Chapter

5
Mutual Gains?
Introduction
A balanced approach in SHRM suggests equilibrium in the interests of those involved, in particular the
employer and the employees. The mutual gains proposition is what SHRM is built on: What is good for the
employee is also good for the employer, and the other way around. Mainstream SHRM often builds on
implicit assumptions with regard to joint interests of both the employee and the employer. The HRM
discipline has now reached a stage in which the added value of HRM can be claimed on the basis of
empirical evidence, while at the same time there is a growing body of empirical literature showing the
downside of HRM.

It seems to become a day-to-day reality in many high-performance organizations that what seems
to be good for both the employee and the employer according to mutual gains principles in the end turns
out to have serious potential negative implications for both the employee and the employer. SHRM as a
discipline has structurally neglected these aspects.

There is also critique on the mutual gains proposition from an equality perspective. Keegan and
Boselie (2006) noticed that mainstream HRM is mainly focused on core employees that potentially
contribute economic value to an organization. In both theory and practice certain employee groups are
included, while other groups are excluded.

HRM is positively associated with happiness-related outcomes such as satisfaction and also with
relationship outcomes between employee and employer. But HRM is also mainly negatively associated with
health indicators such as stress and strain.
HRM effects:
Positive
Negative
No effect

Happiness
76%
0%
24%
(25 studies)
Relationship (employee and employer) 81%
5%
14%
(21 studies)
Employee health
13%
63%
24%
(8 studies)
Professor Marc Van Veldhoven, stress expert at Tilburg University, contrast the what employers want
question with the issue of what employees want in one of the MA courses he teaches in university in a
nice and understandable way. In times of continuous change in markets and societies, the average
employer is in search of individual employees that possess:
1. The willingness and capability to change with whatever situation the individual is confronted with,
comparable with the adaptation of a chameleon to its environment.
2. The intelligence of an Albert Einstein with above-average scores on knowledge, skills and
competences.
3. The capabilities of an athlete in terms of speed and endurance.
There are young talents who possess these qualities. But how many of them actually meet these criteria
and are willing to live by these standards? And what are the implications for the employee health? We are
therefore in need of extending our SHRM horizon with inspiration from critical perspectives, organizational
behaviour (OB) and health psychology for gaining a full insight in the HR value chain and its implications for
employees and employers.

Organizational behaviour (OB): Focuses on how people, individuals and groups act in organizations.

Organizational health psychology: Mainly focuses on what workers can handle given the working
conditions; for example, in terms of job demands and stress.

This chapter focuses on potential tensions, conflicting interests and balance issues that are related to
employers and employees. Micro HRM (MHRM) insights from organizational health psychology and OB are
summarized to give the reader a better understanding of the complexity and dynamic of HR issues in
practice, taking explicitly into account the interests and needs of the employer and the employee.

Critical HR studies: guess whos coming to dinner?

HRM is a social construction: The use of language by theorists and researchers to describe HRM is a form
of social action, creating understanding about what HRM is and the effects it is presumed to have on social
life and in structuring employment relations (Keegan & Boselie, 2006: 1492-93). The social constructivist

perspective is used to show that HRM as we know it from most of the books and the journal articles does
not exist as a simple fact of the real world, but is shaped by deeply embedded historical, political and
discursive processes (Keegan & Boselie, 2006: 1493). Another set of characteristic features of HRM, based
on Deetz (1996) and Keegan and Boselie (2006) is related to the consensus nature of mainstream HRM:
- There is general and common trust between the employer and the employee.
- The employer and the employee share the same interests. This is also known as the mutual gains
perspective.
- The relationship between the employer and the employee is harmonious.
- The present is little or not affected by the past.
- The employee acknowledges the organizational hierarchy and the employers power position.
- Science is neutral.
- The researcher is neutral, anonymous and out of time and space.

Consensus nature of mainstream HRM: Builds on the core assumption what is good for the employer is
also good for the employee and vice versa.

The dissensus orientation in HRM represents articles that apply a critical perspective, often highlighting the
tension between employers and employees interests.

Dissensus orientation in HRM: Highlights the downside of people management practices in an organization.

Overall, we found that the HRM field is largely consensus-oriented, constituted as managerial, prescriptive
and strategic, and biased in its focus on the development of core employees (the happy few) in large
multinational companies (MNCs) (Keegan & Boselie, 2006). The narrative style of many HR articles is very
much focused on strategy and the search for added value through people. The main SHRM themes are:
- HRM and performance.
- HRM and sustained competitive advantage, mostly using the resource-based view (RBV) as the
theoretical framework.
- HRM, strategy and fit (strategic fit between HRM and strategy).
The core employees in the studies include chief executives, HR professionals, expatriates, line managers,
management trainees, MBA students and other white-collar employees. Executive selection, succession
management, management development (MD) and performance-related pay (PRP) are popular best
practices in HRM that are linked to these core employees in mainstream HR research.

In chapter 1 was argued that mainstream HRM and SHRM are domineated by the
rational/structural frame and the HR/behavioural frame. The symbolic frame and the political frame are
mostly neglected and these are exactly the lenses that critical theorists use and apply to their studies. All 4
frames can be helpful for gaining a full understanding of a possible balanced approach taking into account
the interests of those involved.

The critical HR studies (dissensus orientation) highlight the other side of organizational innovations
and HR renewal; for example, with regard to work intensification, job stress, perceived employee insecurity
and discrimination.

Critical HR studies: Focus on the negative effects of organizational innovations and HR renewal in terms of
work intensification, job stress, perceived employee insecurity and discrimination.

Job stress: A condition or feeling experienced when a person perceives that demands exceed the personal
and social resources the individual is able to mobilize.

Organizational reality is often full of conflicts, politics and tensions between the different stakeholders,
including managers, employees and employee representatives.

The dissensus-oriented perspective presented above highlights the lack of critical HR studies. The previous
rare critical HR studies often take the individual employee perspective as a starting point and reveal the
opposite employer model that is dominant in the HR field. These previous critical studies often do not fully
incorporate the actual individual employee perspective in terms of what the employee experiences and
how the managerial HR model affects employee well-being in terms of stress and burn out. Information

about the actual individual experiences can be found in the fields of organizational health psychology and
OB.

Burn out: A persons condition in which the individual is completely exhausted, lacks the energy to work, is
extremely demotivated, is cynical towards the organization and colleagues and perceives personal
incompetence in job performance.

OB
Organizational behaviour (OB) is mainly focused on how people, individuals and groups act in organizations.
This is what Boxall et al. (2007) call MHRM. Wright and Bowell (2002) make a distinction between 4 areas of
HRM and OB research based on 2 dimensions:
1. Level of analysis, individual versus organizational.
2. Number of HR practices, single versus multiple.
SHRM is mainly focused on the organization level and multiple HR practices, while OB or MHRM is mainly
focused on the indivicual level and single HR practices. Single HR practices research on the individual
employee level can be found on recruitment, selection, training and development, compensation, PM, and
employee participation and work design. The single HR practices studies on the individual employee level
tend to include the individual perspective (the employees interests). The single practice studies on
organizational level often use a focal HR practice and some measure of organizational effectiveness (Wright
& Boswell, 2002). These studies mainly apply an employers perspective in an attempt to show the added
value of specific HR practices or intervention on labour productivity, service quality, product quality,
organizational flexibility, innovation, etc.

A typology of HRM research:

NUMBER OF HRM PRACTICES


Multiple:
Single:

Strategic
H
RM
Isolated
function

Organization:
Industrial Relations

High-performance
Work systems
LEVEL OF ANALYSIS
Psychological
Contract
Traditional/functional HRM

Individual:
Employment Relationship
Industrial/Organizational Psychology



Other research including multiple HR practices on individual employee level involves studies on the
employment relationship (Tsui et al., 1997). These studies are related to macro HRM studies on HPWss, but
the difference is the focus on individual employee outcomes. The study by Tsui et al. (1997) is interesting
because they acknowledge balanced employment relationships (mutual investment and quasi-spot
contract) and imbalanced employment relationships (underinvestment and overinvestment) between
employers and employees. The mutual investment employment relationship and the overinvestment
employment relationship outperform the other 2 relationship models with regard to these multiple HR
outcomes (Tsui et al., 1997):
- Job performance.
- Citizenship behaviour.
- Continuance commitment.
- Employee presence (in contrast to employee absence).
- Affective commitment.
- Perceived fairness.
- Trust in colleagues.
The direct costs related to the 4 employment relationship modes is very different. Quasi-spot-market and
underinvestment are cheap looking at direct short-term costs. The overinvestment type is most expensive.

There are strong sectoral differences that affect the dominant employment relationship within
specific sectors.

The analysis by Tsui et al. (1997) suggest that the mutual investment mode of employment
relationships outperforms the other 3 modes on employee outcomes in combination with cost notions. The
majority of these HR outcomes reflect the employers interests.


Employee performance and attitudes under 4 employer-defined employee-organization-relationship
approaches:

Quasi-Spot-
Under-
Over-
Mutual
Market:
Investment: Investment: Investment:
Basic task performance:
-
-
+
+
Citizenship behaviour:
-
-
0
+
Dependable continuance:
0
0
0
+
Presence: (Reverse of frequency of absences) -
-
-
+
Affective commitment:
-
-
+
+
Perceived fairness:
-
-
+
+
Trust in co-workers:
-
-
+
+
Direct costs: (HR investment; for example Low
Low
High
Medium
training and salaries)

The OB research (or MHRM studies) on the individual employee level in the Wright and Boswell (2002)
typology is focused on employee attitudes or what an employee desires (Sanders et al., 2008; Conway &
Monks, 2008). Organizational health psychology is much more focused on employee well-being or what an
employee can handle.

Organizational health psychology

When workers are under continuous pressure, there is a high risk of job stress and burnout. The experience
of long-term exhaustion at work can also result in burnout (Maslach & Jackson, 1981). Kroon et al. (2009)
arguie that burnout can emerge from any job in itself and from management practices and that the
majority of previous research focuses on stress, burnout and the job. Overall, the research in organizational
health psychology tends to be much more focused on potential negative effects of jobs and managerial
practices on employees than the HRM discipline and the OB discipline.

Karasek (1979) developed a stress-management model of job strain commonly known as the job
demand-job control model. In this model a distinction is made between (1) job demands (low versus high)
and (2) job decision latitude (low versus high). These 2 dimensions create 4 job types:
1. Passive jobs (low job demands and low decision latitude).
2. Low strain jobs (low job demands and high decision latitude).
3. High strain jobs (high job demands and low decision latitude).
4. Active jobs (high job demands and high job decision latitude).

Job demands: Measures stress sources (stressors) and refers to an internal state of an individual.

Job decision latitude: Refers to job control or discretion, and represents individual employees leeway or
room to manoeuvre in their jobs.

Karaseks job strain model:


The model predicts that, following diagonal A, strain increases as job demands increase, leative to
decreasing job decision latitude (Karasek, 1979: 288). The model also predicts that active jobs lead to the
development of new behaviour patterns both on and off the job (Karasek, 1979: 288). Passive jobs induce
a decline in activity in contrast to the active job type.

High strain jobs represent situations in which employees are under a lot of pressure without any
leeway of solving the issues and therefore they are most likely to be stressed (mental strain) ad dissatisfied
with their jobs (Karasek, 1979). The findings also suggest that increasing job decision latitude leverages
negative effects of high job demands: in the case of high job demands, it is essential that the individual
employee has leeway and autonomy to avoid high levels of job stress. Employees are not purely stressed
(or frustrated) because of demanding jobs only. Their stress also depends on how much influence they have
on their own jobs and their work. Demanding jobs with a lot of leeway or room to manoeuvre can get the
best out of certain employees. Low job demands in combination, in combination with little or no individual
leeway, can make employees passive and lazy.

We may conclude that the HR discipline, the OB discipline and the organizational health psychology
discipline show little or no interaction and knowledge-sharing on these people management issues,
particularly in the context of adding value through people. Employee burnout is a serious HR outcome,
resulting from chronic emotional and interpersonal stressors on the job (Maslach et al., 2001), causing
employee absence, employee turnover and/or additional labour costs.

There are a few exceptions in this area. The high commitment and involvement HR approaches
(called HPWSs) not only imply more employee participation and learning opportunities, but potentially
cause higher job demands and more stress. Godard (2001) shows positive relationships between HPWP and
employee outcomes. The basic idea is that a happy worker is automatically a productive worker. Perhaps a
happy worker can be very unproductive, while unhappy workers can be very productive. If this is true, this
potentially creates a further but significant gap between the employers interests and the employees
interests. Van Veldhovens (2005) findings in a longitudinal study suggest that:
1. Work pressure and increased work intensity predict poor business unit financial performance.
2. Good financial performance (or financial success) predicts low job strain.
Kroon et al. (2000) find a positive relationship between HPWPs and burnout. Critical HR researches claim
that HRM and HPWPs can have a negative effect on employee well-being.

Balanced approaches
Balanced approaches with implications for people management have started to emerge in OB, general
management, organizational health psychology and HRM highlight the potential of balanced approaches
for HR issues on different levels of analysis. They characterize the HR discipline by its ambiguities and
potential conflicting interests between employers and employees, and dualties in goals.

Balanced approaches: Balanced approaches in HRM take into account employers and employees interests
on individual employee and organization levels of analysis.

Balanced approaches on individual employee level

The study by Tsui et al. (1997) incorporates both notions on balanced employment relationships (mutual
investment and quasi-spot contract) and imbalanced employment relationships (underinvestment and
overinvestment). Their findings suggest that the balanced mutual investment employment relationship
model is the optimal model with regard to HR outcomes. The overinvestment employment relationship also
reveals positive effects on HR outcomes. Overinvestment might look interesting to please the employees
and get good scores on employee outcomes, such as satisfaction and commitment, but the downside is
most likely to be lower efficiency rates.

Bakker et al. (2004) present the job demands-resources model of burnout. This model proposes
that job demands, defined in terms of workload, emotional demands and work-home conflict, positively
affect exhaustion. The model also proposes that job resources, defined in terms of employee autonomy,
possibilities for employee development and social support from colleagues and/or managers, negatively
affect employee disengagement. So, job resources positively affect employee engagement. Another
important set of propositions in the model:
- Job demands and job resource are negatively associated.

- Exhaustion and disengagement are also negatively associated.

- Exhaustion is negatively associated with in-role performance.
- Disengagement is negatively associated with extra-role performance.
The job demands-resources model implicitly incorporates elements of a balanced approach on individual
employee level taking into account:
- Job demands versus job resources.
- Exhaustion versus engagement/disengagement.
- In-role versus extra-role performance.

Balanced approaches on the organizational level

In the strategic balance model, organizational success can be only achieved when financial performance
and societal performance of an organization are above average in the particular population in which the
organization is operating (Deephouse, 1999). Exclusive high scores on either financial or societal
performance are bad for the long-term survival of an organization. Deephouse (1999) finds empirical
evidence that successful organizations both conform to and differentiate from other organizations (mostly
competitors) in the population. Some practices, including HR practices, need to conform to the population
norms and regulations, while other HR practices have more leeway for differentiation.

With regard to HR goals, Paauwe (2004) makes a distinction between economic value and moral
values:
- Human resources are something more than just resources.
- HRM is not concerned solely with financial performance.
- HRM focuses on the exchange relationship between employee and organization.
- The shaping of the employment relationship takes place in an era of continuous tension between
the added value and moral values.
Paauwe (2004) argues that organization can create unique approaches for long-term success when the
economic and the moral side of organizing are fully taken into account. This requires a balanced approach.

Agility and vitality

Organizations that apply a balanced approach on both the individual and the organizational level might find
the Holy Grail through HRM. The concept that perhaps best captures what employers want is agility,
reflecting the organizational capability to adapt easily to changes in its external environment (Dyer &
Shafer, 1999). An HPWS is thought to be the foundation for the creation of an agile organization by
enhancing employee abilities, providing them with the right incentive structure and creating opportunities
for extensive employee involvement and participation. More attention on employee well-being, in
particular employee vitality, is required to restore the balance between what employers want and what
employees want (Dorenbosch, 2009). The concept of vitality captures elements of employee satisfaction,
job demands, employee trust in the organization and the managers, job stress and the physical health of an
individual employee.

Vitality: The emotional, the mental and physical well-being of employees.

One of the major challenges for organizations is the persistency and consistency of a balanced approach
towards employees focused on both agility and vitality in times of crisis. Vitality notions are likely to be
dropped in times of crisis. In some cases actions are inevitable. The argument for a balanced agility-vitality
approach in times of organizational prosperity could then be that organizations build up reserves for bad
times that might come. An agility-vitality approach is a long-term model that should be part of a more
general organization philosophy and strategy.

Conclusion
The outcomes of this chapter have multiple implications for future HR research and HR in practice:
1. Balancing what employers want with what employees want suggests the relevance of a multi-
actor approach explicitly including individual employee and employer input. the latter can be
represented by line managers and top management.

2. Blending and integrating insights from different theoretical lenses critical HR perspectives, OB and
organizational health psychology can contribute to the full understanding of the shaping of
successful HRM in organizations.
3. The proposed multi-actor and multiple lenses approaches also imply multi-level analysis.
The balanced theoretical framework proposed in this chapter builds on 2 important underlying
assumptions:
1. Organizational success can be achieved when an organization is moderately different on social and
economic performance from other organizations in the same population (or sector).
2. Long-term outstanding scores on both social and economic performance are unlikely for most
organizations. Excellent economic performance can contribute to social performance. Excellent
social performance can be the buffer for poor economic performance.
Financial reserves or buffers can contribute to social aspects of shaping the employment relationship. And
social reserves or buffers can contribute to the financial performance of an organization in the case of
organizational crisis.

Summary
- The management and HRM literature is dominated by what employers want.
- What employers want is not necessarily the same as what employees want.
- In general, employers search for employees who have the characteristics of a chameleon (adapt-
ability skills), Einstein (intelligence and knowledge) and a top athlete (speed and endurance).
- The average individual employee is in search of a job that can be characterized by fun at work,
social support from superiors, an acceptable work-life balance, employee development
opportunities, a nice group atmosphere and employment security.
- Critical HR studies show the dark side or downside of the dominant management and HRM
approaches.
- Mainstream HRM is focused on the added value of HRM, the search for sustained competitive
advantage through good people management and the alignment between HRM and strategy.
- OB pays more attention to the individual employee outcomes of which some may reflect what
employees want, instead of the dominating what employers want paradigm.
- Organizational health psychology highlights the negative effects of managerial and HR interventions
on employee well-being.
- The balanced approaches in HRM on individual and organization levels present a new school of
thought.
- The balanced approaches acknowledge shared interests between the employer and the employee
in some situations, but also pinpoint the often conflicting interests between the 2. The relationship
between the employer and the employees is therefore most likely to be a coalition instead of a
harmony as proposed by mainstream HRM or a conflict as suggested by many critical HR studies.
- An agility-vitality approach is a model for long-term organizational success blending the employers
(agility) and the employees interests (vitality).