Saunders SHRM Im

Instructor's Manual
Strategic Human Resource Management: Contemporary Issues

First edition
Mike Millmore Philip Lewis Mark Saunders Adrian Thornhill Trevor Morrow
For further instructor material please visit:
www.pearsoned.co.uk/millmore
ISBN: 978-0-273-68168-7
 Pearson Education Limited 2007

Lecturers adopting the main text are permitted to download and photocopy the manual
as required.
1 © Pearson Education Limited 2007

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Contents
Introduction An overview of the Instructors’ Manual Strategic Human Resource
Management: Contemporary Issues: an overview Rationale and aims of the book
Structure of the book Readership Pedagogic features Chapter 1 Strategy and human
resource management Learning outcomes Chapter summary Teaching and learning
suggestions: • Comment • Student preparation • In the classroom • Follow-up work
Answers to self check and reflect questions References Chapter 2 Strategic human
resource management: a vital piece in the jigsaw of organisational success?
Learning outcomes Chapter summary Teaching and learning suggestions: • Comment •
Student preparation • In the classroom • Follow-up work Answers to self check and
reflect questions Chapter 3 SHRM in a changing and shrinking world:
internationalisation of business and the role of SHRM. Learning outcomes Chapter
summary Teaching and learning suggestions: • Comment • Student preparation • In the
classroom
9 9 10 10 11 12 12 14 14 14 14 15 15 15 15 16 16 18 19 19 19 19 20 20 20 21 21 21
23 23 23 23 24 24 24 24
• Follow-up work Answers to self check and reflect questions Chapter 4 Evaluating
SHRM: why bother and does it really happen in practice? Learning outcomes Chapter
summary Teaching and learning suggestions: • Comment • Student preparation • In the
classroom • Follow-up work Answers to self check and reflect questions Answers to
part 1 case study Questions: Strategic human resource management at Halcrow Group
Limited Chapter 5 The role of organisational structure in SHRM: the basis for
effectiveness? Learning outcomes Chapter summary Teaching and learning suggestions:
• Comment • Student preparation • In the classroom • Follow-up work Answers to self
check and reflect questions Answers to case study questions: Daimlers–Chrysler AG
Chapter 6 Relationships between culture and strategic human resource management: do
values have consequences Learning outcomes Chapter summary Teaching and learning
Answers to self check and reflect questions Answers to case study questions:
Corporate culture and Group values at DICOM Group plc
25 25 27 27 27 27 28 28 28 29 30 30 33 38 38 38 38 39 39 40 40 41 41 42 49 49 49 49
50 50 51 51 52 53 56

Chapter 7 Strategic human resource planning: the weakest link? Learning outcomes
Chapter summary Teaching and learning suggestions: • Comment • Student preparation
• In the classroom • Follow-up work Answers to self check and reflect questions
Answers to case study questions: Human resource planning in mergers and
acquisitions References Chapter 8 Strategic recruitment and selection: much ado
about nothing? Learning outcomes Chapter summary Teaching and learning suggestions:
• Comment • Student preparation • In the classroom • Follow-up work Answers to self
check and reflect questions Answers to case study questions: Recruitment and
Selection at Southco Europe Ltd References Chapter 9 Performance management: so
much more than annual appraisal Learning outcomes Chapter summary Teaching and
learning suggestions: • Comment • Student preparation • In the classroom • Follow-
up work Answers to self check and reflect questions Answers to case study
questions: Performance management at Tyco References Chapter 10 Strategic human
resource development: pot of gold or chasing rainbows? Learning outcomes
61 61 61 61 62 62 62 63 64 64 67 71 73 73 73 73 74 74 74 75 76 77 80 84 86 86 86 86
87 87 87 88 88 89 90 93 94 94 94

Chapter summary Teaching and learning suggestions: Comment • Student preparation •
In the classroom • Follow-up work Answers to self check and reflect questions
Answers to case study questions: INA References Chapter 11 Strategic reward
management: Cinderella is on her way to the ball Learning outcomes Chapter summary
Teaching and learning suggestions: • Comment • Student preparation • In the
classroom • Follow-up work Answers to self check and reflect questions Answers to
case study questions: Developing a global reward strategy at Tibbett and Britten
group Chapter 12 Managing the employment relationship: strategic rhetoric and
operational reality Learning outcomes Chapter summary Teaching and learning
Answers to self check and reflect questions Answers to case study questions:
Strategic approaches to the employment relationship social partnership: the example
of the Republic of Ireland Further Reading Chapter 13 Diversity management: concern
for legislation or concern for strategy? Learning outcomes Chapter summary Teaching
and learning suggestions: • Comment
94 95 95 95 96 97 97 101 105 106 106 106 106 107 107 107 108 108 109 110 113 113
113 113 114 114 114 115 116 116 117 129 130 130 130 130 131 131
• Student preparation • In the classroom • Follow-up work Answers to self check and
reflect questions Answers to case study questions: Making diversity an issue in
leafy Elgarshire Chapter 14 Downsizing: proactive strategy or reactive workforce
reduction? Learning outcomes Chapter summary Teaching and learning suggestions: •
Comment • Student preparation • In the classroom • Follow-up work Answers to self
check and reflect questions Answers to case study questions: The demise of MG Rover
Cars?
131 132 133 133 138 140 140 140 140 141 141 141 142 143 143 145

Millmore et al., Strategic Human Resource Management: Contemporary Issues,
Instructor’s Manual
Supporting resources
Visit www.pearsoned.co.uk/millmore to find valuable online resources Companion
Website for students • Answers to self-check and reflect questions For instructors
• Instructor's Manual containing: • learning outcomes and summaries • teaching and
learning suggestions including comment, student preparation, in the classroom and
follow-up work • answers to self-check and reflect questions • answers to case
study questions • references • PowerPoint slides
Also: The Companion Website provides the following features: • • • Search tool to
help locate specific items of content E-mail results and profile tools to send
results of quizzes to instructors Online help and support to assist with website
usage and troubleshooting
For more information please contact your local Pearson Education sales
representative or visit www.pearsoned.co.uk/millmore

INTRODUCTION
An overview of the Instructors’ Manual
This instructors’ manual has been designed to help the lecturer utilise the
textbook Strategic Human Resource Management: Contemporary Issues as a teaching
resource. This Introduction incorporates a brief overview of the text in order to
set the context for its utilisation as a teaching resource. Its substantive
content, however, comprises a chapter by chapter commentary with supporting ideas
and materials for teaching strategic human resource management (SHRM) to
undergraduate and postgraduate students of Management and HRM. Each chapter
commentary includes the following features: • • • Learning outcomes Chapter summary
Teaching and learning suggestions: • • • • • • Comment Student preparation In the
classroom Follow-up work
Answers to self check and reflect questions References
In addition, answers are provided to all case study questions and PowerPoint slides
are included for all chapters. There is one integrated case covering the Part One
chapters (Chapters 1–4). Answers to the questions for this case appear in this
manual immediately after the final chapter of Part One, i.e. Chapter 4. Each Part
Two chapter (Chapters 5–14) has its own specific case study positioned at the end
of each chapter. Answers to these chapter case study questions appear in this
manual immediately after answers to self check and reflect questions for each
chapter. There is substantial standardisation in the ‘Teaching and learning
suggestions’ for each chapter with respect to the ‘Student preparation’ and ‘In the
classroom’ sections. Although tailored to reflect the particular content of
specific chapters these sections inevitably reflect our own teaching style
preferences. The style that we most commonly favour involves the student
undertaking preparatory reading and related activities with the teaching session
using these activities to build on a base level of knowledge. A key element of the
teaching session when adopting this approach, however, is to provide sufficient
time for students to raise any queries they may have on the reading. Many of the
pedagogic features of this book such as self check and reflect questions, follow-up
study suggestions and case studies can be used as the basis for preparatory work
and/or in-class activities. Other ideas for preparatory and in-class activities can
be found in this manual. Our ideas are not meant to be prescriptive but simply
represent suggestions that can be customised or substituted as required.

Strategic Human Resource Management: Contemporary Issues: an overview

Rationale and aims of the book
In teaching strategic approaches to the management of human resources (HRM) to a
variety of undergraduate, postgraduate and professional students, we found it
impossible to find a single text to adopt as a reader in support of their studies.
Our dilemma was that available texts explicitly positioned to address the strategic
development of HRM practice were either too inaccessible or insufficiently rigorous
in their treatment of strategic integration such that their content mirrored more
that to be found in the many personnel or human resource management texts
available. We therefore set about writing a book to bridge this ‘divide’. However,
in stressing the strategic focus of the management of human resources we were faced
with a particular difficulty of terminology. Given the overwhelming consensus that
the HRM variant of managing human resources is nothing if not strategic, deciding
on the title for this book (Strategic Human Resource Management) provided us with
something of a conundrum. If the essence of HRM, and its key feature for
distinguishing it from personnel management, is its focus on strategic integration
then the ‘S’ of ‘HRM’ is tautological in that it simply adds the strategic element
that is already accepted as a given in HRM! It was therefore with some misgiving
that we opted for the SHRM title because of the possible confusion this may cause
amongst our readership. However, we justify our decision on two grounds. First, in
our view the term HRM has come to be inappropriately used such that it has been
increasingly adopted in place of personnel management without due regard for its
differentiating characteristics. In this sense the term HRM is frequently used in
the literature too loosely as a simile for personnel management. This has also been
reflected in practise where organisations have relabelled their personnel function.
It is not unusual to find that Personnel Departments have become HRM Departments,
Personnel Managers, HR Managers and Personnel Officers and HR Officers with no
commensurate change in their underpinning ideology or in the way functional roles
are executed. This is akin to the proverbial case of ‘old wine in new bottles’!
Second, this loose use of the term creates the possibility that some texts
masquerade as HRM when they essentially cover the same ground found in earlier
personnel management texts. Many of these HRM texts and some of the SHRM texts
allude to strategic integration but arguably after a nod in that direction proceed
to present the material in a relatively standard way without maintaining an
explicit strategic focus throughout. We hope that our readership will agree that
the strategic component of HRM underpins the content throughout our book. We have
attempted to build on the personnel foundations of HR theory and practice by
exploring in detail what is meant by strategic integration, both generally and with
specific reference to a selection of key HR levers, and issues around its
development and delivery in practise. In order to stress this strategic focus and
differentiate our work from those loosely titled HRM texts, we have adopted, with
reservation, the title Strategic Human Resource Management. In writing this book
the key concern was to capture the distinctive focus of HRM. Our aims can be
summarised as to write a SHRM book that: • maintains a rigorous and critical focus
on the ‘S’ of ‘SHRM’ throughout rather than resorting to a more traditional,
personnel management, treatment of the subject domain;
• •
through its written style and supporting pedagogic features can be readily
understood by its potential readership; conveys the central importance of vertical
and horizontal strategic alignment in a way that enables the reader to appreciate
the holistic nature of the concept and how it can be applied in practice to
recognised specific areas of HR activity; and grounds the reader in the
practicalities of organisational life in a way that enables them to distinguish
between SHRM rhetoric and reality.
Structure of the book

The book is divided into two parts. Part One, through four chapters (covering
respectively: strategy and human resource management; strategic human resource
management; international SHRM; and evaluating SHRM) provides an overview of the
SHRM territory. In addressing the substance of their respective chapter titles we
have endeavoured in this part to present a holistic view of SHRM. A particular
concern has been to surface the complexity lying behind the notion of strategic
integration and to explore how this complexity impacts on the conceptual
development and practical application of SHRM. In support of our attempts in part
one to present a holistic approach to the subject domain we have used one
integrated case study to cover all four chapters rather than the chapter case
studies that are a feature of part two. This comprehensive, integrated case –
‘Strategic Human Resource Management at Halcrow Group Limited’ – appears at the end
of part one and hopefully sets the scene for the exploration of the specific key HR
levers that follow. The second part looks in detail at 10 selected HRM levers and
critically examines how they too can be conceived strategically and operationalised
through organisation practice. The 10 areas selected for part two inevitably
reflect our personal views. They are included because we feel that they all
represent critical components of SHRM practice. Many of these selected levers
(Strategic Human Resource Planning, Strategic Recruitment and Selection,
Performance Management, Strategic Human Resource Development, Strategic Reward
Management and Strategic Employee Relations) will be found in the majority of HRM
texts while others (Organisation Structures, Culture, Diversity and Downsizing) are
less frequently covered. In all cases our treatment of the 10 selected topics
concentrates on their strategic construction and organisational manifestation and
consistently adopts a critical perspective that surfaces the difficulties of
putting the rhetoric of SHRM into practice. However, in disaggregating this HRM
‘bundle’ to examine its constituent parts we have not abandoned the central HRM
tenet of horizontal integration. Throughout the chapters making up Part Two we
provide crossreferences to other HR levers to emphasise their interconnectedness
and use other devices, selectively, to reinforce the essence of horizontal
integration. For example, in Chapter 8 (Strategic Recruitment and Selection) we
provide a specific example to demonstrate how recruitment and selection can help
facilitate the horizontal integration of the various HR levers and in Chapter 7
(Strategic Human Resource Planning: the weakest link?) we frequently use the theme
of mergers and acquisitions to illustrate the need for ‘joined-up’ HRM thinking.
Also, although each chapter concludes with its own topic-specific case study, it is
possible to use the integrated Halcrow case to explore further the strategic
connections of the various HR levers presented.

Readership
This book can be used with a range of students from those with little experience of
the world of work to more experienced managers. The principal target audience for
this book comprises undergraduates, postgraduates and students on professional
programmes who are studying the management of human resources either as their
subject specialism or as an integral component of more general business and
management programmes. It works well if students have some work experience or
already have some knowledge of organisational behaviour. This is nearly always the
case with our likely readership. Part-time undergraduate, postgraduate and
professional students are nearly always already in employment, or between jobs, and
can therefore relate the content of this text to a range of work experiences. Full-
time postgraduate and professional students tend to enter such programmes following
a period of work experience or, like full-time undergraduate students, have
undertaken a work placement and/or part-time jobs prior to or during their studies.
Pedagogic features
The over-riding purpose of Strategic Human Resource Management: Contemporary Issues
is to help undergraduate and postgraduate students and students on professional
courses get to grips with how the discipline of human resource management can be
developed as a powerful adjunct to strategic management. The concern throughout is
to help students understand how the management of human resources can be developed
strategically, at both the conceptual and practical level, to support the
formulation and achievement of an organisation’s strategic objectives. Each chapter
deals with a dimension of strategic human resource management and discusses
relevant theory and practical applications using as little jargon as possible.
Tables and figures are used to aid this discussion and as a vehicle for enhancing
clarity of communication. A comprehensive glossary provides brief definitions
and/or explanations of key terms and an index is available to help students find
their way around the book and its underpinning literature sources. Learning
outcomes at the beginning of each chapter provide the reader with clear statements
of chapter objectives and benchmarks against which the reader can assess their
subject knowledge and comprehension. Mapping diagrams are incorporated into chapter
introductions to provide a visual summary of the chapter content. These mark out
the subject territory by identifying key areas of discussion and showing how these
are structured in the chapter. Key concepts boxes are used to help explore
conceptual development. These take a variety of forms including, for example,
providing subject definitions, identifying key themes, presenting theoretical
frameworks and summarising research findings. In practice boxes are used to
illustrate how conceptual understanding can be or is being used to inform
organisational practice. These too take a variety of forms and include, for
example, case studies reported in the literature, cases drawn from the direct work
experiences of the author team, examples sourced from the internet and other news
media and, occasionally, hypothetical constructions of practical applications. Self
check and reflect questions enable students to check whether they have understood
dimensions of the chapter content. These can all be answered without recourse to
other

(external) resources and are designed to encourage the student to interact with the
chapter readings. They can also be used either as preparatory activities for
subsequent class-based teaching sessions or tackled during the teaching session
itself. Answers to all self check and reflect questions are provided as part of
this instructors’ manual. A summary of key points at the end of each chapter can be
used by students before and after reading the chapter to structure their thinking
and to ensure that they have digested the main points respectively. Case studies
drawn from a variety of sources are used at the End of Part One and Chapters 5−14
to facilitate student comprehension and transfer of learning. Case study questions
require students to apply their knowledge and understanding of chapter content to a
variety of organisational scenarios covering many different types of organisation.
As with self check and reflect questions, the cases and accompanying questions can
also be used either as preparatory activities for subsequent class-based, teaching
sessions or tackled during the teaching session itself. Answers to all case study
questions are provided as part of this instructors’ manual.

CHAPTER 1
Strategy and human resource management

Learning outcomes
By the end of this chapter you should be able to: • • • • • • define the term
strategy; describe and evaluate a range of approaches to strategy making; analyse
links between different approaches to strategy and human resource management (HRM);
understand the significance of strategic integration to explore links between
strategy and HRM and its multi-dimensional nature; analyse the resource-based view
of the organisation and describe key concepts related to this approach; describe
and evaluate links between resource-based theory and HRM.
Summary
• • Strategic management focuses on the scope and direction of an organisation, and
often involves dealing with uncertainty and complexity. Strategic human resource
management is concerned with the relationship between an organisation’s strategic
management and the management of its human resources. The exact nature of this
relationship in practice, however, is likely to be difficult to analyse and
evaluate, not least because strategic management is a problematic area. Four
approaches to strategy making were described and evaluated: the classical approach,
evolutionary perspectives, processual approach and systemic perspectives. The
implications of each of these approaches for human resource management were
subsequently analysed. Strategic integration was used to explore possible links
between approaches to strategy and human resource management. Integration has been
recognised as a necessary condition for HRM to be considered strategic although it
is not sufficient to treat it as the only link to define a strategic approach to
HRM. Six possible strands of strategic integration were identified. Resource-based
theory was analysed because of its recognition of an organisation’s internal
resources as a potential source of competitive advantage. Forms of organisational
capability were analysed and their relationship to human resource management were
evaluated.

Teaching and learning suggestions

Comment
To many students this may not be the most appealing chapter in the book because it
does not immediately deal directly with the topic of strategic human resource
management (SHRM). This will be the expectation of most students who will want to
‘jump straight in’ to the topic. That said it is important for all students to have
a grasp of the early material in the chapter on definitions of strategy and
strategy formulation. Specialist HRM students in particular may find this material
valuable as they may have dealt with it in fairly basic form in earlier studies.
Those students using the chapter as part of a BA Business Studies or MBA course,
for example, may have dealt with the material on definitions of strategy and
strategy formulation in other modules so a brisk move to later sections of the
chapter exploring links between approaches to strategy and HRM would be advisable.
All students should find the sections on resource-based theory and its recognition
of an organisation’s internal resources as a potential source of competitive
advantage, and forms of organisational capability useful because of the strong
relationship to HRM.
Student preparation
Prior to the class, we believe it is important that students read and make their
own notes from the chapter. More specifically we ask students to note those topics
that they found particularly complex, or interesting (or both) in order that may
form the basis of an initial classroom discussion. The notion of strategy is
particularly abstract for students with limited or no work experience. It is also
challenging for those students who are in a junior position in their own
organisation. In view of this we think it is an important part of student
preparation that they think about the issue of strategy in relation to an
organisation where they work or one known to them. Indeed, the latter may be easier
since they may feel closer to the strategy of a well known multi-national of which
they are a customer (e.g. Apple or Microsoft) than to the organisation in which
they are an employee. In this regard it is important to emphasise to students that
‘organisation’ may just as easily mean the department where they work as the
corporation. Completion of the self-check questions for this chapter is
particularly useful prior to the class as they may form the basis of group work.
They form an immediate link with chapter content and enable the tutor to develop
many teaching points from the resultant discussions. It may be very useful to ask
students to illustrate the points they make in response to the self-check questions
with ideas from the chapter’s practice and concept boxes.
In the classroom
The danger with running a class on this topic is that it runs the risk of being too
abstract. We have found that focus on a case study is an important part of a
strategy class for HRM students in particular, because it ‘brings to life’ the
topic and allows the tutor to make a series of valuable teaching points from the
chapter. For example, Practice Box 1.5 ‘The impact of environmental concern on
motor vehicle manufacturers’ raises the important issue of the constraints upon the
activities of organisations that forms part of the host of considerations that need
to be taken into account in the strategy-making process. A case based on this, or a
similar, issue may form a useful platform for analysis of strategy.

Follow-up work
The first two of the follow-up study suggestions at the end of the chapter: 1.
Undertake a search of practitioner publications (related to HR and management),
identify a number of short articles about case study organisations that often
feature in these and select, say, two or three of them to identify references to or
evidence of any of the strategic management themes discussed in this chapter and
their relationships to the management of human resources. 2. Seek out the
possibility of talking to a senior manager in an organisation to discuss its
approach to strategy making and the relationship between strategy and HRM in this
case. are specifically designed to ensure the practical relevance of HRM is not
lost in the consideration of more abstract strategic issues.
Answers to Self-Check and Reflect Questions

1.1 Is it possible to reconcile any of these four approaches to strategy making in
practice and if so how might this occur? Perhaps the first key point to recognise
is that these four approaches are theoretical positions and therefore we should not
expect any particular organisation to fit neatly into one such position in reality.
Discussion in the first part of this chapter also recognised that ‘real’
organisational behaviour is unlikely to use one approach to the mutual exclusion of
other possibilities. Mintzberg et al (1998) recognise that real behaviour will
combine deliberate control with emergent learning, for example, while Mintzberg
(1987) recognised that in reality a purely deliberate or purely emergent strategy
will not exist. Figure 1.1 seeks to illustrate the range of actual strategies that
Mintzberg and Waters (1985) identified, from the mainly deliberate to mainly
emergent. The first section of the chapter also used the work of Brews and Hunt
(1999), which illustrates that good quality planning is likely to combine elements
of both formal planning and incrementalism, so that both control and learning can
coexist. It was also recognised in the first part of the chapter that theorists who
adopt a systemic perspective also agree that organisations should engage in
strategic planning; what they question is the universal applicability of the
classical approach to formulate strategy. However, we may again refer to the work
of Brews and Hunt (1999): their approach to strategic planning recognises the need
to undertake this in a flexible manner. In this way, organisations in different
countries will be sensitive to their own social, cultural and national
institutional systems and adopt an approach to planning that is sensitive to such
systemic attributes, perhaps without being aware of the particularistic nature of
their actions. It will be multi-national corporations that need to be more overtly
sensitive to such systemic differences and to act accordingly. The evolutionary
perspective adopts a much more deterministic approach, where management must react
to environmental circumstances. However, it was recognised in the first part of the
chapter that this perspective has been criticised on the grounds that environmental
systems may be more open than is being suggested by this approach to strategy.
Where this is the case, this would recognise use of behaviours that include both
planning activities and incrementalism to enact more effectively with the
environment. These considerations are of course highly abstract but allow us to
think about the application of these approaches in practice. You may wish to think
about applying these ideas to an organisation that you know.

1.2 What is the scope for the strategic integration of HRM in relation to each of
the four approaches to strategy making discussed in this section? Using the
behavioural perspective or matching model to explain the link between the classical
approach to strategy and HRM suggests that strategic integration may be a feature
of this approach, where HRM is not only informed by organisational strategy but is
also capable of shaping it, at least to some extent. The processes involved in
strategy formation in practice, however, means that a much more complex and messy
picture emerges, which may mean that HRM is not strategically integrated and can
only adopt a reactive posture. The reality is therefore likely to be highly
variable and depends on a range of different factors. Evolutionary perspectives
suggest an approach to strategy making that is highly deterministic, so that while
HRM would need to be closely matched to an organisation’s strategy, its approach
would be reactive rather than proactive. The processual approach to strategy making
is the one that offers the clearest scope for HRM to be strategically linked to
organisational strategy. Emergent strategy would, according to this theory, require
a proactive HRM approach, which suggests that HRM would capable of shaping as well
as responding to organisational strategy. However, the section on the resource-
based view of the organisation later in the chapter includes some discussion that
evaluates and challenges this assertion. The systemic approach to strategy making
recognises that the scope for the strategic integration of HRM with organisational
strategy is much less clear: this perspective points to the fact that in many
situations HRM will not be conceptualised in a way that is intended to lead to
strategic integration. 1.3 Think of an organisational situation with which you are
familiar. This may be one in which you currently employed or one that you have
worked for previously, or another organisation known to you. Use the model of the
six strands of strategic integration to evaluate, as far as you are able, the
extent of the integration of HRM and human resources within the organisation.
Whilst this question is designed to check your understanding of the elements of
this model, it requires you to apply this to an organisation known to you and so
your answer will be based on your own evaluation. However, you may have been able
to include consideration of the following aspects: • The nature of the relationship
between organisational strategy and HRM. This may have led to some interesting
reflections about the nature of strategy in the organisation as well. The nature of
horizontal integration between HRM policy areas and also between HRM and other
functional areas in the organisation. Whether there is a Human Resource Director
and at what level or levels within the organisation. The nature of line management
integration with HR policies. The integration of employees with the goals of the
organisation. Your judgement about the capacity for the organisation to respond to
change as the future unfolds related to the capabilities of its human resource
base.
• • • • •
1.4 How would you relate the resource-based view to the dichotomy between the
planning school and the learning school that we discussed earlier? In simple terms,
the planning school emphasises a deliberate approach to strategy making, which
implies a high level of control over the processes involved in relation to both
strategy formulation and implementation. The learning school by contrast places
emphasis on strategy as an emergent process, embedded in the knowledge and skills
of those who manage and work in the operating divisions, business units or
departments of organisations. Resource-based

theorists also stress the importance of learning and knowledge as we saw in the
discussion in the final part of this chapter. However, this is not to say that
organisations will not seek to develop organisational resources and capabilities
deliberately, including core capabilities. Authors such as Prahalad and Hamel
(1990) discuss examples of large corporations who have intentionally developed core
competencies to achieve competitive advantages over others in their respective
industries. In contrast, Mueller’s evolutionary approach suggests that while
organisations may express their strategic intent, their level of control over the
subsequent development of organisational capabilities will not be as deliberate and
controlled as these other examples seem to imply. These differences of view appear
to suggest that there may be a range of views about intentionality and
deliberateness amongst resource-based theorists as there is between those who
subscribe to the planning school and those who subscribe to the learning school. If
there are different positions here these may be seen as having different
implications for the role of HRM.
References
Boxall, P.F. (1996) The strategic HRM debate and the resource-based view of the
firm, Human Resource Management Journal, 6(3), 59–75. Johnson, G. and Scholes, K.
(2002). Exploring Corporate Strategy: Text and Cases (6th edn). Harlow: FT Prentice
Hall.

CHAPTER 2
Strategic human resource management: a vital piece in the jigsaw of organisational

success?
Learning outcomes
By the end of this chapter you should be able to: • • • • identify the major
principles, which underpin the concept of strategic human resource management
(SHRM); analyse the main theoretical approaches to SHRM; explain the history and
origins of SHRM; evaluate the studies which aim to establish the link between SHRM
and organisational performance.
Summary
• The main principles of SHRM include: • • • • • a stress on the integration of
personnel policies both one with another and with business planning more generally;
the locus of responsibility for personnel management no longer resides with
specialist managers but is now assumed by senior line management. the focus shifts
from management–trade union relations to management–employee relations, from
collectivism to individualism. there is stress on commitment and the exercise of
initiative, with managers now donning the role of ‘enabler’, ‘empowerer’ and
‘facilitator’.
The principal theoretical approaches to SHRM are termed: universalist, matching

models (closed) and matching models (open). The universalist approach assumes that
there are ‘best HR practices’ that promise success irrespective of organisational
circumstances. The matching models (closed) approach specifies HR policies and
practices that are relevant to specific organisational situations, whereas the
matching models (open) approach defines the employee behaviours necessitated by the
organisation’s overall strategy. These behaviours are to be delivered through the
HR strategy. All of the theoretical approaches to SHRM have their problems. Those
concerned with the universalist approach are: defining the ‘best practices’ to
apply; the low regard for organisational context; and the absence of employee input
assumed. The problems with the matching models (closed) approach are: the ambiguity
that attends the defining of strategy; the essentially managerialist stance
assumed; and problems concerned with implementation.
•
Problems attending the matching models (open) are the models rather idealised
nature and, like the other models, their prescriptive tone. • The growth of
interest in SHRM was due to a number of factors including: the crisis of under-
performance in American industry; the rise of individualism; a decline in
collectivism; the rise of knowledge workers with differing work expectations; and a
search for more status by personnel specialists. In an attempt to establish the
link between SHRM and organisational performance there have been numerous studies
conducted since the mid-1990s in the USA and UK. In general these have been very
positive about the relationship between SHRM and organisational performance
although most have not offered an explanation as to why certain HR practices are
may lead to enhanced organisational performance.

Comment
This is a chapter that should appeal to all students studying an SHRM model
irrespective of their practical and academic background. It is rooted in strategic
management theory but is a vehicle for examining organisational practice in
employment contexts of all types. One of the exciting things about teaching
management to students is that it enables them to reflect on organisational
practice, which makes sense of what’s going on in reality: the ‘oh! that explains
why that is done’; or ‘now I can see how that idea is linked to this aspect of
policy and practice’. This chapter offers such opportunities for reflection. The
section on the three theoretical approaches to SHRM will be of particular interest
to many students given the critical stance it takes, among other ideas, to that of
the universalist approach. Not only is universalism relevant in the study of SHRM
it also permeates the whole of the management literature. The section enables
tutors to make valuable points about the value of taking an evaluative stance
towards the study of management and, in particular, emphasise the value of
contingency theory.
Student preparation
As with other chapters, prior to the class, we believe it is important that
students read and make their own notes from the chapter. It will be of importance
for students to think and make notes upon some of the major themes from the chapter
in relation to organisation practice in which they may have been involved.. Some of
themes may be: high employee commitment to the goals and practices of the
organisation; the securing and training of high quality staff and internal
practices to achieve high quality products; and flexibility in terms of
organisational structure, employee functions and job content to enable the
organisation to respond quickly to change. In similar vein to Chapter 1 it is an
important part of student preparation that they think about the issue of SHRM in
relation to an organisation where they work or one known to them. It would be
extremely useful as class preparation for students to talk to an HR manager about
one of the two key themes, e.g. to what extent is the HR strategy in y(our)
organisation integrated.

Prior to the class, the completion of the self-check questions for this chapter is
particularly useful as they may form the basis of group work in the class. The
questions create an immediate link with chapter content and enable the tutor to
develop many teaching points from the resultant discussions. It may be very useful
to ask students to illustrate the points they make in response to the self-check
questions with ideas from the chapter’s practice and concept boxes.
In the classroom
After an initial class discussion based on the student preparation we have found
that the topic of SHRM is best illustrated by case study work. For example, one of
the central concepts of the chapter lends itself very well to this. This is the so-
called open approach to SHRM, which argues the existence of a clear and mutually
supportive relationship between organisational strategy and HR strategy. As the
chapter explains, using the ‘open approach’, the test of the degree to which the HR
strategy is truly ‘strategic’ is a test of its appropriateness to the
organisational strategy. The variables in the model: the operating environment
(both external and internal) in which the organisation finds itself; the
organisational strategy, which requires specific desired employee behaviours to be
adopted if it is to be achieved; and the three 'key levers' (structural, cultural
and personnel strategies) through which the HR strategy is pursued, may all be
identified or suggested, in relation to a case study. This may be the case related
to the chapter or another of the tutor’s choice. We have found the model works
really well and illuminates many of the ideas of integration in an interesting way.
Follow-up work
To some extent the follow-up work will be dictated by the content of the classroom
work. If the case study, for example, was based on the ‘open’ approach it may be
useful to ask students to work with the ideas in their own organisation or read
more about organisations who have pursued HRM and estimate the extent to which the
approach adopted by the organisation has been ‘open’. Indeed, one of the
suggestions for follow-up work in the chapter: • search the specialist practitioner
HR literature for case studies that illustrate the way in which clear and cogent
organisational philosophies inform HR strategy
may be a useful precursor to such an exercise. What this task does is to enable the
student to integrate ideas from Chapters 1 and 2.

2.1. What value would you place in a philosophy statement similar to the BP example
above were you searching for employment? This is one of those questions that we
cannot answer because it is obviously personal to you. That said the intention of
the HR specialists who write and publish such statements is to enthuse you
sufficiently to prompt you to register an interest in the organisation. As such
this is an initial step in the recruitment overture and, possibly, a long-term
relationship between employer and employee. If this is the case it must be an
honest attempt to portray reality. If the philosophy statement is a genuine attempt
to describe life for employees in the organisation then it should be of value to
employees because it encourages those potential employees who like the sound of the
organisation and, just as importantly, discourages those who do not.

2.2. In what ways do you think the presence of employee voice may be helpful to the
implementation of universalist HR initiatives? The central argument behind the
concept of employee involvement in the design and implementation of HR initiatives
is that better outcomes will result if employees are involved. This is for two
reasons. First, at the rational level it seems sensible that if employees
understand the reasons for and components of a particular initiative, then they are
more likely to be effective participants in the process of implementation.
Performance appraisal is a good example of this. It is not unusual for managers to
introduce performance appraisal schemes and incorporate training for managers but
not employees. The result is often that employees do not understand the part they
play in the process, or, more importantly, really understand the reasons why the
organisation is introducing appraisal. The second reason is emotional and concerns
the notion of ‘ownership’. We are all more likely to engage more enthusiastically
in the initiative if we have been part of its conception and design rather that it
being imposed upon us. 2.3. How influential would you say that the factors noted in
Figure 2.4 were in creating the drive to introduce SHRM in major organisations? The
simple answer to this question, of course, is that it is very difficult to say. On
the face of it does seem reasonable to assume that all of these factors were
influential. Perhaps some (e.g. the crisis in American industry) were more
important than others. But we can safely say that these factors were associated
with the rise in interest in SHRM. It would too much to say that they caused the
growth of SHRM. When considering such questions as this it raises the extreme
difficulty of linking changes in a cause–effect manner. Considering the complexity
of this problem is a useful introduction to the section, which concluded Chapter 2,
that is, on the HR–organisational performance link. 2.4. What practical
contribution do you think the studies linking HR and organisational performance
listed in this section have made to the practice of SHRM? Much depends upon the
extent to which HR managers take notice of what the studies have concluded. Some
may argue that there is little point in academics producing studies such as this if
nobody actually in a position to change management policies reads them. We do not
take the bleak view that the gap between academia and practice is so wide that the
studies will not be of practical benefit. Certainly in the United Kingdom the
Chartered Institute of Personnel and Development have done much to commission and
publicise the results of the research at conferences and in pamphlets and in-house
journals. In many respects the studies tend to confirm a lot of what we might
expect. It seems intuitively correct to say that carefully designed and skilfully
implemented HR practices will have an effect upon the ‘bottom-line’. But the
studies we have outlined go much further than confirming this. They identify the
key practices and the combination where these practices may be introduced. They
also point to the difference that factors such as the importance of front-line
managers may make. Above all, they note some useful measures that may be used to
assess HR effectiveness. If some plausible link can be shown, this will contribute
greatly to the influence that HR managers can have at the highest levels in
organisations.

CHAPTER 3
SHRM in a changing and shrinking world: internationalisation of business and the

role of SHRM.
Learning outcomes
By the end of this chapter you should be able to: • • • • • • identify some of the
key background issues relevant to the internationalisation of business; analyse the
significance in the growth of multi-national companies; define strategic
international human resource management; identify the key components of strategic
international human resource management; explain the significance of the capability
perspective on strategic international human resource management; evaluate the
importance of the cultural perspective on strategic international human resource
management.
Summary
• • • MNCs pursue international business for a variety of reasons in a variety of
ways. The importance of MNCs is not new but their growth in recent years has been
rapid and significant. SIHRM may be better understood by the examination of a model
in which classic MNC components and factors relevant to the MNC’s external and
internal operating environments influence the SIHRM issues, functions and policies
and practices, which in turn affect the concerns and goals of the MNC. The
development of key competences by MNCs is important at three levels:
organisational, line management and HR professionals. National cultural differences
are an important aspect of SIHRM and have been measured by a number of authors
allowing these differences to be categorised. Strategies for managing cultural
differences include: ignoring them, minimising them and utilising them.
• • •

The effects of national cultural differences on HR practices can be quite profound

with the consequence that the transformability of many of these practices is
suspect.

Comment
This is probably the chapter in the book, which will offer the least opportunity
for students to engage in reflective learning since most will have no first-hand
knowledge of SHRM. The most useful fund of knowledge that most students possess
will be that of MNCs with which they are familiar as customers. That said the
chapter contains the opportunity for many interesting debates where students and
tutors may engage. An example of this is the ethical dimension to the activities of
MNCs; a topic which is regularly featured in the news and one on which most of us
have strong views. What is less clear from such debates is the role of SIHRM. So
the challenge for many tutors will be teasing out valuable learning points related
to SIHRM from topics where it is not immediately apparent. But that is not clearly
the case with some topics, e.g. culture, which we have found is a subject that
interests all students and one that promotes lively debate!
Student preparation
Prior to the class, we believe it is essential that students read and make notes
from the chapter. We use a variety of vehicles to bridge student preparation and
class-based activities to enhance their understanding of the chapter content and
its overall relationship to managing human resources strategically. As standard, we
would ask students to make a note of any queries arising from their reading and to
come prepared to raise them during the teaching session. Sometimes this may be
formalised by asking students to write down (as questions) the three issues
addressed by the chapter where they would like further clarification and guidance.
Students may also be asked to do one or more of the following: • • • address pre-
set questions and write their answers briefly in note format; complete the self
check and reflect questions and come to the session prepared to share and discuss
their responses; and familiarise themselves with the chapter case study (or an
alternative case supplied in advance) and come to the session prepared to tackle
the case questions.
Our outline answers to self check and reflect questions follow in the next
substantive section of this chapter guide.
In the classroom
Clearly the approach adopted to ‘student preparation’ can be followed through into
the classroom. A starting point that we find useful is to discuss the issues
arising from the students’ preparatory reading. This avoids providing lecture input
that simply repeats what students have already grasped, reinforces the value of
reading as an essential prerequisite for class-based discussion and provides a
platform from which further class-based activities can be launched.

However, when adopting this approach, we find it useful, once student queries have
been exhausted, to provide a snappy summary of key issues. Where preparing answers
to self check and reflect questions, has been set as part of preparation for the
teaching session, at least two alternatives present themselves. First, students can
be asked to contribute individual responses that are then subjected to plenary
discussion. This is our preferred approach because it makes students more
accountable for their personal learning and reserves any group work for case study
analysis. Second, students can be formed into groups to share their individual
answers and draw conclusions from their discussions. However, if preparing answers
to self check and reflect questions was not part of preparatory work but
consideration of the questions is to feature as part of the taught session, we
would favour the group approach as a more stimulating approach. In all cases
student responses can be considered against our suggested answers, which themselves
can be usefully critiqued. Greater topicality can be achieved by capturing the big
business news stories of the week and discussing any SHRM issues that are likely to
arise.
Follow-up work
The pedagogic features adopted throughout this book are intended to offer up a
number of alternatives for follow-up work whilst at the same time leaving the
lecturer free to add or substitute their own ideas. If they have not already been
used as part of class activities any prior preparation of answers to the self check
and reflect questions will serve as a useful reinforcement to chapter content.
There are also a number of follow-up study suggestions after the chapter summary
that can be undertaken by students either individually or in groups and an
extensive list of references provides many opportunities for further reading.

3.1. The reasons that companies pursue a strategy of internationalisation are not
new. Historically, empires have been built on thriving international trade. Yet the
rate of growth of international trade has grown apace in recent years. Why should
this be? The first reason is the growth of technology, in particular air transport
and information technology. These have made communications immeasurably easier in
the past 10–15 years. Secondly, there is easier movement across borders now than in
previous generations. The free movement of goods and services across the EU is a
perfect example of this. Thirdly, there has been a development of support services
including banks and government agencies. Banks now speed financial exchanges
electronically across continents in minutes making economic exchanges efficient and
less risky. Government agencies provide support for businesses in terms of finance
and advice. Finally, the increase in communication has facilitated global brands
and the desire of consumers to purchase those brands. For example, the Apple I Pod
started life in 2002/2003 in the United States but it was a matter of weeks before
demand grew across the world to the extent that Apple could not meet demand.

3.2. As a senior HR manager in a major MNC what arguments would you anticipate
using to defend your company against the anti- globalisation lobby’s position that
globalisation was a disadvantageous to your company’s employees? Inevitably your
opponents would cite the examples of MNCs, which exploit child labour and
vulnerable adult employees by paying poor wages and compelling them to work long
hours. But even where MNCs locate production facilities in developing countries you
could argue that terms and conditions of employment are often much better than in
local companies. You could argue that, for example, in south-east Asia the
migration of rural workers to the cities (similar to the British industrial
revolution of the 18th and 19th centuries) is evidence that the opportunities
provided in a developing economy are more attractive than remaining among the rural
poor. In addition, you could argue that the opportunity to develop international
careers is an extremely attractive one for many managerial, professional and
technical employees. 3.3. In what other ways may the expatriate managers at
DecoStore have established tacit knowledge? HCN employees will learn tacit
knowledge through the ways in which expatriate managers interpret policies and
procedures. All managers in all organisations follow some procedures very closely
and pay scant attention to others. This teaches employees a good deal about what
the organisation sees as important and what it does not. Of course, this has the
potential to lead to confusion among employees. But the ways in which this
confusion is accommodated in the minds of employees is part of the learning
process, which helps them to sort out what is important and what is not. Tacit
knowledge will also be imparted to employees through the patterns of power and
influence, which exist among expatriate managers. Which of them is the most
powerful? From where does that power emanate? Who wins the battles for scarce
resources? Who gets his (usually) or her own way? The answers to these, and other
similar, questions will assist the employees to understand power patterns and gain
important tacit knowledge about how the organisation works at an informal level.
3.4. Which of the line manager competences do you think are particularly important
for HR professionals? Of course, all of them are important. Increasingly,
international business knowledge and the ability to take the role of innovator by
seeing old problems in new ways and trying new methods of solving them are
important as HR professionals operate strategically rather than pursue a narrower
specialist focus. Indeed, the former perspective has been the focus of this
chapter. However, the final section of this chapter, on the cultural perspective to
SHRM, emphasises the importance of both cultural adaptability and perspective
taking (i.e. taking into account the views of others). Perhaps the key role of the
HR professional is to ensure that senior and line management develop and practise
these competences. 3.5. Of what value is this general grouping of national cultures
to managers in their SIHRM activities? You may argue that all they do is confirm
the general sort of assumptions that managers have about different cultures. If so,
this is in itself is of some value. But more importantly what such research does is
to provide managers with valuable insights, which they can use in SHRM decision
making. These decisions may be concerned with issues of structure (e.g. the extent
to which the organisation may decentralise its foreign operations with local HR
managers and staff) or HR practices (e.g. whether to impose a standardised reward
structure across different countries). Such cultural information may not determine
decisions but they have the virtue of concentrating managers’ minds upon the
consequences of some of their decisions.

CHAPTER 4
Evaluating SHRM: why bother and does it really happen in practice?

Learning outcomes
By the end of the chapter you should be able to: • • • • • • • explain the
importance and contribution of evaluation to strategic human resource management;
identify the range of different purposes an evaluation can serve; assess the
barriers to evaluation and their causes; identify the various stakeholders in any
evaluation and their need both to contribute and to receive feedback; assess the
choices to be made in respect of the evaluation process and make suitably informed
decisions; outline a range of strategies and data collection techniques involving
both primary and secondary data, which may be used to evaluate strategic human
resource management; and identify the complexity of issues associated with feeding
back the findings of evaluations.
Summary
• • • Evaluation has the potential to make an important contribution in relation to
the implementation of specific HR initiatives but also to wider SHRM. Evaluation
takes place continuously on an informal and personal basis and will affect people’s
choices and behaviours at work. There are a number of valid reasons relating to
organisational culture, unchallenged assumptions and previous experience that
explain why planned formal evaluation of strategic HR has rarely taken place. A
planned systematic process of evaluation should be included at the beginning of the
implementation process for all HR interventions. Within evaluation of SHRM a
distinction can be made between typical evaluations and action research. While both
use the same strategies and data collection techniques, action research has
explicit foci on involvement of participants and subsequent action. Both can make
use of both secondary and primary data.
• •

Prior to evaluating SHRM it is important that a clear understanding of the precise

purpose and objectives of the evaluation is reached. This needs to reflect the
context and purpose of the evaluation and be agreed between those undertaking the
evaluation and the sponsor. Evaluation of SHRM involves multiple stakeholders and
cannot be divorced from issues of power, politics and value judgement. Feedback
typically involves cascading a summary of findings from the top-down the
organisation. Alternatively the findings can be shared first with those who
generated the data. This can help promote ownership of subsequent actions. Issues
that cannot be dealt with may be fed up from the bottom to high levels of the
organisation.
• •

Comment
An immediate problem facing the delivery of this topic is the overall lack of
attention it receives in the HRM literature, the topic of evaluation rarely being
considered in any depth. This is problematic as we discuss in the chapter.
Evaluation is rarely included in a planned evaluation and, on those occasions when
it is, the findings are rarely utilised at all, let alone strategically. This
observation forms part of the opening section of this chapter and part of the
justification for its inclusion as a discrete chapter. It is also a point we
believe must be emphasised to the students. In this chapter we argue that the
evaluation of HR strategies needs to involve those affected within the organisation
as fully as possible. This is not to say that evaluation can only be undertaken by
people within the organisation. Rather it implies that where people external to the
organisation are used, their role should be to help those within to perceive,
understand and act to improve the situation. As part of this we recognise that,
depending upon the purpose of the evaluation, one or a number of research
strategies might be more appropriate. Evaluation may take place over a range of
time horizons. These we suggest can range from one-off case studies perhaps
answering the question ‘Where are we now’? through cross-sectional studies, which
benchmark HR practices, to longitudinal evaluations perhaps using a series of
employee attitude surveys. Similarly, we recognise that to address particular
strategic objectives some data collection techniques are likely to collect more
appropriate data than others.
Student preparation
from the chapter. We have found that producing mind maps of the chapter content is
a useful approach to note taking and encourages students to reflect on the internal
integration of the subject content of the chapter. We use a variety of vehicles to
bridge student preparation and class-based activities to enhance their
understanding of the chapter content and its overall relationship to managing human
resources strategically. As standard, we would ask students to make a note of any
queries arising from their reading and to come to the teaching session prepared to
raise them. Sometimes this may be formalised by asking students to write down (as
questions) the three issues addressed by the chapter where they would like further
clarification and guidance.

the case questions.
Our outline answers to self check and reflect questions follow in the next
substantive section of this chapter guide. Pre-set questions that we have found
useful for structuring student reading, preparatory activities and classroom
discussion for the topic of evaluating strategic HRM include: 1. How would you
justify the need for evaluation of a new HR initiative to the head of Human
Resources? 2. Why do organisations fail to evaluate HR initiatives? 3. What are the
purposes of evaluation? 4. Outline the range of evaluation strategies that could be
chosen to evaluate an HR initiative?
In the classroom
the classroom. A starting point that we find useful is to surface and discuss the
issues arising from students’ preparatory reading. This avoids providing lecture
input that simply repeats what students have already grasped, reinforces the value
of reading as an essential prerequisite for class-based discussion and provides a
platform from which further class-based activities can be launched. However, when
adopting this approach, we find it useful, once student queries have been
exhausted, to provide a summary of key issues. Where preparing answers to self
check and reflect questions has been set as part of preparation for the taught
session, at least two alternatives present themselves. First, students can be asked
to contribute individual responses that are then subjected to plenary discussion.
This is our preferred approach because it makes students more accountable for their
personal learning and reserves any group work for case study analysis. Second,
students can be formed into groups to share their individual answers and draw
conclusions from their discussions. However, if preparing answers to self check and
reflect questions was not part of preparatory work but consideration of the
questions is to feature as part of the teaching session, we would favour the group
approach as a more stimulating approach. In all cases student responses can be
considered against our suggested answers, which themselves can be usefully
critiqued. Where case study work has featured as part of preparatory activities,
similar approaches to those suggested for self check and reflect questions can be
adopted. Our approach here would be to start with a more general exploration of the
integrative case at the end of Part One: ‘Strategic Human Resource Management at
Halcrow’ and use this to focus upon evaluation issues, in particular those
highlighted by Questions 6 and 7. However, in doing this it is important to
recognise the length of this case and ensure that students have read it prior to
the class.

Follow-up work
number of alternatives for follow-up work while at the same time leaving the
used as part of class activities, any prior preparation of answers to the self
check and reflect questions and/or the questions suggested for student preparation
and/or the integrative case ‘Strategic Human Resource Management at Halcrow’ will
serve as a useful reinforcement to chapter content. Our outline answers to the self
check and reflect questions follow in the next substantive section of this chapter
guide. Answers to the integrated Part One case study questions are included after
this chapter. There are also a number of follow-up study suggestions after the
chapter summary that can be undertaken by students either individually or in groups
and an extensive list of references provides many opportunities for directed
further reading.

4.1 Think about the last time you were asked to evaluate a course in which you were
participating. Possible course could be a module on your current programme or a
training course at your workplace. a. What aspects of the course were you asked to
comment about? b. How do you think your evaluation and that of your fellow students
was used subsequently? a. Inevitably your answer will depend upon the course that
you choose. However, it is likely that it will focus upon the operational aspects
of the course such as the quality of the teaching, the usefulness of
handouts/module guides, support facilities such as library and information
technology, the strengths of the course, the weaknesses of the course, the quality
of the teaching facilities and, for many one day courses, the quality of the lunch.
What is less likely to have been included is some form of evaluation of how much
you felt you had learnt or how you felt that the course would contribute to your
work life or you future career. b. Your knowledge of how the evaluations were used
subsequently is likely to be less certain, although it is probable that the data
were used to improve the course. What is likely to be less clear is whether the
wider impact of the learning was considered. 4.2 List the arguments you would use
to justify the need for an organisation to justify evaluating SHRM interventions.
There are a wide variety of arguments you could list here. Some of the most
frequently cited include: • • to help organisations respond to their external and
internal environments in a timely and positive manner by providing the information
to plan strategically; to provide a mechanism for capturing individual learning and
to enable experience to contribute to organisational learning;

• • • • •
to provide an opportunity for analysis and reflection before making adjustments to

HR interventions; to improve management decision making; to gain acceptance and
commitment to SHRM initiatives; to help create new insights and shared
understanding; to overcome what may be subjective evaluations by enabling
assumptions held to be tested and shared.
4.3 Before you read on based on your own experience make a list of reasons why you
might be reluctant to undertake an evaluation of an HR process. As you read this
section compare the reasons you have listed with those we identify. To what extent
are they the same or similar to those you have identified? The list of reasons that
you are likely to have compiled as your own reasons for being reluctant to
undertake an evaluation are: • difficulties of undertaking evaluation • • • • HR is
widely considered to be virtually unmeasurable, there is no consensus regarding
universally relevant HR indicators, organisations do not possess the necessary
skills to produce a competent or credible evaluation;
perceived lack of a need to evaluate • • • • people ‘know’ the results will be

positive, ‘gut’ feelings are often perceived to be sufficient, managers often
prefer to rely on their informal information channels, managers tend to focus on
implementation rather than evaluation;
difficulties associated with dealing with negative outcomes • • • previous

evaluations have been divisive and negative, a blame culture exists within the
organisation, a risk of being unpopular with peers.
4.4 Outline the relative advantages of action research and more typical approaches
to evaluation from the perspective of the HR manager sponsoring an evaluation. Your
answer to this question is unlikely to be in the same format as ours. For both
typical evaluation and action research, we would hope your answer makes reference
to the need to gather data in a rational and systematic manner to find out the
extent to which the HR intervention(s) has achieved its objectives. In addition we
would have expected you to include at least some of the following advantages for
typical evaluation and action research, although we recognise our list is not
exhaustive:

A typical evaluation may be advantageous to an HR manager sponsoring an evaluation

when: • • • an evaluation was not considered to be a necessary part of the SHRM
intervention; the HR manager is uncertain whether s/he will wish to act upon the
findings of the evaluation; the HR manager requires the evaluation to be undertaken
by people who are obviously separate from the organisation so that the findings are
more likely to be seen as objective rather than biased by the sponsor’s beliefs;
there is a desire to maintain close control of the evaluation process; there is a
desire to maintain close control of the findings and the extent to which these are
fed back to their employees.
• •
In contrast action research may be advantageous to an HR manager sponsoring an

evaluation when: • • • • • • the evaluation process is seen as an integral part of
facilitating strategic change with regard to HRM; there is a wish that employees
work alongside those undertaking the evaluation throughout the process; there is a
desire to engender employees’ ownership of the findings and any subsequent changes;
there is a desire to develop evaluation expertise within the organisation; the HR
manager intends that the knowledge gained from the evaluation is transferred to
other aspects of SHRM within the organisation; there is a desire to adopt a process
consultation approach.
4.5 Outline the advantages that are likely to accrue to an organisation using a
range of techniques, rather than just one, to obtain data to evaluate SHRM. One
technique on its own is unlikely to provide sufficient data to fully evaluate SHRM.
While secondary data can be used to benchmark the evaluation against an industry or
perhaps national context there is often still a need to collect a range of data. By
selecting appropriate techniques, the data collected can be matched to the
objectives of the evaluation more closely. Different techniques are better at
collecting different types of data. For example, to gather information from a large
number of people and answer ‘what’? questions questionnaires are an efficient
method. However, to explore the same situation in more depth and gather information
to answer ‘why’? or ‘how’? questions, techniques such as unstructured interviews
are likely to be more appropriate as the interviewee can talk freely about events.
Using different data sources also enables the finding to be triangulated. If all
the findings suggest the same outcome then you can be more certain that the data
have captured the reality of the situation rather than your findings being
spurious.

PART 1 CASE STUDY
Strategic human resource management at Halcrow Group Limited

Answers to Case study questions
1. Provide a brief overview of Halcrow Group’s strategy. Like many other former
civil engineering companies Halcrow has extended its range of disciplines to cover
architecture, project management, environmental science, transport planning and
other non-engineering but related skills. To reflect the future needs of the
business Halcrow’s operations were brought together in 2001 as four main business
groups: Consulting, Property, Transport and Water. The structure of the company was
seen as an important component in delivering the strategy. It changed to a matrix
structure. There are eight geographical regions meaning that appropriate employees
or teams may be brought together for specific projects throughout the world. Each
of the four business groups is led by a management team comprising five people
including a Group board director or managing director. Within each business group,
professional and technical (Professional and Technical staff are assigned to
technical skills groups, the leader of whom is responsible for their training and
career development. Employees are also assigned to an office in one of the regions.
These vary in size from less than 10 to more than 500 employees. The business
groups and regional offices are supported by Corporate Support Services, comprising
all the corporate and business support functions, including HR, and located
predominantly within the United Kingdom. In 2004, Halcrow launched their change
programme, ‘Act now’, which was designed to help the group ‘to continue to develop
in a dynamic and sustainable way’. The focus of ‘Act now’ was to align employees’
behaviours and approaches to Halcrow’s purpose, values, codes of behaviour and
business principles thereby improving individual, team and overall business
performance. 2. Outline the linkages between Halcrow Group’s strategy and its
strategic human resource management. The focus of the Halcrow change programme,
‘Act now’, was to align employees’ behaviours and approaches to Halcrow’s purpose,
values, codes of behaviour and business principles. The intention was that this
would improve individual, team and overall business performance. This change
programme is intended to be continuous rather than having a specific end date. It
emphasises the need for flexibility and the sharing of good practices and learning
throughout the group, the centrality of employees to achieving this and the need to
monitor and evaluate. The ‘Act now’ change programme is central to everything that
Halcrow plan to do in relation to the HRM strategy. The overriding concern is to
change the organisation’s culture. It is often said that the Group is full of
people who are professional engineers and who take pride in a job well done. In
essence, technical excellence has previously taken precedence over commercial
success. By the very nature of their training Halcrow people tend to be concerned
with ‘detail’ rather than seeing the bigger picture. This has served the group
well. But a recent client satisfaction survey commissioned by the group did not
show Halcrow in a uniformly glowing light. It reported that Halcrow emerged as
technically excellent and a ‘safe pair of hands’ but that clients were looking for
much more than technical competence and a track record. They

wanted business partners whose behaviours were aligned to their own needs. In
addition the group was also seen as rather ‘grey’. The challenge for Halcrow is to
retain the reputation for technical excellence and reliability while becoming
increasingly commercially aware, flexible and, above all, more responsive to
customer needs. It is a challenge, which the SHRM strategy, through the change
programme, is designed to meet. Overall, the key change issue that is driving SHRM
is the need for Halcrow to be more responsive in the light of a more competitive
industry. Therefore, the principal aim of the new HR initiatives is to generate
more competitive employee behaviours which, in turn, is envisaged will generate
better all round employee and business performance. 3. What obstacles do you think
that Halcrow management will face as it works to change the Group’s culture from
one dominated by technical excellence to one that also embraces commercial
awareness? Obstacles related to changing the culture highlighted in the case
include: • The knowledge and understanding (and qualifications) of the workforce
need to be developed to ensure that employees have the requisite commercial skills.
At present approximately 80% of Halcrow’s employees are classified by the group as
professional and technical (P and T) staff who have a minimum of an undergraduate
degree in engineering or a related subject and are also members of a relevant
professional institution. The focus of employees is on a job well done. As noted in
the case, the group is full of people who are professional engineers and who take
pride in a job well done. In essence, technical excellence takes precedence over
commercial success. Although Halcrow needs to retain its reputation for technical
excellence and reliability, the organisation’s employees must become increasingly
commercially aware about the group’s profit performance, flexible and, above all,
they need to be more responsive to customer needs in the light of a more
competitive industry. This is all occurring in an environment in which Halcrow’s
customers are taking technical excellence for granted when making decisions about
which consultancy group to employ. In view of Halcrow’s reputation for technical
excellence this is also an obstacle.
4. What measures might Halcrow take to increase its retention of young professional
graduates? Based on the available data, labour turnover amongst young professional
graduates is clearly perceived as a critical problem within Halcrow with the
potential to frustrate the achievement of its strategic business plans. The
sustainability of their commitment to continued dynamic growth and quest for
superior business performance as a route to competitive advantage are being
jeopardised by the high levels of labour turnover being experienced amongst
Halcrow’s cadre of graduate engineers and, more generally, across P and T staff.
This problem of labour turnover assumes greater significance within the prevailing
organisational context, characterised by: a shortage of high quality consultants
throughout the construction and engineering sectors; fierce competition for such
labour; progressive decline in the number of students studying relevant degree
courses; and increasing client expectations that projects require a stable staffing
base to support their delivery. Despite the frequent reference to the problem there
is little hard data available in the case on the extent of labour turnover or its
causes. Further, apart from benchmarking within their business sectors, there is no
evidence of any broader external comparisons that might shed more light on the
problem. Therefore, a useful starting point for increasing the retention of young
professional graduates is the use of thorough evaluation to address these gaps.
However, and in fairness, steps have already been taken in this direction. Employee
survey results have
highlighted feedback, recognition and employee involvement and engagement as being

particularly problematic areas requiring attention. There is also reference to
problems concerning the managerial environment, the leadership and management
skills base, organisational culture, the attractiveness of the financial sector as
an alternative career pathway, increasing concerns over staff development and the
lack of succession planning together with a clear acknowledgement within the
company that these issues require attention. The cursory analysis above at least
provides pointers towards future action that can be taken to improve the retention
rate of young professional graduates at Halcrow. However, this has to be set in the
context of an increasingly articulated specification of the HR base required by
Halcrow to achieve its organisational objectives. This embraces required values,
codes of behaviour and core competencies that underpin the HR strategy designed to
improve the organisation’s human capital base. A key consideration is how these HR
requirements are being translated into HR practice and the impact that they may
have on future retention. How, for example, is recruitment and selection being
conducted to maximise the probability of bringing appropriate staff into the
organisation and avoiding such HR requirements becoming mere platitudes, and to
what extent does successfully matching employer HR demands and the employee
attributes of recruits impact positively on their retention? Further exploration of
how recruitment and selection could contribute to improving the retention of young
professional graduates could be directly linked to Chapter 8. Apart from its role
in contributing to the acquisition and maintenance of required employee behaviours,
human resource development (HRD) represents another important potential area for
improving retention. A failure to undertake effective induction and to audit
training undertaken may in themselves exacerbate labour turnover and cause
employees to question the organisation’s commitment to their development and
succession planning. There is also, worryingly, a lack of detail with respect to
HRD particularly with respect to knowledge management and creating a learning
environment given the organisation’s emphasis on the need to develop an open
culture within which learning transfer is facilitated. Attention to those features
alone may help young professional graduates engage with and commit to the
organisation. In addition greater emphasis may need to be placed on a ‘grow your
own’ philosophy. From the case details it is not clear what proportion of young
professional graduates are recruited directly into the organisation and what
proportion are ‘grown’ through company training schemes. However, where labour
shortages persist it may well be in the organisation’s interest to recruit school
leavers into sponsored training programmes to meet their future professional and
technical requirements. This may even be done in conjunction with other companies
in the sector to increase the attractiveness of construction and engineering and to
secure an increase in the future supply of such staff. This would seem to be
particularly appropriate if directed at increasing the participation rate in the
sector of previously underrepresented groups such as females. Lastly, another
possibility emerges from the outputs of internal evaluation activities. Currently
senior managers are working with Kaisen Consulting Ltd to create processes through
which employees can become involved in developing actions to improve the managerial
environment, which if successful is likely in itself to have a positive impact on
retention. As part of this, why not actively involve the ‘at risk’ employee group –
young professional graduates – in evaluating the causes of labour turnover and
developing action plans to improve retention? This would be entirely consistent
with organisational aims to address issues around feedback, recognition, employee
involvement, career development and succession planning. Such an approach could
incorporate areas such as recruitment and selection and HRD but would almost
undoubtedly surface other areas for consideration and action planning. Picking up
on this last point, it is accepted that we have been highly selective in the areas
we have brought to bear on the problem of increasing retention of Halcrow’s young
professional graduates. It is recognised that the reader could range more widely
over the content of the book to focus on how such areas as structure, culture, HR
planning, performance management,

reward management and diversity management can all be brought into the equation for
developing measures for reducing turnover and increasing retention. 5. (a) What
hurdles do you think that Halcrow will have to overcome in its attempt to ensure
international employees adopt the Group’s codes of behaviour? (b) Now visit the
Halcrow Group website (http:/www.halcrow.com) and read Halcrow’s Statement of
Business Principles, paying particular attention to the Code of Business Practice.
Expand your answer in the light of what this tells you about the Group’s views
regarding business integrity, and what is expected of Halcrow staff. The case
reports that the fact that there has been no HR function in any of the offices
until recently suggests that HR has experienced a very low profile in Halcrow’s
international operations. In fact, the function in all but the most basic
administrative sense has been nonexistent. However, the HR director was keen for
this to change. A catalyst for this drive is the group’s recently published codes
of behaviour. These stress the need for honesty, transparency and integrity in all
Halcrow’s business operations. However, the lack of an international HR tradition
in Halcrow means that the HR director clearly has a large task on hand establishing
the relevance of the function and the mission that HR is attempting to deliver
through the change strategy. That is not to say that the employees will openly
doubt the relevance of the HR effort, but committing to it fully is a different
matter. Delivering a strategy through adjusted employee behaviours is a way of
thinking with which most will be totally unfamiliar. Of course, there are the
inevitable cultural and communication problems, which may attempt to change
employee behaviours. Look again at the list of employee behaviours that Halcrow are
trying to encourage throughout the group: • • • • • • • • Treat everyone with
respect, trust and dignity; Help each other – share experiences and lessons
learned; Be polite; Never undermine anyone directly or indirectly; Work together to
resolve disagreements; Be professional and ethical at all times; Listen to others’
points of view; Be honest and open.
The wording of the list presents immediate potential misunderstandings. Does the
concept of ethics have the same meaning in all cultures, is the notion of
professionalism and what it means accepted consistently internationally. The
Halcrow website
(http://www.halcrow.com/html/documents/pdf/corporate_info/bus_princ.pdf) contains a
very clear account of business principles with helpful statements of what is
required from the staff and what the staff may expect from the company. 6. To what
extent does the data collected by the employee survey allow the HR director to
evaluate the extent to which HR initiatives are supporting the Group’s strategic
direction?

The core content of the questionnaire has remained substantially the same since
2000 enabling benchmark comparisons over time. The 30 questions are used to
ascertain employees’ views on 10 key areas that relate clearly to the group’s
strategic direction. These include clarity about their job, client focus, their
competence, resources to do their job, empowerment, involvement, cooperation from
others, feedback to them and recognition. Additional supplementary questions are
also included, for example on employee commitment, to allow specific issues to be
evaluated. By including location information, such as regional office, business
group and skill group, comparisons can be made between different parts of the group
highlighting areas that are performing both above and below the Group average. High
response rates for the survey (over 67% of employees worldwide returning their
questionnaire in 2002 and 72% in 2004) mean that the data collected are more likely
to be representative of the Group. 7. (a) How does Halcrow currently make use of
primary and secondary data to evaluate the extent to which initiatives to engage
employees within the Group are working? Through the 2000 employee survey (primary
data), Halcrow was able to identify those areas of strategic HRM highlighted by
employees as being most in need of attention. These were: feedback, recognition and
involvement of employees. Benchmarking the surveys in 2002 and 2004 against the
2000 employee survey, has allowed Halcrow to establish the extent to which these
issues are being addressed through HR initiatives. Results from the surveys suggest
that there have been improvements in all three areas. However, data from the survey
(and other sources) suggest that there is still more to be done to improve these
and other aspects of HRM such as employee engagement. Data from Halcrow’s employee
survey has been used to calculate an HR Enablement Index for the group. This is an
average score of responses to all the questions in each of the ten key areas and
provides an overall indication of the extent to which employees are engaged with
their work within the Group. Average scores for each of the 10 key areas are then
be used to highlight those aspects where satisfaction is relatively low and where
action may need to be taken. Comparison of the 2004 HR Enablement Index score with
that for 2002 revealed that there had been no significant change in employees’
engagement. Secondary data on retention rates for the same period revealed that
this was within a context of declining labour turnover. This led the HR Director to
ask why engagement had only remained constant in a labour market characterised by a
shortage of suitably qualified people. The answer to this question is currently
being sought from a range of primary and data including employee exit interviews,
staff workshops around the world to discuss issues associated with employee
engagement and further analysis of the employee survey data. (b) What other
measures do you think they might adopt? There are a whole host of other measures
that might be adopted to evaluate the extent to which initiatives to engage
employees within the group are working. These will relate to data already held by
the organisation in HR records such as the technical versus organisational focus of
training and development courses attended (secondary data) as well as collecting
additional data. For example, subject to agreement and issues of confidentiality,
annual reviews between line managers and employees might be developed to explore
and feedback issues related to organisational engagement. In addition Halcrow
appears only to have considered employee engagement from the perspective of the
employees. Given their need to develop commercial awareness it is important that
they also seek to understand their customers’ views regarding this. This might be
done with focus groups with customers or a series of in-depth interviews.

CHAPTER 5
The role of organisational stucture in SHRM: the basis for effectiveness?

Learning outcomes
By the end of this chapter you should be able to: • • • • define the term
organisational structure and evaluate its links to strategy; describe and analyse
conceptual approaches to the design of organisational structures and discuss their
strategic implications; identify principal forms of organisational structure and
explore their main effects on those who work within them at both a theoretical and
practical level; analyse the relationship between organisational structure and
SHRM.
Summary
• • • Strategic linkages exist between corporate strategy, organisational structure
and human resource strategies, demonstrating the strategic nature of structure.
Dimensions of organisational structure have been identified that can be used to
analyse the nature and evaluate the effectiveness of an organisation’s structure.
These dimensions indicate the complex range of variables to be understood by
managers in deciding how they should structure an organisation’s activities to meet
its strategic objectives. They also indicate that the design of organisation’s
structure involves managerial or strategic choice. Three perspectives were
considered that offer explanations about the relationship between the design of
organisational structure and strategic effectiveness. These relate to the classical
universal, contingency and consistency approaches to the design of organisational
structure. A fourth perspective relates to the role of organisational politics and
the exercise of power that has already been considered and discussed in depth in
Chapter 1. Principal forms of organisational structure were reviewed and their
effects on those who work within them analysed and evaluated. These forms include:
simple; functional; divisionalised; matrix; project-based; network, cellular and
virtual structures. Theoretical linkages between these organisational forms and
contingency variables have been recognised. The development of these forms
indicates some degree of movement from centralised and bureaucratic structures to
decentralised and more fluid ones.

Organisations need to promote human resource strategies that are congruent with the
nature of the organisational structure that they chose (or recognise the impact of
their structure on their espoused human resource policies and the practice and
outcomes of the human resource strategies that they promote). Choice of
organisational structure has been recognised as leading to a problematic
relationship between the respective desires for managerial control, organisational
efficiency and responsiveness to external conditions and intended markets. Attempts
to maximise centralised managerial control in situations requiring greater
organisational responsiveness are likely to affect the pursuit of effectiveness and
working relationships adversely. Decentralised forms of organisational structure
may adversely affect the scope for and nature of organisation-wide human resource
strategies. In practice, this is likely to be a function of both the nature of the
structural form that is chosen and the strategy of the organisation.

Comment
In general strategy terms one of the most important resources an organisation has
is its employees. Within the context of strategic human resource management (SHRM)
models and theories a central theme emerging is that people are the organisation’s
most important ‘asset’, so how they are organised is crucial to the effectiveness
of a strategic approach to the management of human resources (HR). Traditional
views about controlling the organisation through structure can be traced back to
the early twentieth-century management scientists such as F.W. Taylor and Elton
Mayo. These approaches can be directly linked to a view of strategy making that is
essentially top-down. Strategy is developed at the top of the organisation and the
rest of the organisation including the HR function is utilised as a supporting
mechanism in the implementation of the strategy. In this approach to strategic
management the organisational structure becomes a method for achieving top-down
control. Such principles of control are as bureaucratic or mechanistic. This
chapter considers organisational structure in the context of SHRM. The fact that
there is a need to regulate the implementation of an HR strategy is accepted but
this needs to take of a wide variety of influences into account. For example, the
types and range of issue and problems the organisation faces in developing and
implementing a strategic approach to the management of its HR. Key issues to
consider include: • • The operating environment of the organisation, it may operate
in a highly complex or changing environment or in a relatively stable one. How
diverse is the organisation, for example the needs of a multi-national company with
a wide range of products and services and globally dispersed customer base will be
dramatically different from those of a small local firm. How accountable are the
senior executives of the organisation to external influences, for example is the
organisation a public body, perhaps reporting to a government minister or is it a
publicly quoted company reporting to a board of directors and a variety of internal
shareholders or is the business privately owned by a family or group of partners
who may be owner managers and have complete control over the current and future
direction of the business?

Student preparation
understanding of the chapter content and its overall relationship to managing HR
strategically. As standard, we would ask students to make a note of any queries
arising from their reading and to come to the teaching session prepared to raise
them. Sometimes this may be formalised by asking students to write down (as
clarification and guidance. Students may also be asked to do one or more of the
following: • • • address pre-set questions and write up their answers briefly in
note format; complete the self-check and reflect questions and come to the session
prepared to share and discuss their responses; and familiarise themselves with the
chapter case study (or an alternative case supplied in advance) and come to the
session prepared to tackle the case questions.
Our outline answers to both self-check and reflect questions and case study
questions follow in the next two substantive sections of this chapter guide. Pre-
set questions that we have found useful for structuring student reading,
preparatory activities and classroom discussion for the topic of the role of
organisational structure in HRM include: 1. How would you define organisational
structures and set it into the SHRM context? 2. What are the principal strategic
relationships between organisational structures and corporate strategy and how
could they be evidenced in practice? 3. How would you argue the case for and
against the formal adoption of structures by organisations?
In the classroom
exhausted, to provide a snappy summary of key issues. Where preparing answers to
self-check and reflect questions has been set as part of preparation for the
answers and draw conclusions from their discussions. However, preparing answers to
self-check and reflect questions was not part of preparatory work but consideration
of the questions is to feature as part of the teaching session, we would favour the
group approach as a more stimulating approach. In all cases student responses can
be considered against our suggested answers, which themselves can be usefully
critiqued.
Follow-up work
The pedagogic features adopted throughout this book are intended to offer a number
of alternatives for follow-up work while at the same time leaving the lecturer free
to add or substitute their own ideas. If they have not already been used as part of
class activities, any prior preparation of answers to the self- check and reflect
questions and/or the questions suggested for student preparation and/or the chapter
case ‘Daimler–Chrysler AG’ will serve as a useful reinforcement to chapter content.
questions follow in the next two substantive sections of this chapter guide. There
are also a number of follow-up study suggestions after the chapter summary that can
be undertaken by students either individually or in groups and an extensive list of
references provides many opportunities for directed further reading.

5.1 Drawing on the dimensions of organisational structure outlined above, use the
list of potential organisational consequences from structural deficiencies to
evaluate the structure of an organisation known to you. This question is designed
to allow you to relate theory to your own experiences so your response will be
individually related to your own reflections. However, hopefully you will have been
able to use the dimensions of structure outlined in Concepts Box 5.1 and in the
discussion that follows this and to relate these to the consequences of structural
deficiencies reported in Concepts Box 5.2. For example, too high a level of
standardisation or centralisation may in your evaluation be associated with some of
the adverse consequences reported in Concepts Box 5.2. Conversely, your evaluation
may judge that the structure within which you work is not affected by such adverse
consequences because of the appropriate ways in which these structural dimensions
are applied in this organisational context. 5.2 What other criticisms do you think
may be made against the classical universal approach to the design of
organisational structure? The classical universal approach is strongly associated
with a philosophy of managerialism. Universal principles are advanced in the name
of organisational responsiveness and efficiency. However, while they may be seen as
furthering short-term managerial interests they neither consider the consequences
of those affected, nor, the longer-term implications of some of the practices that
may flow from these universal principals. The available literature related to the
use of forms of flexibility, leanness and downsizing would support this view about
an absence of thinking about these people-centred and longer-term business
consequences. While some of the practices associated with this approach may be seen
as encouraging employee involvement, this is based on unitarist principles and does
not consider more conflictual frames of reference. 5.3 How would you summarise the
key differences between the classical universal, contingency and consistency
approaches to the design of organisation structure?

The classical universal approach is associated with the identification of so-called

best practice principles that may be used in a variety of organisational settings.
It is therefore associated with the notion of 'one best way'. The contingency
approach requires a more situational analysis and believes that effective
organisations will result from a structural design that takes account of the
demands created by the environment and the characteristics of the organisation. The
consistency approach allows for structural variation based on a broader range of
aspects. It highlights the need to analyse the internal fit between the various
elements of an organisation's structure to produce a higher level of effectiveness
and performance. 5.4 Using the ideas discussed above, how would you summarise
‘organisational fluidity’? ‘Fluidity’ is used, following Clegg and Hardy (1996), as
the opposite to, or movement away from, bureaucracy. Bureaucracy is associated with
systems of rules and rule-following, division of labour, hierarchy, authority and
centralisation. ‘Fluidity’ by contrast is associated with decentralisation,
collaboration, the need for participative and entrepreneurial behaviours,
alternatives to hierarchy and structures that facilitate these. The later forms
described in the section entitled ‘Principal forms of organisational structure and
their effects on those who work within them’ progressively describe attempts to
construct structures that are intended to produce these outcomes. Of course, the
actual incidence of organisations using more radical types of structure is still
very much in the minority. 5.5 The discussion in this section has considered the
impact of decentralised organisational structures on the development of human
resource strategies. How do you think a more centralised and bureaucratic form of
organisational structure will affect the development of human resource strategies?
Large organisations based on these principles were associated traditionally with
the existence of an internal labour market. For certain groups of employees, this
offered a pathway for progression linked to the provision of training and
development, incrementally progressive rewards and security of employment. These
characteristics are associated with a psychological contract that exchanges
security and gradual progression in the organisation for loyalty and commitment.
The bureaucratic approach also points to the creation of centralised rules that are
likely to include those related to HR. Organisations based on centralised and
bureaucratic principles are therefore likely to develop corporate HR strategies
that are applied across the organisation. However, the effects of such corporate HR
strategies may be questioned in practice. Those outside particular groups may be
excluded from the intentions of these HR strategies, especially in the context of
recent developments to differentiate more strongly between core and peripheral
groups of workers. Secondly, a centralised and bureaucratic organisational
structure is likely to have an adverse impact on the intended outcomes of certain
HR strategies in an organisation. Concepts Box 5.2 and related discussion are
examples of this type of effect. The impact of structures based around centralised
controls and bureaucratic procedures may thus act to impair HR strategies aimed at
promoting or improving employees' performance, involvement and commitment. This is
likely to indicate a failure by those responsible to appreciate the lack of
congruence between the impact of this type of structure and the aims of such HR
strategies, if this is indeed their real aim.

Answers for the Daimler–Chrysler (DC) case study have been presented in the form of
a PowerPoint presentation that can be used to respond to class discussion and
analysis of the case study.

As the HR-Director of DC (Stuttgart, Germany) you are required to develop a

‘suitable HR strategy' and to propose solutions to the problems raised by the
actual situation of DC and the intentions of the CEO described above.
State your understanding of the situation at DC and determine the needs of DC

(problems within DC and reasons for the new organisational structure); also
describe some strategic elements of the organisational structure.
Question 1 New HR Strategy Downsizing and “Decruitment” Options

• • • • • • • • sharing Firing and/or layoffs Voluntary Severance Incentive Program
Recruitment stop Transfers Reduced workweeks Early Retirements Job Regular Unpaid
Sabbatical
Common Mistakes in Restructuring & Creating New HR Strategies

• Not involving management and employees • Avoiding employee input when times get
tough • Faulty belief that downsizing employees will boost financial performance •
Breaking the psychological contract that reflects the common interests of employers
and employees • Failure to treat employees fairly and with dignity

Organizational Structures to Support HR Strategies in the 21st century

Cultural Change Complexity Knowledge Transportation tech Communication tech
Technology Diversity Flexibility Flatter Smaller Quicker networked Pace of
Innovation Demographic Change
Globalization
Hyper Competition
Whereas German companies like Deutsche Bank AG, Lufthansa AG or Allianz AG are seen
by specialists and scholars as ‘truly’ global companies with excellent strategic
HRM policies Daimlers Chrysler lacks such a reputation. There were incredible
problems integrating Chrysler in the DC group. It took years to fix many post-
merger problems. There are many other examples of a poor international HR policy of
DC. This may also be a reflection of a generally rather poor (strategic) HR
management of DC’s head office.
You are therefore also asked you to answer the following questions: • • In light of
the intentions in the announcement of DC (text above), which HR areas or HR
challenges are concerned? Please name some of these challenges. Then establish a
plan of action by formulating and justifying possible solutions to the challenges
you have identified.

Question 2 Improving organizational effectiveness at DC: Key HR Challenges

• Centralization of strategic functions • Concentration of operational functions
which are demanded by different companies of DC-Group (realization of synergies) •
Decentralization of all other operational functions which are specific for each
business units • Tendency toward a “matrix structure” • Flatter organizations:
Quicker communication, empowerment, cost savings fewer layers of management •
Creating a more “horizontal” company ( defining the firm’s core processes) • More
networking in a matrix • Reassigning support staff from headquarters to divisional
offices and workplaces • Empowerment of employees
Improving organisational effectiveness at DC: Key HR Challenges
Fundamental Challenge Organizational Designs (1)

Functional Organization
CEO
Product Organization
CEO
VP Production Product ion Man.Prod. A Production Man. Prod. B
VP Marketing ProductManager A ProductManager B
VP HRM
VP Product A Production Man. Prod. A Product Manager A HRM Man. Product A
VP Product B Production Man. Prod. B Product Manager B HRM Man. Product B

Fundamental Challenge Organizational Designs (2)

CEO
Matrix Organization
Functional Managers
Production
Marketing
HRM
Manager Product A
Manager Product B
What type of organisational structure should be created and implemented to support

the new HR strategy?
Question 3 Possible (Matrix-) Structure of DC

Group HO Board Mercedes Board Chrysler Board
Finances
Fin. Mercedes
Fin. Chrysler
Human Resources
Human Resources Mercedes IT and Organisation Mercedes
IT and Organisation
R&D
R&D Mercedes Production

What are possible advantages (and disadvantages) of creating a new organisational

structure?
Question 4 Global Product Division

Advantages of new structure • Clear responsibility for a Product or a Division •
Control within Division product-based structure • Decision making within Products
Areas • Responsibility for Strategy and Top Management (for all Divisions) •
Additionally responsible for Strategy (Group and all Top-Strategies of Divisions)
Headoffice
Strategy Strategy Product ProductA A Europe Europe CEO CEO Mercedes Mercedes Car
CarGroup Group Product ProductB B Americas Americas Top Top Management Management
Product ProductC C Asia Asia
Human Human Resources Resources
Marketing Marketing
How to provide a DC-culture of empowerment, involvement, participation and

innovation?
Explain business plans and strategy Explain the necessary change of employees’ role
and responsibilities. Organizational development Effective organisation (Business
Success, improved productivity and quality..) Stimulating and Nurturing Innovation
and an innovative culture Employee (Enabling, motivation, training, confidence..)
Involve Unions as partners A “new” leadership style with Mercedes

In developing and implementing the new structures, the company will have to recruit
new international managers. How could the company really select and develop a group
of experienced international managers? What instruments would you use?
Question 5 Recruiting New International Managers Managing the Change Process

• Establish a sense of urgency • Mobilize commitment to change through
communication and involvement • Access to information on business plans and
operational performance. • Create a guiding coalition; involve unions and workers
representatives as partners at every stage • Develop a shared vision and
communicate the vision • Enable employees to make the change (team structure and
development, training, and information flow) • Show short-term wins; give
incentives • anchor the new ways of doing things in the company’s culture; •
Monitor progress and adjust the vision as required
DC’s SHRM Approach in a truly global Company

1. Develop and manage Common international Culture vs. national or corporate
Culture 2. International Recruitment, Staffing, Assignment and Performance
Management 3. Train Employees and Managers, build up international “people pool”
without regard to nationality 4. IHRM is “state of the art” (instruments,
processes, systems; e.g. admin services, cross-cultural training, compensation,
competency management) 5. International Communication and network (projects, cross-
cultural teams, conferences, matrix) 6. Manage cultural diversity and draw benefits
out of it

CHAPTER 6
Relationships between culture and strategic human resource management: do values

have consequences?
Learning outcomes
By the end of this chapter you should be able to: • • • • • explain the meanings of
national and organisational cultures and the debates relating to their existence;
discuss the importance of organisational and national cultures in managing SHRM
interventions; explore the three main perspectives through which culture has been
explored within organisations: integration, differentiation and fragmentation;
assess the complexity of issues associated with aligning culture to an
organisation’s strategic direction; analyse the linkages between organisational and
other cultural spheres and SHRM interventions.
Summary
• An understanding of culture and the interactions between different spheres of
culture such as national and organisational, can assist in the selection and
application of effective HRM interventions and the hierarchies in which they are
placed. At the same time, SHRM interventions can influence the culture within an
organisation. Culture consists of shared attitudes, beliefs, values and behaviours
that belong to and have been learned by a group and, because they are considered to
be valid, have been internalised and are taken for granted. These are taught to new
members of the group as the correct way to perceive, think and feel. Culture is one
of a range of factors that can influence an organisation's competitiveness. There
is long-standing debate as to whether the impact of national cultural differences
is declining or increasing. This is known as the convergence/ divergence debate.
Researchers have developed dimensions upon which national cultures can be placed.
These emphasise the importance of power and the way it is exercised, alongside
other factors, such
• • •

as tolerance of uncertainty, orientation to time, the relative focus on individuals

and the way in which conflicts are resolved. • Nations’ scores against dimensions
of national cultures can be thought of as stereotypes representing the mean around
which scores for individual members of that country are dispersed. There is likely
to be less variation within countries than between countries. Within organisations
culture is most visible in practices or artefacts and, to a lesser extent, espoused
values. SHRM interventions are largely concerned with structural means of
influencing and supporting these visible manifestations. To re-align an
organisation’s culture, the basic underlying assumptions upon which these practices
or artefacts are based need to be changed. As these are deeply and strongly held
within each employee’s subconscious they are difficult to change, especially over
the short term. Re-aligning an organisation’s culture is a complex process
utilising a range of strategies. These are often divided into top-down
(programmatic) and bottom-up (critical path) approaches.

Comment
Most students will come to this topic having already experienced it in other
modules. This presents advantages and disadvantages. One advantage is that students
are likely to be familiar with both Handy’s four fold typology of organisational
cultures and may well have also be aware of Hofstede’s dimensions of national
cultures. However, this may well be offset by their limited understanding and
acceptance of either typology uncritically. We have also found that most students
are also familiar with Johnson and Scholes’ cultural web, often from business
strategy modules. Within this chapter, we adopt a structure of general to specific.
Consequently, we start by considering different meanings of culture and exploring
different typologies of national cultures. Building upon this we then examine
frameworks for understanding organisational cultures and typologies of
organisational. Not surprisingly we consider the implications of different cultures
for different SHRM interventions. In our consideration we adopt the standpoint that
an organisation’s culture is an objective entity, and in particular that it is
‘something an organisation has’ (Legge, 1994: 405). This implies that an
organisation’s culture, as well as impacting upon human resource (HR) policies and
practices, is something that can, at least theoretically, be manipulated and
managed to achieve alignment with an organisation’s strategic direction. To this
end we offer an analysis of a variety of ways in which this might be achieved and
the contribution SHRM might make. Within this analysis we feel it is worth
emphasising, especially to students with limited workplace experience that, while a
large number of views and prescriptions for realigning or changing an
organisation’s culture abound, in reality the process is long term and complex
needing careful study prior to attempting any strategy of change. A particular
difficulty facing the teaching of culture in relation to SHRM is therefore, the
fact that typologies are inevitably generalisations of the national and workplace
reality. For this reason, we try to make the links between theory and practice in
the self-check and reflect

questions and the boxed examples. These allow the students to explore how the
material they are studying applies to the world of work.
Student preparation
following: • • • address pre-set questions and write their answers briefly in note
format; complete the self-check and reflect questions and come to the session
preparatory activities and classroom discussion for the topic of culture and SHRM
include: 1. Based upon your reading do you consider culture is something an
organisation is or one of a series of organisational attributes? 2. What are the
main similarities and differences between different typologies of national
cultures? 3. Why do you think it is often stated that it is difficult to change an
organisation’s culture? 4. Is it better to adopt a top-down or a bottom-up approach
to organisational change?
In the classroom
exhausted, to provide a brief summary of key issues.

Where preparing answers to self-check and reflect questions has been set as part of
preparation for the teaching session, at least two alternatives present themselves.
First, students can be asked to contribute individual responses that are then
subjected to plenary discussion. This is our preferred approach because it makes
students more accountable for their personal learning and reserves any group work
for case study analysis. Second, students can be formed into groups to share their
individual answers and draw conclusions from their discussions. However, preparing
answers to self-check and reflect questions was not part of preparatory work but
consideration of the questions is to feature as part of the teaching session, we
can be usefully critiqued. Where case study work has featured as part of
preparatory activities, similar approaches to those suggested for self-check and
reflect questions can be adopted. If coming to the case afresh, there is unlikely
to be time for groups to consider all four questions. Here we would suggest that
groups major on one of the case questions only moving on to others if they have
time. Our answers to the three questions arguably present a degree of
comprehensiveness and detail unlikely to be echoed within the parameters of a
standard teaching session. However, they can be introduced into discussion of the
case study and their validity critiqued. In addition, there is scope for further
detailed development of our answers and examples are provided as to how this might
be put into operation.
Follow-up work
class activities, any prior preparation answers to the self-check and reflect
case ‘Corporate culture and group values at DICOM Group plc’ will serve as a useful
reinforcement to chapter content. Our outline answers to both self-check and
reflect questions and case study questions follow in the next two substantive
sections of this chapter guide. There are also a number of follow-up study
suggestions after the chapter summary that can be undertaken by students either
individually or in groups and an extensive list of references provides many
opportunities for directed further reading. A further task for part-time students
could involve them exploring their own organisation’s culture with a view to
analysing the extent to which the symbols/artefacts, espoused values and basic
underlying assumptions mutually reinforce each other.


6.1 Produce a table summarising the arguments for convergence and for divergence of
national cultures using the following structure: Arguments for convergence • • • •
advances in telecommunications mean the world is becoming smaller people are
increasingly buying global brands there is a rapid increase in the use of
technology growing numbers of multinational firms will result in structures,
strategies and practices becoming more similar between countries multinational
organisations have no national allegiances, only an international common purpose
many managers are trained in western business schools which tend to underpinned by
similar ideologies Arguments for divergence • • • • • language differences
encourage divergence different religious beliefs mean things are done differently
political systems and laws differ between countries countries differ in their level
of economic development within countries workforces are increasingly culturally
diverse
6.2 Examine Tables 6.1 and 6.2 and select two countries with contrasting profiles.
Use Hofstede’s dimensions to suggest how SHRM interventions to motivate and
appraise employees might differ between these countries. Now repeat this process
using Trompenaars and Hampden-Turner’s dimensions. To what extent do your
suggestions differ? Inevitably your precise answer will depend upon the two
contrasting countries you have chosen. In our answer we have chosen the United
Kingdom and Japan. As you will see, although the dimensions differ, the suggestions
based upon these dimensions are similar. Hofstede: The United Kingdom scores lower
on the power distance dimension than Japan. According to Hofstede, this suggests
that UK employees will be less likely than Japanese employees to accept uneven
distributions of power within the workplace and will expect more consultative
decision-making. UK employees will also be less likely to be happy with large pay
and reward differentials than Japanese employees. Hofstede’s research suggests that
UK employees are likely to be more individualistic than Japanese employees. This
suggests that the UK employees are more likely to prefer bonuses such as individual
performance related pay while those in Japan may prefer team-based performance
related pay or company wide bonuses. Both UK and Japanese employees are likely to
place emphasis on performance at work, both having scored towards the masculine on
Hofstede’s masculinity/femininity dimension. This means there are less likely to be
differences in their views in this area. However, Hofstede’s work highlights that
UK and Japanese employees differ markedly on uncertainty avoidance. UK employees
are likely to have a lower level of uncertainty avoidance,
implying that they are less likely to be motivated by long-term job security. This
means that the reward package developed is likely to differ from that, which would
be developed for Japanese employees. Finally, Hofstede’s work highlights that
Japanese employees are likely to have a longer-term view than their UK employees.
This may be reflected in the focus on longer-term targets rather than quick results
more normally expected in UK organisations. Trompenaars and Hampden-Turner
According to Trompenaars and Hampden-Turner, UK employees are likely to be more
universalist than those in Japan. This suggests that schemes to motivate UK
employees are more likely to need to be clearly delineated with well defined
criteria than those in Japanese organisations. Differences in attitudes to time
also support this suggestion, UK employees being more likely to consider motivation
as a linear sequence where specific performances result in specific rewards. As
discussed in this chapter, Trompenaars and Hampden-Turner’s individualism versus
communitarianism dimension is almost identical to Hofstede’s
individualist/collectivist dimension. Not surprisingly therefore it would seem
likely that UK employees are more likely to prefer bonuses such as individual
performance related pay while those in Japan may prefer team-based performance
related pay or company wide bonuses. The specific versus diffuse and the attitudes
to the environment dimensions also support this assertion. The former suggests that
Japanese employees are more likely to consider issues such as performance
holistically, emphasising the interdependency of their own performance with that of
others. The latter suggests that, in contrast to UK employees, Japanese employees
are more likely to consider the wider external context within which their
performance has occurred. Relative scores on the neutral versus emotional dimension
suggest that communicating personal feelings when motivating employees is more
likely to be acceptable in the United Kingdom than in Japan. Trompenaars’ and
Hampden-Turner’s dimension achievement versus ascription suggest that UK employees
are more likely to expect rewards such as promotion for their own achievements. In
contrast, Japanese employees focus’ on ascription suggests that seniority and
promotion linked to age or time served in the organisation are more likely to be
acceptable. 6.3 Why do you think it is difficult for managers to describe their
organisation’s culture in detail? Although outward manifestations of culture are
easy to discern (relatively visible), deeper underlying meanings upon which these
are based are more difficult to decipher. In particular, the underlying values upon
which an organisation’s culture are based are held deep within individual
employees’ subconscious. Consequently, although they are articulated in
individuals’ practices and, perhaps, the organisation’s espoused values, they occur
almost automatically and are taken for granted. This means they are likely to be
thought about only rarely. 6.4 Visit HP’s corporate website at http://www.hp.com.
Use the menus to go to the pages headed ‘Company information: About us – History
and Facts’. What clues do these give you about the culture of HP? Which culture do
you consider was dominant in the merger between HP and Compaq? As you browse
through these pages you will find lots of clues to HP’s corporate culture. Some of
those that are readily apparent are the stories relating to the founding and early
years of HP.

Others relate to the management style adopted and the SHR interventions made by the
company. They include: • The story that when Bill Hewlett and Dave Packard founded
HP in 1939, they built the company's first product, an electronic instrument used
to test sound equipment, in a Palo Alto garage. The HP management style of
management by walking about was created by the founders and emphasises personal
involvement, good listening skills and the recognition that everyone in an
organisation wants to do a good job. The use of an open door policy to create an
atmosphere of trust and mutual understanding. This policy encourages employees to
discuss problems with a manager without reprisals or adverse consequences. The
provision of medical insurance for employees, using first names to address them,
and the holding regular parties to show that the company cares for its employees.
The use of reward schemes to reflect the company’s belief that all employees should
share directly in the company’s success. The use of charitable giving and other
activities to show the company’s belief that it has a responsibility to be a good
corporate citizen. The design and location of buildings reflect the company
philosophy that people require attractive and pleasant surroundings to attain
maximum job satisfaction and to perform to the best of their abilities. The
institution of flexible working hours, or flex-time. The purpose, as explained by
Bill Hewlett was ‘to allow employees to gain for family leisure, conduct personal
business, avoid traffic jams or to satisfy other individual needs’.’
• • • •
Although the website talks about the historical development of Compaq – the company
with whom HP merged in 2002, there is relatively less information provided than for
HP’s development as outlined above. This combined with the company retaining the HP
name may be taken to suggest that the HP culture was dominant in the merger (see
also Practice Box 6.6). 6.5 How might an organisation use SHRM interventions to
support a culture re-alignment process? SHR interventions are likely to be used to
support and facilitate cultural re-alignment rather than initiate it. It is
important that such interventions are aligned to the desired culture, and therefore
the overall strategy of the organisation, and that they project values appropriate
to both the strategy and the culture. Symbols of cultural re-alignment such as the
management structure, office space and car parking allocations can be used to
reinforce the new culture. Training interventions can also be used to help educate
employees about the reasons for the re-alignment and the new desired behaviours. HR
systems can be designed and implemented to support the desired culture. For
example, performance measurement and reward schemes can be used to monitor and
reinforce desirable behaviours in employees such as openness, learning and risk
taking. Similarly recruitment, retention and redundancy can be used to help ensure
that employees’ skills and preferred approaches to working match an organisation’s
requirements.

Whether top-down or bottom-up strategies are adopted, it is important that the HR

interventions used provide consistent clues to the desired culture. 6.6 Why might
organisations choose a top-down approach to cultural re-alignment? Top-down
approaches may be appropriate in particular circumstances or at particular times
during a culture change process. Re-examining Table 6.4 highlights those of Bate’s
(1995) design parameters of culture re-alignment for which a top-down approach is
more effective. In particular, the table emphasises the ability of top-down
approaches to communicate simple messages quickly. Thus, where expressiveness is
essential to culture re-alignment or to a particular stage of the culture re-
alignment process then a top-down approach may be most appropriate. This is
especially where all that is required are changes at the practice/artefact level or
rapid change is required. Top-down approaches may also be effective where it is
essential that the new culture’s message is spread throughout all levels of an
organisation such as the merger between HP and Compaq. The ability of the message
to penetrate in such cases depends on the communication process being highly
structured. However, it must be remembered that in the short-term, such an approach
is likely to generate some resistance to the new culture’s values and basic
underlying assumptions. In contrast, bottom-up approaches are more likely to
generate a shared understanding and ownership of the new culture, although
initially only amongst a sub group of employees rather than the whole organisation.

1. Drawing on the information given in this case, construct a cultural web for
DICOM group. Inevitably the visual cultural webs that are constructed by the
students will differ. However, each sphere is likely to contain at least some of
the following elements drawn from the case: Routine: this is the way that different
members of the organisation link behave towards each other and link together or
‘the way we do things around here’. Johnson and Scholes (1993:60) continue that at
their best such routines ‘lubricate’ the workings of the organisation. DICOM is
promoted to its staff as the ‘DICOM Family’. The unofficial (although heavily
endorsed by senior management) aim is ‘To make money and have fun doing it’.
Consequently, management and staff operate together with the minimum of supervision
necessary and allow staff great freedoms to do their jobs in their own way, albeit
within the confines of company procedures and policies (paradoxical as it might
sound). As senior management would put it, ‘We like to steer with very long reins’.
Rituals: these are performances that re-enforce the routines above, such as
training programmes, assessment and promotions. Training is a very important part
of DICOM’s culture. All levels of staff are encouraged to take advantage of both
in-company and external training programmes. If there is a business advantage in
the training, then DICOM will finance it and allow the individual the time to
complete it. At present within the UK office, staff are attending courses as
divers, as CIPD diploma, Open University CMS and a number of technical staff are
undergoing Microsoft Certification training. DICOM have recently introduced a new
initiative, ‘The DICOM Academy’. As part of the programme all DICOM management (and
those identified as management for the future) are being offered a series of one-
week courses at various venues around the world, taught by Harvard Business School
professors alongside DICOM board members. These have included Leadership and
Marketing.

Performance appraisal is carried out annually, with three monthly reviews in some
areas. The onus is very much on the staff to review their own performance. They
fill in their own appraisal schedule with their line manager, and are asked things
such as, ‘How do you rate your punctuality on a scale of one to ten’? If the member
of staff has very different ideas of the rating to his/her manager, then a
discussion is held and a compromise reached. Wherever possible, staff are given as
much responsibility as they can handle as quickly as possible in both their own
development and their working lives. Wherever possible, internal staff are promoted
into managerial positions as they arise. Where this is not possible, they are
involved in the writing of the job specification and the recruitment process,
including the interview and selection process. Stories: these are told by members
of the organisation to each other, outsiders, new recruits and mavericks. Their aim
is to create awareness of organisational history, personalities and important
events. Stories form a very important part of the way DICOM portrays itself. They
are used to illustrate the company's values to visitors, new hires and people who
come for job interviews. In the main, all the stories emphasise the humanity and
caring nature of the Swiss based board of directors and how this permeates the
entire company. The case highlights the story regarding the company’s tenth
anniversary celebrations. All the 800 company staff from around the world and their
partners were invited to Switzerland for all expenses paid weekend of celebrations
at the Lucerne opera house, which was hired exclusively for the company for the
whole weekend. Legend has it that the company chairman paid for this out of his own
pocket. Announcements regarding company performance and other news are communicated
regularly to the whole company through email from the CEO. He always begins the
email, ‘Dear Friends’, and always makes a point of finishing off by thanking
everyone for their hard work and commitment. DICOM's board of directors asked all
subsidiaries to complete an annual report on promotions, hires of disabled staff
and donations to charity. This is done with the aim of promoting ‘ethical
awareness’ amongst DICOM's management. Subsidiaries are also expected to produce a
bimonthly newsletter for local staff, keeping them informed of company news and
performance, as well as giving them to opportunity to include their own personal
and departmental news. Symbols: these include things such as offices, cars, logos,
titles and terminology, which themselves can become representative of the nature of
the organisation. Virtually all employees work in an open plan offices and symbols
of rank and seniority are discouraged. Language is very important within DICOM with
unique ‘organisational’ meanings being given to some everyday words. This would
make some conversations within the organisation fairly unintelligible to outsiders,
although completely sensible to those within. This helps reinforce the feeling of
camaraderie, and membership. For example: DICOM word 'Standards!' We don't wear
stripes Meaning Well done! Congratulations! For example, we have set the standard
to our competitors. Everyone has the right to have their say and be involved in
decision-making.
Control systems: these are measurement and reward policies that emphasise what is
important to the organisation, and focus attention on it accordingly.

Measurement is a continual process, even if official performance reviews are not.

Workgroups normally meet on a monthly basis to discuss problems and progress. All
are encouraged to make suggestions to improve workgroup performance against certain
measurable criteria. Where performance of an individual is exceptional, managers
have discretion to reward them in a way most valuable to the individual. This might
be the granting of extra holiday, a meal for them and their partner or a public
display of gratitude at an award ceremony. Every year at the Christmas celebration,
a number of awards and prizes are given out to individuals and workgroups who have
been voted as exceptional by their colleagues. Power structures: these are
associated with the key constructs of the paradigm. Senior management is most
likely to be associated with the core assumptions and beliefs as to what is
important to the organisation. Students are likely to find this sphere more
difficult to discern from the case. However, the role of senior management in the
group’s tenth anniversary celebrations emphasises how management are associated
with core assumptions and beliefs that are important to the organisation.
Organisational structure: this is the more formal way in which the organisation
functions, and is likely to demonstrate power structures, relationships and again
what is important to the organisation. DICOM has a very flat organisational
structure. Within the United Kingdom, there is the Managing Director, Senior
Managers, Junior/Workgroup Managers and staff. As noted within the case, although
employees do have ‘rank’ the display of ‘stripes’ is not encouraged. When visitors
are shown around the company, managers introduce their staff saying ‘These are my
colleagues’. If anyone said ‘These people work for me’ or ‘these are my staff’
people would become quite annoyed and expect a later apology. 2. Assess the extent
to which DICOM Group’s culture is aligned to its vision and mission. Having
constructed their cultural webs, students are likely to find this and subsequent
questions far easier to answer. The vision and mission are both set out clearly at
the beginning of the case. We have found that in answering the question, students
benefit most from seeing how each sphere in their cultural web enables each of six
bullet points that make up the mission are addressed using a simple table. These
then enable DICOM to work towards its vision. For example: Mission statement
Cultural web sphere Limited evidence Symbols Language is very important within
DICOM with unique ‘organisational’ meanings being given to some everyday words. For
example, ‘standards’ Language is very important within DICOM with unique
‘organisational’ meanings being given to some everyday words. For example,
‘standards’ Evidence
We care for our customers better than anyone else in our industry. We are a premier
business partner of the world's leading system integrators, software developers, IT
resellers and OEMs We only compete with superior products and services in fast
growing information technology sectors in which we can achieve and maintain a
dominant market share
Symbols

We hire the highest calibre employees available and continually invest in their
development.
Rituals
Training is a very important part of DICOM’s culture. All levels of staff are
encouraged to take advantage of both in-company and external training programmes
including the DICOM Academy. Performance appraisal is carried out annually, with
three monthly reviews in some areas. The onus is very much on the staff to review
their own performance.
We constantly aim to achieve attractive returns for our shareholders.
Control systems
Workgroups normally meet on a monthly basis to discuss problems and progress. All
are encouraged to make suggestions to improve workgroup performance against certain
measurable criteria. DICOM is promoted to its staff as the ‘DICOM Family’. The
unofficial (although heavily endorsed by senior management) aim is ‘To make money
and have fun doing it’. The humanity and caring nature of the Swiss based board of
directors and how this permeates the entire company. DICOM has a very flat
organisational structure. Within the United Kingdom, there are the Managing
Director, Senior Managers, Junior/Workgroup Managers, and staff. As noted within
the case, although employees do have ‘rank’ the display of ‘stripes’ is not
encouraged.
To us respect, integrity and loyalty constitute very important values, reflected in

a co-operative relationship with the society and the environment in which we
operate.
Routine
Stories
Power structure
3. To what extent do you consider that DICOM Group’s culture exhibits

characteristics identified by Hofstede (Table 6.1) and by Trompenaars and Hampden-
Turner (Table 6.2) for Switzerland? Give reasons for your answer. Hofstede Power
distance relates to the extent to which less powerful employees accept that power
is distributed unequally. Within DICOM inequalities between people appear to be
minimised and consultative decision appears more likely to be used.
Individualism/collectivism refers to the extent to which individuals are orientated
to themselves and their immediate family, rather than wider strong cohesive in-
groups that offer protection in exchange for unquestioning loyalty. In DICOM
contracts of employment appear to be based on mutual advantage, DICOM providing
training and good physical conditions. This suggests the organisation is more
collectivist. Masculinity/femininity refers to the extent to which assertiveness
and decisiveness are prioritised over more caring values such as nurturing and
concern for quality of life. Within DICOM importance is placed upon competition and
high performance emphasising the ‘masculine’ aspects of this dimension. At the same
time, the resolving of differences by discussion emphasises the feminine aspects of
this dimension.

Uncertainty avoidance relates to the extent to which people feel threatened by

ambiguous or unknown situations. It is less clear from the case where DICOM is
placed upon this dimension. Confucian dynamism captures the long- or short-term
orientation. Although DICOM places emphasis on the importance of social
obligations, the emphasis on results and high performance suggests a more short-
term orientation. Trompenaars and Hampden-Turner Relationships with people
Universalism versus particularism. Relationships with people are important within
DICOM. However, personal relationships are not anticipated to impact upon business
decisions. Rather they are expected to be made logically, impartially and
professionally suggesting a more universalist focus. Individualism versus
communitarianism emphasises that societies can be individualistic or collectivist.
Within DICOM employees appear to regard themselves as part of a group and
consequently more communitarian than individualistic. Neutral versus emotional
highlights the extent to which it is acceptable to express emotions publicly and
communicate the full extent of personal feelings. Within DICOM, by establishing
rapport between individuals, it appears possible to discuss performance issues and
communicate personal feelings. Specific versus diffuse is concerned with the
relative importance ascribed by different cultures to focusing on the specific, for
example analysing issues by reducing them to specific facts, tasks, numbers or
bullet points. This is contrasted with a focus upon analysing issues by integrating
and configuring them into relationships, understandings and contexts. From the
information within the case, it is uncertain where DICOM would be placed on this
dimension. Achievement versus ascription This focuses upon the way in which status
is accorded. DICOM places relatively high values on achievement rather than status.
Attitudes to time This focuses particularly on whether time is viewed as linear and
sequential (past, present and future) or circular and synchronic (seasons and
rhythms). These differences are likely to impact on how planning and organising
takes place, little information on which is provided in the case.

CHAPTER 7
Strategic human resource planning: the weakest link?

Learning outcomes
By the end of this chapter you should be able to: • • • • • identify and discuss
the core principles that underpin the concept of strategic human resource planning;
critically evaluate the extent to which strategic human resource planning
represents the vital connecting link between organisational strategy and SHRM
practice; analyse the conceptual and operational difficulties surrounding the
practise of strategic human resource planning; assess the relevance of strategic
human resource planning to organisations facing an increasingly changing business
environment; review potential avenues for addressing the difficulties associated
with human resource planning to enhance its operational viability.
Summary
• HRP is the name given to formal processes designed to ensure that an
organisation’s human resources capability can support the achievement of its
strategic objectives. It involves forecasting the future demand for and supply of
labour and drawing up HR plans to reconcile mismatches between the two. When viewed
as the vital link between organisation and HR strategies HRP can be regarded as a
bridging mechanism fulfilling three vital roles: aligning HR plans to
organisational strategies to further their achievement; uncovering HR issues that
can threaten the viability of organisational strategies and thereby lead to their
reformulation; and acting in a reciprocal relationship with organisational
strategies such that HR issues become a central input into the strategy formation
process. Numerous difficulties surrounding the practise of HRP may thwart its
potential to serve as the link between organisational strategy and SHRM practice.
These difficulties may be sufficient to lead organisations to abandon any thoughts
of practising HRP, may conspire to reduce the effectiveness of HRP practice or may
limit its application to short-term, operational matters. Patchy and limited data
on HRP practice points to its low level of take-up by organisations leading to an
alternative perspective of HRP as the missing or weakest link between

organisational and HR strategies. This leads to a paradox where the more the
complexities of organisational life warrant the establishment of HRP as the vital
link the more these complexities are likely to cause HRP to be cast aside to become
the missing/weakest link. • Avenues for confronting operational difficulties and
forging HRP as the pivotal bridging mechanism between organisational strategy and
SHRM practice focused on: raising the profile of HR issues generally and the status
and credibility of HR practitioners particularly; using contingency and scenario
planning to introduce flexibility into the HRP process; building towards a flexible
workforce that can manage the vagaries arising from unplanned developments and an
uncertain future; and developing an HRP process centred on continual review,
evaluation and adaptation and adopting a multi-stakeholder approach to make this a
realistic possibility.

Comment
An immediate problem facing the delivery of this topic is the overall lack of
attention it receives in the human resource management (HRM) literature,
particularly in the United Kingdom, despite its potential bridging role between
corporate strategies on the one hand and HRM strategies and operational activities
on the other. Increasingly mainstream HR texts do not include a chapter on human
resource planning and where they do its strategic role receives only passing
attention. One reason for this is the conflation of HRP and HRM such that both may
come to be regarded as synonymous. This is not the stance adopted in this chapter,
which makes the case for human resource planning (HRP) to be regarded as the prime
vehicle for translating the strategic imperatives of organisations into meaningful
human resourcing strategies, policies, procedures and operational activities.
Drawing on the seminal work of Schuler and Jackson (1987), for example, HRP is the
bridge that links their competitive strategies with HRM practices. Here the
argument is that to identify and develop HR practices relevant to different
organisational strategies requires a deliberate planning intervention, that is,
HRP. However, it is also important to emphasise that this one-way, top-down
strategic relationship between corporate and HRM strategies is only one of a number
of different types of strategic fit such that at the other extreme, for example,
HRP when used to identify and generate core competences can become a vehicle for
shaping organisational strategy itself. It is also important to emphasise to
students that there is a potential conflict between the whole notion of planning
and the environmental uncertainties surrounding many organisations. Planning
suggests a degree of certainty that is largely unrealistic in today’s volatile
business climate. Therefore to be useful HRP processes have to be shaped so that
they can accommodate planned and unplanned change over different time horizons.
Student preparation
integration of the subject content of the chapter.

We use a variety of vehicles to bridge student preparation and class-based

activities to enhance their understanding of the chapter content and its overall
relationship to managing human resources (HR) strategically. As standard, we would
ask students to make a note of any queries arising from their reading and to come
to the teaching session prepared to raise them. Sometimes this may be formalised by
asking students to write down (as questions) the three issues addressed by the
chapter where they would like further clarification and guidance. Students may also
be asked to do one or more of the following: • • • address pre-set questions and
write their answers briefly in note format; complete the self check and reflect
questions and come to the session prepared to share and discuss their responses;
and familiarise themselves with the chapter case study (or an alternative case
supplied in advance) and come to the session prepared to tackle the case questions.
Our outline answers to both self check and reflect questions and case study
preparatory activities and classroom discussion for the topic of strategic HRP
include: 1. How would you define HRP and set it into the SHRM context? 2. What are
the principal strategic relationships between HRP and corporate strategy and how
could they be evidenced in practice? 3. What do you understand by the HRP paradox
and how does this impact on the utility of the concept? 4. How would you argue the
case for and against the formal adoption of strategic HRP by organisations?
In the classroom
self check and reflect questions has been set as part of preparation for the
can be usefully critiqued.

Where case study work has featured as part of preparatory activities, similar
approaches to those suggested for self check and reflect questions can be adopted.
Our approach here would be to start with a more general exploration of the HRP
implications of mergers and acquisitions and use this to develop an evaluative
framework against which practice in the three case companies can be analysed. If
coming to the case afresh, there is unlikely to be time for groups to consider all
four questions. Here we would suggest that groups be allocated one of the case
companies (Deutsche Bank/Bankers Trust or British Petroleum/Amoco or Volvo/Ford)
and asked to work through Questions 3 and 4 for their allocated company. Group
outputs can then be used as the basis for a plenary consideration of Questions 1
and 2. Greater topicality can be achieved by capturing the big business news
stories of the week, discussing the HRP issues that are likely to arise and
exploring how HRP might be used effectively to address these issues.
Follow-up work
used as part of class activities, self check and reflect questions and/or the
chapter case study, ‘Human resource planning in mergers and acquisitions’, can be
set as follow-up work and should serve as a useful reinforcement of chapter
content. Our outline answers to both self check and reflect questions and case
study questions follow in the next two substantive sections of this chapter guide.
There are also a number of follow-up study suggestions after the chapter summary
that can be undertaken by students either individually or in groups and an
extensive list of references provides many opportunities for directed further
reading. A further task could require students to research reported case examples
of mergers and acquisitions and analyse the extent to which HRP is evident during
the planning, implementation and consolidation stages and the likely consequences
of their findings.

7.1 To what extent can the hard and soft variants of HRP be regarded as mutually
exclusive? Too frequently hard and soft HRP are presented as either/or
alternatives. Like much else in the literature this is far too simplistic and
ignores the potential for both to operate in tandem and for hard HRP to have a soft
edge and vice versa. For example, throughout the chapter mergers and acquisitions
are used as a linking theme to illustrate facets of HRP practice. Here hard HRP
will often involve: restructuring work activities to remove unnecessary
duplication; forecasting staff numbers against this reduced requirement; and making
staff surplus to requirement redundant to bring labour supply into line with
demand. Although ‘hard’ this action may be vital if the planned synergies from
merger/acquisition are to be realised. However, at the same time soft HRP may be
evident. The organisation may be trying to manage the cultural integration of
surviving employees or setting aside the cultural inheritance to re-align the
organisation culture. Further the hard, quantitative manifestation of HRP arising
from redundancy may simultaneously exhibit a soft edge. The way the organisation
manages the process, including its

treatment of survivors, is likely to directly affect the success of the redundancy

programme itself and the future prospects of the emerging organisation. Similarly,
if cultural alignment is imperative for the future survival of the organisation,
employees unable to make the necessary adjustment may find themselves managed out
of the organisation. 7.2 To what extent can the view that HRP is all about ensuring
that the right person is in the right place at the right time be interpreted as a
soft, as well as hard, approach to HRP? In a similar vein to Question 1, this
simple view of HRP has been strongly associated with the ‘hard’ variant but
arguably contains within it the potential for a ‘soft’ interpretation. This view is
often bracketed with manpower planning with the assumption that the ‘right person’
carries with it quantitative overtones. Here it is interpreted as referring to the
number of employees with manpower planning being about ensuring that the supply of
staff matches the demand for staff arising from the different tasks to be
performed. However, this is a restrictive interpretation because ‘right person’
could equally be said to refer to the soft, qualitative dimension of HRP. Here
‘right’ could be expressed in terms of skills and competences, cultural
orientation, motivation, commitment, values etc. However, a number of these
attributes represent intangibles. Some are personal, some contextual and some
organisational such that any attempt to incorporate them within HRP will require an
approach that reflects the longer-term orientation consistent with strategically
focused HRP. Therefore, although this view of HRP appears simple in appearance, it
can be argued that a broader interpretation reflects more comprehensive definitions
of HRP. The key lies in how ‘right’ is interpreted and similar analysis can be
applied to ‘right place’ and ‘right time’. 7.3 How would you map out the benefits
of HRP identified in the above analysis against the ‘regulation’, ‘control’ and
‘shape’ phases of Ulrich’s (1987) model of transitions in SHRP (see Table 7.4). You
might find it helpful to structure your answer in tabular format. To get you
started, one example under each of the three phases identified by Ulrich has been
provided below. Phase I Regulation Provides detailed information that enables
tighter control over staffing numbers and costs. Generates a detailed audit of an
organisation’s human capital. Phase II Control Enables HR strategies to be linked
to and integrated with organisational strategies. Phase III Shape Surfaces and
recognises the potentially unique contribution an organisation’s human capital can
make to long-term strategic direction. Ensures that the HR dimension receives due
attention in the strategy making process.
Provides a formalised process that encourages organisations to take account of HR

issues early on in strategy making thereby reducing the risk of implementation
failures due to a lack of HR capability. Provides a formalised process for
generating plans to tackle the HR issues arising from strategic planning.
Enables the appropriateness of the organisations current skills, knowledge and

attitudes mix to be analysed.
Provides a process for raising people issues early in the strategy – setting debate
and ensures that business-based plans are put in place for the people outcomes of
this debate.

Provides a mechanism for forecasting labour demand against internal and external
supply in terms of numbers, knowledge, skills and attitudes. Matches labour demand
and supply and through gap analysis surfaces mismatches between the two that need
to be addressed.
Generates a variety of HR solutions for tackling the complexity of problems arising

from strategy making.
Operates as a major facilitator of competitive advantage.
Enables HR strategies, policies, procedures and practice to be developed as a

coherent bundle of activities. The integration of HR policies and practices
horizontally and vertically contributes positively to organisation performance.
Facilitates the pursuit of high performance organisations commonly associated with
SHRM by focusing on a high commitment, productivity and trust agenda. Crucial to
helping organisations to adapt the workforce to meet changing demands arriving from
a dynamic socio-economic climate.
HRP has an important role to play in reconciling the needs of individual employees
and the needs of the organisation.
7.4 For each of the above cases answer the following question and justify your
answer with reference to case evidence: • Which of the six strands of strategic
integration are evident in the case company?
The SIBUC case HRP at SIBUC reflects a systems perspective where it is conducted as
a rational process flowing down through the three levels of organisational
strategy. HRP starts from the organisation mission and strategic objectives, which
inform the objectives for each of the nine functional areas. This led to the
formulation of a set of HR objectives, strategies, plans and control mechanisms to
help achieve the organisation’s over-arching mission and strategy. This mirrors the
first and third strands of strategic integration (and perhaps by implication, the
second). Emerging from the strategic objectives is a set of what could be called
core competences such as service vocation, innovative, autonomous and effective
interaction. These together with the cross-integration of the objectives for the
nine functional areas provides for horizontal integration, the fifth strand. The
use of the SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis to
analyse and draw on the strengths of the existing staff, however, provides an
opportunity for these to shape strategy formulation and suggests the possibility
for two-way strategic integration, the fourth strand. The Farquhar case The
Farquhar case appears to be much more opportunistic. Planning appears less
formalised and the big decision to locate a production unit in the Czech Republic
arises from the economic

potential emerging from Eastern Europe. In this sense Farquhar appears to be

responding to change in a dynamic business environment, which reflects the sixth
strand of strategic integration. Developments in the Czech plant are also working
upwards to influence production practice at Huntley, reminiscent of the fourth
strand. Although Farquhar’s corporate strategy is not made explicit the location
decision clearly reflects first and second-order strategic decisions and therefore
relates to the first and second strands.

We would like to emphasise that we have used Salama et al’s (2003) work as a
vehicle for an analysis of HRP particularly as it applies to mergers and
acquisitions. It should be stressed that this was not the main point of focus in
their study and their published work obviously reflects this. It should be
remembered throughout that there is limited specific data available on the HRP
processes and activities deployed by the case companies. Therefore, at times, it
has been necessary to make assumptions that we recognise in reality may be open to
question. In answering the case study questions we found it helpful to keep in mind
that mergers and acquisitions comprise a number of key stages. First, there is a
pre-merger or integration phase where organisations have the opportunity to assess
the compatibility or fit between the merging organisations. Second, there is the
post-merger or integration phase where plans to exploit the potential synergies
provided by mergers and acquisitions are finalised and implemented. Salama et al
(2003) refer to these two phases as the courting and the marriage phases
respectively. As such these phases arguably cover the due diligence period ahead of
merger and the short to medium-term HRP time horizon following merger. Third, is a
longer-term, post-merger consolidation phase that may also incorporate further,
significant strategic change.
1. Compare and contrast the three outline cases from an HRP perspective. What are
the main similarities and differences between them? In all three cases it appears
that any HRP considerations lie downstream from a first-order strategic decision to
merge. One possible exception is the Deutsche Bank and Bankers Trust merger where
it might be argued that the results of the cultural assessment exercise could have
resulted in ‘the marriage’ being called off. However, it seems to us that the
exercise was designed more to identify issues that would have to be addressed
during the marriage phase than to determine whether the merger should go ahead or
not. In all three cases attention is being paid to second-order strategic issues
concerning structures. For Deutsche Bank/Bankers Trust and Volvo and Ford
restructuring is at a corporate level whereas with British Petroleum (BP) and Amoco
it appears to be more concerned with merging functional operations. In all three
cases there appears to be an understanding of the importance of cultural
compatibility and the need to successfully manage any emerging acculturation
process. This reflects concern for soft HRP issues. There is also evidence that
hard HRP issues are being persued. For Deutsche Bank/Bankers Trust this has a clear
line through to downsizing/redundancy whereas with BP/Amoco and Volvo/Ford we are
reading ‘synergies’ as a euphemism for rationalising business functions, leading to
redundancy as a natural consequence. In terms of process both BP/Amoco and
Volvo/Ford established integration teams to help manage the merger although their
emphasis appeared to be more on identifying potential operational synergies. Across
all three cases, and particularly with Deutsche Bank/Bankers Trust and BP/Amoco,
where there is more detail available, it is not clear what HRP processes

are being used to generate the HRP initiatives being implemented. However, with
Deutsche Bank/Bankers Trust there appears to be a close fit between the analysis of
results from the cultural assessment exercise and subsequent management action and
HR initiatives deployed. This is unlikely to have happened by accident and suggests
that deliberate planning lies behind such integration. Communication, a vital
ingredient to successful mergers and acquisitions, appears being handled
differently across the three cases. For Deutsche Bank/Bankers Trust the
communication focus appears to be directed at employees during the courting phase
through the cultural assessment exercise and enhanced communication to close the
information gap revealed by its findings. For BP/Amoco the focus appears to be on
the marriage phase with different approaches adopted for managers and employees.
For the former there were regular meetings designed to breakdown barriers between
BP and Amoco managers whereas for the latter attitude surveys are being used to
surface issues that managers would need to address if they are to win over the
‘hearts and minds’ of employees. For Volvo/Ford there is no explicit reference to
communication processes. However, the fact that a cultural analysis of the two
companies has been derived from employee perceptions implies that some form of
employee survey has been conducted during the courting phase. With Deutsche
Bank/Bankers Trust and BP/Amoco there is evidence of specific downstream HRP
initiatives designed to facilitate achievement of strategic objectives whereas with
Volvo/Ford such HRP appears, at best, to have been deferred until after operational
synergies have been achieved. Although the integration team in Volvo/Ford was seen
‘as an important vehicle for overcoming cultural differences’ there is no
suggestion as to how this was to be achieved. Lastly, despite the process being
essentially top-down there is evidence pointing to the use of ‘employee voice’ to
provide a bottom-up perspective. This would certainly appear to be behind the
cultural analysis at Volvo/Ford and can be seen to be driving management thinking
at Deutsche Bank/Bankers Trust. However, involvement beyond this is not evident
although at BP/Amoco it might be part of the input into establishing desired work
behaviours, systems and processes. 2. If you had been responsible for the HRP
dimension of each of the three merger situations, which do you think was handled
most effectively and why? Interestingly, in each of the three cases there is no
real indication as to the role, if any, being played by any HR function in planning
and implementing the merger. However, on the basis of available information, we
found it easier to identify Volvo/Ford as the merger situation we believed to have
been handled least effectively from an HRP perspective. Here, apart from the
initial cultural analysis and organisational restructuring, HR concerns appear to
play second fiddle to other functional concerns arguably raising the risk of merger
failure because of poor HRP as highlighted by Appelbaum and Gandell (2003). The
choice between the other two case scenarios is much more difficult as there is
merit in both their approaches to HRP. In the HRP chapter summary it was argued
that ‘When viewed as the vital link between organisation and HR strategies HRP can
be regarded as a bridging mechanism fulfilling three vital roles: aligning HR plans
to organisational strategies to further their achievement; uncovering HR issues
that can threaten the viability of organisational strategies and thereby lead to
their reformulation; and acting in a reciprocal relationship with organisational
process’. We would argue that both the Deutsche Bank/Bankers Trust and BP/Amoco
cases evidence the first role of ‘aligning HR plans to organisational strategies to
further their achievement’. However, we were initially attracted to the Deutsche
Bank/Bankers Trust case where we felt there was more explicit concern to
incorporate the second of these HRP roles concerned with ‘uncovering HR issues that
can threaten the viability of organisational

strategies’. From this perspective it could be argued that the Deutsche

Bank/Bankers Trust case evidences a more comprehensive approach to HRP than
BP/Amoco, particularly with respect to their handling of the pre-merger integration
phase. However, contrary to this initial position, we would argue that BP/Amoco
comes out stronger in the post-merger integration phase. Apart from a concern to
challenge prevailing working values, the Deutsche Bank/Bankers Trust marriage
appears to overly focus on the hard HRP issues surrounding business efficiency.
While this is a critical consideration there is evidence that not only is this
dimension being actioned within BP/Amoco but that they are also dealing with soft
HRP issues to a greater extent. With BP/Amoco we particularly liked the fact that
rather than imposing a cultural blueprint they appeared to be more concerned to
identify and develop appropriate behaviours from an analysis of current patterns of
employee behaviour. There is an apparent concern to develop a new corporate culture
and the commitment to build from current patterns of work behaviour is also evident
in the approach being adopted for integrating systems and processes, including HR.
Here ‘best practice’ is being used as the guiding criteria for such decisions
irrespective of where it appears across the constituent companies. Throughout the
cases there is very little reference to arguably a third phase of mergers and
acquisitions, the post-merger consolidation phase. This incorporates a longer-term
perspective and we particularly liked the intended use by BP/Amoco of regular
monitoring of employee attitudes to shape future managerial action to secure their
commitment to the new company. There appeared to be less concern for longer-term
HRP issues within the Deutsche Bank/Bankers Trust case. In conclusion, based on the
above analysis, we believe that the HRP dimension of the respective merger
scenarios was handled most effectively within BP/Amoco. However, this could have
been improved significantly if greater attention had been paid to HRP during the
courting phase and the outcomes of this used to further guide HRP decisions during
the marriage phase. 3. If you had been responsible for the HRP dimension of each of
the three merger situations what would you have done differently and why? More
general points relating to HRP in the three merger situations are covered in our
answer to question four below. Here, we concentrate more on detailed operational
HRP issues arising from the case scenarios. We have simply provided short, bullet
point responses to provide examples of the sort of HRP practices we would have
advocated. These can be used to facilitate a discussion around developing a broader
and deeper analysis of the three case scenarios from an HRP perspective. Deutsche
Bank/Bankers Trust 1. Given the challenge to existing Deutsche Bank working values,
develop a new corporate culture for the merged company. 2. Translate this cultural
blueprint into those over-arching employee values and behaviours (perhaps using a
competency framework) thought to be necessary to achieve long-term merger and
corporate business success. 3. Use these values and behaviours as the operational
criteria when making HR decisions with respect to selection for redundancy,
transfers, promotions, human resource development (HRD), reward allocation etc. 4.
Develop communication channels/initiatives to cover the ‘marriage’ phase of merger
and the longer-term consolidation phase. 5. Consider the approach to employee
involvement in key areas such as ‘integration team’ membership and development of
new working values as well as a broader consideration of the employee relations
strategy to be adopted.

6. Identify further key HRP issues and develop appropriate responses. Apart from
communication and employee involvement identified above, these might include, for
example, managing survivors, HR systems and processes such as job grading and
remuneration, HRD strategies for acculturation and organisation structures to
facilitate the emerging corporate culture (or vice versa). BP/Amoco 1. A clear HRP
focus in the ‘courting’ phase to establish what will be the likely HR issues that
will need to be addressed as part of the merger process (core values, attitudes,
competences; structures; change management approaches; employee relations
strategies etc.). 2. Make more explicit the nature and scope of employee
involvement with respect to the ‘integration team’, development of core behaviours,
development of new corporate culture, analysis of ‘best practice’ etc. 3.
Significant investment in communication to keep employees informed and engaged in
the merger process (and beyond). 4. Challenge the apparent quota-based approach to
manager selection and replace with a performance and/or competency-driven approach.
5. Work through key organisational structures and assess the HRP consequences of
any revised structures. 6. Plan how to manage the fallout from any: restructuring;
functional rationalisation, particularly in terms of downsizing/redundancy; and
performance management. Volvo/Ford Here we would have done just about everything
differently. In terms of the information available we would certainly have wanted
to work through the HRP implications of identified cultural differences between
Volvo and Ford and the major structural reorganisation as well as making explicit
the HR remit of the integration team if it is to fulfil its role as ‘an important
vehicle for overcoming cultural differences’. More generally we would have given
active consideration to all the other points raised above against the Deutsche
Bank/Bankers Trust and BP/Amoco cases. 4. Critically evaluate the HRP process and
practice evident in the three cases against the subject content of the chapter.
Again we would suggest that our responses here leave scope for further development
through facilitated discussion in-class. While a merger can be seen as an example
of first-order strategy it does not in itself constitute the long-term corporate
strategy of the organisation. What this corporate strategy might be in the three
case scenarios is not made explicit in the information provided. This throws up two
important limitations in HRP terms. First, the absence of a broader corporate
strategy makes it impossible to evaluate the appropriateness of any HRP activity
directed at furthering its achievement or to uncover HR issues that might threaten
its viability. At best, it might be surmised that the mergers reported on are
designed to achieve competitive advantage through cost minimisation but this is
almost certainly not the whole picture. Second, in terms of temporal analysis, the
focus in the cases is on short-term and, to a lesser extent, medium-term HRP
activity. This ignores HRP related to the ‘long-term cycle’. As identified by
Gratton et al (1999), the long-term cycle requires different clusters of people
processes to secure strategic integration compared to those required for the
‘short-term cycle’. In the case scenarios there is no clear division or distinction
in identified HR interventions between those relevant to short and long-term
planning cycles.

The above analysis throws up two further important limitations in all the case
scenarios presented. First, there is no evidence that the third ‘vital role of HRP
identified in the chapter summary has played any part in organisational thinking.
This third role concerned the ‘reciprocal relationship with organisational
process’. As far as can be seen here, HRP concerns appear to be almost exclusively
directed at the output rather than the input level. Second, and very much related
to Gratton et al’s (1999) temporal perspective, it is difficult to discern any HP
consideration around the general issues of managing change and enhancing
organisational competence to deal with planned changes (e.g. the merger) let alone
future shocks. What is apparent throughout the chapter case study is that within
the consideration of three mergers involving international companies there is
little or no detailed information on the HRP processes deployed by the case
organisations. We are in the dark as to how HR interventions have been determined
and as to how they fit into a broader HRP process. There does not appear to be any
evident HR strategy underpinning HRP (in an HR strategy input–HRP output
relationship) or deriving from it (in an HRP input–HRP strategy output
relationship). Further, there is no mention of HRP ownership making it difficult to
discern the role, if any, of any extant HR function or the extent to which HRP has
been embedded in line managers’ role responsibilities. Without this it is not
possible to determine which conceptual models of HRP might apply to practice in the
case companies. As will be evident from answers to earlier questions, there is also
little focus on any post-merger consolidation phase. This may be an important phase
if the marriages are not to subsequently breakdown and lead to ‘divorce’. Although
there is hard HRP thinking evident in the first two case scenarios we are left to
speculate on the extent of any labour demand and supply forecasting. This means
that the quantitative dimension of HRP receives no substantive coverage and that
the overall scope of any HRP is in consequence restricted. While the evident
concentration on cultural issues exemplifies soft HRP concerns it is arguably at
the expense of a broader consideration of the soft and hard HRP issues surrounding
mergers and acquisitions. In brief, against the chapter content, we flag up three
further considerations:
1. That the above critique, together with answers to Questions 1–3, only serves to
demonstrate how difficult it is to practice strategic HRP. Despite the adage ‘to
fail to plan is to plan to fail’ our review of some of the HRP issues to be
confronted in mergers alone exemplifies the complexities associated with the
process and lends credence to those who question its operational efficacy. 2.
Notwithstanding the complexities associated with HRP our review should also lead to
a greater understanding of the possible consequences of ineffective or non-existent
HRP (in this case with mergers). 3. The centrality of flexibility to HRP, if it is
to gain credence as an operational HR tool, is not surfaced by any of the three
case scenarios. There is no evidence of any contingency or scenario planning being
used to inject flexibility into the HRP process or steps being taken to build
flexibility into the workforce itself so that it can better deal with the vagaries
of future uncertainties as well as planned change.
References
Appelbaum, S.H. and Gandell, J. (2003) A cross method analysis of the impact of
culture and communications upon a health care merger, The Journal of Management
Development, 22:5, 370–409.

Gratton, L. (1999) People processes as a source of competitive advantage, in

Gratton, L., Hope Hailey, V., Stiles, P. and Truss, C. (eds) Strategic Human
Resource Management, Corporate Rhetoric and Human Reality, Oxford: Oxford
University Press, 170–198. Gratton, L., Hope Hailey, V., Stiles, P. and Truss, C.
(1999) Strategic Human Resource Management: Corporate Rhetoric and Human Reality,
Oxford University Press. Salama, A., Holland, W. and Vinten, G. (2003) Challenges
and opportunities in mergers and acquisitions: three international case studies —
Deutsche Bank–Bankers Trust; British Petroleum–Amoco; Ford–Volvo’, Journal of
European Industrial Training, 27(6), 313– 321. Schuler, R.S. and Jackson, S.E.
(1987) Linking competitive strategies with human resource management practices, The
Academy of Management Executive, 1(3), 207–19.

CHAPTER 8
Strategic recruitment and selection: Much ado about nothing?

Learning outcomes
By the end of this chapter you should be able to: • • • • • • provide an
underpinning rationale in support of the development and practise of strategically
integrated recruitment and selection; identify and explain the major features of
strategic recruitment and selection and summarise these through an explanatory
model; analyse how recruitment and selection can be developed to fit a variety of
strategic scenarios using illustrative examples to support your analysis; explain
how recruitment and selection practice can be shaped to accommodate the demands of
strategic change and unplanned change arising from an uncertain future; evaluate
evidence to determine the extent of strategic recruitment and selection practice;
account for the apparent mismatch between the rationale for strategic recruitment
and selection and paucity of evidence of its practise.
Summary
• The pursuit of competitive advantage, interest in SHRM and the role of
recruitment and selection in securing one of an organisation’s most valuable assets
provide a powerful rationale for the development of strategic recruitment and
selection. It is possible to construct a model of strategic recruitment and
selection around three primary features: strategic integration; a long-term
perspective; and the use of HRP as a bridging mechanism between strategy and HR
practice. The strategic variant elevates the organisational importance of
recruitment and selection and leads to the generation of a more demanding person
specification. These two outcomes generate four consequential interrelated,
secondary features that are likely to shape strategic recruitment and selection
practise: the adoption of a front-loaded investment model; rigorous evaluation of
outcomes; the use of high validity, sophisticated selection methods; and multi-
stakeholder involvement. Far from being a simple notion strategic fit has been
revealed as a multi-dimensional concept where it is possible to identify at least
six different strands. This means that strategic recruitment and selection has
potentially to be aligned with multiple interpretations of strategy if it is to
satisfy its strategic credentials.

Despite uncertainties surrounding strategy implementation and the business

environment as it unfolds over time, recruitment and selection practice can be
shaped to support long-term changes in strategic direction. On balance and despite
a powerful rationale to the contrary, organisational approaches to recruitment and
selection practice appear to be dominated by traditional and not strategic
approaches. The overall conclusion is that although the case for adopting strategic
recruitment and selection may be seductively persuasive it is arguably another case
in the HR arena where the rhetoric runs ahead of the reality.

Comment
The chapter begins by presenting a rationale for the adoption and practise of
strategic recruitment and selection by organisations. In brief, it is argued that
over the last two decades there has been considerable focus on strategic management
and its crucial role in securing competitive advantage and that employees are a
critical, if not the most important, resource for achieving an organisation’s
strategic objectives. From this stance it is argued that it would therefore be
rational for organisations to tailor their recruitment and selection practice to
meet their strategic imperatives. On this basis the prime concern of recruitment
and selection would be the employment of staff who can make a direct contribution
to the achievement of an organisation’s strategic objectives. Whatever the merits
of this argument, a review of research findings at the end of the chapter concludes
that there is little evidence that strategically-driven recruitment and selection
is being practised by organisations. In contrast, what was found was that
traditional approaches to recruitment and selection, driven by the demands of
specific job vacancies, continue to dominate organisational practice. This may
account for why there is, like HRP, a paucity of literature on strategic
recruitment and selection. The overwhelming majority of literature on recruitment
and selection focuses on its traditional construction and delivery and not its
strategically-driven variant. Two particular difficulties facing the teaching of
strategic recruitment and selection are, therefore, the wide chasm that exists
between the apparent logic for its practise on the one hand and the absence of
evidence of its practise on the other and its lack of coverage in the literature.
For this reason the chapter explores the concept of strategic recruitment and
selection in depth. It particularly draws on material from Chapters 1 and 7 to
illustrate and explore the multiple meanings of strategic fit in relation to
strategic recruitment and selection. This approach is supported directly by the
self-check and reflect, and case study questions most of which require the reader
to work through the conceptual construction of strategic recruitment and selection
and/or apply it to a number of real organisational scenarios.
Student preparation
integration of the subject content of the chapter.

We use a variety of vehicles to bridge student preparation and class-based

activities to enhance their understanding of the chapter content and its overall
relationship to managing HR strategically. As standard, we would ask students to
make a note of any queries arising from their reading and to come to the teaching
session prepared to raise them. Sometimes this may be formalised by asking students
to write down (as questions) the three issues addressed by the chapter where they
would like further clarification and guidance. Students may also be asked to do one
or more of the following: • • • address pre-set questions and write their answers
briefly in note format; complete the self check and reflect questions and come to
the session prepared to share and discuss their responses; and familiarise
themselves with the chapter case study (or an alternative case supplied in advance)
and come to the session prepared to tackle the case questions.
preparatory activities and classroom discussion for the topic of strategic
recruitment and selection include: 1. Based on prior learning and/or experience,
how would you map out the entire recruitment and selection process in a flow
diagram? 2. What are the main strengths and weaknesses of the recruitment and
selection process you have drawn up in response to Question 1? 3. What do you
understand to be the key similarities and differences between the traditional
approach to recruitment and selection focused on job fit and the strategic variant
focused on organisational fit? 4. What problems are likely to be encountered by an
organisation intent on developing and practising a strategic approach to
recruitment and selection? 5. To what extent can a recruitment and selection
exercise that you have encountered be classified as strategic?
In the classroom

preparatory activities, similar approaches to those suggested for self check and
to be time for groups to consider all four questions. Here we would suggest that
groups major on one of the case questions only moving on to others if they have
time. Our answers to the four questions arguably present a degree of
comprehensiveness and detail unlikely to be echoed within the parameters of a
standard teaching session. However, they can be introduced into discussion of the
case study and their validity critiqued. In addition there is scope for further
detailed development of our answers and examples are provided as to how this might
be put into operation. For students who have not previously studied recruitment and
selection before it is useful to spend more time on exploring the fundamentals of
the ‘traditional’ process. Here the first question suggested for student
preparation (Based on prior learning and/or experience, how would you map out the
entire recruitment and selection process in a flow diagram?) can be used as the
basis for group work. Groups can be asked to share their flow diagrams and draw up
a composite flow chart before analysing it in terms of the second question
suggested for student preparation (What are the main strengths and weaknesses of
the recruitment and selection process you have drawn up in response to Question
1?). For students who are adding a strategic focus to prior studies of HRM it is
more useful to focus on their answers to Questions 3–5 of those suggested for
student preparation. We have particularly found it useful to focus on students’
practical experiences of recruitment and selection and to analyse these to evaluate
their strategic credentials against the conceptual models provided in the chapter.
Even if this did not form part of ‘student preparation’ it is normally possible to
get students to share and analyse their recruitment and selection experiences in
this way.
Follow-up work
class activities, self check and reflect questions and/or the chapter case study,
‘Recruitment and Selection at Southco Europe Ltd’, will serve as a useful
reinforcement of chapter content. Our outline answers to both self check and
opportunities for directed further reading. A further task for full-time students
would be to utilise material on recruitment and selection practice gathered as part
of any search for a ‘first destination’ job and analyse it for evidence of
strategic practise.

A further task for part-time students could involve them researching their own
company’s recruitment and selection activities in more depth with a view to
analysing its strategic credentials against the conceptual referents provided in
the chapter.

8.1 Imagine that you work as an HR officer for a company that is unhappy with the
effectiveness of its current recruitment and selection practice. You have been
asked to write a paper presenting a rationale for the development and subsequent
implementation of strategic recruitment and selection. Before you read on, take
five minutes out to think through the main arguments that you would use to
structure such a paper. Write them down now in note form. If you have already read
Chapters 1, 2 and 7 you should find these helpful in developing your ideas. This is
one of two questions designed to engage the reader with the subject through a
process of interaction. The authors’ answer to this question is summarised in Key
Concepts 8.3 and you would have been able to compare your answer against this and
weigh the significance of any differences. If you have not already done this you
should now do so although the full value of this question will have been lost if it
was not answered before reading on. 8.2 What potential features emerge from your
reading of the section ‘What is the rationale for strategic recruitment and
selection’? that you would expect to be incorporated into the development of a
conceptual framework of strategic recruitment and selection? This is another
interactive question although here the answer is embedded in the rest of the
chapter and is therefore not so obvious. It is argued that the themes below emerge
from this section in the following order of appearance: • • • • • • • a strategic
focus so that recruitment and selection is linked inextricably with corporate
objectives; the need to facilitate change in an increasingly turbulent business
environment; adoption of a long-term perspective consistent with the strategic
focus; the need for HRP to match recruitment and selection activities to corporate
strategy; recognising the importance of recruitment and selection when human
resources are viewed as an organisation’s most valuable asset; the need for
recruitment and selection to be internally integrated with other activities making
up the HR bundle; and the need to adopt a broader organisational focus into the
processes of job analysis.
Further on in the chapter these themes take form through the development of a
conceptual framework and model of strategic recruitment and selection. You might
like to go back and see how the above themes have been reflected in these
explanatory devices. 8.3 To what extent do staffing processes at the Dionysos
reflect the strategic approach to recruitment and selection encapsulated by the
conceptual framework and model depicted in Key Concepts 8.4 and Figures 8.3 and
8.4? Before directly addressing this question it is arguably important to reflect
on the contextual circumstances impacting on recruitment and selection practice at
the Dionysos. In summary, the hotel:

• • • •
is located in Turkey and not subject to the draft of legislation operating on

recruitment and selection within the European Union; currently operates in a loose
labour market where supply of labour exceeds demand; essentially provides a single
product that supports a relatively straightforward approach to first, second and
third order strategic decisions; and can be classified as a small to medium family
business.
Within this identified context, current recruitment and selection practice could be
argued to reflect the strategic variant through at least two strands of strategic
integration. There is a strong link between the personal attributes, or core
competencies, required in staff and the business goal with particular emphasis on
service quality and family fit. There is also evidence of horizontal integration
through an inter-related bundle of HR practices including staff development,
welfare, performance management, reward management, management style and employee
involvement. The strategy itself suggests a longer-term focus of creating a market
niche and, although not formalised, a degree of HRP is evident in the HR practices
developed and their integration with strategic imperatives. Although not cited in
the case, both Rim and Ahmet actively use their MBA qualifications to inform their
business planning. With respect to secondary features recruitment and selection at
the Dionysos, although somewhat unconventional by UK standards, reflects a front-
loaded investment approach and use of sophisticated selection with some evidence of
multi-stakeholder involvement. The probationary period is tantamount to an
extended, realistic and valid application of work sampling which costs a minimum of
one month’s pay for each shortlisted candidate. There is also extensive and
meaningful involvement of staff in making appointments to their work groups. In
addition there appears to be significant attention given to evaluating
organisational performance against key performance indicators. Although this
evaluation is not explicitly linked to recruitment and selection, by implication it
incorporates measurements of the quality of service provided by recruits. The hotel
industry is very labour intensive and dependent on the quality and performance of
its staff. Presumably therefore the success of the Dionysos in meeting its business
goals has to be down in no small measure to the staff employed to deliver its
vision. 8.4 To what extent does the process used to recruit Ryan Parry reflect a
strategic approach to recruitment and selection? It is recommended that you conduct
your analysis against the conceptual framework and model of strategic recruitment
and selection presented earlier in the chapter (Key Concepts 8.4 and Figures 8.3
and 8.4). An analysis of the Buckingham Palace example against featured templates
of strategic recruitment and selection is clearly constrained by a lack of detailed
information. However, despite reference to careful selection, a feature of Borucki
and Lafley’s definition of strategic recruitment and selection, the signs are not
good. While not privy to the corporate strategy of the Palace, if one exists, and
although it does not fit neatly into the normal classifications of strategy, it is
difficult to believe that the security of the monarch and other members of the
Royal Family is not a central objective. Allied to this, particularly given the
sensitivity to media relations, it might be expected that personal attributes such
as commitment to the Royal Household, fidelity, honesty, integrity etc. would be
fundamental attributes of personal specifications designed to recruit staff against
this paramount concern for security. On the basis of the reported events and their
detailed exposure in the tabloids it would seem that the antithesis of strategic
recruitment and selection is operating here. There was either no strategic
connection or the recruitment and selection process blatantly failed to deliver it.
Selection methods used appear to be very basic and far removed from sophisticated
selection with no evidence of a front-loaded investment model or multi-stakeholder
involvement. Ryan Parry resigned from his post, presumably so he could reveal all,
but it begs the question as to

how long he could have worked at the Palace without being rumbled! What does this
say about effective evaluation of recruitment and selection? 8.5 In Chapter 2 a
number of studies exploring the contribution of SHRM to organisational performance
reported on. A critique of the research methodology used by each study was
presented under the banner of ‘Study limitations’. On a similar basis, what
limitations can you identify in the study outlined above in Practice 8.11 that
might explain the low incidence of strategic recruitment and selection reported?
First, it might be argued that the study was directed at recruitment and selection
practice generally and was not directly focused on strategic recruitment and
selection. Second, the use of a non-directed, self-reporting procedure (flow chart
production) inevitably reflects the personal perceptions of the respondent. While
this was the intention it may nevertheless result in features being incorrectly
omitted or inadvertently invented. However, other survey methods are not without
these problems but here there were a number of checks and balances in operation.
Class-based discussion allowed the opportunity for further elaboration or
correction. Respondents were not led by the structure and content of data
collection methods such as questionnaires or interview questions. By definition
respondents were close to the action and not remote as might be the case with some
respondents to questionnaires. The data was not likely to be doctored for a
particular audience as its use was not disclosed until after its production. Also
the fact that in some instances a number of respondents were employed by the same
organisation (as many as eight in one case) and the availability of company-
produced documentation made it possible to compare and contrast data and identify
any glaring inconsistencies. Third, there was an element of leading in as much as
their responses were not completely nondirected. As described earlier, emphasis was
placed on the beginning and end points of their flow charts. Additionally, prior to
producing their data students were exposed to other course inputs and preparatory
activities. For management students this covered SHRM, HRP and recruitment and
selection. For personnel students this covered strategic integration, HRP and
recruitment and selection. As a result students were arguably sensitised to
relevant subject material that was particularly associated with the beginning and
end points of the recruitment and selection process and, more generally, strategic
human resource practice. Taken together this could result in an over-statement of
features of recruitment and selection associated with the strategic variant which
could not be quantified. Fourth, the fact that responsibilities for recruitment and
selection are generally divided in organisations between line managers and
specialist personnel practitioners raises the possibility that respondents may only
participate in part of the process. This may provide them with an incomplete or
distorted picture of the process. However, these two groups were almost equally
represented and taken together should provide a comprehensive picture of the state
of play particularly where line manager and personnel practitioner respondents hail
from the same organisation. Lastly, the process of data collection itself is open
to abuse. Students do not always undertake preparatory work as diligently as their
tutors might like and it is possible, for example, that students may simply omit
elements of the flow chart in their rush to complete ‘homework’. However, it could
be argued that there is a greater motivation for students to complete a task in
which they have a vested interest (i.e. part of their personal study) than there is
for questionnaire recipients to become respondents. It is also important to
remember that there is an assumption here that student perceptions of practice will
reflect what they see as the most significant aspects of recruitment and selection
practice. It is possible to conjecture that if senior managers maintain that their
organisation’s human resource practices are strategic but that operational staff do
not identify with this then the strategic message has not been internalised. Put
another way if those responsible for recruitment and selection activities do not
perceive any
strategic significance they are unlikely to be found practising the strategic

variant whatever the organisational intent!

The first two of four case study questions are embedded in the case itself and have
been answered here as we expected our readers to answer them. Therefore, although
further material relevant to these case questions may be revealed as the case
unfolds, Questions 1 and 2 have been answered solely on the basis of what has gone
before in the case narrative.
1. Based on the information provided with respect to organisation context,
strategy, vision, mission statements and annual key objectives, what core
competencies do you feel will underpin Southco’s recruitment and selection
processes? For us the key words appearing in the opening section of the case
(covering organisation context, strategy, vision, mission statements and annual key
objectives) that impact on recruitment and selection are: ‘leading global source of
engineered access …………. solutions’; ‘continuous growth’; ‘seamless teamwork’;
‘operational excellence’; “performance management’; ‘a climate of constant change’;
and ‘appreciation of cultural diversity’. Putting our own strategic interpretation
on these contextual statements, it would seem that the organisation is pursuing a
mixture of growth, innovation and quality strategies underpinned by a performance,
team-based culture. At times these strategic intents may surface internal
contradictions that may put further pressure on recruitment and selection practice.
Further, we would argue that these strategic concerns are being pursued in a
dynamic global market place where change is a constant. All of this leads
potentially to very demanding person specifications although we argue that in a
team working environment it is not necessary for all members to posses all required
core attributes. What we advocate instead is that teams need to contain a critical
mass of the required attributes among its membership. Working from this analysis,
we would argue that competencies associated with innovation, quality enhancement,
performance management, managing change, diversity, foreign languages and teamwork
are likely to be ‘core’ to Southco realising its strategic imperatives. A useful
starting point to competency analysis to meet the strategic requirements of
innovation and quality is the work of Schuler and Jackson (1987), developed further
in Chapter 2. They identified the following required employee behaviours to support
the respective strategies of innovation and quality enhancement: Innovation – high
degree of creativity, longer-term focus, high degree of co-operation and
interdependence, equal attention to process and results, high degree of risk-
taking, and high tolerance of ambiguity. Quality enhancement – repetitive and
predictable behaviours, long/intermediate-term focus, modest degree of co-operation
and interdependence, high concern for quality, modest concern

for quantity, high concern for process, low risk-taking, and high commitment to
organisational goals. A number of the above employee behaviours are arguably also
relevant to other identified competency requirements. For example, a high degree of
co-operation and interdependence, and equal attention to process and results can be
related to effective team working and a high degree of risk-taking, and high
tolerance of ambiguity to managing change. Adding to this, Cockerill (1989:54–55)
cites 11 competencies that are associated with high performance management in
rapidly changing environments: ‘information search; concept formation; conceptual
flexibility; interpersonal search; managing interaction; developmental orientation;
impact; self-confidence; presentation; proactive orientation; and achievement
orientation’. To operate successfully in an environment of dynamic change arguably
requires a critical mass of employees who possess competencies associated with
continuous learning and development, and transformational leadership skills. These
include, for example: experiments; admits mistakes; openness; encourages ideas;
makes joint decisions; charismatic; inspirational; goal directed; adopts rational
approaches to problem solving; and with a strong concern for the needs of
individuals with a capacity to contribute to their further development (Bass, 1990;
Evenden, 1993). As before, a number of these overlap competency boundaries. With
respect to teamwork, for example, it could be argued that admits mistakes,
openness, encourages ideas, makes joint decisions and concern for the needs of
individuals with a capacity to contribute to their further development are all
relevant. Standing somewhat outside this list are the competency requirements
around foreign languages required by global operations. This may simply be
expressed in terms of fluency in a number of particular languages but would need to
embrace the full range of linguistic competencies, verbal, written, comprehension
etc. We could go on but what is already emerging is a very demanding list that
leads us to three further points. First, is a reminder that core competencies
represent those required in sufficient quantity in the workforce as a whole to
support the achievement of corporate strategies and do not represent a person
specification to be applied to every prospective employee. Second, the legitimacy
of our ideas can be discussed further through class discussion. We would argue, for
example, that: the list could be augmented, particularly in the area of diversity
(where we have been deliberately silent but where Chapter 13 can be used as a
source of ideas); some entries are open to challenge; and others require further
exploration to establish their full meaning or legitimacy. Third, any debate around
core competencies should be accompanied by the caveat that, however, the
competencies are generated they need to be validated in the specific organisational
context to which they apply if they are to serve a useful purpose. 2. What do you
think would be an appropriate recruitment and selection procedure for Southco to
follow? Map out your answer providing as much detail as possible on the recruitment
and selection methods you would use. We start with a given that recruitment policy
at Southco dictates that in the first instance vacancies must be advertised
internally. However, irrespective of whether the focus is internal or external we
would advocate that the process should start with the development of comprehensive
role descriptions and person specifications that capture the demands arising form
the strategic and competency analysis presented immediately above. Therefore we
would expect these recruitment documents to adequately reflect role
responsibilities and competencies associated with organisational requirements with
respect to innovation, quality enhancement, performance management, managing
change, diversity, foreign languages and teamwork.

The job description and person specification will be used as the basis for the
creation of a realistic job and organisational preview to be shared with
candidates, as stakeholders, at every opportunity. This would start with the
production of objective job advertisements providing sufficient detail to enable
the prospective candidate to assess their continued interest in the vacancy. We
recommend that this should be supported by open access to a help line to discuss
the vacancy and, when recruiting externally, the organisation, to ensure a
realistic preview of both is fully communicated. For major recruitment exercises
involving multiple vacancies, key managerial appointments and areas of short supply
we advocate that this be supplemented by open days/evenings designed to enable
prospective candidates to subject the organisation to close scrutiny. With respect
to external advertising it is difficult to be precise because specific copy and
media placement will depend on the particular vacancy in question. However, this
must be preceded by a detailed analysis of potential recruitment sources augmented
by an evaluation of the company’s previous recruitment exercises. For each vacancy
we would require a competency-based application form that reflects precisely the
core organisational and job competencies demanded by the role. Although some of the
information will be common the competency-based component of the application form
will need to be tailor-made if it is to be fit for purpose. To provide greater
objectivity we would propose that applications received are evaluated independently
by three stakeholders against the persons’ specifications. These stakeholders would
then meet to determine the shortlist. Initially the shortlisting panel should
identify all those applicants where there is agreement amongst all three
stakeholders that they meet the shortlist criteria based on their independent
assessments. Hopefully any panel discussion will then be about discussing finer
distinctions between such applicants before finalising the shortlist. Cockerill
(1989) argued that competencies can be assessed reliably through direct observation
and simulated assessment centre conditions. Given the likely complexity of the
persons’ specifications the use of multiple selection methods will almost certainly
be necessary if reasonable levels of validity are to be achieved. Under these
circumstances assessment centres, which feature direct observation as one of their
elements, would be a sensible option. Based on the competency analysis we would
anticipate the use of psychometric testing to assess dimensions such as attitudes,
intelligence, motivation and personality supported by simulated group exercises to
further assess teamwork competencies. In-depth interviews would be competency-
based, structured and behaviourally oriented to assess directly those competences
incorporated into application forms. Assessment centre exercises directed at work
sampling would be designed so as to actively involve other important stakeholders
and enable their participation in the selection process. This is seen to be
particularly relevant to support the assessment of cultural fit, attitudes to
others, interpersonal competencies and teamwork. If there is an interest in
exploring the topic of strategic recruitment and selection in greater depth then a
further, demanding exercise would be to take competencies identified under Question
1 and work through how each one could be assessed in detail within the multiple
selection method context advocated. So, for example, taking risk-taking or high
tolerance of ambiguity the task would be to work through how these could be
assessed through interview, psychometric testing, work sampling etc. 3. To what
extent could Southco’s approach to recruitment and selection be classified as
strategic? Justify your answer with evidence drawn from case material.
Encouragingly there appears to be evidence of both external, vertical integration
(Mabey et al, 1998) and institutional integration (Mabey and Iles, 1993) of HRM at
Southco where the corporate alignment of the HR function is seen as a critical
success factor and the most senior HR manager is regarded as an indispensable
member of the senior management team. This is

further evidenced through the corporate scorecard where the HR function is seen to
represent one of the key measurables relating to performance delivery against
corporate goals. How this feeds through to recruitment and selection practice,
however, is less clear-cut. With respect to the primary features of strategic
recruitment and selection (strategic integration, long-term perspective and
formalised HRP), the concern for candidate fit both with organisation culture and
its global context and the requirement for candidates to be able to adapt to the
fastpaced business environment characterising Southco all reflect a strong
strategic focus. Although not incorporated into the case study, this was
exemplified by the process used to recruit a new managing director during the time
the case study was being written. Here the strategic objectives of the organisation
were used to identify the key role responsibilities and related objectives of the
managing director over the short and longer-term and the personal competencies
necessary to deliver these successfully. These key role responsibilities,
objectives and competencies then became the basis for all subsequent recruitment
and selection activity. What is not evident, however, is the extent to which this
overtly strategicallydriven approach to recruitment and selection, demonstrating
both the primary features of strategic integration and a longer-term perspective,
is used to underpin the recruitment and selection of staff lower down the
organisational hierarchy. This is not to say that this is not the approach followed
and, on the basis of evidence available from the case, it can at least be argued
that the over-arching concern for organisational fit directly reflects these
primary features. With respect to the secondary features of strategic recruitment
and selection (adoption of a front-loaded investment model, rigorous evaluation,
the use of sophisticated selection methods and a multi-stakeholder approach) there
is certainly some clear evidence to support some of these features. Here we would
argue that the adoption of a front-loaded investment model, the use of
sophisticated selection methods and a multi-stakeholder approach are evidenced by:
• • • • • • • the philosophy that recruiting the ‘wrong’ person leads to
substantial organisational costs; the use of a competency-based approach; the
information material sent to candidates to establish realistic organisational and
job previews; the length of selection events; the use of behaviourally-based
interviews, competency assessments, psychometric testing, presentations and the
assessment of team interaction; the involvement line managers and more senior
levels of the management hierarchy, the HRD manager and the current role holder;
and the joint decision-making process conducted against competency and cultural fit
assessments.
On the basis of the evidence available, and acknowledging that this will not
necessarily represent a complete picture, we conclude that at the very least
Southco are operating a highly professional and sophisticated recruitment and
selection process and that at the very best it has strong strategic underpinnings.
However, as revealed by our answer to the last case question below, on the basis of
available information the process does not meet all of our criteria for strategic
recruitment and selection and therefore as currently evidenced is classified as
largely but not fully strategic.

4. What changes would you make to Southco’s recruitment and selection processes in
order to more fully meet the model, core dimensions and conceptual framework of
strategic recruitment and selection captured respectively in Figures 8.3, 8.4 and
Key Concepts 8.4? From the foregoing analysis it is argued that the following
changes or additions are necessary in order for Southco’s recruitment and selection
processes to more fully meet the model, core dimensions and conceptual framework of
strategic recruitment and selection captured respectively in Figures 8.3, 8.4 and
Key Concepts 8.4 in Chapter 8: • • • • • • evidence of closer strategic alignment
for a wider range of appointments throughout the organisational hierarchy; evidence
that the qualities of the organisation’s existing HRs are being considered as an
input into strategy formulation to establish two-way strategic integration; the
explicit use of a HRP mechanism or equivalent to translate corporate objectives
into valid core competencies; the clear articulation and use of a set of core
values and/or competencies to inform recruitment and selection decisions broadly
throughout the organisation; evidence of a long-term focus being adopted in
addition to the more immediate job requirements in most appointments throughout the
organisational hierarchy; rigorous evaluation of recruitment and selection
processes and outcomes to assess: the validity of specified competencies and
appointment decisions; stakeholder satisfaction; costeffectiveness; contribution to
the achievement of corporate objectives and strategies, and the successful
management of change; and to inform the further development of recruitment and
selection practice; and more comprehensive evidence that key stakeholders are
routinely being involved in recruitment and selection exercises.
References
Bass, B.M. (1990) From transactional to transformational leadership: learning to
share the vision, Organizational Dynamics, Winter, 19–31. Cockerill, A. (1989) The
kind of competence for rapid change, Personnel Management, September, 52–56.
Evenden, R. (1993) The strategic management of recruitment and selection, in
Harrison, R. (ed.) Human Resource Management: Issues and Strategies, Wokingham,
Addison–Wesley, 219– 45. Harrison, R. (ed.) Human Resource Management: Issues and
Strategies, Wokingham, Addison– Wesley. Mabey, C. and Iles, P. (1993) The strategic
integration of assessment and development practices: succession planning and new
manager development, Human Resource Management Journal, 3(4), 16–34.

Mabey, C., Salaman, M. and Storey, J. (1998), Human resource management; a

strategic introduction (2nd edn), Oxford, Blackwell. Schuler, R.S. and Jackson,
S.E. (1987) Linking competitive strategies with human resource management
practices, The Academy of Management Executive, 1(3), 207–19.

CHAPTER 9
Performance management: so much more than annual appraisal

Learning outcomes
By the end of the chapter you should be able to: • • • • • define performance
management and explain its relationship to strategic human resource management;
analyse the reasons for the growth in importance of performance management; explain
the performance management systems model and the key processes embedded in the
model; evaluate some of the major criticisms of performance management; suggest
ways in which performance management may link more closely to strategic human
resource management.
Summary
• • • • Performance management is an umbrella term to describe not a single
activity but a range of activities which may be gathered together to enhance
organisational performance. Although the performance indicators approach to
performance management has proliferated in many organisations, it offers a
restricted perspective on performance management. Performance management may be
linked to the organisation’s strategy through horizontal and vertical integration.
Performance management has the facility to change the culture and therefore the
working practices of organisations as part of a concerted effort to generate change
through its role as part of an organisation’s ‘high performance’ HR strategy. An
important way of integrating the HR practices is to use the skills, behaviours and
attitudes necessary to deliver effective job performance as a way of assessing
individual success. Among the reasons for the growth in importance of performance
management, are the desire to achieve greater organisational effectiveness and the
dissatisfaction with traditional performance appraisal.

The performance management systems models includes inputs such as external and
internal contexts and employee skills, processes including setting objectives and
360-degree appraisal; HR outputs such as performance plans and pay awards; and
enhanced organisational performance. Included in the major conceptual flaws in
performance management thinking are the potential preoccupation with management
control, the assumed compliance of employees and the dangers of prescribing a
particular model of performance management without paying due regard to the
organisation’s context.

Comment
This chapter has been written from the perspective of the HRM specialist rather
than the management generalist. This is an important distinction. The chapter opens
with a section, which is written to demonstrate that performance management is much
more than performance measurement, the ‘metrics’ approach that dominates in so many
organisations. Thus, the chapter concentrates very much on the processual approach
to performance management. Yet, as the chapter title makes clear, the chapter is
not just about the process of performance appraisal; this is treated as just one
aspect of performance management. What the chapter attempts to achieve is to place
performance management clearly within the framework of SHRM by placing emphasis
upon the extent to which performance management can be integrated with other HR
components. Therefore, the hope is that the reader will see how performance
management is an intrinsic part of the SHRM approach and fit this chapter neatly in
the framework of the whole content of the book.
Student preparation
from the chapter. We use a variety of vehicles to bridge student preparation and
class-based activities in order to enhance their understanding of the chapter
content and its overall relationship to managing human resources (HR)
them. Sometimes, this may be formalised by asking students to write down (as
format; complete the Self-Check and Reflect Questions and come to the session
Our outline answers to both Self-Check and Reflect Questions and case study
questions follow in the next two sections of this chapter guide. Pre-set questions
that we have found useful for

structuring student reading, preparatory activities and classroom discussion for

the topic of performance management include: 1. How would you define performance
management and set it into the SHRM context? 2. What are the weaknesses of
performance management in many organisations? 3. What are the principal strategic
relationships between performance management and corporate strategy and how could
they be evidenced in practice? 4. What do you think are the most important outputs
of the performance management model in your organisation or one known to you?
In the classroom
A starting point for classroom activities that we find useful is to raise and
discuss the issues arising from students’ preparatory reading. This avoids
providing lecture input that simply repeats what students have already grasped,
reinforces the value of reading as an essential prerequisite for class-based
discussion and provides a platform from which further class-based activities can be
launched. However, when adopting this approach, we find it useful, once student
queries have been exhausted, to provide a summary of key issues. Where preparing
answers to self- check and reflect questions has been set as part of preparation
for the teaching session, at least two alternatives present themselves. First,
students can be asked to contribute individual responses that are then subjected to
plenary discussion. This is our preferred approach because it makes students more
to self- check and reflect questions was not part of preparatory work but
would favour the group approach as a more stimulating method. In all cases student
responses can be considered against our suggested answers, which themselves can be
usefully critiqued. Where case study work has featured as part of preparatory
activities, similar approaches to those suggested for self check and reflect
questions can be adopted. Our approach here would be to start with a more general
exploration of the performance management implications of the case.
Follow-up work
of alternatives for follow-up work while at the same time leaving lecturers free to
add or substitute their own ideas. If they have not already been used as part of
class activities, any prior preparation of answers to the self-check and reflect
case ‘Performance management at Tyco’ will serve as a useful reinforcement to
chapter content. Our outline answers to both self-check and reflect questions and
case study questions follow in the next two sections of this chapter guide. There
references provides many opportunities for directed further reading.


9.1 What factors do you think would explain the weaknesses Radnor and McGuire found
in their research? It seems that they may well stem from one particular source: the
imposition of performance management upon managers in the UK public sector by
central government. However wellintentioned the government was, the point is that
the initiative in many cases was not the idea of managers in the organisations in
which it was implemented. This raises question about the extent to which it is
reasonable for those managers to be enthusiastic about their performance management
scheme and transmit this enthusiasm to their line managers and employees. Perhaps
the best that can be hoped for is a following of government guidelines, which is
what seemed to be happening. 9.2 What obstacles do you think may stand in the way
of an attempt by organisations to adopt a ‘new style’ of management in which the
'new style' manager is supportive, a team leader, a coach and facilitator? There
are a number of reasons why this may be a difficult, not the least of which is
traditionalism. The image of the boss ‘as someone who tells me what to do’ as
opposed to ‘someone who asks me if I would be happy to do it’ is a difficult one
for many managers, and, indeed, employees, to grasp. It contradicts generations of
thought and practice. Yet in many Western developed countries at least, the general
consensus is that this may be the most effective way to get the best out of people.
In addition, there is an insufficiency of the skills needed to practise the new
style of management. Many managers do not find it easy to be more consultative
because it is not as easy. Giving negative feedback in such a way that it is
accepted as legitimate by employees is a difficult skill. Many managers say that
the most difficult thing that they have to do is to tell employees that they are
being made redundant. The traditional promotion route for many managers is through
the ranks of their technical skill. So many managers are managers because they have
been good technicians; their potential managerial skills have traditionally not
been considered when promotion decisions are made. So it is understandable if many
find the ‘people’ side of their management role difficult and forbidding. 9.3. To
what extent do you think that the lack of objectivity in performance appraisal may
be overcome in performance management? There is an argument that a lack of
objectivity is inherent in most assessments of employee performance. By objective
we mean phenomena having reality independent of the mind. Yet all decisions in the
range of activities concerned with performance management are subjective; that is
they are clearly not independent of the mind. They reflect managerial judgements
about, in particular, what to assess, and how to assess so the objectivity evident
in performance appraisal is equally evident in other performance management
activities. 9.4. In what ways do you think the psychological contract is threatened
by the shortcomings in the implementation of performance management at Stiles et
al.’s organisations? In the research the key components of the psychological
contract were organisational commitment and trust. Commitment-seeking HR activities
such as performance management are usually accompanied by explicit and implicit
messages of which make promises to employees of better rewards, better development
etc. In the organisations surveyed in the research it seemed that there were a lot
of reasons for those promises not being kept. If they

are not kept then managers should not be surprised if levels of trust and
commitment are not what they hoped for. 9.5. What problems may be involved in
distinguishing between lack of capability and negligence? In practice the
difference may be quite difficult to establish. Negligence suggests a strong
element of wilfulness. In this case the employee is deliberately negligent due to a
slipshod, careless attitude. But some cases of negligence may be the consequence of
the employee not having sufficient awareness of what constitutes negligence, i.e.
he or she is not capable of understanding what negligence means in the context of
his or her job. For example, there is a difference between call centre operator A,
who treats customers in a brusque manner because she is having a bad day to
assistant B who always treats customers in this manner because she does not know
the difference between brusqueness and a polite yet business-like manner. The way
in which you would treat these two employees would be quite different. Repeated
brusqueness on the part of the assistant A would be a misconduct case for the
disciplinary procedure whereas assistant B may well be treated as ‘incapable’.
There may be a case for moving assistant B to alternative work more suited to her
skills and experience (e.g. not involving customer contact), always assuming that
her employer can offer her such work. 9.6 What other potential problems may be
relevant to the introduction or implementation of performance management? Like most
other HR initiatives the list is endless! The main problems, as the chapter has
sought to illustrate, are concerned with ineffective implementation rather than
flawed design. Some of these problems are: resistance from managers who see
performance management as just more ‘HR bureaucracy’; lack of training for managers
and employees; lack of top management commitment; lack of resources and lack of
evaluation of schemes in order to see what could be improved. However, there are
other potential difficulties, which may be concerned with principle rather than
practice. Given the strategic thrust of this book and this chapter it may be that
there is a lack of strategic coherence concerned with performance management due to
the lack of vertical and horizontal integration.

1. What action is needed to ensure that Tyco managers play their full part in
ensuring that the performance management system is effective? The handbook, which
outlines the details of the scheme specifies that managers must: • • • • set and
clarify employees’ goals; support employee development and possible career
progression; provide useful, frequent and candid feedback; assess performance
fairly.
Clearly it is how effectively the managers conduct these activities that will
determine that the performance management system is effective. The most important
precursor to the pursuit of these activities is that the managers must be committed
to the effective principles of the scheme. This is easier said than done. In many
organisations performance management is seen as just another personnel department
imposition: ‘as long as it’s done and the forms are filled in that is all that is
necessary’. Unfortunately, the ‘metrics’ based performance

measurement approach to performance management tends to encourage such a

bureaucratic outlook. This is clearly not the approach at Tyco as the second and
third aims of the performance management scheme make clear: • • it empowers
employees to take an active and influential part in the processes; and it is
designed to assess not only the results that employees achieve but the way in which
these results are achieved.
The implications for managers of these twin aims are important. It suggests that
commitment to the effective principles of the scheme is not enough. What is also
necessary is an enlightened attitude to the management of people, which believes
that how people do what they do is as important as what results they achieve. This
is profoundly different from the ‘metrics’ based performance measurement approach
to performance management where the emphasis is solely on results. Commitment to
the performance management scheme and an enlightened attitude to the management of
people must be allied with training in the skills of goal setting, development
needs identification, feedback giving and assessment. All this will mean that Tyco
managers should play their full part in ensuring that the performance management
system is effective. 2. What action is needed to ensure that Tyco employees are
equipped to gain the maximum benefit from the performance management system? The
handbook which outlines the details of the scheme specifies that employees must: •
• • • work hard to achieve their goals; take responsibility for their own
professional development; solicit, listen to and act upon feedback; assess their
performance objectively.
In the same way as managers must be committed to the principles of the performance
management scheme at Tyco so must employees. The second responsibility that is
thrust upon employees as part of the scheme, to take responsibility for their own
professional development, demands a quite different psychological approach from
that with which many employees are familiar. They are used to the idea of the
employer accepting responsibility for employee development. After all, many of us
have grown up with the idea of the organisation being a ‘good company to work for’,
which will ‘look after us’. This is very different from the idea of employees
accepting responsibility for their own career planning and development. It is
consistent with characteristics of the ‘new psychological contract’ which are set
out in Table 9.1 below.
Table 9.1 Characteristics of the ‘old’ and ‘new’ psychological contract

Characteristic Focus of the employment relationship Format Duration Underlying
principle Intended output Old Security and a long-term career in the company
Structured and predictable Permanent Influenced by tradition Loyalty and commitment
New Employability to cope with changes in this and future employment Flexible and
unpredictable Variable Driven by market forces Value added

Employer’s key responsibility Employee’s key responsibility Employer’s key input

Employee’s key input
Fair pay for a fair day’s work Good performance in present job Stable income and
career Time and effort
High pay for high job performance Making a difference to the organisation
Opportunities for self-development Knowledge and skills
Adapted from Hiltrop (1995:290). The third responsibility that is thrust upon
employees as part of the scheme, to solicit, listen to and act upon feedback, is
consistent with the personal acceptance of responsibility for career development.
It demands an openness that, again, will be quite difficult for many employees who
are more used to defensiveness when faced with criticism, even of the more
constructive type. Assessing their performance objectively obviously demands
similar openness. 3. What should be the priority concerns of Tyco HR specialists in
their attempt to ensure that the performance management system is fully integrated
with other HR activities? The chapter goes into some detail about how performance
management systems may be fully integrated with other HR activities. Vertical
integration may be achieved by reinforcing to the Tyco mission, and, crucially,
relating the organisation’s business objectives to those of the individual. This,
and the notion of the necessity for employees to accept more responsibility for
their own development, is consistent with what the chapter notes about performance
management being seen as part of a so-called ‘high performance’ HR strategy. The
characteristics of such a strategy are: • • decentralised, devolved decision-
making, made by those closest to the customer – so as constantly to renew and
improve the offer to customers; development of people capacities through learning
at all levels, with particular emphasis on self-management, team capabilities and
project-based activities – to enable and support performance improvement and
organisational potential; performance, operational and people management processes
aligned to organisational objectives – to build trust, enthusiasm and commitment to
the direction taken by the organisation; fair treatment for those who leave the
organisation as it changes, and engagement with the needs of the community outside
the organisation – this is an important component of trust and commitment-based
relationships both within and outside the organisation.
All this suggests an emphasis upon attention to organisation structural design (see
more detail in the chapter); and training and development to support performance
management. 4. What problems may be encountered in applying a standardised
performance management system throughout the 100 countries in which Tyco operate?
The overall aim of Tyco’s performance management system is to contribute to the
company’s goals of achieving operational excellence and becoming one unified
company. The aim is to unite Tyco teams throughout the world into a single
operating company with a healthy culture characterised by alignment and growth
opportunities. This suggests that the key task for Tyco management is to
communicate the performance management strategy and policy throughout its operating
companies and to train all those involved in its operation. But, given all that
Chapter 3 says about cultural adaptation that is clearly easier said than done.
Part of the section defining national culture in Chapter 3 states
that ‘(national culture) affects all aspects of how people think, solve problems
and make decisions both within and outside their employing organisations’. The
complexity of ideas contained in the previous answers to this case study suggests
that Tyco employees in different operating countries will think very differently
about some of the issues. Take, for example, the notion of individual
responsibility for self-development. If this is a problem for many organisations in
highly individualist cultures like the United States and the United Kingdom, it
follows that it is likely to be even more so in cultures where dependence upon the
employer has traditionally been prevalent. An example here is China, whose state-
owned enterprises for much of the latter part of the 20th century operated a cradle
to grave welfare system where the employer accepted responsibility for all aspects
of the employee’s life, both inside and outside work. Chapter 3 specifies three
ways of dealing with national cultural differences: ignoring the differences;
minimising the differences and utilising the differences. The first approach sees
cultural differences as irrelevant, or at least to push them to one side in the
pursuit of standardisation and efficiency. This may be an important part of the
MNCs overall business strategy since the strength of international brands such as
Wal-Mart and Starbucks depends upon the customer receiving a similar experience in
whichever part of the world the store is situated. Tyco may admire the marketing
strategy of these organisations but this implies an HR strategy that is similarly
uniform, which seems intuitively wrong. The second approach to dealing with
national cultural differences is minimising cultural differences. This perspective
sees cultural differences as a problem but does not ignore such differences.
Operating companies in different countries are given some decision-making autonomy
on the basis that ‘local people know what is best for them and the part of the
organisation, which is located in the host country should be as local in identity
as possible’. This approach does not rule out the possibility of the MNC developing
a strong corporate culture: but there is sufficient flexibility to adapt that
culture to local conditions’ (Perlmutter, 1969). Indeed, such flexibility may be
dictated by the necessity for adapting to local custom and legislation. The third
approach is utilising cultural differences. Here Tyco will be concerned to use
cultural differences as a learning opportunity and a source of competitive
advantage. This will enable the company to take advantage of different ideas and
insights from wherever they may come. At first sight, this seems consistent with
Tyco’s desire to ‘become one unified company….to unite Tyco teams throughout the
world into a single operating company with a healthy culture characterised by
alignment and growth opportunities’. But the cost of this is the element of
standardisation of the performance management system. We are left wondering whether
an effective standardised performance management system is possible. It may be that
standardisation is consistent only with bureaucracy and effectiveness with
differentiation. So Tyco’s aim, however laudable, may not be realisable.
References
Hiltrop, J,M. (1995) The changing psychological contract: the human resource
challenge of the 1990s, European Management Journal, 13(3), 286–294. Perlmutter, H.
(1969) The tortuous evolution of the multi-national corporation, Columbia Journal
of World Business, 1, 9–18.

CHAPTER 10
Strategic human resource development: pot of gold or chasing rainbows?

Learning outcomes
By the end of this chapter you should be able to: • • • • • develop and discuss a
continuum of strategic maturity upon which different approaches to Human resource
development (HRD) can be located; identify and explain the major features of
Strategic human resource (SHRD) and organise these into a conceptual framework;
analyse how systematic approaches to HRD can be accommodated in conceptual
frameworks of SHRD; analyse the significance of the learning organisation and
knowledge management to SHRD; critically review the rhetoric and reality of the
role of managers as key SHRD stakeholders.
Summary
• It is possible to construct a continuum of HRD strategic maturity upon which
different approaches to HRD can be positioned. At the strategically immature end
HRD is conducted in isolation of organisational strategies. Here any strategic
linkage is accidental and HRD interventions represent isolated, tactical responses
to operational problems encountered. At the strategically mature end HRD approaches
and specific interventions reflect full strategic integration through their
effective accommodation of two-way vertical and horizontal integration. In addition
to strategic integration, SHRD is characterised by: senior management sponsorship;
the commitment and active involvement of all levels of management; effective
collaborative partnerships between HRD specialists and line managers; systematic
environmental scanning to maximise the lead time for developing HRD responses to
change; transformation in the role of HRD specialists from training providers to
proactive change agents; a learning culture; and comprehensive evaluation of SHRD
interventions. Although often positioned at the non-strategic end of the continuum
of strategic maturity, it is possible for the more familiar systematic cycle of HRD
to be modelled to incorporate the characteristics of SHRD. The learning
organisation and knowledge management have emerged as two recent approaches to HRD
that have a strong strategic connection. The learning organisation focuses on the
process of learning to learn so as to enable learning within organisations to

be faster than their competitors and the rate of change. Knowledge management
adopts a narrower focus and seeks to capture, disseminate and utilise existing
knowledge and generate new knowledge in order to sustain an organisation’s
competitive position and promote innovatory behaviour. Both concepts place a
premium on human capital as the route to sustainable competitive advantage where
learning and knowledge can assume the status of an organisation’s core competence.
• Within a multi-stakeholder perspective, managers can be identified as the
linchpin for the successful execution of SHRD. However, for a variety of reasons,
their willingness and ability to assume this central role in SHRD is questionable.

Comment
Contrary to the situation for strategic human resource planning and strategic
recruitment and selection there is a much greater wealth of literature available on
the topic of strategic human resource development (SHRD). In this literature there
is a particular emphasis on strategic integration, the centrality of learning and a
learning culture to SHRD and multi-stakeholder responsibilities and involvement.
These represent three key themes running through Chapter 10 although with respect
to multi-stakeholder responsibilities and involvement the emphasis on HRD
professionals commonly found within the SHRD literature is downplayed in favour of
a greater focus on managers as HRD stakeholders. An important consideration here is
the critical role played by managers in learning and development generally and its
strategic manifestation particularly. This is graphically illustrated by ‘A case of
two managers’, Felicity and Stanley, depicted in Practice Boxes 10.10 and 10.11. An
important feature of the chapter is the attention given to the traditional
systematic cycle of HRD and its strategic potential. This strategic potential is
often overlooked in the SHRD literature whereas in Chapter 10, along with other
models of HRD, we have attempted to show that irrespective of how HRD is portrayed
or constructed it is possible to provide it with a strategic focus. Here,
throughout the chapter, we have tried to capture and explore different degrees of
strategic HRD focus, or integration, through the use of a conceptual model of
strategic maturity developed along the lines of a continuum. We hope the concept of
a continuum, with an absence of any strategic connection at one end and full
strategic integration at the other, will provide a useful teaching vehicle for the
exploration of the SHRD subject domain.
Student preparation
bridge student preparation and class-based activities in order to enhance their
them. Sometimes this may be

formalised by asking students to write down (as questions) the three issues
addressed by the chapter where they would like further clarification and guidance.
the case questions.
preparatory activities and classroom discussion for the topic of strategic HRD
include: 1. Drawing on the models and conceptual developments contained in the
chapter, what for you constitutes SHRD? 2. To what extent is SHRD an unrealistic
organisational aspiration and why? 3. Why are the concepts of the learning
organisation and knowledge management so difficult to get to grips with? 4. How
could organisational HR practice be developed and implemented to foster greater
commitment among managers to their HRD role responsibilities? 5. To what extent
could HRD practice in an organisation known to you be classified as strategic and
what would be necessary to increase its strategic credentials?
In the classroom
exhausted, to provide a snappy summary of key issues. While preparing answers to
reflect questions can be adopted. If coming to the case afresh, there

is unlikely to be time for groups to consider all four questions. Here we would
suggest that groups major on one of the case questions only moving on to others if
they have time. HRD is an area where almost every student has some experience
irrespective of whether they are full or part time. The majority of full-time
students will have accumulated work experience prior to and during their higher
education studies and many will be following business-related courses, which
incorporate a placement element. Therefore, we have found it both feasible and
useful to surface these experiences during class discussion and to subject them to
critical analysis in order to evaluate their strategic credentials.
Follow-up work
used as part of class activities, the self check and reflect questions and/or the
chapter case study, ‘INA’, will serve as a useful reinforcement of chapter content.
questions follow in the next two substantive sections of this chapter guide. There
references provides many opportunities for directed further reading. One common
denominator amongst students is that they are all actively engaged (or should be!)
in the process of learning. An interesting exercise, therefore, is to ask them to
reflect on the relevance of concepts underpinning the learning organisation and
knowledge management to their student learning experiences and how they think these
could be exploited in the world of work by both themselves and their work
organisations.

10.1 Based on the story so far, what do you think are the essential characteristics
of SHRD? Analysing the content of HRD/SHRD definitions surfaces a number of
characteristics of the concept. Of these, strategic integration is the most
frequently cited but takes on a number of different forms. First, is where HRD is
managed strategically to help achieve organisational objectives. Second, SHRD can
be viewed as a process that helps influence and shape strategy making. Third, is
horizontal integration with other SHRM activities. In addition, there is a clear
focus on continuous individual and organisational learning and growth. At one
level, providing workplace learning experiences and utilising the resultant outputs
of knowledge, skills and attitudes is seen as a necessary input into organisational
learning and the achievement of business goals and strategies. At another level,
the creation of a learning culture, with its emphasis on developing human capital
as a core competence, is seen to lie at the heart of SHRD. There is also due
consideration given to mutuality of interests between individual and organisational
needs through focusing on achieving the longer-term aspirations of both. Lastly, it
is possible to identify a focus on future change that not only reinforces the long-
term perspective but also casts SHRD into a proactive as well as reactive process.

10.2 Before reading on, how would you critique Garavan’s depiction of SHRD as
summarised in Key Concepts 10.2? Although Garavan’s early work provides a very
useful starting point to an exploration of SHRD he appears to approach the subject
very much from the perspective of the HRD specialist. Most of the key
characteristics he identified relate specifically to the HRD function, which gives
rise to a number of potential problems. First, it could be argued that this
perspective may signal that the HRD function is seen as the most important
stakeholder with prime responsibility for HRD. This would clearly represent a
position that is inconsistent with SHRM with its emphasis on devolvement of HR to
line managers. However, against this, his two characteristics of ‘top management
support’ and ‘line manager commitment and involvement’ (Garavan, 1991: 18 and 20)
reflect the SHRM roots of SHRD but could lead to a second difficulty. By placing
together a heavy emphasis on the functional responsibilities of HRD specialists on
the one hand and increased managerial responsibility and involvement on the other
it may be setting up a recipe for conflict between these two respective
stakeholders. Third, if taken to its extreme, the adoption of SHRM may result in
the total abandonment of a specialist HR (and HRD) function making it impossible to
activate the HRD functional interventions anticipated by Garavan. Lastly, although
the absence of a specialist HRD function may be rare in large organisations the
same cannot be said for small and medium-sized organisations. Another problem area
arises around the central characteristic of 'integration (of HRD) with
organisational missions and goals’ (Garavan, 1991: 17–18). Within Garavan’s
analysis business strategy is introduced in a generalised way that masks its true
complexity and SHRD is essentially cast in a downstream relationship to it
(although there is acknowledgement of the potential for HRD to influence strategy
formulation through its attention to environmental scanning). In previous chapters
it has been stressed that strategy is a multi-dimensional concept incorporating
two-way vertical integration against a number of different orders (or levels) of
strategy. Such issues are discussed at length elsewhere in this book and you are
particularly referred back to Chapters 1, 7 and 8 for confirmation. A final
possible area of critique arises from potential gaps in Garavan’s (1991) analysis.
For example, his characteristic features of SHRD appear to have a very
managerialistic bias. Stakeholder involvement covers HRD specialists, line managers
and senior managers with no reference to employees. It may be recalled that in a
number of definitions reviewed earlier there was an emphasis in the mutuality
between individual and organisational growth such that SHRD was concerned not only
with strategic integration but also with developing employees towards their full
potential. Increasingly employees may be expected to take the lead role in their
own personal development thereby shifting responsibility for SHRD. This is not to
say that this shift in responsibility is an outcome of SHRD but it is legitimate to
question whether the onus of responsibility might be different under HRD and SHRD
respectively. Similarly, approaches to the more prosaic areas of training needs
analysis and HRD delivery, including the emphasis of on-the-job training versus
off-the-job training, might be differently oriented under SHRD compared to HRD.
10.3 How can SHRD help support second-order strategy changes designed to produce a
flatter organisational structure through delayering? Recessionary pressures and
cost reduction strategies frequently lead to organisations trying to do more for
less. Often this means substantial downsizing and/or delayering with the two
frequently being synonymous as layers of management are removed from the
organisation. When they are applied in tandem the consequence for the remaining
workforce is that levels of output may have to be maintained, or even increased,
while at the same time the displaced managerial processes need to be absorbed into
the job specifications for those that remain. In order to accommodate restructuring
through delayering employees almost inevitably require a different skills base.
Firstly, there may be a need for a set of technical skills necessary to
support multi-skilling in order to enable employees to learn the jobs of colleagues

and to cross hierarchic job boundaries, for example, skills associated with quality
control, work scheduling, stock inventories and maintenance functions. Secondly,
there are conceptual skills, which are frequently demanded by the vertical
integration of work particularly where it embraces managerial responsibilities.
Examples include quality assurance, problem solving, risk assessment, preventative
maintenance and customer service. Thirdly, there are behavioural skills that are
strongly associated with management processes and effective team organisation.
Examples here could include giving and receiving feedback, negotiation, leadership,
communication, group dynamics and personnel functions such as recruitment, HRD,
performance appraisal and discipline. Whatever management's motivation for
delayering the implications it has for SHRD should now be readily apparent. Almost
every change to organisational structures will carry with it the need to develop
additional and/or different skills in the workforce. This potentially represents a
formidable HRD agenda particularly given the multi-dimensional nature of the skills
base outlined above. Organisations will then need to develop specific HRD
interventions to address these needs and are likely to do so against the
conventional decision options confronting HRD practitioners, for example, on-the-
job versus off-the-job HRD or internal versus external provision. Possibilities
might include National Vocational Qualifications (NVQ)s, which are designed to
provide practical skill development, competency-based HRD programmes and the use of
open learning as a vehicle for acquiring theoretical knowledge. The SHRD portents
for effective restructuring, however, are not particularly encouraging. Approaches
to HRD frequently focus on knowledge and skill dimensions and neglect attitudes
perhaps in the hope that appropriate attitude change will automatically flow from
behavioural change! The business conditions that frequently spawn restructuring
programmes may well lead to disinvestment in HRD rather than challenge the myopic
managerial stance on HRD. Lastly, managers may not be of a sufficiently high
calibre to handle the challenges to traditional command and control structures
presented by restructuring through delayering. This clearly places a premium on
management development, as a component of SHRD. 10.4 Why might it be argued that
managers are the linchpin in the successful introduction and maintenance of SHRD?
Underpinning SHRD is the notion of strategic integration where HRD acts to both
influence and shape an organisation’s strategic direction and support its effective
implementation. Managers are arguably the conduit through which this two-way
strategic integration can be developed. This is consistent with the key role played
by managers in performance management systems (Chapter 9) where they play a vital
downstream and upstream role. In the downstream role they act to cascade strategic
integration down through the organisation. In their upstream role they act as the
channel for the upward communication that can highlight impediments to strategy
implementation and/or provide an input into strategy making. Management support,
commitment and involvement have been identified as key characteristics of SHRD. For
example Garavan’s (1991) analysis, depicted in Key Concepts 10.2, refers to Top
management support – where the strategic integration of HRD requires the active
support and participation of senior management in order to become a reality and
Line manager commitment and involvement – where the line manager takes centre stage
in identifying and addressing the HRD needs of subordinates. McCracken and Wallace
(2000) built on these two propositions to argue that SHRD requires top management
leadership and line manager collaboration with HRD specialists to develop strategic
partnerships if full strategic integration is to be achieved. They also argue that
senior managers should take responsibility for scanning the organisation
environment and identifying the HRD implications arising from their analysis (Key
Concepts 10.3).

The active involvement of managers in SHRD covers a number of key areas of

responsibility. Managers: • • • will frequently take the lead role in identifying
HRD needs; are likely to have substantial input into organisational SHRD resourcing
decisions; increasingly contribute directly as coaches and mentors as SHRD
interventions move away from prescriptive off-the-job courses to focus on the
learning opportunities offered by the immediate workplace; and are likely to be at
the heart of the effective transfer of know-how acquired either through offthe-job
HRD or workplace learning.
Senior managers arguably represent the dominant coalition of interests in

organisations and through their decisions and behaviour, exert strong influence on
the prevailing organisation culture. Their decisions on the structural design of
the organisation, commitment to their personal development and performance in
executing their HRD role responsibilities help determine the extent to which the
organisation develops a learning environment. For example, the extent to which
mangers are able to create the conditions that support mutual learning and which
capture, disseminate and share learning as well as an appropriate culture that
supports experimentation, risk-taking, independent thinking, discord, authority
based on expert knowledge rather than status is likely to be instrumental to the
creation of a learning culture. 10.5 What factors have contributed to the
relatively low level of importance attaching to management development? Running
through the chapter are a number of references to factors that may impact adversely
on management development. For ease of reference these might be grouped under three
headings. Based on your own experiences you may of course be able to add to those
factors identified here. Firstly, there are the direct experiences of the managers
themselves. They may have got where they are with little personal investment in
management education and training, which may therefore be perceived as largely
irrelevant. This attitude is likely to be reinforced if organisations demonstrably
promote staff into management positions on the basis of their functional expertise
rather then their potential management competence. Secondly, their interpretation
of their role may emphasise functional rather than managerial responsibilities.
This may reflect a comfort zone where they find it easier to carry on much as
before rather than tackle a set of difficult responsibilities for which they feel
inadequately prepared. Further if the way they develop their staff is not
explicitly rewarded their functionally oriented behavioural patterns are likely to
be reinforced. Thirdly, the way they are managed within the organisation will
impact on their attitudes to personal development. They may have experienced little
by way of quality one-on-one development time with their manager and are therefore
exposed to poor role models. Further, the emphasis on short-term results may send
out signals that longer-term investment in HRD is a low priority.


1. How is INA trying to build a learning culture and how would you assess its
success to date? INA’s commitment to the development of a learning culture and the
critical strategic significance of it doing so successfully are clearly evident. In
moving to the position where the company intends to compete on the basis of its
skill base, the development of a culture of continuous improvement and building
towards a learning organisation are seen as essential in order for it to realise
its strategic vision. The company regards its survival and future success as being
dependent on its ability to learn faster than the rate of change. Although only a
short way into its period of strategic re-alignment, the company has already taken
a number of significant steps towards building a learning culture. An interesting
initiative was the initial step taken to hold individual meetings with all
employees, which surfaced their perceptions on the obstacles confronting the
development of a learning culture and ideas on how they could be addressed. The
fact that management responded to their ideas with a clear set of actions
communicated early confirmation of the importance of employee voice and of
managers’ own recognition of their need to learn. Another key initiative was the
development of systems to support company financed individual learning plans
(similar to EDAPs) particularly, as it transpired, that some of the HRD outcomes of
these plans involved employees attending non work-related study in their own time.
Such investment should have communicated a clear message that the company values
and is prepared to support learning for its own sake. The re-launch of a suite of
NVQ programmes was clearly designed to underpin the development of the company’s
skill base. The introduction of the NVQ level 2 programme in performing
manufacturing operations for all of the company’s production operators exemplifies
INA’s commitment to learning and development throughout the organisation. Another
important milestone was the development of a learning centre. Here, computerised
learning facilities provide a network of HRD possibilities for all staff and as an
example of its impact to-date 100 employees have signed up for the Government-
initiated Learndirect courses. In-house continuous improvement courses further
reinforce the focus on learning and, importantly, this is increasingly being
supported by those already trained becoming involved as coaches, mentors and NVQ
assessors in order to help cascade the outputs of the various training programmes
throughout the organisation. As roles are redefined HRD support is also being
offered to help facilitate these changes such as programmes to develop meetings
skills to support the active engagement of employees in the works council and its
sub-committees. Interestingly the trade union Amicus also appears to be fully
committed to fostering the development of a learning organisation. It has secured
significant funding for investment in the company’s learning centre and appoints
and sponsors four learning representatives and uses TUC courses to support their
role development. At this early stage it is obviously impossible to assess how
successful INA has been in its intent to develop a learning culture because it is,
by definition, a long-term project. However, early signs are encouraging. For some
operators gaining the NVQ award represented their first ever external qualification
and a number already seem to have got the learning and development bug as they are
now progressing through levels 3 and 4 of the programme. Other encouraging signs
are: the active use of learning centre facilities by employees; the transfer of non
work-related study to work situations by some employees; the general organisational
commitment to learning being valuable in its own right; and the cyclical impact of
learning and development as those already trained increasingly get involved in the
development of others and thereby further develop their own skills base.

2. In a number of models of SHRD, employees, line managers and senior managers are
identified as having important roles to play in its development (for example Mabey
et al, 1998; McCracken and Wallace, 2000). To what extent do these stakeholders
represent obstacles to the development of SHRD in INA and how are any such
obstacles being addressed? The starting position for business turnaround was not
particularly propitious. The workforce was characterised by long-serving employees
who had received little task-based HRD. In addition the workforce was generally
cynical about management’s change intentions because of the failure of previous
turnaround initiatives. This cynicism was arguably evidenced by the operation of
the ‘grapevine’, which was not only rife but had become the most believed source of
information in the company. From the collective (union) perspective: the works
council was regarded as little more than a forum for discussing housekeeping
issues; shop stewards viewed confrontation and not collaboration as the natural
modus operandi; and employee relations had deteriorated to such a low level that
despite INA’s dire predicament strike action was being actively mooted in response
to a number of unresolved issues. For line and senior managers the major
frustration was that they could not adequately fulfil their role responsibilities,
including those related to HRD. In response to the company’s predicament, the
demands of production had resulted in the HR roles of managers, supervisors and
team leaders becoming diluted. In a chain reaction team leaders were spending too
much time helping out with production meaning that the management hierarchy had
become distorted with supervisors operating as team leaders and managers as
supervisors. Also management’s previous track record in HRD did not augur well for
INA’s change in strategic direction. Previous attempts to build skills through NVQ
(National Vocational Qualifications) programmes had foundered because of lack of
time and commitment amongst supervisors to undertake the necessary assessments of
employee competencies. Based on the above, the identified stakeholders could have
represented a very significant impediment to the proposed strategic re-alignment.
However, action being taken appears not only to be addressing identified obstacles
but doing so successfully. As a starting point we would argue that the steps being
taken to build a learning culture described immediately above, carry with them
significant potential to successfully address the obstacles presented by
stakeholder attitudes, behaviours and competencies. For employees, two steps appear
to be particularly important. First, was the one-to-one meetings directed at:
communicating the company’s position honestly; explaining the company’s vision for
business turnaround; and signaling management’s commitment to that vision. Second,
was the direct HRD investment by INA in its employees such that even if the latest
attempt at business turnaround failed those employees would have at least been
equipped with high-level, portable skills that would significantly enhance their
employability. A key step from the collective perspective was the forging of a
partnership agreement with the trade union Amicus. This resulted in the union
signing-up to the change programme and appears to have been a major contributory
factor in changing the employee relations climate and opening up a genuine twoway
dialogue as exemplified by the re-alignment of the works council’s remit and
operation. For managers, supervisors and team leaders an important step has been
the redefinition of their role responsibilities to enable them to commit to their
HRD responsibilities. This has been supported by training needs analysis to
identify skills gaps that might constrain effective role performance and
appropriate training to meet identified needs such as communication. This has led,
for example, to the introduction of an NVQ level 3 in business improvement
techniques for supervisors and an NVQ level 3 in management for team leaders.

3. Where would you position INA along the HRD strategic maturity continuum (Figure
10.8) and how would you justify your placement decision? Drawing on the work of
Garavan (1991) and McCracken and Wallace (2000), the strategic credentials of INA’s
HRD activities have initially been analysed against their 9 characteristics of HRD
as follows: 1. There is clear vertical strategic alignment between INA’s decision
to compete on the basis of quality and its commitment to develop workforce
capability through switching investment in machinery to investment in human capital
in order to build an employee skill base capable of realising the company’s
strategic vision. Although there is reference in the case to the works council now
playing a key role in developing strategy there is too little detail here to
suggest that this vertical strategic integration is anything but downstream at this
stage and is therefore more consistent with Garavan’s views. 2. Consistent with
Garavan, the active support of senior management for HRD is apparent through the
many initiatives detailed above. This is reinforced by the assistance senior
managers provide in customising training to meet INA’s context and their
participation in its delivery to those with leadership roles. However, no clear
picture emerges that senior managers are adopting the strategic HRD leadership role
championed by McCracken and Wallace. 3. The strategic and consequent HRD re-
alignment, identified in 1 above, appears to have been formulated directly from
environmental scanning. However, this is again more consistent with Garavan’s views
as it appears to reflect the previously cited downstream strategic relationship
rather than a senior management role to scan the environment for HRD implications
as advocated by McCracken and Wallace. 4. HRD plans and policies appear to be being
systematically integrated with organisational strategy within a clearly defined HRD
strategy directed at developing a continuous improvement culture and building
towards a learning organisation consistent with the SHRD views of McCracken and
Wallace. 5. There is clear evidence of line manager commitment and involvement.
This is consistent with their pivotal role in HRD anticipated by Garavan. However,
there is no substantive evidence of line managers developing strategic
relationships with HRD specialists as propounded by McCracken and Wallace. 6. The
case provides no substantive evidence related to HRD being developed alongside and
in a complementary way with other HRM activities. Therefore, although there may be
some implicit evidence to the contrary, it is argued that horizontal integration is
missing from the strategic equation. 7. The case provides no substantive evidence
related to the roles of training specialists in INA. However, reports of INA’s
story by Roberts (2003) and Evans (2004) both appear to indicate that the Personnel
Manager in delivering his HRD role responsibilities is fully engaged as an
innovative change consultant consistent with McCracken and Wallace’s construction
of SHRD. 8. Again consistent with McCracken and Wallace’s construction, there is an
evident and significant role being played by HRD to influence and change
organisational culture. 9. The case provides no substantive evidence related to the
process of evaluating HRD in INA. However, the summary of achievements to date,
detailed at the end of the case, point to the success of the changes being made at
INA particularly in terms of their strategic contribution. Without further data it
is impossible to assess the contribution of the various HRD interventions although
against this it could be argued that this must have been substantial for the
company to be named ‘Welsh people development company of the year’ in 2003 and
shortlisted for CIPD’s annual People Management Award in both 2003 and 2004.

In addition, it is argued that evidence of multi-stakeholder involvement in HRD

places INA towards the right hand side of the continuum of HRD strategic maturity
depicted in Figure 10.8 in the chapter. Apart from the involvement of senior
managers, line managers and training specialists apparent in the foregoing
analysis, this includes: • • • • collaboration with a local college in delivering
the NVQ level 2 programme in performing manufacturing operations; employee
representatives through their participation in the works council, its subcommittees
and as learning representatives; support of the trades union Amicus in part funding
INA’s learning centre; and the pivotal role being played by line staff in
transforming the company’s skill base.
On balance we argue that the above analysis (points 1, 2, 3, 5 and 9) reflect more
Garavan’s (1991) depiction of SHRD although elements of McCraken and Wallace’s
depiction are evident in points 4, 7 and 8. This, together with evident multi-
stakeholder involvement, pushes our placement of INA on the continuum (Figure 10.8)
further to the right. In conclusion, although recognising that there is limited
evidence of two-way vertical strategic integration, we argue that INA’s current
position on the 6 point continuum of HRD strategic maturity is significantly to the
right of point 4 (‘HRD’) and just short of point 5 (‘SHRD’). 4. Either – what
recommendations would you make to help INA move further towards strategically
mature HRD? Or – what further evidence would be needed to justify positioning INA
at the SHRD end of the HRD strategic maturity continuum (see Figures 10.3 and
10.8)? Given our analysis in Question 3 above we argue that to fully satisfy
positioning INA at the SHRD point on the continuum and to move it even further to
the right towards the final point of SHRD plus requires: • two-way strategic
integration where HRD more explicitly informs strategy formulation and subsequently
leads to the position where employee capabilities become identified as the
organisation’s core competence; the development of strategic partnerships between
line managers and those with specialist HRD role responsibilities; concerted
attention being paid to horizontal integration to ensure the development of a
complementary bundle of HRM activities; and success criteria of HRD interventions
to be defined at the point of their development and subsequently evaluated using
transparent processes with results being openly disseminated throughout the
organisation.
• • •
With a nod to the second’ option of Question 4, it could of course be that INA is
already doing the above and all that is required is evidence to this effect. More
directly, we would argue that to fully justify our current positioning of INA on
the continuum requires additional evidence in support of: • HRD plans and policies
being developed within a clearly articulated and coherent HRD strategy;

• • • •
the organisation change consultant role of HRD specialists; the strategic

contribution being made by those with specialist responsibility for HRD; HRD’s
input into shaping and managing culture change; and evaluation of the direct
strategic contribution of HRD.
Lastly, it is argued that it is too early to position INA against a concept that is
fundamentally long-term in its orientation and that what will be needed is an
accumulation of confirmatory evidence over time.
References
Evans, J. (2004) Bearing up brilliantly, People Management, 11 November, 32–33.
Garavan, T.N. (1991) Strategic human resource development, Journal of European
Industrial Training, 15(1), 17–30. McCracken, M. and Wallace, M. (2000) Towards a
redefinition of strategic HRD, Journal of European Industrial Training, 24(5), 281–
290. Roberts, Z. (2003) Learning leads the way, People Management, 6 November, 34–
35.

CHAPTER 11
Strategic reward management: Cinderella is on her way to the ball

Learning outcomes
By the end of the chapter you should be able to: • • • define reward management and
strategic reward management; explain the factors in the external environment which
have led to the increased interest in strategic reward management; analyse the
links between intra-organisational factors that impact upon strategic reward
management.
Summary
• Reward management is concerned with financial and non-financial rewards to
employees and embraces the philosophies, strategies, policies, plans and processes
used by organisations to develop and maintain reward systems. Strategic reward
management plays an important role in delivering the organisation’s overall
business strategy by creating in employees certain behaviours, the need for which
are implied by the business strategy. These employee behaviours may be produced by
an HR strategy, which includes a reward strategy as well as other HR strategies
such as the cultural strategy; the structural strategy and other HR strategies. A
variety of factors in the external environment have led to the increased interest
in strategic reward management. Principal among these are those factors, which have
impacted upon the commercial environment in which organisations operate creating
the necessity to be more competitive and responsive to change. The intra-
organisational factors, which impact upon strategic reward management are the
organisation cultural strategies, structural strategies and other HR strategies. In
terms of reward the principal contributors to the organisation’s cultural
strategies are pay for performance schemes. These may be at the level of the
individual, the team and the business unit and the organisation. The reward
contribution to the organisation’s structural strategies involves changing reward
structures. In this chapter the move from traditional pay structures to job family
and broadbanded structures were examined. Competence-related pay was analysed as
the means by which reward may complement other HR strategies.


Comment
The chapter makes the point that reward has always enjoyed something of a
Cinderella status in the world of personnel management. It has traditionally been
about the rather dull but necessary concerns of wage and salary administration than
the more exciting arena of strategy. This chapter covers evidence, which suggests
that the situation in many organisations may not have changed that much in the last
twenty years. However, for the more progressive organisations times have changed;
reward now plays a central part in HR strategy. It is this change, which is the
theme of this chapter. A broad definition of reward is used in the chapter. This
includes non-pay benefits, such as recognition and pensions, as well as wages and
salaries. The term ‘strategic reward management’ is also explained. This serves as
the guiding framework for most of the chapter. The chapter has a detailed analysis
of the factors in the external environment, which have led to the increased
interest in strategic reward management. But the main part of the chapter is about
the environment internal to the organisation and the links between intra-
organisational factors, which impact upon strategic reward management and strategic
reward management. The chapter also includes a discussion of some of the ethical
concerns which attend new types of reward.
Student preparation
As with other chapters, we believe it is essential that students read and make
notes from the chapter prior to the class. We use a variety of vehicles to bridge
student preparation and class-based activities in order to enhance their
format; complete the self check and reflect questions and come to the session
questions follow in the next two sections of this chapter guide. Pre-set questions
that we have found useful for structuring student reading, preparatory activities
and classroom discussion for the topic of strategic reward management include: 1.
How would you define strategic reward management and set it into the context of
SHRM?

2. What factors in the external environment have led to the interest in strategic
reward management? 3. What are the principal strategic relationships between
strategic reward management and corporate strategy and how could they be evidenced
in practice?
In the classroom
A starting point for classroom activities that we find useful is to raise and
discuss the issues arising from students’ preparatory reading. This avoids
providing lecture input that simply repeats what students have already grasped,
reinforces the value of reading as an essential prerequisite for class-based
discussion and provides a platform from which further class-based activities can be
launched. However, when adopting this approach, we find it useful, once student
queries have been exhausted, to provide a summary of key issues. Where preparing
answers to self check and reflect questions has been set as part of preparation for
the teaching session, at least two alternatives present themselves. First, students
can be asked to contribute individual responses that are then subjected to plenary
would favour the group approach as a more stimulating method. In all cases student
responses can be considered against our suggested answers, which themselves can be
usefully critiqued. Where case study work has featured as part of preparatory
activities, similar approaches to those suggested for self check and reflect
questions can be adopted. Our approach here would be to start with a more general
exploration of the strategic reward management implications of the case.
Follow-up work
of alternatives for follow-up work while at the same time leaving lecturers free to
add or substitute their own ideas. If they have not already been used as part of
class activities, any prior preparation of answers to the self check and reflect
case ‘Developing a global reward strategy at Tibbett and Britten Group’ will serve
as a useful reinforcement to chapter content. Our outline answers to both self
check and reflect questions and case study questions follow in the next two
opportunities for directed further reading.


11.1. What obstacles stand in the way of the more widespread adoption of work-life
balance policies? It is undoubtedly more likely that work-life balance policies
will be more prevalent in larger organisations. This may be for two reasons in
particular. First, it tends to be larger organisations that blaze the trail in
terms of ‘good HR practice’ and second, resources tend to be spread less thinly in
larger organisations. These reasons may provide the answer to the question.
Usually, when measures such as this are introduced smaller organisations cry foul
and argue that initiatives such as work-life balance policies hinder their ability
to manage their own businesses and harm their commercial viability. There is, of
course, some truth in this. However, you may argue that the cause of women wishing
to have families and careers would be greatly harmed by the absence of maternity
legislation. This is now taken for granted in developed countries. The pace the
adoption of general work-life balance policies may, therefore, hinge upon the
willingness of governments to legislate. 11.2. What problems occur to you when you
look at Figure 11.2? There is one which cries out from the diagram: what if the
organisation does not have a business strategy? The theory of strategic reward
management explained in the chapter revolves around the assumption that this will
be in place. Chapter 1 explains that strategy formulation is not the neat,
unproblematic process, which the literature often assumes. But the absence of a
formal written strategy does not necessarily invalidate the model in Figure 11.2.
The general thrust of the organisation’s affairs serves the model in the same way
as the formal written strategy. That said it would be realistic to point out that
Figure 11.2 is more appropriately applied to the larger organisation with a
specialist HR (if not necessarily reward) function. 11.3. Moving from a situation
where all pay is base pay to one where there is a combination of base and variable
pay does carry with it threats. What may these be? Variable pay puts a proportion
of the pay packet ‘at risk’ through techniques. Employee wellbeing is potentially
threatened by an increased amount of insecurity and unpredictability that is
potentially harmful both economically and psychologically. Additionally, putting a
proportion of employees’ income at risk may lead to such behaviours as overwork,
which may damage both mental and physical health. Variable pay also carries with it
the threat of greater unfairness in that decisions have to be made by managers
about the level of pay to be received. This too creates the potential for employee
instability. 11.4 What may be some of the potential disadvantages of competence-
based pay? Most problems occur with the definition and measurement of competences.
Much work has gone into defining competences in the areas of job design, selection
and training. But relatively little attention has given to the issue of measurement
for pay purposes. This may be more straightforward when manual skills are involved
but for many knowledge-based jobs the problems come with the so-called soft skills
such as team leadership or motivating others. As the chapter text notes, the more
subjective the process becomes the more scope there is for perceived unfairness
among employees. There are other potential disadvantages. Developing competences in
employees is worthless if they are not to be used in the workplace. Another problem
may be the disentangling of the motivational effects of enhanced reward and
enhanced skills. Some reward commentators believe that applying extrinsic benefits
(e.g. pay) to intrinsic factors (e.g. competence

development) renders employees less motivated by the prospect of achieving new

competences.

1. Why do you think that the creation of internal consistency was such an important
objective of the new reward strategy? The key to the answer to this question lies
in the second and third objectives of the broader framework for reward, which the
company wished to introduce across the company. These were to: • • address tactical
issues impacting negatively on employee motivation and engagement, and create a
culture where performance drives reward and recognition; and create competitive
advantage for Tibbett and Britten Group in the marketplace, particularly by
improving its reputation as a contractor and employer of choice.
Clearly it was felt that such fundamental concerns of reward strategy were being
prejudiced by a lack of internal reward consistency. The potential harmful outcomes
of a lack of internal reward consistency are always the perception by some
employees that they are being unfairly treated in comparison with others. One of
the basic ‘truths’ of reward management is that all of us, as employees compare our
salaries with someone else, both inside and outside our employing organisation.
Preventing perceptions of unfairness is well-nigh impossible. But employers can
take as many steps possible to lessen these by attempting to achieve internal
consistency within the organisation and external consistency with similar jobs and
similar employers in the relevant labour market. Tibbett and Britten sought to do
this through bringing a measure of internal consistency to reward by establishing a
group policy framework that would: help managers communicate a coherent policy on
reward; guide country managers in the alignment of reward policies and projects
within overall group principles; initiate a cost-effectiveness review of current
reward expenditure in light of what is identified as valued by employees; and
maintain the flexibility for local innovation and adaptability to customer's needs.
It should be borne in mind that most of Tibbett and Britten Group’s employees were
transferred from major customers such as Debenhams, Homebase or IBM. These
employees retained their existing terms and conditions of employment. This meant
that there were a wide variety of pay and grading arrangements in operation. These
varied by country and by contract. There were short- and long-term incentives and
other benefits. There were also differing local relationships with trade unions.
Local managers had traditionally agreed to vary certain arrangements locally and to
pay upper quartile rates, for instance, or to use a particular form of competency-
based pay. While the use of Tibbett and Britten Group incentives and benefits had
become more consistent, many contracts were determined by the terms and conditions
transferred from the customer. Most non-management employees were not on Tibbett
and Britten Group terms and conditions. Managing the anomalies thrown up by this
inconsistency was a key issue in the company's relationships both with employees
and customers.

2. Look again at the ten principles. Do you think there may be any potential
contradictions inherent in these principles? Some potential contradictions are
suggested. These may be: Principle ’Think global, act local’ by creating programmes
that employ group principles and maintain optimum internal consistency and
cohesion, while providing the flexibility to adapt to local market requirements and
practices. Potential contradictions It may sound a bit pedantic but the very act of
providing the flexibility to adapt to local market requirements and practices may
in itself contain the potential to lead to internal inconsistencies. To deny the
opportunity for managers the scope for flexibility to adapt to local market
requirements would, of course, be unworkable, but the threat of internal
inconsistencies must be recognised. As the chapter points out, one of the problems
of problems of paying for individual job performance is that managers find
differentiating between individual performance levels is very difficult. This may
be for a variety of reasons. One of these, which the Tibbett and Britten Group
reward principle opposite overlooks, is that the contribution of individuals may be
broadly similar. This can lead to a situation of ‘forced’ differentiation which
contains the potential for internal inconsistency and perceived unfairness. Again,
It may sound a bit pedantic, but the emphasis upon the unique characteristics of
certain roles, as opposed to their similarity, leads to differentiation which
potentially leads to internal inconsistency and perceived unfairness. The pursuit
of internal consistency suggests to us an activity associated with cool
rationality; ‘recognition from the head’ rather than ‘recognition from the heart’.
The latter suggests the potential for subjectivity rather than objectivity, and for
inconsistencies such as favouritism. Again, the components of this principle:
flexibility, choice, diversity, responding to customer requests; suggests decisions
which do not reflect internal consistency.
Pay for performance, strongly differentiating rewards, which reflect the underlying
contribution of individuals through performance assessment against stretching
objectives.
Implement rewards selectively and tactically, where justified, in recognition of

the unique characteristics of certain roles.
Support and encourage all managers to ‘recognise from the heart’ the contribution
of individuals and teams, as a critical component of the Total Rewards strategy.
Incorporate flexibility in the design of reward programmes, to provide the benefit

of choice across our increasingly diverse workforce and to facilitate controlled
tailoring to customer requests.
The answer to this question may strike you as rather over-critical. Does not all
human activity contain the potential for contradiction? Are we all as humans
entirely rational and consistent in our thoughts and actions? Of course, we are
not. And Tibbett and Britten Group reward principle designers are no different from
the rest of us. Preventing internal inconsistency is, arguably, impossible and may
be undesirable. Being aware of its potential is neither.

3. What potential benefits do you think may accompany the achievement of greater
transparency in the new reward strategy? Look again at the answer to Question 1.
The point was made that preventing perceptions of unfairness is well-nigh
impossible. But employers can take as many steps possible to lessen these by
attempting to achieve internal consistency within the organisation and external
consistency with similar jobs and similar employers in the relevant labour market.
It is tempting for employers to conceal their reward decisions as much as possible
on the basis that concealment heightens management control while transparency
lessens management control. After all, the less employees know about pay reward
decisions the weaker position they are in to challenge those decisions. While
managers at Tibbett and Britten Group may not want to go as far as revealing all
the details about the rewards to individuals the basis upon such reward decisions
were made will lessen the possibility of perceived unfairness.

CHAPTER 12
Managing the employment relationship: strategic rhetoric and operational reality

Learning outcomes
By the end of this chapter you should be able to: • • • • • • • explain the
importance of the employment relationship to SHRM ; define the employment
relationship; evaluate the strategic approaches to managing the employment
relationship; identify the various formats for organising the employment
relationship at a range of levels; define employee involvement and voice; assess
the linkages between SHRM and employee relations; evaluate the concepts of
partnership and the psychological contract.
Summary
• The management of the employment relationship is a central area of discussion,
research and organisational practice within the field of SHRM. Key concepts include
the shift from traditional industrial relations to employee relations. Key parties
to the employment relationship can be the grouped into bodies representing
employers and employees. Two key differing perspectives in relation to a strategic
approach to the management of the employment relationship – namely unitarism and
pluralism – are identified and discussed. Key theoretical contributions in
relations to strategic HRM and employee relations have been identified and grouped.
Four possible organisational approaches to the management of the employment
relationship are presented. These four approaches are: new realism, traditional
collectivism, individualised SHRM and the black hole. Potential policies and
practices in relation to managing employee relations in a strategic manner are
discussed. This discussion is presented under the central theme of employee
involvement and participation. Within this context two key approaches are discussed
in depth namely partnership and the psychological contract. The practical realities
of developing and managing partnership are discussed, as are the elements involved
in the development of the psychological contract at the workplace and
organisational level.
• •


Comment
Our aim in this chapter is to consider how the management of the employment
relationship can contribute to the achievement of SHRM. Essentially, the chapter
has three key areas– the first area focuses on defining the changes that have taken
place in the employment relationship. Central to this discussion has been the shift
away from industrial relations to employee relations. The aim of this chapter is to
explore and assess the linkages that exist between employee relations and SHRM.
This exploration emerges in the second and third areas of this chapter. In the
second area an analysis of key theoretical discussions on the linkages between SHRM
and employee relations will be presented. In the third area of the chapter evidence
of the practices associated with a strategic approach to the management of the
employment relationship will be presented. These practices are grouped around the
central SHRM concept of employee involvement and participation. In the last 25
years the human resource management (HRM) literature has seen significant focus and
evaluation being placed on a ‘strategic’ approach to the development and
implementation of HRM policies and practices (Legge, 1995; Storey, 1995, Tyson,
1995; Schuler and Jackson, 1999; Boxall and Purcell, 2003). Extensive discussions
on this strategic approach will have taken place in previous chapters of this book
and the purpose of this chapter is to consider the management of the employment
relationship and evaluate the strategic choices that are available to the various
parties in this relationship. The term employment relationship can be defined most
simply as the interaction between employers and employees. This simplistic
definition highlights a potential problem in the employment relationship, if the
relationship is merely based on interaction at best is will be operational and as
such have little strategic value for the parties involved. Traditionally the
management of the employment relationship has focused around the concept known as
industrial relations. Industrial relations are generally understood to refer to the
relationship between employers and employees collectively. The focus of industrial
relations was firmly based on collective relationships that existed between
individual or often groups of employees and the representatives of employees,
namely trade unions.
Student preparation
queries arising from their reading and come to the teaching session prepared to
following: • address pre-set questions and write their answers briefly in note
format;

• •
complete the self check and reflect questions and come to the session prepared to
share and discuss their responses; and familiarise themselves with the chapter case
study (or an alternative case supplied in advance) and come to the session prepared
to tackle the case questions.
preparatory activities and classroom discussion for the topic of managing the
employment relationship include: 1. How would you define the employment
relationship and set it into the SHRM context? 2. What are the principal strategic
relationships between employee relations and corporate strategy and how could they
be evidenced in practice? 3. What do you understand by the term strategic
approaches to the management of the employment relationship? 4. How would you argue
the case for and against the formal adoption of strategic employee relations by
organisations?
In the classroom
reflect questions can be adopted. Greater topicality can be achieved by capturing
the big business news stories of the week, discussing the employee relations issues
that are likely to arise and exploring how a strategic approach to the management
of the employment relationship might be used effectively to address these issues.

Follow-up work
of alternatives for follow-up work while at the same time leaving the lecturers
free to add or substitute their own ideas. If they have not already been used as
part of class activities, any prior preparation of answers to the self check and
reflect questions and/or the questions suggested for student preparation and/or the
chapter case ‘Strategic Approaches to the Employment Relationship Social
Partnership: The example of the Republic of Ireland’ will serve as a useful
reinforcement to chapter content. Our outline answers to both self check and

12.1 Define the employment relationship and discuss the changes that have taken
place to the relationship in recent years? The employment relationship at the
simplest level is the interaction between the employer and the employee. You can
focus on discussing industrial relations and employee relations and highlight the
shift away from collectivism to individualism. SHRM has had a major impact in this
area and you can use SHRM as a tool for focusing your responses to this question
and the emergence of the concept of employee involvement and participation is
closely linked to SHRM. Traditional industrial relations are still in operation but
largely in the public sector and traditional industries. Employee relations operate
in a wide range of industries and sectors and are often linked to non-unionised
workplaces. 12.2 Fox (1966) clearly believed that the pluralistic perspective on
employee relations was the most valid and realistic way to manage the employment
relationship. Given the emergence of the HRM models of management in the 1980s do
you believe that unitarism is a more appropriate way of managing the employment
relationship in the twenty-first Century? You can characterise pluralism as
reflecting adversarial relationships between employers, employees and trade unions.
Highly formalised procedures would exist at the workplace or industry level. These
procedures would be based on collective bargaining and joint consultation.
Conflicts could occur over virtually everything and disruptions to work would occur
frequently. This model is very closely associated with traditional personnel
management and industrial relations and in the context of the private sector it
operated in industries that have been in the decline over the last 20 years. This
approach may be contrasted with employee relations, which in the rhetoric of HRM
would lead us to believe, we are all unitarists and that all employers have highly
committed employees as a consequence of employee involvement and participation.
This led to the term ‘new’ being used in relation to unitarism and ‘old’ being used
in relation to pluralism. The organisational reality is of course not quite as
straightforward. The United Kingdom and Ireland, continental Europe and North
America operate an employment relationship that is

largely pluralistic in nature. In the United Kingdom and Ireland most public sector
employees are managed in a pluralistic manner. 12.3 Choose an organisation with
which you are familiar and, using Guest’s (1995) evaluation of the four possible
approaches to the management of the employment relationship describe the current
employment relationship. You should be able to identify, discuss and assess the
four distinct types of management of the employment. In considering each approach
to the management of the employment relationship approach you should be able to
identify the key concepts and components of each approach and compare and contrast
this with the policies and practices of the organisation they have chosen. You
should attempt to evaluate the policies and practices of the organisation in
relation to the four distinct approaches to the management of the employment
relationship and decide which of the approaches is most prominent in the
organisation. 12.4 Consider the arguments for and against the development and
introduction of a partnership agreement in an organisation. You should be able to
talk about the recent developments at national, industrial and organisational
levels. In presenting arguments for and against the partnership model you should
consider the elements required to develop a partnership agreement and the key
stakeholders involved. The nature of the organisation you choose will have a major
impact on how you answer this question. Factors to be included in your analysis
are: the industry where companies operate, their key markets, products or services,
the ownership of the organisation, the organisational culture, the size of the
organisation, the structure of the organisation, previous relationships between the
employer, employees and the union and the current methods for employee involvement
and participation. The involvement of management is of vital importance and,
depending on the organisation, can be viewed as an advantage or a disadvantage.
12.5 To what extent is the ‘new’ psychological’ contract a myth dreamed up by HR
commentators to add a new dimension to discussions about SHRM? As with significant
elements of the general theory of SHRM, there may be an element of overstatement
here in that the idea or the rhetoric as it has referred to it in this chapter may
be running somewhat ahead of the organisational reality. The emergence of the ‘new’
psychological contract can be considered as the consequence of two observable
trends. The first is that all organisations have to be mindful of operating costs.
In such a climate, the ‘promise’ of a job and career for life is an expensive one.
The second trend is the desire that many employees have to take control of their
lives. This means that the concept of working for one organisation throughout a 40-
year career is becoming less and less appealing.

1. Outline the main driving factors for the development of social partnership in
Ireland? 2. Why do you think it was so important to have a tripartite agreement
between the national Government, employers and trade unions? 3. Why do you think it
has been possible to develop and sustain social partnership in Ireland for such a
long period? 4. Do you think it would be possible and/or beneficial for the UK to
develop its own model of social partnership?

The answers to this case study are presented in the form of a handout that can be
used in answering the questions presented in the case study or for studying the
subject of employee relations approaches in more depth.
Social Partnership Handout

Broad aim: to understand the development of classical and competitive neo-
corporatism and to examine social partnership in the Irish Republic against this
theoretical background.
Question 1 Factors driving social partnership in Ireland

Governments and Pay
The Irish Government were seeking to have an influence on the pay and working
conditions of its Citizens. The answer to this question arises from their role in
management of national economies. In neutral terms, overall aim might be defined as
the achievement, maintenance and enhancement of national prosperity – involving
pursuit of objectives like low inflation, a balance of payments surplus, favourable
currency exchange rates, full employment and so on. But there clearly are choices –
political choices – to be made about, which will have priority. And an important
influence will usually be the ideological disposition of the government. Its
political approach might be: • • • • neo-liberal/individualistic (‘Thatcherite’);
social democratic (‘labour’/socialist); communitarian (populist/‘green’/grass-
roots); or even corporatist (on which, see more later).
Approach may also depend on whether it has sectional interests, like unions or
employers, to take care of. This is not to argue that governments have no scope for
independent, autonomous action – that they are always prisoners of ideology and/or
interest groups, or of the capitalist system itself. It is simply to note that we
are dealing here with a matter of popular controversy – one at the core of the
public policy-making process.
Employee Relations Policy Choices

'Bias' of System (political Inclination?) Liberal, or neoLiberal – unitarist (right
wing?) Position of Unions Weak NeoLaissez Faire Strong Free Collective Bargaining
(FCB)

Corporatist – pluralist (left wing?)
Corporatism
Bargained or neoCorporatism
Neo-laissez faire
Crouch uses 'liberal' in original 19th Century sense – as demanding the freeing of
individuals from all forms of community, economic, moral and political restraints.
In particular: ‘Freedom from interference by the state in the economy (in the 19th
Century) meant allowing market forces to work without interference. Similarly,
individualism meant liberty for the individual to grasp opportunities available to
him; but it also meant being forced to remain an individual and not to combine with
others ‘ (Emphasis added). Revived in Ronald Reagan’s America and Mrs Thatcher’s
Britain in 1980s, as a product of neoliberalism, its three essential tenets are: 1.
pursuit of individual self-interest is the engine of economic progress; 2. state
must ensure that vested interests – especially trade unions – are not permitted to
interfere, using essentially illegitimate collective power, with the totally free
operation of markets; 3. no role for government in setting pay and conditions of
employment, and no role for interest groups in formation of public policy. In late
1970s British unions were still strong – so it was necessary, to attain neo-laissez
faire IR, for them to be weakened, using a number of measures: by legal
restrictions on union power in workplace – help employers resist unionisation, and
make it more difficult to engage in industrial action by ‘de-regulation’ of the
labour market: no minimum wage; no ‘union labour only’ contracts; privatisation of
state enterprises; tendering for public services; erosion of legal job security
rights; accepting unemployment as method of wage regulation by ending ‘social
partnership’: elimination of unions and employers from influence on formation of
government social and economic policy.
Free collective bargaining

To operate in their purest forms, both liberal and corporatist systems require a
weak, or at least quiescent, trade union movement. It was the growing strength of
trade unionism – the strength that people gained by facing the economic system not
as individuals but as part of a combination (or collective) of people – which
forced 19th century economic liberalism away from laissez faire individualism
towards an accommodation with union-based collectivism. The product of this
accommodation with the new power of the unions was encouragement of free collective
bargaining (FCB) between employers and independent, representative unions.

This was liberal in traditional ideological terms, but also liberal in a modern
sense – meaning tolerant, progressive and defensive of diversity. In Britain and
Ireland FCB also retained in one important respect the key liberal canon of ‘no
state interventionism’: governments were to be – more or less – bystanders as
regards industrial relations. FCB faith was based on conviction that both order on
the streets and just as importantly, economic and social justice were most likely
to be assured by unregulated free collective bargaining; and free meant: • • •
virtually total independence of industrial relations system from government
control; general distrust of law and its restrictive effects; complete self-
reliance and independence of TUs, employers and employers’ associations.
These ‘freedoms’ were regarded as so essential that the only real interventions by
governments were: • • • to offer further support for FCB; to provide a substitute
for it and/or; to apply moral pressure.
Support: took form of state-funded conciliation and arbitration, designed to

provide help when ‘normal’ bargaining had not produced agreement. Substitute: was
represented in what later came to be known as Wages Councils, which set minimum
wages in certain trades. Exhortation: the most a government operating a rigorous
liberal collectivist FCB policy might do as regards wage levels was to urge the
parties to moderation Corporatism
‘Classical’ Neo-Corporatism
As we have already noted, neo-corporatism was generally influenced by a social
democratic ideology, and was popular in Europe in 60s and 70s. It involved state
and organisations of employers and workers working jointly to achieve social
justice. And it usually included incomes (control) policies, and the effective
redistribution of wealth. What actually provoked the European turn to neo-
corporatism from 1960s onwards? Two things: • high inflation, industrial militancy,
low productivity;

slow down in post-war boom – including a so-called ‘investment strike’, under which
the captains of capital invested in property, for example, rather than
entrepreneurial ventures.
In response, governments sought to change the behaviour of both the employers and
the trade unions by giving them a role in policy-making. ‘Classical’ agreements
usually involved increases in public spending – often funded by borrowing.
Sometimes this also involved labour market regulation concessions to unions, such
as: • • legislation protecting employees from arbitrary or unfair dismissal; ‘top-
down’, representative employee involvement in organisational decision-making.
(In Ireland the late 1970s legislation requiring appointment of worker directors to
boards of semi-state companies is a good example of this).
Competitive Neo-Corporatism
But, as in Ireland, this tradition of neo-corporatism virtually withered on the
vine in Europe in the 80s. Why? • • • economic recession; globalisation of markets;
ideological shift towards neo-liberal thinking.
But it revived in 1990s – in a different form. It was now about competitiveness,

enterprise and cutting public expenditure. The focus of agreements now turned
towards: • • • • pay deals consistent with national competitiveness; sustainable
levels of public expenditure; reform of tax and social welfare systems; measures to
increase flexibility, skill and quantity of labour.
Union sides no longer claiming pacts as major, beneficial negotiating

breakthroughs. Instead found themselves on defensive: ‘best that could be achieved
in difficult economic conditions’. There was also effective abandonment by many
governments of Keynesian demand management. This reflected not only an ideological
move to the neo-liberal right, but also curtailed latitude that existed to use
public spending to prime economic activity. In defence of absence of specific
mechanisms to reduce inequality, poverty and want, the argument was that ‘a rising
tide lifts all boats’ – in other words, everyone would benefit automatically from
economic success. Instead of labour market regulation, new neo-corporatist pacts
began to include de-regulation, in a variety of forms – including some of the
mechanisms used by the Thatcher government in 1980s:

• •
on employee involvement, emphasis changed too, towards employers’ rather than

workers’ interests; direct, ‘bottom-up’, individualised, employee involvement,
linked to promotion of company objectives, especially achieving competitive edge.
However, looking back at our policy choices, perhaps only serious choice now is
between neolaissez faire and neo-corporatism? We shall now look at the case of
social partnership in the Republic of Ireland Inherited policy: free collective
bargaining.
Question 2 Back to National Agreements: The importance of a tripartite agreement?

The role played by social partnership in Ireland’s current economic success cannot
be overstated. In the space of a little over a decade the employee relations
climate has been transformed from a confrontational win/lose model to one that is
far closer to modern win/win corporate relationships. The tripartite bodies
representing employers Irish Business Employers Confederation (IBEC), employees
Irish Congress of Trade Unions (ICTU) and government continued their work, and the
National Economic and Social Council (NESC) was to play key role in revival of
neocorporatism. In 1986 it produced a comprehensive prescription for economic
recovery including – most significantly in view of involvement of the unions in the
NESC – the cutting of public expenditure. Implementation would, of course, only be
possible with the agreement of the social partners – government, unions and
employers. But why go back to partnership? For the unions there were several
considerations: • • • first, under tripartite National Understandings the weakest
and lowest-paid members were protected by agreed minimum pay increases; second,
wage dispersion in the 1980s widened the gap between top and bottom, and threatened
to undermine solidarity of TU movement; thirdly, falling membership and increasing
unemployment made leaders fear that what was happening to unions in Thatcher’s
Britain might also occur in Ireland. A return to social partnership promised help
on all these fronts.
For employers decentralised bargaining had been a mixed blessing. Number of strikes
had fallen significantly, and trends in wage levels had begun to moderate. But all
governments had relied on borrowing rather than cutting expenditure to meet social
spending. And while pay increases outstripped inflation and thus threatened
competitiveness, the ‘social costs’ of employment – taxation, pensions and social
welfare – were also an increasing burden. Though the employers were not exactly
inspired by the idea, then, centralised bargaining (‘neo-

corporatism’ or ‘social partnership’ in other words) did seem to offer the

possibility of linking economic and fiscal reform with pay determination, and
preferably pay restraint Fianna Fáil (FF) and a new partnership. FF viewed the
difficulties of the 1983–87 Coalition with more political concern than political
pleasure. Main reason was that they were going to inherit those difficulties – as
in due course they did, as a minority government formed in 1987. But the FF ‘social
partnership’ inheritance had also been reasserting itself, and some careful wooing
of ICTU figures in advance ensured that the unions, at any rate, were already on-
side. The result was a 3-year tripartite agreement – the grandly-titled Programme
for National Recovery (PNR). It set sharp limits on pay, with only a 3% per annum
increase on first £120 per week of earnings, and 2% thereafter – with underpinning
minimum of £4. The most significant features were (‘competitive’?) commitments to
the control of public expenditure and a reduction in government borrowing. But PNR
included other broadly expressed ‘classical’ commitments: • • • to promote
increased employment through industrial development; to improve social welfare
provision; and to reduce direct taxation on lower paid workers covered by the PAYE
system.
From PNR to PESP

There was widespread recognition by employers and unions that the PNR had
beneficial effects; so it was followed by a similar agreement, the Programme for
Economic and Social Progress (PESP), covering the period up to 1993. This allowed
of much the same percentage increases, but also permitted extra amount to be
negotiated at enterprise or plant level. Although it seemed to be working well,
there were some serious economic setbacks during the PESP period, including
devaluation of the Ir£ that government had tried hard to resist As well as several
pay-related crises, there were also major rows over income tax increases – and
about cuts in social welfare benefits, which were argued by the unions to be in
breach of the PESP. Yet the programme still held together, and also weathered
change of government – when FF made run for a majority in a snap election in 1989,
failed, and was obliged to make a coalition pact with the new Progressive Democrat
party (PDs). The PDs, with only a very small number of TDs, had a ‘new right’, neo-
liberal economic agenda. Yet this had no discernable effect on the government’s
approach to PESP.
From PESP to Programme for Competitiveness and Work (PCW)

In 1992 that Government was succeeded by a more left-leaning Fianna Fáil/Labour
Coalition. Against the background of a recovering economy, a new agreement was
fairly inevitable. So PESP was succeeded by Programme for Competitiveness and Work
(PCW). Its tight pay
provisions followed much the same pattern as in the two previous pacts, but more
attention was given to non-pay issues. As title suggests, one of the main non-pay
issues addressed by the PCW was unemployment. Another was employee involvement
(EI); for ICTU now wanted more than the lip service paid to this in the PNR and
PESP. Significantly, an ICTU internal report on new management methods seemed to
endorse ‘bottom-up’ EI with a ‘competitive edge’ component. What was wanted was for
partnership at national level to be complemented by partnership in the enterprise,
the plant and the office. But while there were more words about participation in
the PCW, IBEC (Irish Business and Employers’ Confederation – the successor to FUE)
fought hard against anything too prescriptive. There was further disappointment for
ICTU when post-agreement discussions produced little more. PCW ended on a sour
note, with public service workers complaining loudly that they had done poorly in
comparison with other groups.
P2000 − Making partnership a priority

Although this made negotiation of a new agreement more difficult, the continuing
economic success, which attended the PCW ensured, once again, that a deal would be
done in the end. Negotiating this time with a Fine Gael (FG)/Labour/Democratic Left
(‘Rainbow’) Coalition Government, ICTU set itself very different targets than those
outlined for the PNR almost a decade before. As well as the obvious – better pay
and tax relief – it demanded ‘mechanisms to develop partnership at the workplace
level; and a focus on equality, long-term unemployment and social exclusion’. The
tone was set by the name – Partnership 2000 (or P2000); it had a key part devoted
to ‘developing partnership in the workplace’. ICTU saw it ‘as a watershed in the
evolution of social partnership’ and believed ‘it would determine whether it
develops or dies’. It was a last opportunity ‘to widen and deepen the national
partnership process into a genuine partnership at the level of the workplace’. So
implementation of chapter on partnership ‘is the most important challenge for all
the parties’. The extent of new workplace partnership would be ‘the union benchmark
when we come to assess its success or failure’. to meet the benchmark a National
Centre for Partnership was established to promote partnership in enterprises and
workplaces. But P2000 also included strong commitments to ‘promoting enterprise’
and the setting up of a National Competitiveness Council. Private sector companies
were encouraged as well to reward employees by means of profit-sharing. Finally, a
vexed labour market regulation question, concerning union recognition, was passed
for resolution to a tripartite ‘High Level Group’. On to the equality, employment
and ‘social inclusion’ aspects, it was argued that economic growth had accelerated
in a period marked by increasing income inequality, low pay and high levels of
relative income poverty (Allen 2001; Kirby 2002). In other words, there were too
many marginalised people not enjoying any of the fruits of the ‘Celtic Tiger’.
Adding a more traditional or ‘classical’ neo-corporatist dimension, then, P2000
laid stronger emphasis on dealing with such issues.

New agreement contained Government commitments to spend £25m on a range of

important social projects before 2000. Targeted specifically were the long-term
unemployed, the educationally disadvantaged, those on low incomes and those living
in the more deprived areas of the country. Where to after P2000? There were a
number of other things to cheer supporters of social partnership Though anecdotal
evidence suggested wage drift beyond agreed norms, a survey of 1,000 pay
settlements confirmed that the level of adherence was ‘remarkably high’. And there
were other achievements: • • agreement in broad terms to a procedure for union
recognition; unemployment had dropped sharply.
Programme for prosperity and fairness

In January 2000 union leaders agreed that a new offer of 15%, plus another 10% in
tax cuts, was the most they could obtain from the talks process. The new agreement
was called the Programme for Prosperity and Fairness (PPF). Under final PPF terms,
workers on basic national minimum wage (NMW) were to receive increases worth 18.65%
over 33 months; workers on IR£200 would receive 16 3% and other workers 15.75%.
Social Welfare Bill to give increases worth another £5 a week to workers earning
under £200 per wk. The NMW started at IR£4.40 and rose to IR£4.70 in July 2001; it
increased to IR£5 (€6.25) in October 2002 – when the agreement expired. Several
interesting ‘non-pay’ parts to the deal, including agreement to increase of 1,500
primary school teachers. PPF also sought to deepen the workplace partnership
measures begun under P2000. Built on too were earlier programmes involving the
social partners in a range of areas of public policy, under the aegis of five
‘frameworks’. Arising from these, 20 working groups came into existence to address
policy development and implementation in a number of areas: childcare; family-
friendly work; housing; and gainsharing. Small wonder some of those involved
complained of ‘partnership fatigue’!
Question 3 Why has social partnership remained in Ireland: arguments for and
against.
Stick with partnership?: no! On the neo-liberal side it was argued: • firstly, the
unions had ‘pushed their luck’ too far. Moreover, ICTU was no longer the authentic,
majority voice of Irish workers; it now represented predominantly public sector
employees;

• •
and it had failed to convince most investors – especially the US high-tech

companies – to recognise trade unions; secondly, it was claimed that the aims that
prompted the birth of social partnership in the late 80s had been almost fully
realised. Needed now was a dose of free market, laissez faire industrial relations
– to sharpen up the act of the unions, management and employees; thirdly, the pay
agreement at the core of the PPF was becoming a fiction. Increases in the booming
parts of the private sector appeared to be exceeding the PPF’s pay norms. And pay
militancy was rising in the public sector. Could increases really be held to 2 – 3%
in a highly successful economy with real labour shortages?; fourthly, there was
widespread ‘partnership fatigue’ arising from the 20+ working groups set up under
the PPF on work, housing, gain sharing etc.
This demanded return to the ‘leaner’ and less complicated agreements of the late
80s and 90s. Stick with partnership?: yes! As against all that, three main
pressures for a continuation of social partnership: • firstly, a simple argument
was that the cumulative benefits of social partnership were so obvious that it
would foolish to throw them all away. It would be even more regrettable to abandon
the uniquely Irish neo-corporatist model – one that incorporated both classical and
competitive neo-corporatism, and represented, as it were, neo-liberalism with a
social conscience; secondly, there was some apprehension that a return to
unfettered FCB would be too much of a shock for the industrial relations system.
Associated worry that many managers and union officials were ill-equipped to deal
with face-to-face negotiating at firm and plant level; thirdly, and perhaps most
telling, it was argued that retaining neo-corporatism was essential in face of an
economic downturn. With so much US investment, Ireland is especially vulnerable to
effects of the US recession of 2001, that was deepened by the 9/11 terrorist
attacks. To make economic matters worse, soon after the 2002 General Election –
which returned the FF/PD coalition for a second term – suspicions about looming
problems in public finances were proved justified. Expenditure running well beyond
expectations, but tax receipts appeared to be in serious decline too. This was not
the right moment, so it was argued, to make any radical change of approach. Social
partnership might be essential for economic stability.
Question 4 Bringing it all together

Eight out of 25 EU member states came to pacts of a competitive neo-corporatist
kind in the recent past (Belgium, Finland, Germany, Greece, Italy, The Netherlands,
Portugal and Spain). But of course the new Irish pacts actually contained elements
of both old and new neocorporatism: • classical – fairness and social justice;

competitive – recognition of the importance of success of the national economy.
Competitiveness obviously became a stronger component with passage of time, but

issues of justice and fairness have not been lost sight of. The present Irish model
of social partnership thus represents what we might call a ‘balanced’ version of
neo-corporatism – unique to RoI; would surely be a mistake to let this major
indigenous institutional achievement fall by the wayside. But was neo-
corporatism/social partnership a major factor in the development of the Celtic
Tiger?
What created the Celtic Tiger and can social partnership work in the United
Kingdom?
Cynics dismiss social partnership as causal factor; so let us try to evaluate what
actually was responsible for recent Irish economic growth: • • • • • • • • •
European money (‘Euro-gold’) – OK, but this could only be used for infrastructural
projects; educated labour force – important, but shared with United Kingdom;
English speaking – once again shared, but Republic of Ireland is the only English-
speaking country within the Eurozone; Industrial Development Authority is good at
selling Ireland – yes, but have to have a good product to be a good salesperson;
low corporation tax – a crucial advantage; low social costs – yes, but social costs
are even lower in the United Kingdom; low value of the euro – this is the one no
one talks about, but it must not be discounted!; good government? – who knows!;
Favourable conjunction of circumstances? – in other words ‘luck’!
All these factors would play a part in the creation of a social partnership
agreement in the United Kingdom. Table 12.1: Key policy elements sustaining
progress factors the United Kingdom could consider in a social partnership
agreement.

Policy Area Macro-economic
Themes Public expenditure taxation Competitiveness and inflation
Building, maintaining and sharing economic Development and prosperity
Infrastructure The environment Adaptation to continuing change
Delivering a fair and inclusive society
Poverty and social inclusion Health and addressing health Inequalities Equality
Access to quality public services Challenge of delivering a fair and inclusive
society
Workplace relations and environment
Protecting employees rights ensuring greater equality Improving skills Promoting

health and safety Achieving a better work - life balance Developing integrated
policies for migrant workers Partnership in the workplace
Social partnership: two clear potential benefits for the United Kingdom: • • low
inflation – a key factor early on; psychological effect – arguably the most
important in the long-term, for both the United Kingdom and for potential
investors.
It seems impossible, then, to conclude other than that social partnership was key
if not the key, to recent economic success of the Republic of Ireland and could be
a key to future economic success in the United Kingdom. But as well as those
relating to employee relations and economic results, there is another wider lesson
to be learned by the United Kingdom from social partnership • because the Irish
experience shows that neo-corporatism is a real and demonstrably effective policy
alternative to full-blooded neo-liberalism.

That a social partnership/neo-corporatist Ireland and a free market/neo-laissez

faire United States were both among the best performing economies 1990s and early
2000s is an adequate testimony to this.
Further Reading
Essential piece is Cradden T, ‘Social Partnership in Ireland: ‘a rising tide lifts
all boats?’, in Collins N & Cradden T (eds), Political Issues in Ireland Today, 3rd
edn, Manchester: MUP, 2004. For a denser piece see Roche WK & Cradden T, ‘Neo-
corporatism and social partnership’, in Adshead M & Millar M, Public Administration
in Ireland, London: Routledge, 2003. For opposing views, see Allen K, The Celtic
Tiger: The Myth of Social Partnership in Ireland, Manchester: MUP, 2000; and Kirby
P, The Celtic Tiger in Distress, London: Palgrave, 2002. Also worth a look are:
Teague P, ‘Pay Determination in the Republic of Ireland: Towards Social
Corporatism?’, British Journal of Industrial Relations, Vol 33 No 2, 1995. Visser
J, ‘Two Cheers for Corporatism, One for the Market: Industrial Relations, Wage
Moderation and Job Growth in Holland’, British Journal of Industrial Relations, Vol
36 No 2, 1998. Irish Congress of Trade Unions website at [http://www.iol.ie/ictu].

CHAPTER 13
Diversity management: concern for legislation or concern for strategy?

Learning outcomes
By the end of this chapter you should be able to: • • • • • explain the differences
between managing diversity and equal opportunities approaches to diversity
management and the debates relating to these approaches; explore the
interdependence between managing diversity and equal opportunities approaches in
managing human resources strategically; evaluate the business case for diversity
management; be able to integrate diversity management with other SHRM issues such
as organisational culture; assess the implementation issues for organisations
adopting diversity management as part of their strategy to manage human resources.
Summary
• Conceptualisations of diversity management within the literature can be broadly
categorised into two groups: • the equal opportunities approach, which has a
legislative and compliance focus and is concerned with equality of status,
opportunities and rights. This, it can be argued, is deeply rooted in traditional
approaches to human resource management; the managing diversity approach, which
focuses upon an explicit holistic strategy of valuing differences, such as age,
gender, social background, ethnicity and disability. This, it can be argued, is
like SHRM, driven by organisational needs.
The business case claimed for a managing diversity approach includes a better
public image for the organisation, a satisfying working environment for employees,
improved employee relations, increased job satisfaction and higher employee morale,
increased productivity and, for the organisation, improved competitive edge. It is
argued that organisations will only survive and prosper in an increasingly
competitive and dynamic global environment if they respond to the heterogeneity of
their markets. However, there is limited empirical evidence to support these claims
in either the UK or USA. Despite a lack of evidence, it seems probable that the
benefits of diversity management will only be realised within the context of the
re-alignment of an organisation’s culture to one

where diversity is valued. For this to happen, it will be necessary to persuade

those in power that this will impact positively on organisational effectiveness. •
Empirical evidence suggests that, for many organisations, diversity management
remains a theoretical concept rather than a strategic reality, combining equal
opportunities and managing diversity approaches. The most frequent reason advanced
for this is that organisations believe they are already undertaking sufficient
investment through ensuring equality of opportunity. However, for organisations
considering the implementation of a managing diversity approach, advice is
available.

Comment
Issues of diversity and diversity management have received considerable coverage in
the national press, particularly with regard to ethnicity, age and gender. It is
also an area of SHRM where, most students often have firmly held personal beliefs
regarding what is right and wrong. However, despite this, few have considered the
implications of their beliefs for their own world of work, for organisations and in
particular how these beliefs relate to recent European Union (EU) employment
related legislation. In the current highly competitive labour market, the ability
to attract and retain talented people is now rated higher than market share in the
top 10 non-financial measures investors use to analyse company performance.
Traditional markets for attracting talented people, however, are changing and
becoming increasingly challenging for many organisations, owing to major shifts in
the demographic composition of the workforce including age, gender and ethnicity.
The topicality of this chapter’s material means that it is relatively easy to make
it both relevant and exciting to students using recent news events to highlight
these issues. EU enlargement and associated migration have considerable diversity
implications for organisations both in the United Kingdom and elsewhere in the EU.
Within organisations issues associated with the composition of organisations’
workforces and their management are a strategic imperative for Human Resource (HR)
Managers and, as a consequence, their management a necessity. However, the ways in
which such issues associated with workforce diversity are tackled and the approach
adopted are varied. It is this variation that and the associated implications that
form the focus of this chapter. The chapter starts by considering the different
ways in which diversity management has been conceptualised. Building upon this
equal opportunities and managing diversity approaches to diversity management are
compared and contrasted and the debates relating to these approaches discussed. As
part of this the question as to whether managing diversity represents a strategic
shift from equal opportunities is addressed. After evaluating the business case for
adopting diversity management, the issues for organisations wishing to implement a
managing diversity approach to managing their human resources are assessed.
Student preparation
a useful approach to note

taking and encourages students to reflect on the internal integration of the

subject content of the chapter. We use a variety of vehicles to bridge student
preparation and class-based activities to enhance their understanding of the
chapter content and its overall relationship to managing human resources
following: • • • address pre-set questions and write up their answers briefly in
note format; complete the self check and reflect questions and come to the session
preparatory activities and classroom discussion for the topic of diversity
management include: 1. What are the main differences between equal opportunities
and managing diversity approaches? 2. Outline the key legislation with regard to
equal opportunities and managing diversity since 1975. 3. What arguments have been
put forward to support the business case for managing diversity?
In the classroom
exhausted, to provide a short summary of key issues. Where preparing answers to
would favour the

group approach as a more stimulating approach. In all cases student responses can
be considered against our suggested answers, which themselves can be usefully
critiqued. Where case study work has featured as part of preparatory activities,
similar approaches to those suggested for self check and reflect questions can be
adopted. If coming to the case afresh, there is unlikely to be time for groups to
consider all four questions. Here we would suggest that groups major on one of the
case questions only moving on to others if they have time. Equal opportunities and
diversity is an area where every student has some experience irrespective of
whether they are full or part time. Most full-time students will have accumulated
work experience prior to and during their higher education studies and many will be
following business-related courses, which incorporate a placement element.
Therefore, we have found it both feasible and useful to surface these experiences
during class discussion and to subject them to critical analysis to evaluate their
strategic credentials.
Follow-up work
and/or the chapter case ‘Making diversity an issue in leafy Elgarshire’ will serve
as a useful reinforcement to chapter content. Our outline answers to both self
check and reflect questions and case study questions follow in the next two
substantive sections of this chapter guide. There are also a number of follow-up
study suggestions after the chapter summary that can be undertaken by students
either individually or in groups and an extensive list of references provides many

13. 1 Note down the changes in the EU’s population highlighted by Figures 13.1 and
13.2. How are these predicted changes likely to impact upon the composition of the
labour force in relation to full- and part-time work, age and gender? What
implications do you consider these changes are likely to have for SHRP (strategic
human resource planning)? What other demographic changes do you predict based upon
your own knowledge of labour markets? The Eurostat (2005) data shown in Figures
13.1 and 13.2 indicate the following key trends in relation to full- and part-time
work, age and gender: • The overall population of working age (16–59) across the EU
is due to fall from 228m at present to 203m in 2030.

• • • •
However, in the 60 plus age group, the population is set to rise from 83m in 2005
to 123m in 2030, and increase of more than 40%. Over the next 25 years, the number
of full-time workers in the EU is set to fall by 8%, but the number of long part-
time work (20–31 hours per week) is predicted to remain constant. Short part-time
work (less than 19 hours), however, is set to rise by 5% across the EU. Thus,
general trends would indicate that over the next 25 years, the working population
across the EU will be older, less reliant on full-time workers and a greater shift
to more flexible forms of working, particularly short part-time work. In terms of
gender composition, employment growth will occur in the part- time sector, more
typically associated with a female workforce.
As for other more general trends indicated by the above data, the following are
frequently mentioned in the literature: • • • • a decline in the youngest labour
market group, of 16–24-year olds. in the UK, 80% of labour market growth by 2010
will be amongst women by 2010 only 20% of the workforce will be white, able-bodied,
male and under 45. the above trends indicate that employers have little option but
to broaden their view on the types of people to target in the labour force. Those
relying on the so-called ‘traditional’ model of an employee as being white, able-
bodied, male, under 45 and working full-time, are likely to find themselves facing
severe skills shortages in the not too distant future. What do you consider to be
the strengths and limitations of the equal opportunities and the managing diversity
approaches to diversity management?
13.2
Equal Opportunities Although your list may differ in the way it is worded from the
one below we would expect you to have listed most of the following strengths: • the
equal opportunities movement, gaining legislative force in the 1970s, has focused
attention on the organisational practice of equal opportunities, and through such
attention has made practices like direct sex and race discrimination a rarity. the
movement has gained much from legislative backing, with Acts in relation to sex,
race and disability being on the statute books for three decades. The area is a
developing one, with new provision being made as circumstances require; for
example, regulations to limit age discrimination and to protect against
discrimination based on sexual orientation.
as well as the following limitations: • treats everyone the same, and focuses on
‘disadvantaged’ groups; can mean people lose their individuality and that simply by
being a member of a particular group discrimination is assumed to be an issue.
there has been little observable impact (except in the case of direct race and sex
discrimination) on employment patterns, despite three decades of legislation. For
example, men still account for the most senior management positions in the United
Kingdom,

women’s pay still lags behind that of men and those from ethnic minorities and the
disabled have made few inroads into senior organisational positions. • it is argued
that a compliance-based model may mean that organisations while complying with the
letter of the law, do not actually comply with the spirit of the law; the equality
approach does not address this issue.
Diversity Management Although your list may differ in the way it is worded from the
one below we would expect you to have listed most of the following strengths: • • •
It is a strategic approach to managing people, which does not try to suppress
difference but actually seeks to identify it and value it. Its focus on improving
organisational performance through promoting practices designed to enhance
individual productivity is seen as a key component of effective people management.
It is a move away from a compliance-based model, to a much more positive and
businessfocused approach to ensuring workplace equality.
as well as the following limitations: • • • Few examples exist of the approach

actually delivering what it promises. The business focus of ensuring maximum profit
may be at odds with key principles of social justice and fairness The extent of
organisational change required to fully embrace the approach is considerable; in
the current fast-paced business environment, organisations may be unable to
resource initiatives with little to show in the way of short-term payback.
13.3 Outline the strengths and limitations for diversity management of the equal
opportunities approach. The strengths for diversity management of the equal
opportunities approach which you are likely to have outlined should include: • the
equal opportunities approach, based primarily on legislative provision, has meant
that the issue of equality in employment has been on the organisational agenda for
the past 30 years or so, and since the law applies to all but the smallest
enterprises; few organisations will be unaware of the issue or of their obligations
under the legislation the equality approach has undoubtedly fallen out of favour in
recent times, particularly with the addition of EU directives, making some
organisations feel that this is an overly burdensome and highly regulated area.
This makes the time ripe for an approach to equality; which shifts the focus from
legal compliance to leveraging and valuing difference for organisational benefit;
i.e. from an external imperative to an internal one. The agenda becomes a far more
positive one, emphasising the value to be gained from valuing and embracing
difference, rather than a punitive avoidance of legal penalty.

The limitations for diversity management of equal opportunities should include: •

the approach may be negatively viewed by organisations used to the restrictive
equal opportunities approach. The shift in mindset required from avoiding
discrimination to actively valuing difference may be difficult to grasp, and more
importantly to articulate organisationally in terms of practical measures that need
to be taken to advance the agenda. for some organisations the shift from an
approach based on social justice, equity and fairness, to one where differences
between individuals are valued simply because of their positive impact upon
organisational performance, may seem morally questionable. the equality approach
has led to a plethora of legal regulation, and with the adoption of EU directives
organisations have a considerable number of regulations to comply with.
Organisations may in these circumstances feel they are doing enough, and that this
is not an area to which further resources can be invested.
13.4 Outline the strengths and limitations for diversity management of the managing
diversity approach. The strengths you have outlined are likely to include: • • • •
a shift in the agenda from externally focused drivers for action to internally,
business-linked drivers. a more positive, strategic and ultimately holistic
approach to the management of equality and difference. closer contact and
understanding with customer and employee markets. the possibility of wider-scale
culture change within the auspices of a diversity management programme.
Your limitations are likely to include: • • • • little empirical evidence, either

in the United Kingdom, United States of America or Europe to support key
contentions made. a plethora of consultants in the area renaming a basic equality
of opportunity approach as diversity management; organisations then believing there
to be little difference. the focus on the business case promotes a view that issues
of social justice, equity and fairness are no longer important. there is confusion
as to the focus of interest; group, individual or both?
13.5 To what extent is it appropriate to support a positive climate for diversity

management for purely business-focused reasons rather than as part of its cultural
values? Those supporting the view that it is appropriate to support a positive
climate for diversity management for purely business-focused reasons, may raise
some of the following points to support their position:

without articulating the financial return an organisation could gain from diversity
management, in times of high competition, few organisations would commit resources
to such programmes. in tight labour markets, emphasis on the link between effective
diversity management and access to new and emerging labour markets will be a
powerful argument. in times when customer satisfaction is at a premium, a link
between a diverse workforce and an improved ability to meet customer requirements
through improved understanding is of great value. links to improving productivity,
reducing turnover and absenteeism will all be highly persuasive to organisations
seeking elusive competitive advantage.
• •
Consequently the overall position of those with this view would be that diversity
management is important, and clearly the right thing to do. However, senior
managers in the organisation who are responsible for the effective utilisation of
scarce resources are not going to commit considerable amounts of that resource to
projects where the only benefit to be gained is that the company is considered to
have done the right thing. Organisations are increasingly looking for strong
financial justification before willing to commit resources to initiatives; and
without a solid business case to support it; the diversity management agenda will
be lost. Those who are uncomfortable with the linking of diversity management to
purely businessfocused outcomes, rather than as part of cultural values would be
likely to raise the following points: • How can you actually do a cost/benefit
analysis on what is right and what is wrong? Diversity management, valuing people
for who they are, the contributions they can make and the difference in the
perspectives, skills and experiences that they bring is simply the right thing to
do. There is no need to go further and start trying to calculate exactly how right
this is in terms of bottom-line profitability. Taking this position to its logical
end, would firms actually start calculating how much they would save by not
managing diversity effectively, and if it were more than the benefit they would
gain; would this be advocated? A diversity management programme, not underpinned by
deeply held corporate values, becomes little more than a collection of initiatives
that have little underlying rationale; people both inside and outside the
organisation would soon see through this fairly cynical approach to the issue If
all that supports the adoption of a diversity management approach is some perceived
business benefit, what happens when the results do not come quickly enough? Does
the organisation stop valuing difference?
At the heart of this approach is the difficulty of taking moral issues, and framing
them as strategic objectives capable of measurable financial return. The point here
would be that diversity management should occur because it is simply right to treat
people with dignity and respect. If this brings the business some financial
benefit, then that is an added bonus, but the financial benefit should not be the
reason why diversity is valued within the organisation.


1. Do you consider Worcestershire County Council to be adopting a managing
diversity or equal opportunities approach to diversity management? Give reasons for
your answer. In order to answer this question, it is worth first reflecting on what
is understood by managing diversity and equal opportunities approaches. The equal
opportunities approach is based upon on compliance with legislation, reiterating
the traditional arena of equality of status, opportunities and rights, valuing
equality and avoiding unfair disadvantage. In contrast the managing diversity
approach is based on an explicit strategy of valuing differences such as gender,
age, social background, disability, personality, ethnicity and work style. These
differences are an asset to work being done more efficiently and effectively and
organisational goals being met. With regard to ethnicity, Worcestershire County
Council’s employees reflect the composition of the county as a whole, the council
complying with legislation. However, they have recognised that for some parts of
the county there is a marked mismatch between ethnicity of employees and that of
residents in receipt of services. In addition their workforce monitoring has
highlighted a lack of women in more senior positions within the organisation.
Alongside this the council’s Chief Officers Management Board has realised that to
get the best from all employees, there was a need to recognise diversity. In the
case it is stated that they were determined to address these issues and raise the
awareness of all staff to the diversity of needs of those living in Worcestershire
and of their employees. The approach that Worcestershire County Council has taken
is to force employees to recognise that diversity issues are important, need to be
addressed and, as part of this, to challenge widely held perceptions. This managing
diversity approach, as illustrated by the diversity and equality training, is based
on an explicit message that differences are to be valued and are an asset to
meeting the needs of the population of Worcestershire. 2. How has legislation
impacted upon Worcestershire County Council’s approach to diversity management?
Worcestershire County Council are keen to be seen as not just ‘ticking boxes’ to
meet legislative requirements, such as those set by the Disability Discrimination
Act 1995 and the Race Relations Amendment Act 2000. Rather they wanted be taking
actions that actually made a difference to those living in the county and working
for the County Council. In addition to monitoring to assure compliance with equal
opportunities legislation, Worcestershire County Council has focused upon
development and training activities required in response to Race Relations
Amendment Act 2000. However, alongside this it has also stressed that the County
Council’s commitment to equality and dignity is much broader, the underpinning
principles of the council’s approach consisting of four interrelated and
overlapping phases embracing all diversity issues: • • • • Phase 1 – Capturing
attention (awareness campaign) Phase 2 – Addressing the issues (training) Phase 3 –
Operational briefings for managers Phase 4 – Embedding the learning

3. Do you agree with Worcestershire County Council’s phased approach to diversity

management; what do you see as the key strengths and limitations of this approach?
Obviously, there is no one right answer to this question. However, Worcestershire’s
phased approach has been based upon the premise that people learn best when they
are motivated and interested. Consequently all employees needed to know that the
County Council was treating diversity and equality as special and important issues
and had been provided with thought provoking information prior to commencing
diversity awareness training (phase 2). This was the basis for the ongoing poster
campaign. Subsequent to this diversity training commenced and is again still
ongoing. Updates on this training and the associated successes can be found in the
Council’s newsletter Equality News. Copies of this can be downloaded from
http://worcestershire.whub.org.uk/home/wcc-chief-exec-equality-news The Council’s
approach is both time consuming and expensive as the authority has over 17,500
employees. By not making diversity training compulsory, employees can opt out of
being trained. Inevitably because of the time to train so many employees and the
ongoing nature of training in a dynamic environment there will be a need to refresh
and update people. Despite these concerns, the case suggests that diversity is
becoming embedded within the County Council. The County Council has employed a
Diversity Officer whose job is entirely concerned with diversity issues. Evidence
that the phased approach is working include ongoing improvements to the ways in
which services are delivered and the fact that both race and disability are issues
of legitimate discussion amongst employees. 4. If you were Worcestershire County
Council’s Diversity Officer, what specifically would you see as being the key focus
of your role? What information/evidence do you think you would need to
collect/disseminate to ensure the County Council makes progress towards its goal of
better serving residents and of valuing diversity amongst its workforce to make a
difference to people’s lives, and not just to comply with legislation? This work is
currently being undertaken by the County Council and is set out in their Corporate
Equalities Scheme document. The latest version of this, which will provide the most
up to date answer to this question, can be downloaded as a .pdf file from
http://worcestershire.whub.org.uk/ home/wccindex/wcc-chief-exec-equality-and-
diversity.htm

CHAPTER 14
Downsizing: proactive strategy or reactive workforce reduction?

Learning outcomes
By the end of this chapter you should be able to: • • • • explain the purpose of
downsizing and analyse the problems associated with its use; identify a range of
organisational strategies to downsize and evaluate their implications; discuss the
significance of employee involvement and influence in relation to the
implementation of downsizing; describe the nature of survivors' reactions to
downsizing and the existence of moderating variables affecting these, and evaluate
their significance for organisations using this type of change strategy; discuss
the role of organisational theories and human resource interventions to provide
strategies to manage the process of downsizing more effectively; explore the
implications of outsourcing for SHRM; analyse the role downsizing plays in
contributing to organisational HR strategies and the interrelationships with other
HR interventions such as performance management, employee involvement and
commitment and training and development.
• • •
Summary
• Downsizing is an organisational strategy to reduce the size of an organisation's
workforce. Its use is likely to generate a range of reactions from those who remain
in an organisation, which may lead to adverse consequences. Three organisational
strategies have been identified to achieve downsizing. These are: the workforce
reduction strategy; organisation redesign strategy; and the systemic change
strategy. An important distinction has also been drawn between the use of proactive
and reactive approaches to downsizing. The use of a reactive, workforce reduction
strategy has been found to impair, rather than improve, organisational performance.
Even where this approach is not used there may still be a negative effect arising
from the creation of negative survivors’ reactions and the loss of organisational
competence. Where organisations use methods to implement downsizing that emphasise
managerial control at the expense of perceived influence by employees, this will
generate further negative survivors' reactions leading to adverse consequences for
the organisation.

The incidence and strength of survivors' reactions are affected by the existence of
moderating variables. These highlight the scope for downsizing organisations to
intervene to seek to minimise their incidence or manage their effects. A range of
organisational theories, related to equity, organisational justice, job insecurity,
job redesign and organisational stress, can be used to suggest appropriate human
resource interventions to manage the process of downsizing more effectively,
depending on the characteristics of the organisational context.

Comment
Downsizing was frequently in the news when we were preparing this chapter, the
closure of MG Rover Cars Longbridge plant providing the case study. It is a major
HR strategy used by organisations of all sizes. At a superficial level most
students see downsizing as a reassuringly simple and inviting strategy to consider.
Reducing an organisation's headcount is a more concrete idea to them than, say,
realigning an organisation’s culture (Chapter 6) and appears to offer cost savings
through fewer people being employed. However, although such a strategy may be
easier for students to comprehend at this superficial level, in reality the process
of downsizing is highly complex and can often generate a range of reactions that
undermine the strategic objectives for downsizing. This chapter explores such
reactions and their consequences for an organisation using this strategy. As a
major organisational HR strategy, downsizing is also capable of promoting and
contributing to other organisational strategies. Indeed, within the chapter we
argue that the successful use of downsizing requires the implementation of and
integration with other human resource strategies discussed in this book. Through
doing this possible negative reactions to downsizing may be avoided or reduced and
the greatest benefits from its use gained. The chapter therefore, focuses upon the
human aspects of downsizing to maximise the positive and minimise the negative
outcomes of using of this strategy.
Student preparation
queries arising from their reading and to come to the teaching session prepared to
following: • address pre-set questions and write their answers briefly in note
format;

• •
complete the self check and reflect questions and come to the session prepared to
share and discuss their responses; and familiarise themselves with the chapter case
study (or an alternative case supplied in advance) and come to the session prepared
to tackle the case questions.
preparatory activities and classroom discussion for the topic of downsizing
include: 1. What do you understand to be the main differences between downsizing
and redundancy? 2. Outline the range of strategies that an organisation may choose
when downsizing and the implications for both organisations and their employees. 3.
What interventions may be used to help manage downsizing and how do these relate to
equity theory, organisational justice, job insecurity, communication and the
psychological contract?
In the classroom
exhausted, to provide a short summary of key issues. Where preparing answers to
student responses can be considered against our suggested answers which themselves
to be time for groups to consider all questions. Here we would suggest that groups
major on one of the case questions only moving on to others if they have time. As
already noted, downsizing is a strategy that most students will have heard about
via the media. If at the time you are teaching this topic there is an
organisational downsizing taking place, it may well be helpful to use this as an
alternative case study. As part of this, students may wish to compare how the same
events are reported by different media. Alternatively, you could obtain more recent
newspaper reports to extend the case on MG Rover Cars at the end of the chapter.

Follow-up work
and/or the chapter case ‘The demise of MG Rover Cars’? will serve as a useful
reinforcement to chapter content. Our outline answers to both self check and

14.1 Using Shaw and Barrett-Power’s definition of downsizing (outlined earlier),
which of the following events would you classify as downsizing methods: compulsory
redundancy, early retirement, induced redeployment, job share, natural attrition,
recruitment freeze, voluntary redundancy involuntary redeployment? Give reasons for
your answer. The short answer to this question is that all of them are downsizing
methods as they will all result in a reduction in the size of the workforce. Each
will place demands upon those remaining in employment (the survivors) requiring
these employees to cope and adapt. As you continue with your reading of this
chapter, you will learn more about the implications of using each of these methods
for both employees and the employer. 14.2 Why might the requirement to adopt a
proactive downsizing strategy in order to minimise its negative consequences be
difficult to achieve in practice? The literature on which this sub-section is based
certainly points to the need for a proactive approach to downsizing as part of the
means to minimise and manage negative survivors’ reactions that may adversely
affect organisational objectives. However, the factors referred to in the
literature (e.g. a strategic planning and environmental scanning capacity) that
underpin a proactive approach may not be present in many organisations (Kozlowski
et al., 1993). In addition, the existence of an integrated, HRM approach is more
likely to exist in larger organisations or those that are part of a larger group of
companies. Such managerial capability and competence may not be present in other
organisations. These other types of organisations may have a tendency to muddle
along and be more likely to adopt reactive approaches where environmental factors
create pressures that cannot be ignored. This reactive approach may also be more
symptomatic of organisations in decline. 14.3 Which factors related to the methods
used to implement downsizing might affect managerial control and employee influence
over the process? Targeting those to be made redundant, or who will be offered some
inducement to accept voluntary severance, is one way of increasing managerial
control over the implementation of downsizing. Targeting relates to the ability of
an organisation's management to focus workforce reductions in areas (i.e. a
particular function or layer) requiring action to overcome the effects of
technological obsolescence, reduced product demand or for some other reason. The
alternative to a targeted approach to workforce reductions is to engage in either
unfocused or across-the-

board reductions, perhaps related to a general cost reduction strategy. Such an

alternative approach has been associated with cost reduction strategies, short-
termism and a low level of managerial control. This approach is likely to lead to
the types of post-downsizing organisational problems discussed in the main body of
the chapter. The use of selection criteria offers a further means to exercise
managerial control in relation to the downsizing process. Selection criteria may be
used in relation to an ostensibly voluntary approach. While targeting (see above)
may be used to identify work areas or groups for downsizing, the use of selection
criteria, in relation to targeted areas, provides a check in relation to particular
individuals whom the organisation wishes to retain. Selection criteria may also be
used as the only filter where volunteers are sought from across the organisation.
The alternative to any form of selection in relation to a voluntary approach to
redundancy is made clear by Lewis (1993: 28): ‘the volunteer population may become
an irresistible force and the pattern of volunteers may largely determine the
distribution of actual redundancies’. The outcome of this lack of managerial
control could be a mismatch between actual and required human resource profiles of
the downsized organisation. 14.4 How would you react to the redundancy of
colleagues in the organisation for which you work, or in an organisation for which
you have worked? (Perhaps you have actually experienced this event. If you have,
how did you react and why?) Your response to this question will clearly be personal
to a certain extent. However, if you are persuaded by the theory being advanced in
this chapter you will have made connections to the approach of the organisation in
terms of its downsizing strategy. You will have also reflected on the methods used
to implement downsizing, or more precisely given the question, the method of
redundancy. Where the organisation simply used a workforce reduction strategy,
without much thought about those who survived, or who would survive, this event,
you may be expected to experience fairly negative reactions. Where the organisation
did not consider those made redundant you may be expected to experience fairly
strong or strong sympathetic reactions to those so affected. This may not be the
case where you feel that those selected for redundancy were appropriately selected.
This may be even more the case where they are fairly treated. However, there may be
a number of reasons related to your psychological characteristics; the prevailing
employment circumstances and the need for your redundant colleagues to find work;
as well as the closeness of your working relationships, beliefs and values etc. why
you would have, or did have, sympathetic reactions towards your colleagues. You can
see what a potentially complex picture can emerge from this type of event. We hope
that you do not have to experience this! Where you have to manage this situation we
hope that the ideas in this chapter provide at least some help! 14.5 Outline how
perceptions of distributive, procedural, informational and interpersonal treatment
may impact positively on downsizing survivors’ reactions. Distributive treatment
refers in this case to the outcomes of downsizing. It is therefore, related to
employees’ perceptions regarding the outcomes downsizing decisions made. Where
employees perceive that these outcomes are fair, such as in relation to individuals
performance or in that they affect both employees and their managers equally they
will perceive the downsizing more positively. The possibility of fair outcomes also
impacts upon perceptions of the procedures through which these decisions were
reached. Where negative reactions are created by outcomes that are seen as unfair,
these may be reduced if the procedures by which they were reached are considered
fair. This is related to the amount of employee involvement in the process such as
through consultation and communication as well as providing employees with options
such as voluntary redundancies.

Interpersonal treatment, in particular by line managers has been shown to have

considerable influence on employees’ perceptions. Where employees are treated
sensitively by line managers they are likely to feel more positive about the
downsizing. Sensitive treatment of those who are leaving has also been shown to
impact positively on those who survive the downsizing (stayers). Finally, the
provision of clear information about both downsizing decisions and the reasons for
these decisions has also been shown to impact positively on reactions to the
downsizing.

One would hope that students will be answering these questions with the benefits of
hindsight and other material, rather than just that contained in the three
newspaper reports. However, from the extracts it is possible to develop answers to
each of the four questions. 1. Outline the organisational downsizing strategy as
adopted by Rover. MG Rover went into administration after Shanghai Automotive
Industry Corporation pulled out of collaboration talks. Approximately 3,000
employees at MG Rover were made compulsory redundant. These employees did not
receive the statutory 90 day notice period because of the sped of the redundancies.
A few hundred MG Rover staff were retained by the administrators to look after the
Longbridge factory site. As a result of the factory closure, a further 17,000
employees at suppliers of the factory also lost their jobs. 2. Outline the range of
support offered to redundant Rover workers. Why do you believe this support was
offered? A range of support was offered to redundant workers. This was part of a
£150m package pledged by the government to help the workers at MG Rover and their
suppliers who had lost jobs. It included: • • • • • redundancy payments averaging
£5,000 each; retraining courses for those who had lost their jobs; setting up an
office on the Longbridge site and the distribution of information packs to
redundant workers by JobCentre Plus, the government employment and benefits agency;
holding a jobs fair on parkland beside the site; setting up a register of
manufacturing vacancies.
The reasons for this support were, according to the newspaper extracts: • • •
statutory redundancy requirements; the large number of workers upon whom the
closure impacted; the impact upon the local economy.

3. Why did the UK Government become involved in the downsizing at Rover? One will
never know for sure. It might be argued that as last UK owned major automotive
manufacturer, MG Rover was of strategic importance. Others might feel it was due to
the redundancies occurring when the Labour Government was campaigning for re-
election and the marginal constituency of Redditch was close by! 4. What were the
intended and unintended outcomes of the downsizing strategy adopted? Intended
outcomes • • About 1,250 out of more than 5,000 workers who lost jobs when MG Rover
collapsed in April had found new employment within 6 weeks of the downsizing. MG
Rover workers signed up for training courses.
Unintended outcomes • The impact upon the local economy was less than expected due
to the ‘tight labour market’ and the diversification strategy for purchasing
components adopted by MG Rover’s previous owner, BMW. The Labour government, which
was seeking re-election when MG Rover collapsed, pledged £175m and the EU put up
£40m. That totalled almost £36,000 per worker. Workers who obtained employment were
earning less in their new jobs than they did at the Longbridge plant
• •

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Instructor's Manual

Strategic Human Resource Management: Contemporary Issues

 Pearson Education Limited 2007

1 © Pearson Education Limited 2007

2 © Pearson Education Limited 2007

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5 © Pearson Education Limited 2007

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Answers to self check and reflect questions References

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Strategic Human Resource Management: Contemporary Issues: an overview

Structure of the book

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12 © Pearson Education Limited 2007

13 © Pearson Education Limited 2007

Strategy and human resource management

14 © Pearson Education Limited 2007

Teaching and learning suggestions

15 © Pearson Education Limited 2007

Answers to Self-Check and Reflect Questions

16 © Pearson Education Limited 2007

17 © Pearson Education Limited 2007

18 © Pearson Education Limited 2007

Strategic human resource management: a vital piece in the jigsaw of organisational

The principal theoretical approaches to SHRM are termed: universalist, matching

Teaching and learning suggestions

20 © Pearson Education Limited 2007

Answers to Self-Check and Reflect Questions

21 © Pearson Education Limited 2007

22 © Pearson Education Limited 2007

SHRM in a changing and shrinking world: internationalisation of business and the

23 © Pearson Education Limited 2007

The effects of national cultural differences on HR practices can be quite profound

Teaching and learning suggestions

24 © Pearson Education Limited 2007

Answers to Self-Check and Reflect Questions

25 © Pearson Education Limited 2007

26 © Pearson Education Limited 2007

Evaluating SHRM: why bother and does it really happen in practice?

27 © Pearson Education Limited 2007

Prior to evaluating SHRM it is important that a clear understanding of the precise

Teaching and learning suggestions

28 © Pearson Education Limited 2007

29 © Pearson Education Limited 2007

Answers to Self-Check and Reflect Questions

30 © Pearson Education Limited 2007

to provide an opportunity for analysis and reflection before making adjustments to

perceived lack of a need to evaluate • • • • people ‘know’ the results will be

difficulties associated with dealing with negative outcomes • • • previous

31 © Pearson Education Limited 2007

A typical evaluation may be advantageous to an HR manager sponsoring an evaluation

In contrast action research may be advantageous to an HR manager sponsoring an

32 © Pearson Education Limited 2007

Strategic human resource management at Halcrow Group Limited

33 © Pearson Education Limited 2007

highlighted feedback, recognition and employee involvement and engagement as being

35 © Pearson Education Limited 2007