Professional Documents
Culture Documents
For The: Long Run
For The: Long Run
the h
th human-resources
management and
other outcomes of the
global economic crisis
miguelgarcia
2009.03.15
FOR THE LONG RUN
RESPONSIBILITY AND COMMITMENT
To some authors, involving the sharing organizational objectives with all the elements of the
organization, is the core of all the Strategic HRM, it is the art of “making people redefine their
own primary priorities, understanding the team, its objectives and embracing them as their
own”.
From this involvement, a strong commitment between HRM and workers arises, a bond based
on mutual trust and respect, a mirror of the actual interdependence built on the organizational
ground. Into some extent, "by replacing rigidities in contractual relations between unions and
management with more flexible and cooperative arrangements entailing greater commitment
by employees to management goals" (Wells, 1993) modern HRM are enhancing flexibility and
suppressing the workspace for traditional Unions “by improving communication and
expanding collaboration between managers and workers in ways that are not mediated by
unions” (Yonatan Reshef, 2000). HRM is now commonly seen as work‐force friendly and
problem solving department, rather than the traditional “Hiring & Firing Unit”.
On the other hand, is part of the RHM role to establish a close commitment and partnership
with the Administration Boards of the companies, keeping close alignment both at strategic
and operational levels. This close connection is what makes of the HRM the important
strategic element of the organizations it is supposed and needed to be, in order achieve
competitive advantage through the strategic development of a highly committed and capable
workforce, using an integrated array of cultural, structural and personnel techniques (Storey,
1995), instead of unorganized measures misaligned with the organizational objectives and
therefore useless or counter‐effective.
As Administration Boards come and go, HRM has an even stronger commitment and
responsibility towards the firm as an institution, derived from the sustainability and long‐run
perspective premises which make of HRM the strong organizational pillar. The concept of great
organizational good and of right managerial decisions, as well as long‐term and short‐term on
corporation is highly subjective, so the relationship between HRM and General Management
(GM) is by concept rich in conflicts. Evaluation processes both for regular employees as for
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FOR THE LONG RUN
company performance are crucial addressing this issue, yet they need a pre‐agreement on
what indicator evaluate, and again it might not be peaceful. To some extent these conflicts are
positive, but quickly they start hurting the organization as whole, sometimes deeper and more
seriously than one would suppose. Being an unbalanced power relation, positions tend to
extremes, making impossible to reach agreements. As a consequence, two stereotypes are
drawn of the typical HR Manager: The Yes Man or the Terrorist, and when the relationship
reaches either one of this points, is the whole company that loses.
HRM has also a great responsibility towards the society: the way a company deals with its
employees, including recruitment, working and firing policies as well as how it handles labor
conflicts has a deep impact on the surrounding society. It is also important for the local social
balances that the company gives to the community at least as much as it takes from it. In this
trade it is included the wages paid, the infrastructures and local development generated, the
services provided, familiar well‐being and the economic wealth created. Some of these
elements (such as wages and familiar well‐being) are highly dependent on the firm’s HR
policies such as working schedules, wage and recruitment policies. A less explicit side of this
responsibility is the influence it has in the way the company defines its objectives, strategy and
how it assess it: what a company does comes from its strategy and the measures it must take
to comply to it, designing the strategy is therefore indirectly defining what will be done and
how it will be done, and directly defining much of the impact on the society.
So the HRM might be seen as a center of coordination of responsibility flows, inside of the
company (with workers and administrators), to the company (itself as an institution) and to
the surrounding outside, as a chain of communicative links. These flows are multidirectional
(both to and from HRM) and continuous, as synchronized sources of feedback, describing the
organizational dynamics of the company.
It is when this chain of responsibility is broken that crisis appear. From the violation of the
commitment with workers, administration, and company it‐self problematic situations arise.
As some of this situations are slow‐burners, taking quite some time before they gain visibility
(such as the current financial crisis) others are explosive (as most of the Union conflicts with
strikes and protest lots), and this difference in timing manifestation, obviously, states little on
how important this situations really are.
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FOR THE LONG RUN
PERFORMANCE, SUSTAINABILITY AND
PROFITABILITY
“In this age, which believes that
In a working organization context, performance
there is a short cut to everything, management “is the process of assessing
the greatest lesson to be learned is progress toward achieving predetermined goals.
that the most difficult way is, in the It involves building on that process, adding the
long run, the easiest.”, Henry Miller relevant communication and action on the
progress achieved against these predetermined
goals helps organizations achieve their strategic
goals.” (Bourne, M.,Franco, M. and Wilkes, J. 2003). Yet the notion of corporate performance is
a very arbitrary conception, since it takes in it what is the individual (or group) concept of what
the company should be doing, in other words, what objectives it should be achieving, and how
it is performing on doing so.
The objective setting is usually a job for the Administration Board even though shared with
HRM and, in some cases with the rest of the organization, only to some extent. Another issue
on objective setting is the kind to chose, since they can be lagging (taking past indicators and
defining new values for the future) or leading (setting absolutely new indicators based on new
business perspective); usually the choice is coherent with how innovative the company is.
Another aspect is how diverse is the nature of the objectives chosen is: when companies have
such diverse departments such as sales and design, is hard to understand if and what is the
impact of each on the final result of the company, so, is rather tempting to chose only macro
indicators, which might hide important details, for instance when choosing sales volume, one
might disregard and therefore, de‐invest in design, and, in a couple of years loose the crucial
design advantage it had before.
Once objectives are set, a great danger created is that the whole organization orients its
efforts towards those objectives, neglecting all the other activities inside the organization.
Avoiding this situation usually takes a broader organizational view, setting macro and micro
objectives and some area specific ones.
It is also important to include non operative indicators in the performance evaluation, such as
RH. This measure induces responsibility and reinforces internal relational bounds inside the
corporation, as well as gives visibility to background but core activities.
Many times regarded as a flawless and unquestionable process, performance evaluation shall
be seen just as another tool for HRM and GM in deep cooperation. It might be manipulated
and produce useless results, if not carefully designed and applied, taking the right goals,
indicators and all the particular insights of the organization. It might even have a perverse
effect of false security, since many companies with sophisticated performance evaluation
systems feel they are in control of their businesses but just might be looking at the wrong
objectives or at manipulated results.
At the bottom line, it all comes to how healthy and solid is the value base of HRM and GM
relationship, how the commitments are respected and responsibility is shared. When these
premises are not neglected, the responsibility chain is broken.
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FOR THE LONG RUN
The increasing pressure for results and results produced fast might change the way managers
perform their job seeking for short‐term results. This choice has deep impact on the whole
company: starting on business analysis, to objective setting and ending on the way results are
obtained suffers strong shifts. Most of these choices tend to favour better present results at
the expense of the future of the company and, being the future impact of these decisions very
hard to compute, those are basically blind choices. So, the result of this pressure is, in the end,
having smart people compromising the future of companies, their employees, social
surrounding and whole economy, to get present results.
When this pressure increases to dramatic levels, when short‐term decisions make the standard
managerial policies globally, then the scenario for a global crisis is set: the aim for year‐end
earnings at the expense of decade‐end shutdown.
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FOR THE LONG RUN
LEGACY, VISION AND AMBITION
As a matter of fact, it all comes down to
“Da minha aldeia vejo quanto da terra se
the true sense of Legacy and Vision:
pode ver do Universo...
when a manager understands that the
Por isso a minha aldeia é tão grande como true evaluation of the work done, comes
outra terra qualquer, not in a couple of years, but of the
Porque eu sou do tamanho do que vejo Legacy of his work, in each organization
E não do tamanho da minha altura...” and project where he held decision
making positions, will he have the Vision
Fernando Pessoa that enables him to see far and wider
than his own project, the yearly
objectives, and make the decisions for
sustainability and long‐term profitability.
“Great ambition is the passion of a
There is truly nothing wrong with ambition, in great character. Those endowed
fact it is one of the main drivers for human with it may perform very good or
motivation, yet ambition might just be too very bad acts. All depends on the
powerful to be let completely loose on principals which direct them.”
administration offices, and must be driven Napoleon Bonaparte
towards the right goals.
ENDURANCE AND PERFORMANCE INSTEAD OF
ENDURANCE VERSUS PERFORMANCE
“Only when I’ve left this house and it
Resisting for the short come glory, is very hard,
remains successfully without me, especially given the current trend of short‐term
will my administration be proved Administrations, where a team is hired to
successful” Daniel Bessa, 2009 manage a company for a short number of years,
and is expected to produce results in that period.
This model has, perhaps, proven itself wrong for
the long run: the springboard effect of company administrators from a company to another,
the outrageous bonus and the “big‐bathes” practices got the entire global economies in deep
trouble. An old concept is arising again, the idea that the best signal of the competence and
success of a managing team is the enduring success of that organization years after the team
left it.
Some companies are already giving some interesting leads on what might be new Corporate
Governance Models after the crisis: the important roles of non‐executive members of the
boars, without special bonuses dependent on the results, and therefore more interested on
the long‐term performance of the companies rather than in short‐term spectacular and
unsustainable earnings; outside evaluation of the companies, from truly independent auditing
companies not pressured for results; more independent and empowered HRM with new
practices for top managing positions recruitment and long‐term top managerial careers,
objective setting for all the organization including the Administrations, with renewed
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FOR THE LONG RUN
rewarding policies (not rewarding the wrong behavior might be more effective as rewarding
the right one).
In the end, it is worth to take a look at some “Hidden Champions” (Herman Simon, 1996),
companies kept away from the spotlights with consistent successful performances over the
years, world leaders. Conservative approaches, low‐profile, strong cultures and values,
coherent HRM practices, common sense and long‐run perspective for sustainable and renewed
success.
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