. In Europe, there may besimilarities in interviewing techniques and in some countries, candidates are more

likely to be faced with psychometric tests than in others. Hand-writtenapplications may be preferred in some countries so that graphologists can assessthem while in some, references are still taken up, a process that is lacking invalidity.The globalisation thesis argues that a truly global economy is emerging or hasemerged. National economies and their management models (including HR and ERmodels), are losing their distinctiveness: the convergence thesis. Tradeliberalisation and restrictions have been eased. Various trading blocs have beenestablished such as the EU, the Triad, NAFTA and APEC. At the firm level, firmshave adopted a common response to the international demands of thecompetitive environment and a new organisational model is emerging: the

transnational firm. This model enables firms to manage simultaneously thecompetitive drivers of global efficiency, multinational responsiveness andworldwide learning. Some authors argue that there is one best way that firmsshould follow if they wish to be successful in the global economy. MNCs are beingtransformed into transnational companies, which are footloose capital, withoutspecific nationality but with a strong corporate identity. Others argue that nationsremain important and ER policy and practice remain diverse across the globe.They argue that globalisation has been overstated: most trade is not global, butuneven, mostly regional and conducted between relatively distinct nationaleconomies. 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 orbusiness systems in explaining comparative differences in HRM and ER.Culturalists argue for the continuing importance of national culture in explainingsuch difference. The claim is that organisational patterns and processes, andmanagerial beliefs and behaviours, are driven by shared understandings and ideas.The institutional approaches will be discussed here in more detail. Institutionalistsclaim that organisations are socially constituted and reflect national differencerooted in institutional setting. They analyse their interaction with business andmanagement (national business systems). The interaction of the state, financialand educational systems, the industrial relations system with HR and ER processes

may be seen as collaborative business environments (e.g. Germany and Japan), orcompetitive (e.g. US and UK). To understand ER, it is necessary to not only look atthe institutionalist and culturalist perspective but also to see that individuals andorganisations 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 thisinfluences 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 alsocomprises corporate values, norms, feelings, hopes and aspirations.There has been much interest in understanding and how to differentiate betweenculture ever since Hofstede performed his work. A number of other approacheshave been proposed such as Trompenaars’ and Schwarz’s approaches. Hofstede’smodel 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 acomputing metaphor that sees culture as the software of the mind. His principalpurpose was to differentiate between the assumed shared values held inorganisations (microscopic culture), and the unique values that could be identifiedas specific to national (macroscopic) cultures. His five dimensions are;

individual versus collective orientationpower-distance orientationuncertainty 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 distancefamily - high collectivism and power distance (India, Middle

East, some Asian countries)

These typologies are related to ER in that the recruitment and selection criteriawill systematically vary. In the UK, the stress will be in negotiation, communicationskills perhaps assessed through assessment centres and psychometric tests; inGermany, the stress will be on technical knowledge assessed through theeducation/ apprenticeship system; in France, a stress on analytical skills and on‘elite’ potential assessed through education systems and elite institutions; inmuch of Asia, a stress on family connections; in Nordic countries, with their high‘femininity’ scores, both genders are more likely to pursue more personallysatisfying rather that hierarchically oriented careers. In addition, these culturaldimensions seem associated with other dimensions of ER, with countries that arehigh on uncertainty avoidance (e.g. Japan and Germany) making more use of expatriates (parent-country nationals) to control overseas operations thanorganisations from countries with low uncertainty avoidance (e.g. USA, UK and theNordic countries).Schwarz built on Hofstede’s approach and listed 56 different values believed to becomprehensive and recognised in all cultures, using both individual andculture-level analyses. He believed that there were difficulties with Hofstede’sclassifications; for instance, collectivism and individualism have values that are incommon but the dichotomy implies a polar distinction. His main model includesthese seven dimensions;

conservatism

hierarchymastery

affective

autonomy



intellectualautonomy

egalitariancommitment

harmony

Trompenaars may be seen as developing Hofstede’s model and also identifying anumber of dimensions through a different, dilemma-based, methodology. These

are;universalism (rules and procedures) versus pluralism

(relationships)individualism versus communitarianismspecific (superficial relationships) versus diffuse (deep

relationships)neutrality (concealing emotions) versus affectivity (showing

emotions)inner directed versus outer (environment) directedachieved 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, twoare 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 belinked to Hofstede’s power distance index if it is accepted that status is accordedby nature rather than achievement; it also reflects a greater willingness to acceptpower 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 areanot looked on by Trompenaars whose other dimensions appear to focus on someresulting effects of underlying value dimensions. So, the neutral/ emotionaldimension describes the extent to which feelings are openly expressed, anormative behaviour rather than value. Universalism/ particularism describes apreference for rules rather than trusting relationships and this could beinterpreted as part of Hofstede’s uncertainty avoidance dimension on one sideand 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 relationshipwould appear to be Hall’s polychromic/ monochronic time perceptions. Finally,the human-nature relationship appears to be closely connected with thehuman-nature relationship in Kluckhohn and Strodbeck’s theory of value.The four principal variables identified by Hofstede can be compared with therelated set of variables from Schwartz.

Culturalvariable

Nature

Hofstede’s variables

Power distance Degree of acceptance as legitimate that power is unequallydistributed in institutions



Uncertainty avoidanceDegree of discomfort with uncertainty and ambiguity,leading to the support of beliefs that promise certainty andthe maintenance of institutions that protect conformity

Masculinity/femininity

A preference for accomplishment, heroism, severity andmaterial success as opposed to a preference forrelationships, modesty, and attention to the weak qualitiesof life

Individualism/collectivism

A preference for socially closed surroundings whereindividuals care for themselves and immediate kin, asopposed to dependencies on groups of others

Schwartz’s variables

ConservationSecurity, conformity and tradition are priorities, andmaintaining the established order of things.

HierarchyLegitimacy of ascription of roles and fixed resources such associal power, authority, humility, and wealth

Intellectual autonomyValues that stimulate autonomy to pursue goals andintellectual interests, including curiosity, open-mindedness,creativity

Affective autonomyPromotion and protection of attainment in positive affectiveexperiences such as pleasure, excitement, and variety

CompetencyValues that polarise the dominance of surroundings throughself-affirmation, such as ambition, success and risk

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

Egalitariancompromise

Includes concepts such as equality, social justice, andresponsibility.

Characteristics of culture for Hofstede and for Schwarz

Although Hofstede’s work has received much criticism, many researchers continueto rely on his work even in studies that do not include countries covered in theearly research.

CHINESE CULTURE AS AN EXEMPLAR OF THE INFLUENCE OF CULTURE ON ER

Hofstede assumes that national territory corresponds to cultural homogeneity butChina is not homogenous. There are strong regional differences with manyreligious 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 theirorganisations and Chinese employees may be more loyal to their families. Butboth adopt the principle of collectivism which differs from Western individualism.The fifth dimension of Confucian dynamism, or long-term orientation, wasidentified much later than his original work and China and otherConfucian-influenced countries scored very highly on this dimension than otherparts of the worlds.

Other studies of Chinese culture take different approaches using Confucianismdirectly which is seen as influencing the way employees perceive the organisation



as a symbolic family, amplified by early Maoist ideology that emphasised grouprewards. This implies a stress on hierarchy, order, authority and mutualobligations. 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 andbehaviour 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 havethreatened these traditions and values leading to sub-cultural generationaldifferences. Studies reveal that dominant constructs included respect for seniority,communication efficiency and selfless contribution and analysis showed 8 criticalsets of relationships;

hierarchybureaucracy

equalityfamily aspects

harmonysecurity

loyaltystability

Factor analysis of this data revealed 5 themes;equalitysecurityloyalty

harmonybureaucracy

Culture arguments, such as those of Hofstede, linking Chinese economicperformance to Confucian values, neglect the ways culture changes: culturesinteract 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 withforeign 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 forbusiness and efficient financial channels may now be seen as developing into‘cosy’ relationships.Ethnic overseas Chinese family business emphasises interpersonal or relationaltrust rather than institutional trust, paternalistic authority, and personal ties,accessing capital through social networks. Differences from Western culturalvalues emerge in terms of trust (personal versus institutional), identity (e.g.individual versus collectivism), and authority (hierarchy versus autonomy asreflected in power distance ) These effect organisational structure andinter-organisational relationships. Simple structures such as centraliseddecision-making, paternalism, nepotism, focus on cash flow and specialisationbased on owner’s expertise are common features of business. Firms are adaptiveand opportunistic, sharing information that is hard to obtain, often accessedthrough inside information, contacts, bribery and Guanxi relationships. drawbacksto this model include limitation of growth, nepotism and a lack of integration withprofessional ‘outsiders’.Chinese culture is very distinct from Western culture, primarily as a result of itscommunity nature as opposed to what is referred to as the utility paradigm of the

West (Newell).



Characteristics Utility paradigm Community paradigm

Nature of knowledgeObjectively defined conceptsand facts

Tacit and sociallyconstructed

Knowledge acquisition Can be captured andcodified

Developed through

group-based knowledgesharing

Best practice fororganisationalimprovement

Objective rules universallyapplied to all organisations

Principles that organisationsuse to locally define theirown rules

Knowledge migration

Transfer through formalexplicit processes (e.g.notes) enhanced byexposure to exemplars

Personal/ local knowledgedeveloped through grouplearning processes thatcreate experience

Dominant metaphor Memory Group processes

Critical success factorsIdentified by Westernnarrative

Trust and belonging

Relating the Western commodity and the Chinese community paradigm of culture

Guanxi, or personal networks and interpersonal relations are of key importancewhen conducting business and authority is based on interpersonal relations ratherthan legal rationality. Guanxi is essential if approval is to be granted to access anykind 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 convinceothers that they know best and so dialogue and encouragement are moreimportant than linear communication and persuasion. A study showed that about70 values affect the Chinese belief system which run across 8 categories;

national traits

interpersonal relationsfamily/ social orientationwork attitude

business philosophy

personal traitstime orientationrelationship with nature

Of particular interest are 6 generic categories;respecthonour

synergyallegianceslearning

sensibility

ER AND CULTURE IN THE MIDDLE EAST

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 MiddleAges. 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 tosignificant actors in finance, tourism and property (e.g. Turkey, Iran, GCCcountries).One issue is in actually defining what constitutes the ME with some includingCyprus, 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 commonthemes run across the region;

the influence of national and international politics on ERthe impact of religion, ethnicity and culture on ERthe 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 areafforded better career opportunities than in most Western countries. For example,reported discrimination in Turkey is lower than the EU average with womenplaying an active, economic roles, including senior level. In Iran, gendersegregation has opened up many career opportunities for university-educatedwomen, even with the role of women reduced due to the Islamic Revolution.In addition, economic nationalism such as ‘Arabisation’ has restricted theautonomy 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 EasternHRM 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, inparticular, French policies in relation to gender equality and the right to strike.Public sector HRM is based on extensive legal foundations, detailed regulationsand centralised decision making. There is little evidence of strategic HRM andexplicit HR strategy links between HR activity and corporate strategic planningand integration of HR practices. This is partly because an Anglo-Saxon conceptsuch as HRM is unfamiliar and partly because real power lies with a powerfulruling elite or monarchy.Israel is partly influenced by European (British) practice such as EO laws and USconcepts of HRM strategy. There is also evidence of convergence between publicand private sector HR practice.

Some have characterised management styles in the Arab world, especially in theGulf states, as distinctive and constituting a fourth paradigm where the style isheld to consist of;

family businesses

autocratic but consultative ownershipa rhetoric of consultative decision making within an essential hierarchicalstructure where joint decision making may be seen as a weakness, andone-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 andpower distance.



Some have noted that HRM often reflects Islamic values and that an Islamic workethic can be identified, influencing a range of attitudes towards organisationalchange and commitment. A distinctive feature of Arab HRM is held to be the roleof networks. Like the Chinese Guanxi , interpersonal connections are rooted infamily and kinship, but also extend into business life. This phenomena is oftentermed wasta (or piston in French-influenced North Africa). In the Arab world, this

is often ‘professionalised’ with ‘mediators’ interceding on behalf of clients toobtain advantages in jobs, tax breaks, information, and favours. In public-sectororganisations, this embraces R&S, compensation, promotion and other ERactivities. Wasta is less-publicly acknowledged and many condemn such activitiesas illegal or unethical, unlike the guanxi in China, while these same critics seekwasta benefits for themselves and relatives. In Iran, nepotism is common and inTurkey, favouritism is still an issue.However, HRM policies in the ME are adopted and implemented within specificnational contexts that are influenced by culture, political ideology, economicconditions, the legal system as well as confessional differences in religion. Thepublic sector remains dominant with some countries such as Turkey and Jordan

embarking on privatisation programmes. This is accompanied by a change in HRpractice away from a centralised service model towards the expansion of T&D, PMand ER initiatives. There has been government intervention to reduce layoffs,replace expatriates and develop local managers. Job security in the public sectorhas been reduced resulting in high unemployment. generally, MNC apply‘strategic’ HRM more than local firms though with greater pressure onperformance. Large private-sector firms tend to offer higher pay, though lower

job security than many public-sector organisations. In Gulf countries, pay ishigher in the public sector with employees reluctant to take up private-sectoremployment; 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. Thepublic sector gives locals priority in recruitment, whereas the private sector oftenemploys 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 andineffective with low salaries, inability to fire low performers, no performancestandards, 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 andopenness in its decision making and can learn from regional and globalexperiences

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-growingeconomy and increasing international collaboration with foreign companiesdemand 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 ingeneral, include seeking out the best expertise, committing significant resourcesto ER, overcoming the lack of evaluation of HR activities, and addressing the lackof specific skills. HRM practices can affect performance of employees and enhanceorganisational 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 currentworkers which both deliver different costs and benefits to the firm.In the Russian context, former employees maintain contact and may return afteremployment elsewhere, and firms prefer to recruit from the extended internallabour 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 themeritocratic criteria often regarded in the West as good practice. Recruitment isoften highly centralised in the hands of the CEO, with informal criteria dominating,and the HR function reduced to administering paperwork.

ER IN MULTINATIONAL ENTERPRISES

Internationalisation and the effective use of international employee resourceslocated outside the home/parent country are major issues affecting firms in anincreasingly global economy. A key question is: Why do multinational enterprises(MNEs) adopt different ER policies and practices in such areas as recruitment andselection, performance management, talent management and career development?A MNE’s ER policies and practices can be seen as the product of the interactionbetween three factors;

Home (parent) country factors relating to its HRM system; e.g. American,

British or Japanese systems. MNEs often remain deeply rooted in thenational business systems of their country of origin (rather than beingglobal, rootless and footloose entities)Host country (local) factors: cultural context, local regulations and practicesFirm-specific factors: e.g. senior management’s attitudes towardsinternationalisation, the international strategy, structure and corporateculture 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-daughterrelationship with subsidiaries) and filling key positions with parent-countrynationalsPolycentric the multinational or multi-domestic approach where an MNEadapts 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 keypositions. This strategy is common in places where local responsiveness isimportant such as advertising and food industries. This strategy minimisesstandardisation as each subsidiary goes its own way and can lead to

innovation and creativity remaining more localised instead of dispersedthroughout 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 globalstandardisation 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. Thisorientation is characteristic of transnational companies which seek tomaximise global efficiency, national responsiveness and worldwide learning.A subsidiary may therefore create a new HR/ER system that is different fromboth the home and local systems.Regiocentricthe regional approach where the MNC employs managers froma particular region (e.g. EU, US, East Asia), enjoying regional (but not global)autonomy with common ER policies being developed across a region (butnot globally).

Global staffing is a key aspect of HRM in the global firm and is seen as a key ERpractice in controlling and coordinating dispersed global operations. One reasonfor this is the continuing problematic performance of expatriates which is costlyin human and financial terms for the individual and organisation with indirectcosts involved such as reputation and loss of business. So talent management hasemerged as a key issues for organisations and is crucial to MNEs as they seek tointernationalise their operations, resulting in greater international diversity inworkforces.Cultural distance between countries is also an issue: where subsidiaries arelocated in ’distant’ countries, MNCs seem to prefer to deploy PCNs even thoughthese people may be less than willing to go to these locations. Also, the age of thesubsidiary 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, successfulaffiliations. 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 andstandardising corporate structure, culture and policy

In addition, companies may use PCNs for various purposes, often mixed for anyone assignment, believing that;

they have a better understanding of, and commitment to, corporatestrategies;they will accept HQ-determined rules more easilyliaison with corporate HQ will be easier, sharing a common language andsocial connectionsthey are more likely to exercise control on behalf of the company

Expatriates may experience, however, various degrees of ‘failure’: early return andunderperformance (more likely for US than European expatriates). They maystruggle to adapt to culture, language, family separation or, if families are withthem, their failure to adapt. These adjustment/ adaptation problems may bereduced 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. Theperson’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 arein 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 processof 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 whenrecruiting, selecting and monitoring and national laws need to be considered. Inaddition, pre-assignment and post-assignment training needs to be consideredas these investments can save time and money. It is important to maintainappraisals for the expatriate, though this raises difficulties;as much of the performance is ‘out of sight’, how much input should the localboss have?

to whom should s/he show loyalty and commitment: the HQ, the localsubsidiary, or both?is the date on which the performance is based comparable given globalvolatility and variance conditions, laws, technology, market maturity?how much weight should be given to ‘non-job’ factors: acting asambassador, engaging in knowledge transfer, mentoring, dealing with localofficials, managing family issues?

Approaches such as 360 feedback and the use of balanced scorecards areuseful in these situations. Because of these issues, companies may seekalternative strategies to employing PCNs as expatriates. Their cost, and the



‘localisation’ pressures put on them by some governments to employ locals meanthat 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 governmentofficials, 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 theinterests of corporate control- they may find communication with corporate HQ difficult, not knowing the language fluently or the people well; and they may beblocking ‘developmental’ international opportunities for talented, promising,high-potential PCNs. Another alternative is to use TCNs as a compromise betweenseeking global (PCNs) and local (HCNs) advantage. They may be cheaper thanPCNs, and are often cosmopolitan ‘career internationals’ with good internationalexperience and good linguistic skills. Local resentment may occur with TCNsbeing seen as blocking HCN opportunity. Other alternatives may be to practiseinpatriation by bringing subsidiary staff, TCNs and HCNS to HQ to transferknowledge or perhaps to build multicultural teams. Virtual assignments throughinternational collaboration on projects through videoconferencing, email, andtelephone rather than physical travel are becoming more common. In addition, theuse of a greater variety of shorter assignments (troubleshooting, contractualassignments, rotational assignments, knowledge transfer activities, training,personal development) is also increasing.So in the ER processes of MNEs, both transfer (of home to affiliates) andadaptation (of ER to local practices) processes are occurring. These transferprocesses are often over knowledge transfer, whether of technology or of ER

processes.

INTERNATIONAL KNOWLEDGE TRANSFER AND ER

Three factors have been found to affect knowledge transfer;a knowledge-sharing environmentinformation and communication technologiesorganisational structure

These three elements are prerequisites for any organisation keen to pursueknowledge transfer. The process of transfer is often seen as covering several

stages from identifying the knowledge to the actual process of transferring theknowledge to its final utilisation by the receiving unit. This route normally occursas a transfer from headquarters to overseas subsidiary although it could bereverse transfer the other way. A firm’s ER processes may constitute a significantsource of competitive advantage over local, indigenous firms.The movement of knowledge between different geographical locations is centralto the process of adding value in MNEs. Terms used to describe this processinclude knowledge diffusion and knowledge transfer (export sales and newproduct development discuss knowledge transfer across cultural and linguisticboundaries). Another term is the phrase mutual knowledge creation as it refers to

the negotiation of new understanding. Within joint ventures, one-way transplantprogrammes are often less successful than more collaborative process-oriented



approaches that make use of local expertise to help in delivery that suits localconditions.A more constructivist term is knowledge migration which occurs from aknowledge source, the knowledge base, often in the West, such as the corporateHQ, to a knowledge destination or sink, often in the ‘South’ or ‘East’, such as anaffiliate or joint venture in China, Russia or Middle East. The process may be

facilitated by a knowledge intermediary such as a consultant, project team orexpatriates.

Knowledge can diffuse in both directions, which occurs when a destinationbecomes a source and vice versa. A knowledge intermediary or knowledge brokermay work in partnership with the source and sink to assist in knowledgemigration across, for example, cultural boundaries. This person may be anexpatriate manager and the effectiveness of this depends on their willingness andtheir ability, which in turn depends on the learning orientation of the source andits strategic objectives.Effectiveness of transfer is also affected by parent-country and host-countrycharacteristics such as culture, national institutional/business systems, includingthe 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 welltransfer occurs.

TRANSFERRING ER KNOWLEDGE: THE CASE OF CHINA

Much of the knowledge base in China has been imported in a linear fashion fromthe West through textbook translation and the use of Western teachers, trainersand education of foreign Chinese students in western universities. An alternativemodel of knowledge is one of social construction, knowledge sharing,participation in social networks and interaction between Chinese and westernideas 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 effectivemanagement. Knowledge has to be continually reinterpreted, recreated or

Knowledgesource

Environment

Knowledge migration in MNEs and international joint

Knowledge

Knowledge migration between 2actors, one operating as source and

the other as a sink via knowledge

Parent country businesssystem

Parent country cultureParent country ER system

Learning orientation

Cultural distanceMotivationWillingness

Host country businesssystem

Host country cultureHost country ER system

Absorptive capacity

Note: an actor may be an individual or a coherent

Knowledgesink

Environment

Actor 1,2 Actor 2,1



reconstituted rather than transferred to ‘create a unique bundle of managementknowledge, deeply embedded in the unique social, political, cultural andeconomic context of China’. Western management can also have much to learnfrom China in terms of its emphasis on networks and stakeholders: knowledgeflows 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 thesubsidiary itself and to achieve successful transfer, these parties have differenttasks to perform in the knowledge migration process.The ability and willingness of Chinese HR personnel to learn will determine howwell they acquire HRM knowledge. Equally, the ability and motivation of HRexpatriates to share their knowledge can determine how well they transfer it. Thetransfer 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 amulticultural 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 differencebetween corporate culture and the culture of the subsidiary. The subsidiaryoperates in the host nation and is suffused with local influences. Thirdly, becausethe subsidiary is made up of an international workforce, there are differences inthe personal values between expatriates and local personnel in terms of management styles and attitudes.Expatriates consider cultural adaptation to culture shock a key factor whichdetermines whether an international assignment will succeed or fail. Culturaladaptation 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 manystudies have shown that deficient language skills can hinder transfer: expatriateswith proficient language skills are better able to succeed in assignments and theability to speak the Chinese dialect can greatly enhance the expatriate to adjust toa multicultural environment.Communication can be improved further when language skills are linked to anunderstanding of cultural background.A good working relationship is also important in stimulating trust and creatingbonds.

An important factor in Chinese business is guanxi and being connected throughthis network allows people to be members of this group. Chinese employees aremore willing to share information within the group than outside the group.Motivation is also a critical factor in knowledge transfer because without it, actualtransfer could be compromised.Personal growth, job satisfaction and monetary rewards are also required. Forexample, Chinese HR personnel can draw motivation from job satisfaction andfrom increased employability and career advancement after having gained ERknowledge and experience. HR expatriates, on the other hand, can drawmotivation from task achievement and job satisfaction, as well as careerdevelopment.

INTERNATIONAL 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 projectssuch as co-production.Issues that need to be addressed range from a clash of national and corporatecultures to ‘Trojan Horse’ fears- potential competitors being allowed access tohome markets, core competencies and advanced technologies.

Some see alliances as inferior to firms in knowledge integration due to theabsence of a common language, social norms, organisational routines andinstitutionalised modes of decision making that limits the capacity to conduct thelow-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 organisationsformed by two or more sponsoring partners originating in two or more countries .Alliances are generic forms of cooperation, and equity joint ventures a specialcase cemented by ownership sharing through equity holdings. IJVs have becomevery 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 theIJF route creates more value than going in on their own.China has more established IJVs than any other country being an importantemerging market. They were the first form of FDIs sanctioned by the Chinesegovernment, receiving preferential treatment and protective rules shielding themfrom uncertainty.Although joint ventures are an increasingly popular form of voluntary cooperationbetween organisations of different sizes, sectors, geographical locations, jointventures 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 involvedand with their interests:

Horizontal alliances occur between competitors in an industry throughfunctional need . This can reduce costs and risks by sharing expertise.Another form of collaboration is cross-licensing agreements to enable risksacross international markets to be reducedVertical alliances occur between organisations sharing the control of operations, e.g. a supply-delivery chainDiagonal alliances occurs across organisations in different sectors poolingknowledge, expertise, resources, or technology

IJV situation

Interest (which maydiverge or be

misinterpreted)

Purpose (which maydiffer or be differently

expressed)

Knowledgemigration and

transfer

Cooperation inresearch anddevelopment

Share cost of innovation

Lead time todevelopment

Share basicknowledge of innovation

New markets

Joint working withhost-countryorganisation todevelop market

Developing joint controlprocesses withhost-countryorganisation

Share product andmarket knowledge



Accessing segmentedspecialist local market

Help in facilitatingaccess to localmarkets

Share productknowledge

Guide technicalknowledge to keep upwith development intechnology

Develop new goalsShare technicalknowledge

Expand market sharein stagnant or crowdedmarkets

Help by facilitatingmarket access to newmarkets

Develop market shareShare marketingknowledge forgiven sectors

Example IJV situations and their characteristics

The table shows examples of different IJV situations and their characteristicinterests, purposes and knowledge transfer focus. Firms lack complete controlover strategy and structure in IJVs and these need continual negotiation andrenegotiation.

As many of half of all IJVs fail with cultural differences being cited as the maincause 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 willbe influenced by the nature of the chosen partner. Each partner is likely to havedifferent 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 tocreate 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 issurprising 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 tocontinue 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 alsobe HCNs, TCNs and PCNs, from the collaborating partner. Clearly HR and ER play asignificant role in the success of IJVs.Of importance are;

the appropriate selection of IJV personnel

the use of experienced PCNscross-cultural training

joint training of HCNs and PCNsproviding special compensation to expatriatesusing HCNs in key positionsbuilding a unique IJV culture, taking elements of both host and homeculture 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 tasksthe appraisal of performance in the IJV

loyalty issues over identification with the IJV or parenthow 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 costsusing high-quality, experienced PCNs at the start of IJV operations topromote inter-partner learning and bridge cultural differences

using local partners to deal with corruption and bureaucracyovercoming ER-related problems by utilising local partner’s experience andfamiliarity 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 assignedto a venture over its lifetime whereas others may assign more time-limitedexpatriates.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 andstyles. As well as team building and two-way communication, projects mayrequire initial ‘dating’ and trust-building on smaller scale projects. They may alsorequire 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-termgoals, team appraisal, indirect feedback)?

IJVs provide significant opportunities for organisational learning and especially thetransfer of culturally embedded knowledge.A vital part of the learning infrastructure includes HRM/ ER policies supporting theprotection of competitive advantage and influencing the direction of IJVs, inparticular, the transfer and accumulation of knowledge.ER failures that may limit how much learning takes place, or how much knowledgeis transferred, include;

HR planning activities may fail to communicate strategic intentshort-term and static planning horizons may give such activities lowpriorityinsufficient lead time is allowed for staffing decisions

a resource-poor strategy is adoptedlow-quality staff are assigned to the IJVthe IJV depends on the partner for staffing

The knowledge sink and source may exist as the ‘parents’ of the alliance and forSchuler, this interactive process enables crucial alliance learning. It enablesparents to learn;

more about each other



more from each othermore from the alliance itself

Some ‘rules’ for successful international ventures include;

Characteristics

interests should be long-term and mutual

purposesstrategic aims and objectives should be compatible andcomplementary

influence andknowledgetransfer

should be sharing, facilitated by relevant ER practices

the wholethe competencies of the alliance should be greater thanthat of any one partner

culture cultural compatibility is important

trusttrust between organisations is essential, reducing need forelaborate procedures

interconnections open communications between organisations is important

relational changechange in partner relationships can be volatile and requirerestructuring

ETHICS, INTEGRITY AND ER

Most discussions of ethics and HRM see the issues involved as developing codesof governance, fairness, performance indicators and ‘best practice’ guidelines.Other concerns include child labour, health and safety standards, andenvironmental pollution.Ethics has a major role to play in ER as it relates to such issues as EO, diversitydiscrimination in employment, R&S, appraisal and PM, and talent/ careerdevelopment; all issues where the interests of the individual may come intoconflict 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 isseen as legal and acceptable in the host country? Should a manager in China orthe ME use guanxi or wasta as an ER tool? Do these culturally-acceptable hostcountry actions raise ethical issues for Western managers?In addition, problems of corruption and bribery remain in many countriesincluding Western industrialised ones. Here, companies may take advantage byemploying low-wage workers, by moving operations ‘off-shore’, or byoutsourcing work to low-wage economies. Such practices are not unknown inWestern countries where exploitation of migrant labour, use of sweat-shops, andhome-working may occur.

A recent development is the principle of corporate social responsibility (CSR) andan appreciation of the role that HR can play in developing CSR initiatives.



Company websites and reports routinely include sections on CSR which cover avariety of local and global concerns.CSR is an evolving but disputed concept with potentially far-reaching implicationsfor ER. However, its practice is very uneven, with codes of practice being poorlymonitored 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 mayoperate 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 MIDDLE EAST

In much of the ME, the influence of often family-based ‘connection’ (wasta orpiston ) affects much of ER, especially in such areas as recruitment, selection,promotion, and performance management. This raises ethical issues overnepotism, bribery and corruption. If one adopts a relativist ethical position, onemay 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 isnot just an issue in the ME.However, many people in the ME and outside have challenged these practices inthe name of more universalist principles such as fairness, transparency,meritocracy, as well as more utilitarian principles such as enhancing efficiency andeffectiveness. These challenges have often been raised with regard to governmentservice employment. Ethical challenges across much of the public sector in the MEinclude;

limiting the size and fiscal weight of the civil servicerestructuring the civil servicesetting and implementing anti-corruption and integrity standardsmaking institutional/ procedural anti-corruption frameworks effectiveimproving scrutiny over government and civil service action

Some countries such as Tunisia, Yemen and Dubai, have reformed andmodernised their civil services introducing flexibility and incentives but in manyother countries, the public-sector pay structures encourage bribery and (petty)corruption, especially in agencies that deal with the public. Many countries lackeffective ethics regimes and integrity provisions to control discretion and prevent

conflicts of interest, allowing favouritism and nepotism to flourish. Public-sectorER and HRM policies and practices in the ME can therefore be deficient in variousways;

The overall institutional framework may not state or enforce basic ethical/integrity principles, or limit political and personal influences on ERdecisions such as R&S, promotion, performance management and careerdevelopment.A lack of HR planning data and an overall ER policy that fails to emphasisemerit 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 theimage of public-sector employment.An absence of sound selection and placement policies based on merit andcompetence 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, reducingfairness in assignments and inhibiting monitoring and measurement.Discrimination in rewards based on personal or political factors, such aspersonal, family or clan loyalty, may be widespread.Training and development may also be subject to abuse and corruptionthrough bribery, non-competitive contracts, and favouritism in trainingnominations.Promotions and career advancement may also be based on personal orpolitical criteria, or offered to those who provide ‘inducements’.

Disciplinary procedures may be subject to corruption and malpractice, witha lack of fairness or transparency.After officials leave employment, they may still seek to advance personalinterest through bids for business, use of information and influence, andre-engagement as consultants or contractors.

Of course, many of these challenges also exist in many developing countries, aswell as many advanced industrial countries, and local HR researchers andpractitioners have begun to recognise and address them.To avoid or minimise unethical practice, HRM strategy generally needs to adoptintegrated approaches based on competence, merit and professionalism,

balancing ministerial and organisational autonomy and accountability in HRM, asdecentralisation may lead to increased discretion for corruption and favouritism.Alternative approaches to developing ethics/ integrity regimes may need to bedeveloped 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).

employee resourcing notes @ bec doms mba hr

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