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Undergraduate study in
Economics, Management,
Finance and the Social Sciences
This subject guide is for a 300 course offered as part of the University of London
International Programmes in Economics, Management, Finance and the Social Sciences.
This is equivalent to Level 6 within the Framework for Higher Education Qualifications in
England, Wales and Northern Ireland (FHEQ).
For more information about the University of London International Programmes
undergraduate study in Economics, Management, Finance and the Social Sciences, see:
www.londoninternational.ac.uk
This guide was prepared for the University of London International Programmes by:
J. Coyle-Shapiro, PhD, Professor of Organisational Behaviour and Head of Employment
Relations and Organisational Behaviour, LSE.
K. Hoque, Bsc (Econ), PhD, Professor of Human Resource Management, Warwick Business
School, Univeristy of Warwick.
I. Kessler, BA, MA, PhD, Professor of International Human Resource Management, King’s
College London.
A. Pepper, DBA, Professor of Management Practice, LSE.
R. Richardson, BSc, MA, PhD, Formerly Deputy Director, Reader in Industrial Relations, LSE.
L. Walker, MA, Seear Fellow, LSE.
This is one of a series of subject guides published by the University. We regret that due
to pressure of work the authors are unable to enter into any correspondence relating to,
or arising from, the guide. If you have any comments on this subject guide, favourable or
unfavourable, please use the form at the back of this guide.
The University of London asserts copyright over all material in this subject guide except where
otherwise indicated. All rights reserved. No part of this work may be reproduced in any form,
or by any means, without permission in writing from the publisher. We make every effort to
respect copyright. If you think we have inadvertently used your copyright material, please let
us know.
Contents
Contents
Introduction ............................................................................................................ 1
Structure of the guide .................................................................................................... 2
Activities ....................................................................................................................... 2
Style of the guide .......................................................................................................... 2
Aims ............................................................................................................................. 2
Learning outcomes ........................................................................................................ 2
Syllabus......................................................................................................................... 3
Using this subject guide ................................................................................................. 3
Essential reading ........................................................................................................... 4
Further reading.............................................................................................................. 4
Online study resources ................................................................................................... 5
How the reading is listed ............................................................................................... 6
Examination advice........................................................................................................ 7
Chapter 1: Human resource management: theories, models, policies
and practices ........................................................................................................ 11
1.1 Introduction .......................................................................................................... 11
1.2 What is HR management? ..................................................................................... 12
1.3 Why are HR policies, programmes and plans so important?..................................... 13
1.4 How do HR policies, programmes and plans work?................................................. 16
1.5 The difference between academic study and the practice of HR management .......... 20
1.6 A reminder of your learning outcomes .................................................................... 21
Chapter 2: Recruitment and selection .................................................................. 25
2.1 Introduction .......................................................................................................... 25
2.2 The importance of recruitment and selection .......................................................... 26
2.3 Recruitment........................................................................................................... 28
2.4 Selection ............................................................................................................... 36
2.5 Is there an ideal, or ‘one best way’ approach to final selection? .............................. 41
2.6 A reminder of your learning outcomes .................................................................... 43
2.7 Test your knowledge and understanding ................................................................ 43
Chapter 3: Training and development .................................................................. 45
3.1 Introduction .......................................................................................................... 45
3.2 Definitions of training and development ................................................................. 47
3.3 Why is training and development important? ......................................................... 48
3.4 Considerations in the design of training programmes. What are the major stages
involved in designing a training programme? ............................................................... 51
3.5 Implementing training ........................................................................................... 52
3.6 Learning methods .................................................................................................. 55
3.7 Barriers to learning ................................................................................................ 56
3.8 Learning theories ................................................................................................... 57
3.9 Vocational education ............................................................................................. 58
3.10 A reminder of your learning outcomes .................................................................. 59
3.11 Test your knowledge and understanding .............................................................. 59
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ii
Contents
iv
Introduction
Introduction
This subject guide is about human resource management (HRM). This is the
management activity taken by commercial firms, state owned enterprises
and other organisations to recruit, retain and motivate their employees. In
other words HRM is the bundle of policies, programmes and plans which
organisations adopt with the objective of making full use of the people they
employ. These include everything from recruitment and selection techniques
(which initiate the relationship between firm and employee), to the mass of
rules that determine how people are treated as current employees, and all
the way to policies on separation (which determine whether, and in what
circumstances, an employee is to be let go).
This guide takes, as its organising framework, a model of strategic
HRM advanced by Boxall and Purcell in their book Strategy and human
resource management (Palgrave Macmillan, third edition, 2011). They
conceptualise workforce performance as a function of capabilities (the
knowledge, skills and aptitudes which employees need to carry out their
work), motivation (the incentives which employees require to encourage
them to perform to the best of their abilities) and work organisation
(the way that work and organisations are structured so as to allow
employees to perform well). To this we add employment relations (the
policies, programmes and practices which govern the relationship between
employees and employers) on the basis that employee relationship
management is a key responsibility of the HRM function. See Figure 1.
The guide follows the perspective adopted in most HRM textbooks and
looks at the subject from an organisational point of view, but it also
acknowledges that a range of other factors shape the use of HRM policies
and practices, including government and regulatory frameworks.
Capabilities
Motivation Employment
relations
Work organisation
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Activities
In addition to these key features of every chapter, Activities have been
provided throughout the guide to help you engage and interact with the
material you are studying. Although these are not assessed, it is strongly
recommended that you complete these Activities as you work through
the course. Taking an active role from the beginning of this course and
developing this throughout, will give you confidence in your knowledge,
ability and opinions.
Aims
The aims of this course are to:
• give students an introduction to the key elements of human resource
management
• demonstrate how the social sciences can assist in understanding the
management of human resources; and to examine and evaluate human
resource policies and practices of organisations
• help students to examine the different theories which try to explain the
relationship between HRM and organisational performance
• develop students’ ability to analyse and critically evaluate HR policies
and practices.
Learning outcomes
By the end of this course, and having completed the Essential reading and
Activities, you should be able to:
• describe the relationship between HRM and organisational
performance and be able to critically evaluate the empirical evidence
• critically evaluate alternative perspectives on HR practices
• analyse the relationship between HR practices and their outcomes for
the individual and the organisation
2
Introduction
Syllabus
The syllabus uses as its organising framework a model of HRM built
around four areas of activity: capabilities, motivation, employment
relations and work organisation.
‘Capabilities’ include recruitment and selection, as well as learning
and development. ‘Motivation’ covers individual performance and the
psychological contract, reward systems, performance management
and job design. ‘Employment relations’ include employee involvement
and participation, organisational justice and diversity. Finally, ‘work
organisation’ covers labour markets, high performance work systems and
the state of HRM in contemporary organisations.
The syllabus examines current theoretical perspectives on the relationship
between human resource practices and organisational performance.
These include strategic HRM, organisational behaviour and employment
relations frameworks, which offer different explanations of how HRM
practices impact on organisational performance. The relationship between
motivation, organisational commitment (defined as an individual’s
emotional attachment to an organisation) and both individual and
corporate performance is central to understanding the effects of HRM
practices on employees.
The skills demonstrated by students are expected to go beyond knowledge
and comprehension. As well as demonstrating that they know and
understand the major HRM policies and practices, theoretical frameworks
and supporting empirical evidence, students are expected to be able to
explain the relationship between different human resource policies and
practices and the underlying theoretical frameworks (for example, by
describing the relationship between performance management and goal
setting theory, or pay strategy and different theories of motivation). These
theoretical frameworks will then provide the basis for analysing and
evaluating whether HRM practices are more or less likely to achieve their
hypothesized outcomes. The potential limitations of each theory and the
subsequent implications for organisational practice will also be considered.
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Essential reading
Your Essential reading for this course comes from three places: textbooks,
journal articles and one chapter of a textbook available in the virtual
learning environment (VLE).
Textbooks
Three textbooks are recommended for this course. These are general
textbooks that are useful for most chapters in this guide. You should buy,
or have regular access to, these textbooks as a number of the Essential
reading are taken from them. Please remember that the more you read,
the better your understanding of the subject area will be.
Bratton, J. and J. Gold Human resource management: theory and practice.
(Basingstoke: Palgrave, 2012) fifth edition [ISBN 9780230580565].
Kramar, R. and J. Syed Human resource management in a global context.
(Basingstoke: Palgrave, 2012) first edition [ISBN 9780230251533].
Torrington, D., L. Hall, S. Taylor and C. Atkinson Fundamentals of human
resource management. (Harlow: Financial Times Prentice Hall, 2009) first
edition [ISBN 9780273713067].
Detailed reading references in this subject guide refer to the editions of the
set textbooks listed above. New editions of one or more of these textbooks
may have been published by the time you study this course. You can use
a more recent edition of any of the books; use the detailed chapter and
section headings and the index to identify relevant readings. Also check
the VLE regularly for updated guidance on readings.
In addition, the following lists specific chapters for Essential reading:
Bach, S. Managing human resources. (Oxford: Blackwell, 2005) fourth edition
[ISBN 9781405118514] Chapter 15 ‘Direct participation’.
Claydon, T. and J. Beardwell Human resource management: a contemporary
approach. (Harlow: Prentice Hall, 2007) fifth edition [ISBN
9780273707639] Chapter 14 ‘Employee participation and involvement’.
Folger, R. and R. Cropanzano Organizational justice and human resource
management. (Thousand Oaks, CA: Sage, 1998) [ISBN 0803956878]
Chapter 1 ‘Equity and distributive justice as outcome fairness’, Chapter 2
‘Process as procedural and interactional justice’, Chapter 4 ‘Organisational
justice and staffing decisions’ and Chapter 5 ‘Organisational justice and
performance evaluation’.
Torrington, D., L. Hall, S. Taylor and C. Atkinson Human resource management.
(Harlow: Financial Times, 2011) (ISBN 9780273756927] Chapter 7
‘Recruitment’ and Chapter 8 ‘Selection methods and decisions’.
Journal articles
As part of your Essential reading, you also need to access a number of
journal articles from the Online Library. To help you read extensively, all
International Programmes students have free access to the University of
London Online Library where you will find the full text or an abstract of
some of the journal articles listed in this subject guide.
Further reading
Please note that as long as you read the Essential reading you are then free
to read around the subject area in any text, paper or online resource. You
will need to support your learning by reading as widely as possible and by
thinking about how these principles apply in the real world. To help you
read extensively, you have free access to the VLE and University of London
Online Library (see below).
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Introduction
A full list of all Further reading for this course is given in Appendix 1.
Other useful texts for this course include:
Baron, J.N and D.M. Kreps Strategic human resources: frameworks for
general managers. (John Wiley & Sons, Inc. 1999) third edition [ISBN
9780471072539].
Boxall, P. and J. Purcell Strategy and human resource management.
(Basingstoke: Palgrave, 2011) third edition [ISBN 9780230579354].
Boxall, P., J. Purcell and P. Wright (eds) The Oxford handbook of human
resource management. (Oxford: Oxford University Press, 2007) [ISBN
9780199282517].
Storey, J. Human resource management: a critical text. (London: Thomson
Learning, 2007) third edition [ISBN 9781844806157].
Journals
The following journals are also particularly useful and a number of
readings are taken from them. They are available in the Online Library:
• British Journal of Industrial Relations (Business Source Premier)
• Human Resource Management Journal (ABI Inform and Business Source
Premier)
• Human Resource Management Review (Business Source Premier)
• International Journal of Human Resource Management (Business Source
Premier).
The VLE
The VLE, which complements this subject guide, has been designed to
enhance your learning experience, providing additional support and a
sense of community. It forms an important part of your study experience
with the University of London and you should access it regularly.
The VLE provides a range of resources for EMFSS courses:
• Self-testing activities: Doing these allows you to test your own
understanding of subject material.
• Electronic study materials: The printed materials that you receive from
the University of London are available to download, including updated
reading lists and references.
• Past examination papers and Examiners’ commentaries: These provide
advice on how each examination question might best be answered.
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Essential reading
For each chapter you are required to do some reading that is essential. This
Essential reading is listed at the start of each chapter. It is also listed in this
Introduction. It is from this material that the majority of your knowledge
will be gained, so it is important that you read as much of it as you can.
Most of the time, you should read the subject guide chapter first, then move
on to the Essential reading. However, please note that in some chapters you
will be advised to do the reading at certain points in the chapter.
Further reading
At the beginning of each chapter, a list of possible Further readings will
be offered. A selection is always offered, but none of them is compulsory.
You can select from the list for each chapter if you wish to. Therefore, you
should not be worried about the length of this list as this is only to give
you a choice should you want one! You may find it helpful to look at the
Further readings if you are particularly interested in a specific subject.
However, we do encourage you to do as much reading as possible.
6
Introduction
References cited
Books and journals that have been referred to in this subject guide are
listed at the start of each chapter. You do not need to read these materials
unless you wish to; they are there for reference purposes only.
Examination advice
Examination format
Important: the information and advice given in the following section
are based on the examination structure used at the time this subject guide
was written. Please note that subject guides may be used for several
years. Because of this we strongly advise you to check both the current
Regulations for relevant information about the examination, and the VLE
where you should be advised of any forthcoming changes. You should also
carefully check the rubric/instructions on the paper you actually sit and
follow those instructions.
The assessment for this course is through a three-hour unseen written
examination. You will be expected to answer four questions from a choice
of eight questions. Questions are generally structured in three parts. The
first part (‘Define’) asks for the definition or explanation of a concept or
construct and is primarily a test of knowledge. The second part (‘Describe’)
asks for applications of the concept or construct and is primarily a test of
understanding and application. The third part (‘Discuss’) is a short essay
in which you will be expected to analyse and critically evaluate an issue
related to the concept or construct which is the subject of the previous two
parts of the question. These shorts essays need to present an argument
that expresses a view on the subject. They should not repeat the notes
written in this subject guide. Instead the essays should show independent,
reflective and critical thought about the issues involved.
Remember, it is important to check the VLE for:
• up-to-date information on examination and assessment arrangements
for this course
• where available, past examination papers and Examiners’
commentaries for the course which give advice on how each question
might best be answered.
Examiners’ commentaries
The Examiners’ commentaries, which are provided annually, are a very
good resource. The reports provide you with two sources of information:
• how students have performed in the previous year’s examination
• what the Examiners are looking for in the answers.
A consistent comment in the last few Examiners’ commentaries, is that
answers to examination questions were generally far too descriptive. The
analysis, if any, was left to the last paragraph, but more commonly the
argument was only stated in the last sentence.
A significant proportion of candidates tend to reproduce theories relating
to the topic of the question regardless of what the question is asking.
Some candidates, on seeing a familiar word or concept, write everything
they know about that word or concept and do not address the terms
of the question asked. Overall, too many candidates are trying to fit a
revised ‘standard’ answer into the question asked. The consequences are
that candidates are giving strong signals to Examiners that they do not
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know what the question is asking for. A critical learning point from the
Examiners’ commentaries is that describing particular theories is not what
the question is looking for – the key is to use the theories, recognising their
strengths and limitations to help address the issues raised by the question.
Ensure that you refer to the Examiners’ commentaries frequently
throughout your study. As you cover topics, you should attempt to answer
previous examination questions and understand the Examiners’ comments
on those particular examination answers. Take time to attempt to fully
understand the Examiners’ comments and the mistakes made by previous
students. This should be done topic by topic, and you should not progress
from one topic to the next until you have:
a. attempted to answer a previous examination question on that topic
b. read the Examiners’ comments on that question
c. thought about ways in which you could improve your own answer.
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Part 1: Introduction
Part 1: Introduction
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Notes
10
Chapter 1: Human resource management: theories, models, policies and practices
1.1 Introduction
This chapter starts with an introduction to the field of HR management in
which four questions are posed:
• What is HR management?
• Why are HR policies, programmes and plans so important?
• How do HR policies, programmes and plans work?
• What is the difference between academic study and the practice of HR
management?
Books
Bratton, J. and J. Gold Human resource management: theory and practice.
(Basingstoke: Palgrave, 2012) second edition [ISBN 9780805838626]
Chapter 1 ‘The nature of contemporary HRM’.
Journal articles
Huselid, M. ‘The impact of human resource management practices on turnover,
productivity, and corporate financial performance’, Academy of Management
Journal 38(3) 1995, pp.645–70.
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Chapter 1: Human resource management: theories, models, policies and practices
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Chapter 1: Human resource management: theories, models, policies and practices
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both costs and productivity. Managing long term unit labour costs is one of
the main underlying objectives of HR policy.
Activity
Are there any other objectives of HR policy apart from controlling unit labour costs?
Make notes on your own thoughts before reading further.
Answer
Some commentators focus on other aspects of commercial success, for
example innovation, and see one of the HR function’s key roles as helping
to foster a culture of creativity and innovation within an organisation.
There is certainly something in this, and a school of strategic thinking
based around the resource-based view of the firm has developed alongside
strategies which focus on cost advantages. Nevertheless, in the long run
cost control remains of great importance.
There may also be other general societal objectives for HRM. For example,
some organisations feel that it is important to be, in some sense, ‘a good
employer’. This means that they choose to act to a degree in the interests
of their employees even if this does not minimise labour costs. Some
organisations choose to act paternalistically. In principle, this might be
seen by the corporations themselves as a way to reduce unit labour costs;
in practice, they surely also reflect some degree of ethical concern over
the interests of the employees. No one can deny that such concerns exist
and influence many aspects of HR policy. It is true, however, that in the
long run they are nearly always subordinate to sustaining commercial
success.
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Chapter 1: Human resource management: theories, models, policies and practices
So any cost gain from the choice of paying lower wages will have to be
balanced against the resulting loss of performance from the less effective
labour; and a cost burden from the high wage choice will produce an
offset from the better performance of the better quality labour. It is an
empirical question as to where the best choice lies (and it may depend
on how important labour quality is to the firm’s more general business
strategy), but choosing the lowest wage is not always beneficial. More
generally, firms have limited room for manoeuvre on the wage front.
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Not only does the decision affect productivity, but it also has implications
for the content of a firm’s HR policy. For example, emphasising functional
flexibility will generally change the firm’s hiring decisions because it
means that the firm now wants to hire more able and better educated
workers; and it will usually affect the firm’s training policy, in that the firm
will probably need to organise more training to make functional flexibility
succeed.
The choice of production process and the details of the design of jobs
are therefore important for us, both because they affect productivity and
because they are at the heart of a whole set of HR policies.
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good job whatever the situation). For such people the intrinsic satisfaction
of the job is very important and the employer is wise to attend to it
carefully. This leads to the philosophy that the organisation should seek
to secure a more complex relationship with its workforce than just the
money one. This has many possible ramifications. For example, the firm
might design jobs with an eye to improving job satisfaction; or it might
introduce policies seeking to develop a sense of trust, obligation, loyalty
or commitment amongst its workforce. The underlying belief would be
that such feelings would reflect intrinsic satisfaction and, in one way or
another, lead to higher performance levels and greater organisational
success.
We may explore these ideas further by using Walton’s contrast between
‘control’ and ‘commitment’. This refers to the degree to which a firm gives
its employees discretion and power over how things at the workplace are
done. Managers may wish to retain tight control and direct workers (i.e.
‘control’). Alternatively, they might believe that it makes sense to give
employees considerable leeway, because they believe that doing this will
motivate employees to perform better; to this end they might therefore
seek to engender a sense of commitment or loyalty to the firm. In policy
terms, this might lead them to stress the importance of such things as
retaining workers in lean times, engaging in conscious communication
policies, and attempting to generate a particular ‘climate’ or ‘culture’
within the firm. All this would be designed to build up ‘trust’ relations,
which has fundamental implications for HR policy.
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Chapter 1: Human resource management: theories, models, policies and practices
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Notes
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Part 2: Capabilities
Part 2: Capabilities
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Notes
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Chapter 2: Recruitment and selection
2.1 Introduction
Recruitment and selection is an important issue within human resource
management. In any organisation that views the human resource as a
major source of competitive advantage, attracting, selecting and retaining
the right people to the organisation will be of great importance.
The aim of the following sections is to look systematically at the key areas
of the overall process, these being:
• recruitment
• shortlisting
• final selection.
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Chapter 2: Recruitment and selection
cost to the organisation, second, they may leave and so the whole process of
recruitment and selection will have to be repeated, with the implications for
cost and time. Third, they may have an adverse effect on existing workers.
There are further reasons why recruitment and selection is assuming
greater importance. First, the workforce is becoming increasingly
heterogeneous. This is partly due to globalisation, partly to the willingness
of workers to become ‘expat’ workers and leave their home country to
work abroad, partly the fact that some countries (e.g. Canada), are still
net importers of labour, partly due to more women coming into the labour
force, the increase in flexible working (part-time and tele-working),
aging populations (e.g. in Japan and the UK) and partly due to peoples’
changing attitudes (e.g. towards disabled colleagues). A second reason is
that governments are showing an increasing tendency to intervene in the
labour market by passing legislation. An organisation that failed to keep to
the law could find itself with added costs (e.g. fines) and a reputation that
it treated people unfairly. It may find it difficult to recruit in the future.
Activity
Think about recruitment in your country. What changes have you noticed that are due
to social and political change and what changes have come about because of changes
in the law? If you need help with this, use the website of your government. They usually
have lots of useful information. In addition, you might want to talk to relatives and
friends who are already at work. What changes have they noticed in the last five years?
2.2.1 Factors that should be taken into account when you are
recruiting and selecting
Recruitment is the process of finding and attracting a pool of suitable
candidates for the vacancy. Letting people know there is a vacancy is
essential. Advertising is important here, in terms of selling the company
to the sort of people outside the company that they would ideally wish
to recruit. Advertising can also apply to jobs which are only available
to candidates who already work for the firm (internal labour market.)
Obviously, the advert would be kept internal to the organisation (e.g. on
the company intranet).
Once a pool of candidates has been created, the next phase concerns
shortlisting. The aim at this stage is to either reduce the number of
applicants to manageable proportions or to ensure that all the candidates
have the necessary skill and ability to do the job. This process is carried
out before the more detailed assessment of candidates within the final
selection phase. It is another way of saving time and money.
Before we look more closely at the recruitment and selection processes, it
is worth thinking about what is meant by ‘effectiveness’ from the point of
view of the recruitment and selection process. Recruitment and selection
processes are typically assessed on the following criteria:
1. Cost and budget. As a manager, you will need to keep control of
your costs and keep within a budget. Jobs that are easier to fill and
which have a low impact on the success of an organisation should
not cost as much to recruit as higher level jobs that will have a high
impact on organisational success and may in addition need skills and
knowledge that are scarce in the labour market. Selection methods for
the low-skill, low-impact jobs should be cheaper and less sophisticated
than the high level jobs.
2. Validity. This refers to the extent to which a particular recruitment
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2.3 Recruitment
2.3.1 Does a vacancy exist?
The first issue to be addressed within the process is to consider whether
or not a vacancy exists. Companies should avoid so-called ‘automatic
replacement syndrome’, by considering, when a member of staff leaves
the organisation, whether it is really necessary to recruit a replacement, or
whether work can be reorganised or rescheduled amongst existing staff.
In addition, a decision must be taken as to whether the vacancy should
be sourced internally, or whether it should be sourced externally. This is a
particularly important issue in instances where companies are looking to
provide their staff with opportunities for career advancement or where it
is the organisation’s policy to operate an internal labour market. This often
applies in the public sector.
If the company decides a vacancy does exist, the recruitment process
then starts. The first step is to determine the type of person or people
the company ideally wishes to fill the job, and how these people can be
encouraged to apply for the vacancy.
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Chapter 2: Recruitment and selection
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Activity
Make a list of five organisations that you would like to work for, and then make a list of five
organisations that you would not like to work for. Why do you think you would like to work
for one company rather than another? Where have your expectations come from?
agencies as people who want these jobs get to know which agencies to
contact to find a job. Even large firms such as some banks use agencies.
They have downsized their own administration functions, such as Human
Resources, and no longer have the time or expertise to do all the HR
functions themselves. It is also possible that, because of their specialist
nature, recruitment agencies do the job better. Another advantage is that
they enable line managers to do their own recruitment, without needing
the specialist knowledge of an HR professional. In international firms, the
use of a local recruitment agency is a distinct advantage. The central HR
department may not be aware of the labour market in all the countries
where they have staff. They would need help, especially with local
legislation and local customs. The use of an agency in this instance would
be invaluable.
We will now look more closely at e-recruitment. This includes everything
from sourcing or finding candidates to an initial assessment of candidates
over the web through online application forms and online assessment
tests. Companies are increasingly looking at whether e-recruitment has
the potential to become more viable or more effective than traditional
recruitment methods, and whether they will be able to replace their
traditional methods with e-recruitment. Many professional business
service companies such as McKinseys, Bain, PriceWaterhouseCoopers
and Accenture have designed their websites with the deliberate aim of
attracting talented candidates, with hyperlinks to job postings featuring
prominently on their home pages. According to the IPD’s annual
recruitment survey (Institute of Personnel and Development, 1999), 32
per cent of UK employers were recruiting through the internet in 1999 (up
from 14 per cent in 1997), though most companies only use it to recruit
to a limited number of posts. Ninety per cent of large US employers were
already using e-recruitment at the beginning of the century. (Capelli, 2001).
What are the benefits of e-recruitment? They can be enormous. On a typical
Monday (the peak day in the US for job-hunting on the internet) four
million people look for work on Monster.com, the leading US online talent
site. Monster.com also has 18 million employee profiles and CVs available
online (Capelli, 2001). This constitutes a massive resource that HR
departments can utilise in their search for suitable applicants. No company
can afford to ignore this resource in its quest to seek out the best available
talent.
Some companies have also established internet alumni networks. The aim
of these networks is to re-establish contacts with former employees that
have left the company to work for competitor organisations, and potentially
to instigate a rehiring process.
Online recruitment has also been demonstrated to be a quicker method of
recruitment than more traditional techniques. One study (Capelli, 2001)
found that companies took, on average, 43 days to recruit a new member of
staff using traditional techniques. This could be cut by six days by posting
jobs online, by another four days if online application forms were used and
a further seven days if applications were screened electronically. There are
also cost benefits to e-recruitment. Recruitment advertisements in national
newspapers are expensive. These costs can be avoided by advertising
online.
Companies have also found that the quality of applicants recruited online is
higher, as many would-be applicants who would not be successful anyway
are deterred by online application forms (see e-recruitment at British
Airways below).
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online after you had taken ages filling in the application form and the
computer rejected you immediately?
• Technical problems can give a bad impression to candidates or stop
them from applying at all. If an organisation relies on a computer as
the only means of applying and the computer fails…!
• Search engine management needed to make sure that the organisation
is on the ‘first page’. When you search for something, the search
engine decides which information comes first. How many of us look at
information on the fourth or fifth page of results?
The above lists are based on Beardwell and Claydon (2010 pp.171–72).
Measurement
There are several techniques that companies can use when deciding
whether a recruitment method is effective and efficient. These are called
‘source analysis’ (i.e. they analyse the sources of applicants for the job to see
if they are effective). There are essentially three types of source analysis:
• Yield analysis: By examining the records of previous recruitment
campaigns, companies can identify the recruitment methods that in
the past yielded the greatest number of applicants, and the methods
that yielded the highest quality applicants. They can then determine
which method of recruitment is most effective for the particular type of
vacancy it is looking to fill. A systematic yield analysis can also assist in
ensuring fairness, in that it enables the company to calculate whether
certain recruitment methods discriminate against minority groups.
• Time-lapse analysis: By looking at records of previous recruitment
campaigns, the company can evaluate the length of time it took from
the start of a recruitment campaign to a job offer being made. The
company may well find that certain recruitment techniques take much
longer to yield successful applicants than do others. For example,
executive search agencies tend to take a long time, whereas employee
referrals can be very quick (Cascio, 1998). As discussed earlier, some
companies have found that the recruitment process can be speeded up
by advertising online. It is important to take this into account when
considering how quickly the vacancy needs to be filled.
• Cost-per-hire: Where an employer finds out which recruitment
method is most expensive. Executive search agencies tend to be
extremely expensive as the process is very labour intensive and relies
on the recruitment consultant building up networks of potential
employees even when no active searching is being done. ‘Walk-ins’,
where a potential employee phones or goes to the employer’s premises
and asks if there are any jobs are much cheaper. Another cheap way
to attract potential job applicants is to ask existing employees to ask
their friends and family if they want a job. The advantage is that this is
a reasonably quick (and cheap) method, but the disadvantage is that
people tend to recommend people ‘similar to them’ and so there may
be equal opportunity issues. The company may decide that it will utilise
the more expensive techniques only when recruiting to higher level
managerial or professional vacancies.
These techniques enable the recruitment process to be planned
systematically, rather than being based on hunch or intuition. But
remember that technology keeps changing so sometimes you may need to
try something new and not rely only on what you have used in the past.
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2.3.5 Shortlisting
Once the company has received the applications for the job, it is then in
a position to begin the shortlisting process. The aim here is to reduce the
pool of candidates either because the advert attracted too many applicants
or to ensure that the candidates have the skill and knowledge required to
do the job.
Activity
Ask your local lecturer what the law says about recruitment and selection in your country.
Do you think that it is easier or more difficult to select people if you have less information
about them? Why should this be? How do you think that discrimination can be avoided?
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Chapter 2: Recruitment and selection
involved and the skills required in performing the job they are applying
for, and then to encourage candidates to assess their own suitability for
the job and to self-select themselves out of the process if they feel that
the job is not suitable for them. The evidence suggests that realistic job
previews are successful in lowering candidates’ naïve expectations to
match organisational reality; they are effective in encouraging unsuitable
candidates to self-select themselves out of the process. The research also
shows that successful candidates have higher levels of organisational
commitment, job satisfaction, performance and tenure in instances where
effective realistic job previews have been used (Premack and Wanous,
1985). It is only job preview that enables the applicant to ‘opt out’ of the
job application process. All other shortlisting or pre-screening methods
involve a decision on the part of the employer to reject a candidate.
2.3.10 Graphology
Handwriting tests are not particularly popular in the UK. It is argued that
their accuracy is unproven, and experts argue that the tests can be ‘beaten’
(Saxe, Dougherty and Cross, 1985). They are, however, popular in France
and so may be used in French companies around the world.
seeking work in the media have been very innovative when it comes to
their CV or résumé. Some have designed video clips, some have paid for
bill board advertising and some have made films about themselves. In an
industry that requires fresh thinking and ideas, it helps if you can show
that you already have this talent.
Activity
Go on the web and search for a job that asks you to do a test before you apply. What
kind of test was it? How do you think that the test would help the employer to shortlist
candidates who are likely to be able to do the job? What was the test testing?
2.4 Selection
Having completed the process of shortlisting in order to narrow down
the pool of candidates, companies are now in a position to carry out final
selection. The objective of any selection method is to obtain evidence
on which to base a decision. The decision is whether the candidate is
likely to be able to do the job. The selection method chosen, therefore,
should be capable of generating evidence that is relevant and reliable.
The only guaranteed way of seeing if someone can do the job is to let
them do it! The next best thing is to give them the opportunity to do some
work sampling. If you want to see a list of selection methods with their
‘predictive accuracy’, then look at the book by Anderson and Shackleton
(1993 p.30). You can also see reference to their work in a variety of text
books such as, for example, Beardwell and Claydon (2010, p.178).
Examples of the final selection techniques available to companies include
interviews, assessment centres, tests and work samples. The techniques the
company decides to use may well depend on the level of vacancy, not least
because many of the techniques, such as assessment centres, are expensive
to administer. The criteria for choosing selection methods varies but will
include:
• the selection criteria for the job to be filled
• acceptability and appropriateness of the methods to the candidates
• qualifications of the staff involved in the selection (e.g. only qualified
staff can administer psychological tests).
This section examines in detail some of the debates and dilemmas
surrounding final selection processes. The first selection method and
the one that will be considered in most detail is interviewing. This is the
most popular method used across the world and, because of its popularity
‘interview’ is often used to mean selection. In this course, however, we
should ensure that there is no confusion. There are a variety of selection
methods and interviewing is just one of them.
2.4.1 Interviewing
Interviews can take a number of different forms. For example:
• Focused interviews: these are interviews within which the discussion
is focused on a pre-planned set of topics or subject areas but the
interviewer has the scope for flexibility to delve into certain issues in
greater depth.
• Structured interviews: these are focused on specific topic areas, with a
standard set of questions being asked to each interviewee. Candidates’
responses to the same questions can then be directly and systematically
compared with each other.
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Chapter 2: Recruitment and selection
Activity
Before reading the next section make a list of what information you think can be obtained
by an interviewer. Then mark with a tick all those bits of information you can guarantee to
be true.
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Chapter 2: Recruitment and selection
Activity
Consider a formal interview process that you have experienced (or discuss one with a
friend).
a. Do you think the interview was a structured, unstructured or semi-structured
interview?
b. Do you think the interview may have incorporated any of the types of bias outlined
above?
c. What evidence have you to support your views?
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Activity
Go on the internet and find a site such as shldirect.com. Try out some of the tests.
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Chapter 2: Recruitment and selection
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42
Chapter 2: Recruitment and selection
more closely tailored to the needs and tastes of different ethnic groups, which in turn will
enable wider markets to be tapped into. This would especially be the case for companies
operating internationally, where staff possessing a diverse knowledge of different countries
and national cultures will enable products and services to be developed and marketed in a
manner that is sensitive to cultural differences around the globe.
Arguments such as these have been taken on board by Marks and Spencer, the UK
retailing chain, perhaps not surprisingly since the minority ethnic community in the UK is
estimated to have a spending power of £14.9 billion. Marks and Spencer has deliberately
targeted minority ethnic groups in its recruitment campaigns, in an attempt to shed its
white, middle-class image and to attract a more diverse range of customers from all
segments of society (Whitehead, 1999).
British Telecom is another example. Minority ethnic employees are seen as capable
of making a distinctive contribution to the business through their ability to interact
sensitively with customers from their own ethnic background. In addition, they are seen
as better able to identify new marketing opportunities and approaches in terms of the
way in which services are marketed to ethnic minority communities.
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Notes
44
Chapter 3: Training and development
3.1 Introduction
This chapter starts with some definitions of what the terms relating to
training and development means. It goes on to introduce you to ideas as to
why learning at work is important, and asks you to consider who might be
involved in the processes in an organisation. We then look at some of the
theories that influence adult learning, then consider Kolb’s learning cycle
and finally think about what factors influence training and development
activity and what might do so in the future. When you have looked at
training and development in general, you should then find out what
vocational education is and how it is organised in your own country.
Books
Torrington, D., L. Hall, S. Taylor and C. Atkinson Human resource management.
(Harlow: Financial Times Prentice Hall, 2011) eight edition (ISBN
9780273756927] Chapter 17 ‘Context, competence and competencies’.
Books
Gold, J., R. Holden, P. Iles, J. Stewart and J. Beardwell Human resource
development: theory and practice. (Basingstoke: Palgrave Macmillan, 2010)
[ISBN 9780230216877].
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46
Chapter 3: Training and development
Kirkpatrick, D.L. Evaluating training programs: the four levels. (San Francisco,
CA: Nerrett-Koehler, 1988) second edition [ISBN 1576750426]
Kolb, D. Experiential learning experience as a source of learning and development.
(Englewood Cliffs: New Jersey: Prentice Hall, 1984) [ISBN 0132952610]
Lingham, T., B. Richley and D. Rezania ‘An evaluation system for training
programmes: a case study using a four phase approach’, Career Development
International 11(4) 2006 pp.334–51.
Mabey, C. and G. Salaman Strategic human resource management. (Oxford:
Blackwell, 1995) [ISBN 0631185054] Chapter 3.
Payne, J. Re-constructing apprenticeships for the 21st century: lessons from the
UK and Norway, paper presented at the International Industrial Relations
Association’s Sixth European Congress, Oslo, 25–29 June 2001.
Purcell, J. ‘The impact of corporate strategy on human resource management’
in J. Storey (ed.) New perspectives on human resource management.
(London: Routledge, 1989) [ISBN 0415010411].
Rana ‘New Deal firms come under fire for training deficiencies’, People
Management 19 August 1999.
Reay, D.G. Understanding how people learn. (London: Kogan Page. 1994) [ISBN
0749412844].
Skills Task Force Skills for all: proposals for a national skills agenda. (Sudbury:
Department for Education and Employment, 2000).
Skinner, B.F. About behaviourism. (New York: Knopf, 1974) [ISBN 0394492013]
Tulgan, B. Not everyone gets a trophy: how to manage Generation Y. (San
Fransisco: Jossey-Bass, 2009) [ISBN 9780470442784].
Watson, J.B. ‘Psychology as the Behavourist views it’, Psychological Review 20
1913, pp.158–77.
Wiley, J. ‘Employee engagement’, Human Resources 2 2010, pp.29–32.
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Activity
Before reading the next section, write down all the reasons you can think of as to why
training and development is important for organisations and their success.
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Chapter 3: Training and development
3.3.2 Flexibility
The environment within which companies are operating is becoming
increasingly turbulent. If organisations are to be able to adapt to their
changing environments, there is a need for employees within the
organisation to be adaptable also. An organisation is only able to take
advantage of an emerging market or move into a new market niche if
its employees possess the skills to be able to operate effectively within
the new market or niche (Crofts, 1995). As such, there is an increasing
emphasis on ‘emergent skills’ that might not be necessary at the current
point in time, but may well be essential in the future. In such a situation,
recruiting employees who are ‘trainable’, and will be willing and able to
learn new skills as the organisation requires, also becomes important. If
the existing workforce is not willing to learn new skills, it may be that
the first step would be to train them to accept change and to change their
attitude to training.
Also, a workforce will be more effective where employees do not just
perform a single job task, but where they are able to move between
different job tasks. This requires employees to be ‘multi-skilled’ (i.e. to be
trained in a wide range of skills). Employees who are fully trained to carry
out all aspects of production can then be moved around as the workload
requires (Hyman, 1996).
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50
Chapter 3: Training and development
If you want a more detailed model, which outlines the way in which a
Training Needs Analysis (TNA) is built up, then look at the work of Cascio
(1998). He also outlines a systematic approach to TNA, but includes more
detailed factors and highlights where there may be a need for solutions
to problems that provide alternatives to training and development. Here,
as an example, you would find the need to look at the recruitment and
selection processes in an organisation. If the ‘right’ recruits are not being
attracted to the organisation, then no amount of training will solve the
organisation’s problems. Cascio lists the alternative considerations under
the headings: organisational analysis (e.g. are the issues training issues
or something else); demographic analysis (e.g. is it a particular group of
workers who are causing problems, such as managers) task/knowledge,
skills and attitudes analysis (e.g. what particular competencies are the
managers lacking); and person analysis, where individual workers can be
compared to the ideal set of competencies needed for their particular job,
and training used to fill the gap between the ideal and reality.
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Chapter 3: Training and development
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54
Chapter 3: Training and development
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Activity
Make a table containing all the different learning methods you can think of. Put in a
column for advantages and one for disadvantages. Add in a final column for when you
would use each method. Now get together with a friend and fill in the columns. If you
want help, then go to pp.144–48 in Gold et al. (2010) or any textbook that includes
learning methods. If you go straight to the list in the book, remember that learning needs
understanding, so discuss the advantages and disadvantages with your friend. What do
you think? Finally discuss the applications of the methods and try to think of examples of
when you would expect the method to be used.
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Chapter 3: Training and development
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Stimulus-response
This theory was further developed by Gagné in 1977. He based it on a
combination of factors, including a need to learn (drive), the stimulation
provided by the learning process (stimulus), the development of
appropriate responses by the learner (response) and the use of feedback to
reinforce the learning until the learner gets it right (reinforcement).
Self-efficacy
This relates to Bandura’s theory (again developed in 1977), who said that
people themselves have a belief in their ability to learn and to perform
a task. Guest (1992) noted that a strong feeling of self-sufficiency is
positively related to becoming a better learner.
Activity
Draw Kolb’s learning cycle but instead of putting in the theory think of an experience you
have had recently and then fill in the cycle to see what you have learnt.
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Chapter 3: Training and development
(through the taxation system) should pay. In the first instance it seems
clear that as the employers benefit from having skilled and qualified
people to do the job, then they should pay. However, think about how
an employer would feel if they paid for someone to be trained as a chef,
and that person then left to work for a rival restaurant. In the second
instance, you could argue that the person who wants the work should
pay for the training as they would benefit all their working lives from
the ability to do the job. Think, though about someone who may have
the capacity to be a brilliant surgeon but who cannot afford the years of
training. Think also that potential workers may be put off doing any job
that entailed doing years of unpaid study. After all a junior doctor and a
junior manager earn about the same early on in their career. What about
the third suggestion, that everyone in a society should pay through the tax
system? After all, everyone benefits from having a good medical service
with skilled and knowledgeable doctors. Everyone benefits from having
skilled and knowledgeable nurses when they have to go to hospital. When
you (eventually) want to buy a property, or need to consult a lawyer about
your will, you expect them to be highly skilled and very knowledgeable
about the law. If we can agree that there is some merit in everyone paying
towards the education and training of doctors, then what do we consider
about bus drivers, car mechanics, plumbers or electricians. What about
managers?
Life is not simple. Find out what the position is on vocational education in
your country. There is a useful chapter on public policy on human resource
development in Gibb (2008). In it he discusses the different perspectives
on national HRD and why they might have arisen. He uses the UK as
an example but acknowledges that different countries have different
perspectives.
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Part 3: Motivation
Part 3: Motivation
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Notes
62
Chapter 4: Individual performance: attitudes and behaviour
4.1 Introduction
Chapter 1 explored the relationship between human resource management
strategies and organisational performance and also, how individual
performance is affected through the mechanisms of competence and
motivation. This chapter explores what is meant by individual performance
and examines employee attitudes and treatment by the organisation as
antecedents to individual contextual performance.
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Borman, W.C. and S.J. Motowidlo ‘Expanding the criterion domain to include
elements of contextual performance’ in N. Schmitt and W.C. Borman (eds)
Personnel Selection. (San Francisco, CA: Jossey-Bass, 1993) [ISBN 1555424759]
pp.71–98.
Eisenberger, R., P. Fasolo and V. Davis-LaMastro ‘Perceived organisational support
and employee diligence, commitment, and innovation’, Journal of Applied
Psychology 75 1990, pp.51–59.
Eisenberger, R., R. Huntington, S. Hutchison and D. Sowa ‘Perceived organisational
support’, Journal of Applied Psychology 71 1986, pp.500–07.
Folger, R. and M.A. Konovsky ‘The effects of procedural justice, distributive justice,
and reactions to pay raise decisions’, Academy of Management Journal 32 1989,
pp.115–130.
Graham, J. ‘An essay on organisational citizenship behaviour’, Employee
Responsibilities and Rights Journal 4, 1991, pp.249–70.
Katz, D. and R. Kahn The social psychology of organisations. (New York: Wiley and
Sons, 1978) [ISBN 0471460419].
Konovsky, M.A. and S.D. Pugh ‘Citizenship and social exchange’, Academy of
Management Journal 37 1994, pp.656–69.
Locke, E.A. ‘The nature and causes of job satisfaction’ in Dunnette, M.D. (ed.)
Handbook of Industrial and Organisational Psychology. (Chicago: Rand McNally,
1976) pp.1297–349.
MacKenzie, S.B., P.M. Podsakoff and R. Fetter ‘Organisational citizenship behaviour
and objective productivity as determinants of salespersons’ performance’,
Organisational Behaviour and Human Decision Processes 50 1991, pp.123–50.
MacKenzie, S.B., P.M. Podsakoff and R. Fetter ‘The impact of organisational
citizenship behaviour on evaluations of salesperson performance’, Journal of
Marketing 57 1993, pp.70–80.
Malatesta, R.M. and Z.S. Byrne The impact of formal and interactional procedures on
organisational outcomes. Paper presented at the twelfth annual conference of
the Society for Industrial and Organisational Psychology, St Louis (1997).
Meyer, J. ‘Organisational commitment’ in C.L. Cooper and I.T. Robertson (eds)
International Review of Industrial and Organisational Psychology Vol. 19 2004,
pp.175–228.
Meyer, J. and N. Allen Commitment inthe workplace: theory, research and
application. (Thousand Oaks, CA: Sage, 1997) [ISBN 978076190105].
Moorman, R.H. ‘Relationship between organisational justice and organisational
citizenship behaviours: do fairness perceptions influence employee citizenship?’,
Journal of Applied Psychology 76 1991, pp.845–55.
Moorman, R.H., B.P. Niehoff and D.W. Organ ‘Treating employees fairly and
organisational citizenship behaviour: sorting out the effects of job satisfaction,
organisational commitment, and procedural justice’, Employee Responsibilities
and Rights Journal 6 1993, pp.209–25.
Moorman, R.H. and G.L. Blakely ‘Individualism–collectivism as an individual
difference predictor of organisational citizenship behaviour’, Journal of
Organisational Behaviour Vol. 16 1995, pp.127–42.
Morrison, E.W. ‘Role definitions and organizational citizenship behaviour: the
importance of the employees’ perspective’, Academy of Management Journal 37
1994, pp.1543–567.
Motowidlo, S.J. and J.R. Van Scotter ‘Evidence that task performance should be
distinguished from contextual performance’, Journal of Applied Psychology 79
1994, pp.475–80.
Motowidlo, S.J., J.S. Packard and M.R. Manning ‘Occupational stress: its causes
and consequences for job performance’, Journal of Applied Psychology 71 1986,
pp.618–29.
Organ, D.W. ‘A reappraisal and reinterpretation of the satisfaction-causes-
performance hypothesis’, Academy of Management Review 2 1977, pp.46–53.
Organ, D.W. Organizational Citizenship Behaviour. (Lexington, Mass.: Lexington
Books, 1985)[ISBN 0669117889].
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Activity
Think about the jobs outlined above and give some examples of factors that individuals
may not be able to control but that may affect their performance.
Activity
Think about how the Katz and Kahn’s (1978) conceptualisation of job performance would
be applied to the following:
a. a teacher
b. a scientist
c. a car assembly worker.
Activity
Give an example of what task performance and contextual performance would be in any
job that you are familiar with.
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Chapter 4: Individual performance: attitudes and behaviour
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organisation include, for example, working late to finish a job and making
suggestions for improvement. These behaviours are of direct benefit to the
organisation and are not directly oriented towards other individuals.
The implication of the distinction between organisationally and
interpersonally focused citizenship behaviours is that different factors may
predict each category of behaviour.
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Chapter 4: Individual performance: attitudes and behaviour
Activities
Give examples of why OCB might affect organisational performance.
Make sure before continuing that you understand:
a. the difference between contextual and task performance
b. what OCB is.
You must be able to give examples of different types of citizenship behaviour and be able
to present some potential explanations of how OCB affects individual and organisational
performance.
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this in mind, Organ (1990) argues that the relationship between OCB and
job satisfaction may be heavily affected by the ‘sizable fairness component
in responses to satisfaction scales’ (p.60).
Moorman’s (1991) initial study examined the role of fairness of procedures
and outcomes in relation to job satisfaction in predicting OCB, and
concluded that when perceptions of fairness are measured separately from
job satisfaction, job satisfaction was not related to citizenship behaviour.
Therefore, the conclusion that seems to be emerging from the research is
that job satisfaction is capturing elements of organisational justice and it is
this that is predicting why employees engage in OCB.
4.8.2 Justice3 3
For a detailed
discussion of justice, see
Briefly, justice is conceptualised as an individual’s perceptions of the
Chapter 10.
fairness of outcomes (distributive justice), procedures (procedural justice)
and interpersonal treatment (interactional justice).
There is promising evidence supporting the link between procedural and
interactional justice and OCB, however the results are not altogether
consistent. Depending on which dimension of OCB is being examined,
formal procedural justice is sometimes the stronger predictor while in
other studies, interactional justice is stronger (Konovsky and Pugh, 1994;
Moorman, 1991; Moorman, Niehoff and Organ, 1993).
Some researchers have begun to argue that the effects of fairness vary
depending on the type of justice being investigated. For example, Malatesta
and Bryne (1997) found that procedural justice was a predictor of
citizenship behaviour directed at the organisation whereas interactional
justice was better at predicting citizenship directed at the supervisor. The
conclusion that can be drawn is that both procedural and interactional
justice are important in predicting OCB but that individual significance
may vary dependent upon which dimension of citizenship behaviour is
investigated.
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Based on the norm of reciprocity, high levels of POS create a felt obligation
to care about the welfare of the organisation and assist the organisation
in achieving its outcomes. Employees who feel that their organisation
supports them as individuals are likely to reciprocate by increasing their
commitment to the organisation and engaging in behaviours that support
the organisation such as OCB.
There is some empirical evidence demonstrating that when organisations
have human resource practices that show recognition of employee
contributions (practices such as job security, autonomy, training and
payment systems), this is likely to lead to employees perceiving that their
organisation is supportive.
Overall, if employees perceive that their organisation is supportive, they
are likely to repay the organisation by having more positive attitudes and
also by engaging in behaviours that help the organisation.
Activity
If you work or have worked, think about whether you would agree or disagree with the
above statements on organisational supportiveness.
4.9 Commitment
Significant relationships between affective commitment (a psychological
attachment to the organisation) and OCB have been observed in a number
of studies (Moorman, Niehoff and Organ, 1993; Organ and Ryan, 1995).
The argument presented is that employees who feel emotionally attached
to the organisation will have a greater motivation or desire to make a
meaningful contribution to the organisation (Meyer and Allen, 1997).
Thus, it appears the balance of evidence favours the interpretation that
commitment is significantly related to discretionary behaviour. Individuals
who are highly committed to the organisation are more likely to take steps
to contribute to the organisation in meaningful ways.
Another explanation put forward as to why people engage in OCB is
because they have defined those behaviours as part of their role or job.
This explanation starts from the premise that individuals are likely to
vary in how narrowly or broadly they define their jobs. An individual who
defines his or her job in narrow terms is more likely to see behaviours
that are typically assumed to be OCB as falling outside their job, whereas
another individual who views their job in broad terms may be more likely
to see many traditional aspects of OCB as part of their job.
Employees are more likely to perform an activity that they define as in-role
rather then extra-role. Therefore, employees who define their jobs more
broadly are more likely to engage in OCB than employees who define their
jobs in more narrow terms.
Morrison (1994) explores this and empirically finds support for the
proposition that job definition presents an important motivational basis
to understanding why employees engage in OCB. She then looks at
what factors affect how broadly individuals define their job and finds
that organisational commitment causes employees to define their job
responsibilities more broadly and thus committed employees are more
likely to engage in what others may see as OCB.
Overall, the evidence suggests that individuals who are highly committed
to their employing organisation are more likely to engage in organisational
citizenship behaviour regardless of whether they define citizenship
behaviours as in-role or extra-role.
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Activity
If you work or have worked, use the statements above to assess how committed you
were or are to your employing organisation.
Activity
What does the empirical evidence suggest in terms of the relationship between HR
practices and organisational commitment?
Make sure you think about this question when you read the subsequent chapters that
examine different HR practices. Ask yourself whether there is empirical evidence that
supports a positive relationship between the different HR practices and organisational
commitment.
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Chapter 4: Individual performance: attitudes and behaviour
Activity
What are the positive consequences of having employees who are highly committed to
the organisation?
4.10 Summary
The distinction between task and contextual performance is important in
terms of understanding how individual performance is conceptualised.
OCB falls into the category of contextual performance and hence is
more under an individual’s discretion. Consequently, there is a greater
relationship between an individual’s attitudes and contextual performance
than task performance.
There are a number of antecedents of OCB. The research suggests that the
direct effect of personality on OCB is weak (individual–collectivism seems
to be an important individual difference). Stronger evidence exists for the
effect of organisational justice and perceived organisational support on
OCB. Finally, highly committed employees are more likely to engage in
OCB.
As highly committed employees are more likely to engage in behaviours
that benefit the organisation, the key issue for organisations is how they
can manage employees’ commitment to the organisation through its
human resource practices.
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Chapter 5: Psychological contracts
5.1 Introduction
This chapter explores the employment relationship between employees
and their employers. Employers make promises to employees in return for,
for example, employees being loyal, exerting effort on the organisation’s
behalf and high performance. It is this relationship based on perception of
what has been promised which is called the psychological contract.
When you read through this chapter, you should keep in mind how an
organisation’s human resource practices may affect what employers and
employees contribute to the exchange relationship.
Activity
Think about a time when someone promised to do something for you and did not do it.
a. How did you feel?
b. What did you do?
c. Why did you do what you did?
This chapter explores the above in the context of the employee–employer
relationship. If you work, think about an incidence when your employer
promised you something but did not deliver – how did it make you feel
and did you do anything about it?
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Journal articles
Please note that when you are using the Online Library, be sure to use
the journal spelling as listed. If you use the UK spelling ‘organisational’ or
‘behaviour’ your search results will not pick up the journals which use US
spelling ‘organizational’ and ‘behavior’.
Guest, D. ‘Is the psychological contract worth taking seriously?’, Journal of
Organizational Behavior 19 Special issue, 1998, pp.649–64.
Robinson, S.L. and E.W. Morrison ‘The development of psychological contract
breach and violation: a longitudinal study’, Journal of Organizational
Behavior 21(5) 2000, pp.525–46.
Raja, U., G. Johns and F. Ntalianis ‘The impact of personality on psychological
contracts’, Academy of Management Journal 47(3) 2004, pp.350–67.
Restubog, S.D.L., P. Bordia and R.L. Tang ‘Effects of psychological contract
breach on performance of IT employees: the mediating role of affective
commitment’, Journal of Organizational and Occupational Psychology 79,
2006, pp.299–306.
Tsui, A.S. and J.B. Wu ‘The new employment relationship versus the mutual
investment approach: implications for Human Resource Management’,
Human Resource Management 44(2) 2005, pp.115–21.
Miles, R.E. and C.C. Snow ‘Designing strategic human resource systems’,
Organisational Dynamics 8 1980, pp.36–52.
Millward, L.J. and P. Brewerton Validation of the psychological contract scale
in an organisational context. (University of Surrey, Guildford: SPERI
publication, 1998).
Millward, L.J. and L.J. Hopkins ‘Psychological contracts, organisational and job
commitment’, Journal of Applied Social Psychology 28 1998, pp.16–31.
O’Leary-Kelly, A.M. and J.A. Schenk ‘An examination of the development and
consequences of psychological contracts’, paper presented at the annual
meeting of the Academy of Management, Chicago (1999).
Pugh, D.S., D.P. Skarlicki and B.S. Passell ‘After the fall: lay-off victims’ trust
and cynicism in re-employment’, paper presented at the annual meeting
of the Society for Industrial and Organisational Psychology, New Orleans,
Louisiana (2000).
Robinson, S.L. ‘Trust and breach of the psychological contract’, Administrative
Science Quarterly 41 1996, pp.574–99.
Robinson, S.L., M.S. Kraatz and D.M. Rousseau ‘Changing obligations and
the psychological contract: a longitudinal study’, Academy of Management
Journal 37 (1994), pp.137–52.
Robinson, S.L. and E.W. Morrison ‘Psychological contracts and OCB: The effect
of unfulfilled obligations on civic virtue’, Journal of Organisational Behavior
16 1995, pp.289–98.
Rousseau, D.M. ‘Psychological and implied contracts in organisations’, Employee
Responsibilities and Rights Journal 2 1989, pp.895–922.
Rousseau, D.M. ‘New hire perceptions of their own and their employer’s
obligations: a study of psychological contracts’, Journal of Organisational
Behavior 11 1990, pp.389–400.
Rousseau, D.M. ‘Psychological contracts in organisations: understanding
written and unwritten agreements’, (Sage, Newbury Park, CA 1995).
Rousseau, D.M. and S.A. Tijoriwala ‘Assessing psychological contracts: issues,
alternatives and the types of measures’, Journal of Occupational Psychology
19 1998 pp.679–95.
Roehling, M., M. Cavanaugh, L. Moyihan and W. Boswell ‘The nature of the
new employment relationship: a content analysis of the practitioner and
academic literatures’, Human Resource Management 39 (2000), pp.305–320.
Schalk, R. and C. Freese ‘New facets of commitment in response to
organisational change: research trends and the Dutch experience’, Journal
of Organisational Behavior 4 (1997), pp.107–23.
Schein, E.H. Organizational psychology. (Englewood Cliffs, NJ: Prentice-Hall,
1980) third editon [ISBN 0136413323].
Stiles, P., L. Gratton, F. Hope-Hailey, P. McGovern and C. Truss ‘Performance
management and the psychological contract’, Human Resource Management
Journal 7(1) 1997, pp.57–66.
Tsui, A.S., J.L. Pearce, L.W. Porter and A.M. Tripoli ‘Alternative approaches to
the employee-organisation relationship: does investment pay off?’, Academy
of Management Journal 40 1997, pp.1089–1121.
Turnley, W.H. and D.C. Feldman ‘The impact of psychological contract violations
on exit, voice, loyalty and neglect’, Human Relations 52(7) 1999 pp.895–
922.
Walton, R.E. ‘From control to commitment in the workplace’ in R. Steers,
L. Porter and G. Bigley (eds) Motivation and work behavior. (New York:
McGraw-Hill, 1991) fifth edition [ISBN 007060956X].
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Activity
Think about your your dream job and ask yourself:
a. what do you think your obligations to your employer would be
b. what do you think your employer’s obligations would be to you?
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Activity
In a dictionary, find a definition of expectations and obligations? Think about the
definitions. Is one stronger than the other? Give an example of an obligation and then
give an example of an expectation.
Activity
How do relationships based on social exchange differ from those based on economic
exchange?
Write down some examples of each type of relationship.
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Employee–employer exchanges
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Economic exchange
In this type of relationship, there is balance between the contributions
of the employer and employee but these contributions are exclusively
economic. The employer offers short-term economic inducements in
exchange for specified contributions (e.g. a stockbroker and brokerage
firm). The employee is not expected to help colleagues or be concerned
about the overall performance of the firm and the employer’s obligation
to employees is confined to rewards. Neither party has an obligation to
maintain a long-term relationship. This type of relationship is known as a
quasi-spot contract.
Mutual investment
This type of relationship is based on social exchange and involves long-
term investment and is similar to a high-commitment approach advocated
by Walton (1985).
Underinvestment
This type of relationship is characterised by the employee adopting a
social exchange view and the employer adopting an economic view of the
relationship. In other words, employees are expected to undertake broad
and open-ended obligations in return for monetary rewards and no long-
term investment (e.g. in job security, career development and training).
Employers want full commitment from employees but at the same time
they want the flexibility to lay-off employees when necessary.
Overinvestment
This type of relationship is characterised by employees taking an
economic view and employers taking a social exchange view. In this type
of relationship, employers provide long-term job security and employees
receive investments from the employer in terms of training but employees
are not expected to go beyond their immediate job requirements.
Not only will employers differ in terms of the type of relationship offered
to employees, but within organisations, the type of relationship may
vary across employees. Employers may develop different relationships
with different types of employees (e.g. permanent versus temporary).
The authors empirically demonstrate that a balanced social exchange
perspective, or an unbalanced exchange in which the employer offers a
social exchange, are associated with higher levels of performance and
more favourable attitudes than the remaining two relationships.
Activity
What are the consequences of the four different types of exchanges for:
a. employees
b. the employer.
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Activity
a. How would an HR manager encourage the formation of a relational contract? (Hint:
think about training, think about pay.)
b. What are the advantages of a transactional contract to the employer and the
employee?
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Activity
Read Cullinane and Dundon (2006) and make notes on:
a. examples of how a psychological contract may be managed
b. the problems facing organisations in managing employees’ psychological contracts?
Activity
Draw up some examples of when employees may think their employer has breached their
psychological contract.
5.11.1 Reneging
Reneging occurs when the organisation knowingly breaks a promise to the
employee. This may occur because the organisation is unable to fulfil a
promise or because it is unwilling to do so.
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Inability
The organisation may at one point in time have promised job security to
new recruits but finds itself in a position of not being able to deliver this
due to changes in the external environment.
Unwillingness
The organisation may make a promise with no intention of fulfilling it or
they may have originally intended to keep it but subsequently decided not
to fulfil it. Whether an organisation decides to renege depends on the costs
and benefits associated with reneging. One factor is the power both parties
have; if the employee has critical skills that the organisation is dependent
on, the organisation will be less likely to renege than the situation where
the employee is easily replaceable. A second factor is how well the
employee has fulfilled their contract, the organisation may perceive the
costs to be lower when an employee has not fulfilled their contract rather
than when the employee is seen as fulfilling their contract. The third factor
is the type of contract: the costs of reneging are considered greater when
the contract is viewed as relational and reneging will be less likely.
Taking these three factors together, if the employee has greater power,
is perceived to be fulfilling their contract and the organisation sees
the contract as relational, the costs of reneging will be greater than
the benefits and hence the organisation will be less likely to renege.
However, if the organisation has greater power, the employee is seen
as not adequately fulfilling their contract and the organisation sees the
relationship as transactional, the organisation is more likely to renege as
the benefits outweigh the costs.
5.11.2 Incongruence
Incongruence occurs when an employee has perceptions of a given
promise that differ from the organisation. This may be a consequence of
three factors: different schemata, complexity and ambiguity of obligations,
and communication.
Different schemata
Schemata are cognitive frameworks that help people process data in
order to make sense of events and situations. One schema relates to
the employment relationship, which helps individuals define what a
typical employment relationship entails. How an individual interprets job
security will depend on how job security fits into an individual’s schema
for employment relationships in general. These schemata are heavily
influenced by prior experiences and culture (a Japanese manager may
have a different schema from the one held by an American manager).
Communication
The greater the accuracy and truthfulness of communication, the more
likely there will be agreement between the two parties.
It depends on:
a. Whether the discrepancy is seen by the employee as important. The
larger the discrepancy, the more important the promise to the employee
and the more vivid the promise in the mind of the employee, the
greater the importance of the discrepancy.
b. The vigilance of the employee (the extent to which the employee
monitors how well the organisation is fulfilling the terms of the
contract). The vigilance of employees will depend on uncertainty (in
situations of uncertainty, such as downturns or lay-offs, employees
will be more vigilant). Employees will also be more vigilant when
the employment relationship is based on a transactional rather than
relational exchange.
Will unmet promises lead to perceived breach? This depends on a
comparison process whereby the employees compare first what he or
she has received to what he or she was promised, and then compares
this to what he or she provides the organisation relative to what he or
she promised to provide. In other words, employees compare how well
they have fulfilled their obligations to the organisation with how well the
organisation has fulfilled their obligations to the employee.
Some key factors affect the likelihood that a breach will occur:
• If the employee perceives that their level of contract maintenance is
greater than the organisation, then perceived breach is likely to occur.
• Employees with low self-esteem are more likely to think that their
contributions have been inadequate and hence are less likely to believe
that an unmet promise represents a breach.
• Individuals differ in how equity sensitive they are. Individuals who are
highly equity sensitive feel that they deserve more than others and they
may consider the slightest discrepancy as an indication that a breach of
contract has occurred.
Will perceived breach lead to perceived violation? This depends on four
factors:
• Outcome assessment: The greater the perceived imbalance
between the two parties’ contributions, the stronger the relationship
between perceived breach and violation. The greater the value attached
to the outcomes, the more likely it is that violation will occur. So,
for example, a worker may have been prepared to do a lot of unpaid
overtime on the expectation that they would be promoted in the near
future. The promotion would help to redress the imbalance because
the worker would be getting more pay and the prestige that goes with
the promotion. The worker may have been subject to adverse pressure
from their family about doing all the unpaid work. They may have
said to their family that if they do the overtime, they are sure to get
promoted. If the expected promotion does not happen, then it is more
likely that the worker will think that their psychological contract has
been violated.
• Attribution: Who is responsible for the perceived breach? If an
employee believes that the organisation purposefully reneged on their
promises, employees will experience more intense negative emotions.
• Process: If an employee feels that they were fairly treated, dealt with
honestly and respectfully and received adequate justification, they will
be less likely to experience negative reactions.
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Activity
a. What is the difference between contract breach and violation?
b. How does contract breach occur? Give an example.
5.12.2 Attitudes
Another strand of empirical research supports the relationship between
contract breach and employee attitudes. Robinson (1996) demonstrates
that contract breach leads to a reduction of employee trust in their
employer and it is this reduction in trust that may lead employees
to reduce their contributions to the exchange relationship. When an
employee experiences contract breach, he or she interprets this as
inconsistency between the employer’s words and their actions, which
causes employees to lose faith in the employer reciprocating their
contributions in the future. In other words, if promises are broken,
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5.12.3 Behaviours
Turnley and Feldman (1999) found that employees who reported
higher levels of contract breach were more likely to attempt to leave the
organisation, to have neglected their in-role job performance, and would
be less likely to represent the organisation favourably to outsiders (be
less loyal). Robinson and Morrison (1995) found a positive relationship
between contract fulfilment and organisational citizenship behaviour.
However, contract breach can have implications for the longer term and
have spillover effects from one job to another. Pugh, Skarlicki and Passell
(2000) investigated the relationship between contract violation with one
employer and the consequences for an individual’s trust and cynicism in
future employment. The findings of the study indicate that:
• Perception of contract violation was negatively associated with trust in
an employee’s new employer.
• Perception of contract violation was positively related to an employee’s
cynicism in their new employment.
• If an employee experiences contract breach with one employer, they are
less likely to trust their subsequent employer.
Activity
a. What are the consequences of perceived breach of employees’ psychological contract?
b. What can organisations do to minimise the effects of a perceived breach?
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Activity
Drawing on what you learned from Chapter 1, which reviewed different types of human
resource strategies, note the key implications of each strategy for the psychological
contract of employees.
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5.14.1 Loyalty
• ‘There is an untapped reserve of employee commitment and loyalty…
Employees want to be loyal.’ (Hackett, 1996)
• ‘Bring out the casket. Organisational loyalty… has finally been laid to
rest.’ (Cole, 1997)
Activity
Go back to the notes you made for the previous activity when you outlined your
expectations about your dream job. Talk to a friend, colleague or family member who
has worked for at least 10 years. Ask them what they expect from their employer. Ask
them if their expectations have changed since they started work and if so how? If their
expectations have changed, do you think this is evidence of a change to the psychological
contract in your country?
5.15 Summary
There is agreement and debate on some of the issues surrounding the
psychological contract. The following are areas of agreement:
a. The psychological contract is an individual’s belief concerning the
reciprocal obligations that exist between him/her and another party.
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Notes
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Chapter 6: Reward systems and motivation
6.1 Introduction
Reward is one of the defining characteristics of the employment
relationship. Indeed, the employment relationship is often defined in
terms of an effort–reward bargain between employers and workers. The
management of reward therefore assumes considerable importance.
Reward can become a powerful means by which employers pursue their
objectives. Thus reward might be used to generate and foster ‘desired’
attitudes and behaviours amongst employees. However, the importance
of reward also makes it a highly sensitive and potentially dangerous
tool. If workers are unhappy with their rewards negative organisational
consequences may well follow.
This chapter covers four main issues. The first is concerned with what
is meant by the term ‘reward’ and distinguishes between different types
of reward. The second issue focuses on how organisations select their
payment systems. It compares rational and strategic approaches with
less rational and more ad hoc ones. The third issue relates to payment
systems in operation; the chapter highlights the strengths and weaknesses
of different systems. The final issue touches on the impact of pay systems;
consideration is given to how such systems impact on employee attitudes
and behaviours as well as on organisational performance.
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Chapter 6: Reward systems and motivation
Activity
Compile a list of the different ways in which employees can be rewarded distinguishing
between intrinsic and extrinsic rewards.
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Activities
Investigate the pay structure/s used in your organisation, or an organisation you have
some knowledge of.
a. What kinds of job fall into which grade?
b. What type of evaluation was used to determine the hierarchy of jobs and grades?
Identify three or four very different jobs in your organisation or an organisation you
have some knowledge of. Gather as much information as you can on the tasks and
responsibilities involved in these jobs.
a. Evaluate these jobs according to a small number of criteria – for example, use
problem solving, knowledge required and responsibility for people and responsibility
for other resources.
b. Rank the jobs according to how they rate against these factors. Which are the more
highly valued jobs? Was the rank order as you had expected?
The hierarchy of jobs and grades naturally establishes a ranking for pay
purposes. However, organisations must still determine exactly what the
rates of pay should be. It is at this point that the issue of external worth
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Chapter 6: Reward systems and motivation
Activity
Investigate the types of pay system used in your organisation or an organisation you have
some knowledge of.
Is the emphasis more on pay linked to person or pay linked to performance?
Activity
Is following fashion a good or a bad idea when it comes to choosing a pay system?
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Chapter 6: Reward systems and motivation
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Peer control
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Chapter 6: Reward systems and motivation
Service, for instance, where there was a tradition of all employees receiving
the same annual pay increase, the introduction of individual performance-
related pay saw those receiving the performance increase pooling the
additional money and taking colleagues out for an office outing. There are
also instances of company pay systems, such as the piecework scheme at
the US firm Lincoln Electric, which have been in place for many years and
clearly have become part of the fabric of the organisation. Details of the
Lincoln Electric pay scheme are set out below.
Location: The location of a company may also affect the viability of a pay
system. Thus, national culture can have a bearing on the adoption of pay
practices. Certain pay schemes are more in tune with national values and
beliefs than others. As Trompanaars (1993) notes:
‘The internationalisation of business life requires more knowledge
of cultural patterns. Pay for (individual) performance, for example,
can work out well in the USA, the Netherlands and the UK. In more
collectivist cultures like France, Germany and large parts of Asia it
may not be so successful.’
In Japan, for example, where the national culture has been based upon
strong collective values, team bonuses and seniority pay (rather than
individual performance-related pay) have until very recently been the norm.
Activity
Do you think that certain payment systems are more suited to your country’s cultural
values than others?
Activity
Review the survey of payment systems by considering:
a. What goals can be pursued through pay?
b. What goals are associated with different payment systems?
c. What factors influence the appropriateness of a payment system?
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Activity
Talk to managers in your organisation or in an organisation you have access to about
their pay systems.
Ask them what they think the pay systems are designed to achieve and whether they are
successful in achieving it?
If they are not working as intended, ask them why?
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Chapter 6: Reward systems and motivation
• distorted pay link: managers may use merit pay to reward behaviours
unrelated to performance
• undermining team work and cooperation.
Profit–gain–sharing:
• line of sight: difficult for employees to see how their behaviour affects
company performance and therefore their pay
• free riding: ‘lazy’ employees can ‘hide behind’ the performance of other
employees and still get paid the same bonus
• unpredictability.
Team pay:
• defining the team
• finding team performance measures and performance standards
• stability of the team.
It can be seen that the problems associated with different pay systems
assume contrasting forms. For instance, profit-sharing and gain-sharing
schemes have created difficulties around the issue of ‘line of sight’. In other
words, it is very difficult for the employees to see how their performance
can affect company profits. According to certain theories (see pp.131–2)
this is likely to weaken its incentive effect. Indeed as a way of establishing
a line of sight, joint consultative committees providing an employee voice
are often seen as an essential part of gain-sharing schemes including the
Rucker and Scanlon plans. Profit-sharing and gain-sharing schemes also
run the risk of the ‘free rider’ problem, a difficulty characterising many
group-based schemes, with employees having the opportunity to rely
upon the efforts of others yet still being rewarded. In such circumstances
considerable emphasis is placed on the need for peer pressure to ensure
that each employee pulls his or her weight.
Team pay has also generated certain operational difficulties. It is not
always clear what constitutes the most appropriate team for pay purposes
given that employees may belong to a number of teams within the work
situation, for instance, the department, the section and the task group.
Moreover, teams are often not stable enough as a basis for reward, coming
together and breaking up relatively quickly as with project groups. Even
if a team can be identified and is stable enough over time, performance
measures and standards for team performance which can be linked to pay
are often difficult to find.
Considerable attention has been given to the operational difficulties
associated with individual performance-related pay in the context of the
recent emphasis placed by policy-makers, commentators and practitioners
on this approach to pay. Individual performance-related pay schemes
comprise three main elements: setting performance targets, evaluating
those targets and linking the evaluation to pay increase. Each of these
elements has been found to have problems associated with them. The first
two elements – target-setting and evaluation – relate to the performance
appraisal process. This is dealt with in greater detail in Chapter 17 of
this subject guide, but it is worth noting at this point that problems of
inconsistent goal setting within the same organisation and subjectivity in
the appraisal process assume particular significance when appraisal is then
linked to pay. Additional problems can arise from this appraisal pay link. It
might, for example, encourage ‘tunnel vision’ in that employees narrowly
concentrate on targets which form the basis of the pay increase to the
neglect of other aspects of their job or the concerns and interests of other
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Activity
Review the section on relating pay to performance by:
• identifying the main operational problems associated with profit-sharing, team pay
and individual performance-related pay
• noting ways in which you might address these problems to ensure that the respective
pay systems work more efficiently and effectively.
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Chapter 6: Reward systems and motivation
their outcomes (in the form for instance of pay) without exerting effort
towards fulfilling the principal’s goals. The agency ‘problem’ focuses on
how to structure monitoring and compensation mechanisms as a means
of aligning agent and principal interests. For the principal the choice lies
between the use of behaviour-based pay or output-based pay as a means of
achieving such an alignment (Bloom and Milkovich, 1994).
Two principal–agency scenarios can be presented which affect the
principal’s approach and calculations:
• In the first scenario, the principal knows what the agent has done and,
since the principal is buying the agent’s behaviour, a contract based on
behaviour is the most efficient. A contract based on outcomes would
needlessly transfer the risk.
• In the second scenario, the principal is uncertain what the agent
has done. A self-interested agent may or may not have performed as
required. In this case the principal has a couple of options: to discover
the agent’s behaviour by investing in information or pay the agents on
the basis of the outcome of their behaviour. Under the latter option the
agent’s preferences are more likely to be aligned with the principal’s
goals but at the price of transferring risk to the agent, given that a
range of factors beyond the agent’s control may affect their outcome
and thus their pay.
The decision whether to base pay on the basis of behaviour or outcomes
depends on the trade-off between the costs of measuring behaviour and
the cost of transferring risk to the agent through outcome-based pay. If it
is relatively inexpensive to monitor behaviour or expensive to place risk on
agents, behaviour-based pay is most efficient (Eisenhart, 1988).
Research drawing upon the principal–agent models has provided some
support for the view that incentive pay can be useful in aligning the
action of agents with desired organisation outcomes. Murphy (1985), for
instance, studied the pay-performance relationship of 501 managers in
72 companies and found that salary, bonus and total compensation were
positively related to total shareholder return and growth in firm sales.
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Activity
Think about your workplace needs. Are they the same as those listed by Maslow? Would
you place them in the same order as Maslow’s hierarchy?
Activity
Would you expect the same factors to be hygiene factors and motivators in different
countries?
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Chapter 6: Reward systems and motivation
• affiliation
• avoidance.
However, he views achievement as the most critical to a country’s
economic growth and success. On the basis of empirical research
McClelland identifies four characteristics of people with a strong
achievement need: moderate task flexibility, personal responsibility for
performance, the need for feedback and innovativeness.
Activity
Drawing upon expectancy theory, design a payment system which is likely to motivate.
Vroom’s model has been developed further by Porter and Lawler, who
have refined each of the three elements. They suggest the ability of
employees to achieve performance levels is influenced by how employees
view their job (‘role perceptions’) and by their abilities and traits. In other
words the extent to which employees feel they have the ability to meet
expected performance levels is likely to be influenced by what they see
their role as involving and whether they see themselves as having the
skills to fulfil it. Porter and Lawler also suggest that a distinction should
be made between the value employees place upon intrinsic and extrinsic
outcomes or rewards. Finally, in evaluating the link between performance
and outcome, they highlight the importance of equity, in other words the
nature of this link is affected by employee perceptions of the fairness of
the rewards received.
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Activity
Read:
Kohn, A. ‘Why incentive plans cannot work’, Harvard Business Review, Sept–Oct. 1993.
Jenkins, G., N. Gupta, A. Mitra and J. Shaw ‘Are financial incentives related to performance?
A meta-analytic review of empirical research’, Journal of Applied Psychology 85(5) 1998,
pp.777–87.
satisfied employees are with pay, the less likely they are to leave the
organisation.
Activity
Think about your own current or past work. (If you do not work, you may need to discuss
the following questions with a friend or family member who does.)
• Do you feel you are being treated fairly in pay terms?
• What are you basing this judgement on?
If you were not being treated fairly how would it affect your work-related attitudes and
behaviours?
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Notes
122
Chapter 7: Performance management
7.1 Introduction
The evaluation of employee performance is often a central element in
organisational approaches to the management of staff. It informs and
shapes a wide range of decisions including those related to reward,
development and training. It is, however, a process which is complex and
full of difficulties. As Bratton and Gold (2012) have stated:
Of all the activities in the HRM cycle, performance appraisal is
arguably the most contentious and least popular amongst those
who are involved.
This chapter defines key elements of the evaluation process and sets out
various approaches to it. However, given the ‘contentious’ character of the
process, it is also concerned with the problems faced by those involved and
seeks to outline some of the tensions, dilemmas and conflicts associated
with it.
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Books
Boxall, P., J. Purcell and P. Wright Oxford handbook of human resource
management. (Oxford: Oxford University Press, 2007) [ISBN
9780199282517] Chapter 18 ‘Performance management’.
Fisher, C. ‘Performance management and performance management’ in J.
Leopold, L. Harris and T. Watson The strategic managing of human resources.
(Harlow: Prentice Hall, 2005).
Journal articles
Grint, K. ‘What’s wrong with performance appraisal? A critique and a
suggestion’, Human Resource Management Journal 3/3 Spring 1993.
Luthans, F. and S. Peterson, ‘360 degree feedback and systematic coaching’,
Human Resource Management 42(3) 2002, pp.243–56.
Mabey, C. ‘Closing the circle: participants views of a 360 degree feedback
programme’, Human Resource Management Journal 11(1) 2001, pp.41–53.
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Chapter 7: Performance management
Activity
Is performance appraisal or performance management used in your organisation or an
organisation you have some knowledge of?
Investigate the goals which underpin the use of either approach in this organisation.
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Activity
Why are specific and tightly focused goals more likely to improve performance than open-
ended goals?
This testing of the goal-setting model has, however, been criticised. Austin
and Bobko (1985), for example, note that goals related to the quality of
work have rarely been tested, while most of the research has been limited
to laboratory environments. Moreover, Earley et al. (1989) note that goal
setting may be harmful where a task is new and unusual and where a
range of possible strategies are available to deal with it.
From a contingency perspective, one of the key issues is for organisations
to be clear about which of the wide range of goals listed by Foot and Hook
(1999) they are pursuing. In this respect it is of value to divide the goals
underpinning appraisal and listed above into two sets:
• judgemental
• developmental.
Judgemental appraisal involves management taking a firm view
and making a concrete decision about the quality of the employee’s
performance which then has significant consequences for the future
treatment of that employee. In contrast, developmental appraisal is much
more of a diagnostic tool designed to identify and address an employee’s
strengths and weaknesses. The following table highlights the activities
informed by these different forms of appraisals. Thus, judgemental
appraisal is used when making decisions, for example, related to reward,
while developmental appraisal might affect decisions on career planning.
Over the years the pendulum has swung between an emphasis on hard
and soft appraisal goals. Research by Long (1986) in Britain in the 1980s
suggested that the emphasis was on harder, judgemental appraisal with
the increased use of tight performance objectives and a tendency to
link appraisal to pay. More recently Bach (2000) has suggested that the
pendulum has swung back to softer developmental aims, with the move
away from reward-driven appraisal.
However, more significant in this context is the potential tension between
the use of appraisal for developmental and judgemental purposes. If
appraisal is being used for judgemental purposes, say, to determine
pay increases, employees are unlikely to be open and honest about
their limitations. Yet this very openness and honesty may be crucial if
management is seeking to develop employees, using appraisal to identify,
for example, training needs. Organisations may well be unclear about
the predominant purpose of appraisal. Is it being used primarily to judge,
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Activity
Many organisations use appraisal for both judgemental and development purposes.
Can schemes be designed to minimise the tension between these two sets of goals? If so,
write down some suggestions about how this might be achieved.
Activity
Investigate how performance appraisal is carried out in your country.
a. How common is it?
b. Does it cover particular occupational groups?
c. Does your national culture encourage or discourage the use of appraisal?
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A Agreed or achievable
R Realistic
T Time bound.
As we shall see, in practice the objective-setting process rarely lends itself
to such seemingly straightforward and simple guidance.
Activity
Try to devise some SMART objectives related to any aspect of your work life or home life
activities. Seek to develop two SMART objectives for each of the performance measures
distinguished – traits, behaviours and results.
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Activity
Review the above by listing the different ways of assessing performance.
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Activity
Think about the strength and weakness of the following forms of appraisal from both a
management and a worker perspective:
a. self-appraisal
b. upward appraisal
c. 360-degree appraisal
d. team appraisal.
Which approach would you prefer and why?
Activity
What advice would you give to a manager trying to minimise these distorting effects?
Read Grint (1993).
Longnecker and Ludwig (1990) adopt a somewhat different approach to the problems
associated with assessment, suggesting that managers may manipulate ratings by
inflating or deflating them for positive or negative reasons. This categorisation of
difficulties gives rise to four types of manipulative rating behaviours:
1. Inflating ratings for positive reasons to:
• keep an employee motivated
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Activity
Read Grint, K. ‘What’s wrong with performance appraisal? A critique and a suggestion’,
Human Resource Management Journal 3/3 Spring 1993.
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Activity
Based on what you have read, in what ways can workers manipulate the performance
appraisal process to serve their best interests?
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Notes
138
Chapter 8: Job design and redesign
8.1 Introduction
The aim of this chapter is to introduce the debates and dilemmas that
surround the issue of job design and redesign. In particular, the chapter
will consider whether it is really possible to design jobs in such a way that
levels of employee motivation and performance can be increased, and
whether the levels of boredom, monotony and stress that are commonly
associated with traditionally designed work, can be reduced. The debate
is split into two halves. The first relates to the design of individual jobs.
This was very much the focus of interest until the start of the 1990s.
The second relates to the post 1990s when attention turned to issues
surrounding teamworking. The structure of this chapter reflects this
chronological development.
A useful starting point in terms of the study of job redesign, is to examine
Taylorism and Scientific Management, and then evaluate ensuing
developments in a chronological order. The reason for this is that most
attempts to redesign jobs have focused on the alleviation of some of
the more negative outcomes of Scientific Management. The chapter
will therefore begin with a discussion of Taylor’s Scientific Management
principles, before moving onto the issues of job enlargement, job
enrichment and teamworking.
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Journal articles
Allen, N.J. and T.D. Hecht ‘The “romance of teams”: toward an understanding
of its psychological underpinnings and implications’, Journal of
Occupational and Organizational Psychology 77 2004, pp.439–61.
Kelly, J. ‘Does job redesign theory explain job redesign outcomes?’, Human
Relations 45(8) 1992, pp.753–74.
Mueller, F., S. Procter and D. Buchanan ‘Teamworking in its context(s):
antecedents, nature and dimensions’, Human Relations 53(11) 2000,
pp.1387–1424.
Parker, S., T.D. Wall and J.L. Cordery ‘Future work design research and practice:
towards an elaborated model of work design’, Journal of Occupational and
Organizational Psychology 74 2001, pp.413–40.
Kelly, J. ‘Does job redesign theory explain job redesign outcomes?’, Human
Relations 45(8) 1992, pp.753–74.
Littler, C. The development of the labour process in capitalist societies. (London:
Heinemann, 1982) [ISBN 9780435825409].
Marchington, M. Managing the team. (Oxford: Blackwell, 1992) [ISBN
9780631186779].
Rose, M. Industrial behaviour: theoretical development since Taylor. (London:
Allen Lane, 1975).
Starkey, K. and A. McKinlay Strategy and the human resource: Ford and
the search for competitive advantage. (Oxford: Blackwell, 1993) [ISBN
0631186743].
Taylor, F.W. Principles of scientific management. (New York: Harper, 1911).
Walker, C. and R. Guest The man on the assembly line. (Cambridge, Mass.:
Harvard University Press, 1952).
Wickens, P. The ascendant organisation: combining commitment and control for
long-term, sustainable business success. (Basingstoke: MacMillan, 1995)
[ISBN 0333611306].
Womack, J., D. Jones and D. Roos The machine that changed the world. (New
York: Rawson, 1990) [ISBN 0029463165].
in the most scientific way using ‘time and motion’ analysis: a technique
that would enable management to find the most effective method of
performing a particular task. All brainwork would therefore be removed
from the shop-floor and be centralised in a planning department, with
management deciding how and when work was to be done, and with
workers simply doing what they were told, when they were told to do it.
Henry Ford took Taylor’s ideas a step further by adding the concept of the
moving assembly line within the car industry. This provided an additional
regulatory effect over the workforce, with work effort now being governed
by the pace of the line. Ford also introduced the $5 day wage, an extremely
generous wage at the time. This reflected the belief that financial incentive
alone would be sufficient to ensure workforce motivation.
These principles have underpinned the concept of job design for many
years. Indeed, industrial sociologists such as Steve Hill (Hill, 1981) and
Craig Littler (Littler, 1982) argue that the real significance of Taylor’s
theory of scientific management was that it established the basic
philosophy of work organisation that still exists in many respects to the
present day, in the sense that the principles of job fragmentation, tight job
boundaries and the separation of mental and manual labour have become
the dominant ideals for job design.
Activity
Jobs are still designed using Taylorist principles. Can you think of an example? Why do
you think that an idea developed in 1911 is still in use today?
Before reading the next section, list the problems you think might emerge within a
workplace that has jobs designed on Taylorist principles.
entitled ‘The man on the assembly line’ (Walker and Guest, 1952). The
study, which examined car plants in the USA, demonstrated that workers
were dissatisfied with the pace of the production line, the repetitiveness of
their jobs, low-skill requirements, the fact they were only involved in one
small part of the production process and the lack of control over the way
in which work tasks were carried out.
The solution Walker and Guest offered was to reconstitute specialised
tasks: in other words, to combine fragmented tasks together. As such,
jobs would be enlarged, cycle times would be lengthened, and individuals
would experience a greater degree of variety and a wider skill range in
their work.
The expectation was that by enlarging jobs in this way, higher workforce
morale and higher performance would result. In reality, however,
job enlargement programmes had little effect. Several reasons were
given for this. First, the nature of the work remained unchanged. Job
enlargement interventions simply combined together simple tasks that
required only minimal skill levels to complete. Second, the intervention
left the separation of conception and execution unchanged. Workers still
had no control over production methods, and no method by which they
could input their own ideas into the production process. Third, many
job enlargement interventions were introduced in a low-trust industrial
relations climate, and they came to be perceived by the unions and
the workforce as a mechanism by which management could instigate
headcount reductions and increase labour intensification.
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CRITICAL
CORE JOB
PSYCHOLOGICAL OUTCOMES
CHARACTERISTICS
STATES
Moderators
HIGH INTERNAL
WORK MOTIVATION
Autonomy EXPERIENCED
RESPONSIBILITY FOR
OUTCOMES OF THE WORK
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8.5.3 Moderators
A further important feature of the job characteristics model is that it
incorporates a set of moderators. These moderate the strength of the
impact of an improvement in the five core job characteristics on the
three critical psychological states, and the strength of the impact of an
improvement in the three critical psychological states on motivation and
performance. The moderators are as follows:
• Knowledge and skill: if a worker does not possess the knowledge
or the skills to perform the redesigned job effectively, the redesign
initiative will not lead to an improvement in performance.
• ‘Growth need strength’ or how strongly the individual
feels that they need to develop and grow: if a need for
personal development is lacking, an improvement in the five core job
characteristics will have little impact on the three critical psychological
states, or on resulting levels of motivation. As different people have
different levels of ‘growth need’ strength, some are likely to respond
more favourably to job redesign initiatives than others.
• Context satisfaction: this relates to the context of the work
situation. It is necessary, therefore, for workers to be in receipt
of a reasonable rate of pay, for supervisory style not to be overly
authoritarian, for working conditions to be acceptable and for there to
be a sense of equity in the workplace. If workers are dissatisfied with
these factors, it is unlikely that they will respond positively to a job
redesign initiative. This last moderator is very similar to Herzberg’s
ideas on hygiene factors.
Activity
Read the article by Kelly listed in the Essential reading.
Before looking at the empirical results, it is worth pointing out that some
question marks have been raised concerning the quality of the research
conducted. First, it is extremely difficult to obtain accurate information on
aggregate, let alone individual, performance levels. This raises problems
in terms of testing the impact of improvements in the three critical
psychological states on performance. Second, many of the empirical
studies of job redesign change were undertaken within a relatively short
time span of about 12 months (Kelly, 1992). It is difficult, therefore, to say
whether the effects of the redesign initiative will be long lasting. It may
be the case that over a longer period of time the motivating effects of an
improvement in job design will begin to fade, after an initial ‘honeymoon
period’.
Nevertheless, the empirical tests that have been carried out demonstrate
the following:
Looking first at the relationship between perceived improvements in job
characteristics and job satisfaction, the evidence suggests a strong link.
In other words, where job redesign leads to an improvement in the three
critical psychological states, this has a beneficial impact on the level of job
satisfaction.
However, the evidence is much weaker where the relationship between
job redesign and intrinsic motivation is concerned. In many instances,
job redesign initiatives have not proved effective in terms of raising levels
of motivation (Kelly, 1992). It seems, therefore, that improvements in
the five job characteristics are sufficient to result in job satisfaction, but
not necessarily to motivate workers to work harder. It also seems likely
therefore that satisfaction and motivation do not share the same set of
determinants. What satisfies employees will not necessarily motivate
them.
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However, there are cases in which job redesign has led to improved
performance, even in instances where there has been no increase in intrinsic
motivation. This raises the question: what causes performance gains, if they
are not caused by higher levels of motivation? The first answer is pay. It is
often the case within the empirical analyses that performance improvements
occurred in instances where workers were expecting a pay increase following
the redesign initiative. Higher work performance was therefore actually
generated by expectations of subsequent higher pay.
A second issue concerns the fact that if a job redesign initiative involves
a change in workflow or in work layout which leads to a reduction in the
amount of downtime, considerable improvements in performance are
possible without there being any changes in levels of motivation. It is simply
the case that the workflow becomes better organised.
One key conclusion that emerges from the empirical tests of the job
characteristics model is that there are several routes by which the redesign
of jobs can impact on employee performance, of which an improvement in
intrinsic motivation is only one. To aid a conceptualisation of all of the routes
by which job redesign can impact on performance, John Kelly has proposed
the ‘twin-track’ model (Kelly, 1992). The model takes into account the much
wider range of routes by which job redesign can affect performance that are
not included within Hackman and Oldham’s ‘job characteristics model’.
8.6 Teamworking
Towards the end of the 1980s, attention began to shift increasingly to the
issue of teamworking. It is fair to say, however, that interest in teamworking
is nothing new. Autonomous or semi-autonomous workgroups were central
features of the socio-technical theories of the 1960s and 1970s (Rose, 1975).
The 1980s and 1990s saw a re-emergence of interest in teamworking as part
of the lean-production debate. Teamworking is now seen as the dominant,
state-of-the-art method of shop-floor job design.
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Activity
Now make a short list of what you think are the main advantages and disadvantages of
team-working? You will probably have used your own experience as a guide. As humans
we have experience of being in teams from an early age, even if it is just a junior sports
team at school.
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teams were bad for effectiveness. He argued that if workers are allowed to
work together in teams they will engage in what he referred to as ‘systematic
soldiering’. This involves workers within a team colluding with each other to
minimise their output and maximise their wage-effort trade-off. The key to
improving effectiveness, Taylor argued, was for managers to break the power
of the workgroup and to exercise direct control over individual workers and the
work process.
The Human Relations school, however, argued that there will always be
groups in organisations. They are a naturally-forming phenomenon, because
individual workers have a basic psychological need for group membership.
Think about Maslow’s Hierarchy of Needs and the need for love, affection
and the acceptance as belonging to a group. If they are not allowed to form,
absenteeism, labour turnover and disenchantment will result from the isolation
and alienation that workers will experience. As groups are naturally forming,
their formation cannot be left to chance. It could be said therefore to be of
paramount importance for companies to proactively manage work processes in
such a way that workers are able to work together in teams.
So it can be seen that the debate on whether teams are a ‘good thing’ stretches
back to the 1930s.
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Teamworking at Nissan
In 1987, Nissan opened its car factory in Sunderland in the north-east of
England. It was soon hailed by Margaret Thatcher, the then prime minister of
the UK, as her favourite factory. The production system is more traditional than
that adopted at Volvo. There is a moving assembly line, and workers are divided
into teams of 16–18 members plus a team leader, who is responsible for his
or her team’s part of the production process. There is considerable flexibility
within the team. There are only two job titles and no job specifications, and
workers are expected to work on any job within the team as the workload
requires. Team members are expected to fill in for absent colleagues, as there
are no spare workers within the system to cover for absenteeism. As a result,
there is considerable peer pressure on workers not to go absent (indeed,
absenteeism is very low). Employees are expected to help their team members
if they are falling behind. They are also responsible for performing simple
maintenance and cleaning tasks.
The work itself is highly standardised, fitting the description of ‘multi-tasking’
or ‘routine variety’ as opposed to ‘multi-skilling’. Cycle times are short and the
work is repetitive. Workers have little control over their own time, and there is
an intense pace of work. Tasks are highly prescribed, and changes to the way
in which tasks are carried out can only be made after being discussed in quality
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circle meetings and after agreement from the supervisor. Any changes to work
practices are then written into Nissan’s standard operating procedure (Garrahan
and Stewart, 1992).
There are no quality inspectors within the factory, and responsibility for quality
is devolved to teams. The quality ethos and ‘right first time’ principles are
drummed into new recruits. The aim is for quality to be ‘built in’ rather than
‘inspected in’. Individual workers can stop the line if a quality fault occurs, in
order that faults can be dealt with at source. Nissan also employs a ‘neighbour
check scheme’, within which workers are encouraged to report errors made by
their co-workers. These will be discussed within team meetings and attempts
will be made to develop solutions to the problems identified. This is a powerful
disciplinary tool, as the fear of having their mistakes exposed in team meetings
will prevent workers from shirking or slacking.
The system of teamworking as adopted as Nissan fits within the ‘lean
production’ paradigm. The aim is to remove all waste from the system, and to
minimise the downtime of individual workers. The peer pressure within the
team not to go absent, the ‘neighbour check scheme’ and the fact that workers
can be moved around within the team to cover for each other or to help out if a
team member is falling behind, are all important elements of this.
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jobs at the factory. These jobs are in addition to the additional jobs announced
on 6 March 2012 (BBC news), to build the new Invitation model from 2013.
Once the new models are in production the total workforce will stand at 6,225
workers. There will be an additional production shift allowing both lines to
operate round the clock for the first time in the plant’s 26 year history. Nissan’s
chief executive, Carlos Ghosn, who is also the chief of the French car maker
Renault, said ‘the Sunderland plant is setting an important benchmark for
quality and efficiency in Europe and around the world.’
Perhaps the cost to the workers in terms of ‘lean production’ is paying off in
terms of more jobs and more secure jobs. Labour turnover continues to be low,
but there is still not much competition in the labour market in that part of the
UK.
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Activity
Why do you think working in teams would speed up the processes needed to produce
something? What skills and knowledge do you think an individual manager needs to
possess to work effectively in a team?
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would allow the project to continue until they were happy with the way it was
progressing. As a result, product development became much less conflictual, and
Ford found it could considerably reduce lead-times in bringing new products into
the market (Starkey and McKinlay, 1993).
Ford was not alone in adopting this type of approach. Land Rover, for
example, used similar project management techniques to bring the Discovery
into the market in only three years. At the time, it typically took between
four and six years to bring a new vehicle into the European market using
traditional product development methods (Beaumont, 1993).
Activity
1. Looking at Belbin’s team roles, which roles do you think you personally play in
teamwork situations?
2. Thinking of any team you have worked in, do you think it was balanced, in terms of the
roles played by different members of the team?
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Part 4: Employment relations
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Notes
160
Chapter 9: Employee involvement and participation
9.1 Introduction
Employee involvement and participation focus upon employee voice. How
do employees make their views known and how do managers find out
about what employees have to say? This chapter is concerned with the
ways in which employees make their voice heard through various forms
of involvement and participation and with the impact the expression
of employees’ views has upon various aspect of work and employment.
Consideration is given to the different forms of voice, distinguishing
between mechanisms associated with employee involvement and employee
participation. Attention is then given to why management introduces these
mechanisms and how they operate in practice. Finally, the spotlight turns
towards the consequences of forms of involvement and participation for
employee and organisational performance.
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Activity
Make a note of what you think the advantages and disadvantages of downward
communication. Try to think of an example of when a manager would want to use this
method of communication.
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Chapter 9: Employee involvement and participation
• problem-solving groups.
Online (or delegative) involvement is designed to allow employees greater
discretion and responsibility to organise and carry out their jobs without
any need to refer back to management. This form of involvement has been
given recent effect through the development of teamworking particularly
in the form of self-managed or self-directed work groups. (This form of
involvement is dealt with in greater depth in Chapter 8.)
Activity
Based on what you have read, identify the advantages and disadvantages of upward
involvement. Try to think of an example of when a manager would want to use this form
of communication.
the degree to which they accept or reject the prevailing political system
(radical opposition or integrative constitutional) and the extent to which
they are primarily concerned with political or economic goals. This
provides for four types of trade union movement which broadly accord
with the movements to be found in different countries:
• instrumental (radical oppositional/economistic): for example,
UK and Ireland
• syndicalist (radical oppositional/political): for example, some
unions in France, Italy and Spain
• business (integrative-constitutional/economistic): for
example, US and Japan
• corporatist (integrative-constitutional/political): for example,
Sweden, Denmark.
The density of trade union membership also vary markedly between
countries. This is reflected in the following table.
Country % of workforce
1970 1980 1995
Sweden 68 80 83
Australia 52 50 33
UK 45 51 33
Italy 36 49 38
Japan 35 31 24
Germany 33 37 30
USA N/A 23 15
France 22 19 11
South Korea N/A 20 14
Singapore 17 23 16
Table 9.1: Union density.
Source: Salamon, 2000.
The table indicates that union density has reduced in most countries
between 1970 and 1995. This reflects a variety of factors combining
in different ways across countries including: changes in the industrial
and occupational composition of workforce, changes in legislation and
broader state policies towards unions and changes in managerial attitudes.
However, there remain striking variations in trade union density between
countries. One can still distinguish between high-density countries
(Sweden), middle-density countries (Australia, Italy, Japan, UK and
Germany) and low-density countries (USA, France, South Korea and
Singapore). Such variations can be traced to fundamental differences in
the social, economic, historical and political development of countries
which have impacted directly or indirectly on the ability and willingness
of employees to join trade unions. It may also reflect the typical size of a
company in particular countries. Where there are many small companies
making up the labour market, there is likely to be less people who join a
trade union.
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Activity
Investigate trade unions in your country. How many trade unions are there? What
proportion of the workforce is in trade unions? Has this proportion changed over recent
years and if so why do you think this is the case? Are the trade unions more concerned
with fighting for pay (economic goals) or are they concerned with social change such as
encouraging the employment of women?
9.2.4 Consultation
Leat (2001) defines consultation as a process by which:
‘employee representatives and the Company’s management
convey and discuss any legitimate concerns relating to
performance, efficiency, operating conditions, and the general
conditions of employment.’
The employee representative may be a trade union member and where
representation on the Joint Consultative Committee (JCC) is provided
by trade unionists this is known as a ‘union channel’ of representation.
However, employee representatives are not necessarily union members
and may be any individual employee elected by their fellow workers. This
is a ‘non-union’ channel of representation. In Britain, where JCCs are set
up on a voluntary basis by employees and management, the union channel
of representation on JCCs tends to predominate. However, in Continental
Europe, for instance in Germany and France, where such committees
have statutory support, the non-union channel of representation is more
common (see below).
The nature and outcome of JCC discussions may take very different forms.
Indeed, Farnham and Pimlott (1995) have distinguished three types of
consultation:
• Pseudo-consultation: with management simply passing on
information without giving employee representatives a chance to
comment or without genuinely listening to the comments that are
made.
• Classical consultation: with the received views of employee
representatives on management proposals or information considered
prior to a decision being made. However, there is no commitment on
management’s part to be bound by the views expressed or to seek any
agreement with employee representatives.
• Integrative consultation: a process of joint decision-making on
a range of subject matters that is wider than the norm for collective
bargaining (see below). In this form the process assumes a form of joint
problem solving between management and employee representatives.
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while under consultation management are only bound to discuss and listen
to employee representatives, under collective bargaining they are obliged
to come to some sort of agreement with them This is reflected in Gospel
and Palmer’s (1993) definition of collective bargaining as:
‘a process by which trade unions and similar associations
representing groups of employees, negotiate with employers
or their representatives with the object of reaching collective
agreements.’
The structure of collective bargaining can be defined along a number of
dimensions:
1. Coverage: the proportion of workers in any given country whose
terms and conditions are determined by collectively bargained
agreements.
2. Level: where, in societal and organisational terms, agreement is
reached. A distinction is usually drawn between multi- and single-
employer bargaining. Under multi-employer bargaining, unions
negotiate agreements with a number of companies from a given
industry, region or indeed from across the whole economy. Under
single-employer bargaining, unions and management negotiate terms
and conditions for the employees in just one company. This may take
place at the corporate level or at lower levels within the company,
say, at workplace or factory level. From a management perspective,
multi-employer bargaining provides a ‘level playing field’ for pay and
other terms across an industry or region and saves on bargaining
costs and other resources, particularly for small companies, given
that just one central agreement is reached. On the other hand, single-
employer bargaining is clearly more sensitive to management needs
and company circumstances. From a union perspective, multi-employer
bargaining establishes a standard pay rate for a given job across an
industry which in that sense is seen as a ‘fair’ rate. Moreover, such
bargaining also allows the union to mobilise its collective strength on
a broader and thus potentially more effective scale. On the other hand
single-employer bargaining allows the union to play employers off
against one another to get the ‘best deal’.
3. Scope: the range of issues which is subject to collective agreement.
This might be broad where bargaining covers not only pay but many
other aspects of employment such as hours, holiday entitlement, health
and safety, equal opportunities and redundancy terms.
4. Representation: the range of organisations representing employees
and management. On the employee side there may be a number of
unions representing a given group of employees or a single union.
5. Unit: the types of workers covered by a collective agreement,
commonly referred to as the bargaining unit. Traditionally,
manufacturing organisations would often have three main bargaining
units, for manual, craft and white collar employees. In other words,
there would be three separately bargained agreements covering these
three groups. The tendency now is to have single bargaining units, so
that the employer agrees terms for all the workers in an organisation.
This is more efficient in terms of time and prevents one set of workers
from using the settlement of another set to ‘leap-frog’ and so gain more
money.
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9.2.6 Co-determination
Co-determination is involvement of an employee representative as
an equal with management representatives in decision-making, often
on broadly-based strategic issues. This can be viewed as a form of
industrial democracy with power being shared between employees and
management. In certain countries, such as Germany and Sweden, this
form of involvement is given effect through employee representation on
company boards. These representatives are known as worker directors.
The three broad approaches to employee involvement and participation
that have been outlined (downward communication, upward
involvement and representative participation) represent
particular bundles of practice that have been further conceptualised in
different ways. Marchington et al. (1992), for example, suggest that
forms of employee involvement can be seen as a series of steps providing
employees with progressively more power and influence. Thus, at the
lowest level with the provision of information these steps move through
communication, consultation and co-determination to finally reach control
by the employees.
Another distinction has been drawn between direct and indirect
involvement. Downward communication and upward involvement are
forms of direct involvement. They tend to be based on management
dealing in a direct and unmediated way with employees. This contrasts
with a more indirect approach, reflected in representative participation,
where a third party, often the trade union, plays a key role. The distinction
between direct and indirect involvement can be taken further. Although
these terms are often used together, and even interchangeably, they
can be seen to have very different meanings and be underpinned by
contrasting rationales. As Hyman and Mason (1995) have noted,
employee involvement is a management-driven process founded upon
unitarist principles which assume shared interests between employers
and employees. It is designed to stimulate the individual’s contribution to
improved task and production line performance. In comparison, employee
participation is based on pluralist assumptions which acknowledge
a conflict between worker and management interests, and view
employee representation in the form, say, of trade unions as a legitimate
manifestation of this conflict. Indeed, given these competing interests,
employee participation is much more about power than about influencing
a wider range of issues at a variety of levels within the organisation.
Activity
Find a definition of what unitarist, pluralist and radical approaches in a textbook. What
actions would a manager who believed in a pluralist approach take that a manager who
believed in a unitarist approach would not?
This contrast between employee involvement and employee participation encourages
a closer consideration of different managerial approaches and, in particular, of the
objectives underpinning them. Managers are influenced by the environment in which
the organisation sits. Culture, politics, economics, etc. play a strong part in influencing a
manager’s action in this area.
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Activity
Look at the list above. Which goals do you think would encourage more participation by
employees? Why do you think this is the case?
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Activity
Is the pattern of employee participation in your country closer to the Anglo-American
or the Continental European model? Are there laws in your country on employee
involvement and participation? Make a note of some examples.
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Activity
Make a note of why you think that these factors influence the willingness of managers to
encourage employee involvement and participation.
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Activity
Review the different operational problems associated with different employment
involvement practices. What steps would you take to try to address these problems?
Activity
Why do you think organisations might not adopt employment involvement and
participation techniques?
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Chapter 10: Organisational justice
10.1 Introduction
‘It’s not fair’ – how often do you hear this or how often do you say it? Why
are some acts, but not others perceived to be fair? How do individuals react
to unfairness?
This chapter examines the concept of fairness1 in organisations and how 1
The terms ‘fairness’
employees react to perceived injustices. In addition, we look at two human and ‘justice’ are used
resource practices, selection and appraisal, through the lens of justice but synonymously in this
chapter.
you can also look at how employees react to any organisational decision
through the lens of justice. The focus of this chapter is what is fairness?
Does it matter? How do individuals respond to unfairness?
The phenomenon of justice is pervasive in all organisations. However, it is
invisible until attention is focused on it by the experience or perception that
an injustice has occurred. Concerns about justice are likely to be triggered:
• when people receive negative outcomes
• under conditions of change
• when resources are scarce
• when people having different levels of power interact.
The following are examples in which one person benefits, or is harmed, in a
way that might be considered unfair:
• A manager gives different performance reviews to two people who have
similar responsibilities and appear to perform equally well.
• An employee is dismissed arbitrarily.
• A man who possesses less job relevant experience is paid more than a
woman for doing the same job equally well.
In keeping with a social science tradition, the treatment of justice is
descriptive in orientation – focusing on people’s perceptions of what
constitutes fairness. When the term justice is used, it generally refers to an
individual’s perceptions, one’s evaluations as to the appropriateness of a
given outcome or process – it is inherently subjective (i.e. in the eye of the
beholder).
A justice framework can be used to understand how individuals within
organisations respond to a variety of human resource practices and also can
be used prescriptively in designing the procedures and enactment of human
resource practices (a justice perspective is applied to performance appraisal
and selection later in this chapter). The principles of justice outlined in
this chapter can be applied in order to understand the consequences of any
human resource practice.
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Books
Folger, R. and R. Cropanzano Organizational justice and human resource
management. (Thousand Oaks, CA: Sage, 1998) [ISBN 0803956878]
Chapter 1 ‘Equity and distributive justice as outcome fairness’, Chapter 2
‘Process as procedural and interactional justice’, Chapter 4 ‘Organisational
justice and staffing decisions’ and Chapter 5 ‘Organisational justice and
performance evaluation’.
Journal article
Ambrose, M., R.L. Hess and K.S. Law ‘The relationship between justice and
attitudes: an examination of justice effects on event and system related
attitudes’, Organizational Behavior and Human Decision Processes 103(1)
2007, pp.21–36.
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Activity
Read Folger’s (1998) Chapter 1 ‘Equity and distributive justice as outcome fairness. Note
ways in which individuals might respond to perceived unfair outcomes.
Activity
What decision rule would you adopt in distributing outcomes?
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Activity
Think about a decision that affected you. Did you distinguish the outcome of that decision
from the procedures adopted to make that decision?
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Chapter 10: Organisational justice
Activity
How does procedural justice contribute to our understanding of how individuals respond
to unfair outcomes?
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Activity
a. Read Folger and Cropanzano (1998) for an elaboration on how organisations can
achieve statistically and socially valid selection methods.
b. Note ways in which organisations can achieve statistically and socially valid selection
procedures.
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Activity
What kind of job may it be difficult to make a valid observational judgement on?
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appraisal. Two other rating sources exist: peer ratings and self-rating.
When peers are used, there are some concerns regarding friendship
bias and lack of feedback value. However, peer evaluations are more
likely to considered fair if they are perceived to be lenient,
developmentally focused and free from friendship bias. Folger and
Cropanzano (1998) argue that self-ratings are more likely to be
perceived as fair but the psychometric evidence is not particularly
good.3 3
See Folger and
Cropanzano (1998)
• Maintain interpersonal fairness in the performance
for the compromise
appraisal interview. The recommendations above primarily draw between psychometric
on the principles of interactional justice outlined earlier. Allowing validity and justice.
employees to participate in the performance appraisal is important for
enhancing the fairness of procedures. Folger and Cropanzano (1998)
argue that it is possible to pursue developmental and evaluative
objectives into one session. This is achieved by delivering negative
feedback in a constructive manner.
• Train subordinates to participate. Subordinates should be given
the skills they need to obtain justice for themselves.
Activity
What explanation is provided by Folger and Cropanzano (1998) in their argument that
developmental and evaluative objectives can be pursued simultaneously?
10.9 Summary
Organisational justice has a number of components: distributive,
procedural and interactional that have different effects on employee
behaviour.
Individuals are concerned about the fairness of the outcomes they receive
as well as the procedures adopted to reach an outcome decision.
A justice framework can be used prescriptively in the design and operation
of human resource practices.
Note that it will be useful to read this section on justice and performance
appraisal in conjunction with Chapter 7 of this guide, on performance
management.
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Chapter 11: Diversity and equal opportunities
11.1 Introduction
This chapter focuses on a range of key issues surrounding equality and
diversity. In order to understand the difference, we will look at some
definitions. This chapter concentrates on gender equality as an example, but
remember that equality and diversity can apply to any aspect of a human
being such as age, race/ethnicity, religion, disability and not just gender.
Indeed in order to manage people effectively we need to understand what
influences the way they behave at work. If we understand what influences
peoples’ behaviour, then we will be able to predict how they might behave
in particular circumstances. People differ in ability, intelligence, skill,
personality, culture, personal circumstances as well as the differences we
can see in different human beings. One of the most powerful influences on
increasing the diversity of a workforce in an organisation is to be found in
the ‘business case’ and we will look at this in greater detail later.
Let us begin with some definitions. Bloisi (2007) says that equal
opportunities is ‘the idea that everyone can be treated equally and should
be given the same opportunities as those who have traditionally held
power’. On the other hand she says that diversity is the recognition ‘that
people are different and that these differences should be valued and used
to enhance the workplace’. You can see there is a difference between the
two concepts. The idea of equality of opportunity can be traced back to the
Universal Declaration of Human Rights Preamble, which was accepted by
the UN General Assembly on 10 December 1948. In business organisations
it is usually the HR manager who is responsible for legal and ethical aspects
of employment. However ethics, which can be defined as ‘doing things
right’ is determined by culture and custom and will vary from country to
country and organisation to organisation. What is acceptable in the private
sector may not be acceptable in the public sector and vice versa. Geert
Hofstede was a Dutchman who carried out a study into an organisation
that had offices in many countries in the world. He tried to find out if
people behaved according to the culture of their country or according to the
culture of the organisation that they worked for. In other words he wanted
to find out which culture had the most influence on a worker’s behaviour.
He found that the culture of the country was the strongest influence. This
research is important when we are looking at international companies and
how expat workers might behave. If you want to look at Hofstede’s work in
detail, then he has a very good website www.geert-hofstede.com. If we say
then that we all behave differently according to our values how can we talk
about equal opportunities with any meaning? We will explore the position
of women in the labour market as an example and use the United Kingdom
for our information, so that we can see why we should take an interest in
this area and why it is in employers’ interests to pursue diversity policies.
In the next section there is a description of the position of women in the
UK labour market. The section after that considers the reasons why women
may experience disadvantage within the workplace. We will then consider
possible solutions to the problem. The solutions that are suggested are:
• first, whether the introduction of formal equal opportunity policies in
organisations is likely to have an impact
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Activity
Read the report at www.managers.org.uk/news/equal-pay-women-still-57-years-away
from the Chartered Management Institute, based on research it carried out in 2010,
which suggested that it will be 57 years before the pay of women managers equals that
of their male colleagues.
Looking at hourly earnings, the pay gap in the UK between men and
women has narrowed from 31 per cent at the time the Equal Pay Act
was introduced in 1970, to about 18 per cent currently (in other words,
women now earn 82 pence for every £1 earned by men). However, where
part-time work is concerned, the pay gap between males and females is
39 per cent (Industrial Relations Services, 2001a). Research released in
February 2000 by the UK government’s Women’s Unit revealed that an
average woman, educated to GCSE level (the school exams taken at 16
years of age in the UK), will earn £241,000 less than men over the course
of their lifetime, regardless of whether or not they have children. This has
a knock-on effect in many areas, not least in terms of pension provision,
with female average retirement income being 45 per cent below that
of men (Mason, 2001). In addition, women tend to have less access to
company benefits such as private health care, company cars and pension
schemes. Looking at management grades, women managers are paid even
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less fairly – they receive only 70 per cent of the pay received by male
managers.
Activity
Read the report at www.eurofound.europa.eu/eiro/2002/01/study/tn0201101s.htm from
eiroline (European Industrial Relations On-line) which reports on the position of women
regarding their pay in a wide variety of European countries (see www.eurofound.europa.
eu/eiro/2002/01/study/tn0201101s.htm).
It can be seen that the UK is not alone in the way that women are treated
at work.
The data provided by EIRO national centres for this comparative study
very much confirm the impression that the pay gap is closing, although
slowly – see (Table 1 in the eironline report cited above).
The reasons why this pay gap exists might be accounted for by the jobs
that they do, We call this horizontal segregation.
Women’s work clusters into the following areas in particular (source: The
Economist, 1992):
• healthcare sector (nursing)
• teaching
• hotels and catering
• retailing.
This horizontal segregation explains a considerable proportion of the pay
gap between men and women. It is not the case, therefore, that men and
women are paid differently where they are working alongside each other.
Instead, the pay gap is explained, at least in part, by the fact that women
do different types of jobs from men, and the types of job that women do
are low paid jobs. In the recommended reading the report on the pay gap
in the USA published by the AAUW contains useful additional information
in this area.
Activity
Before reading the next section, think about the extent to which women in organisations
in your own country experience disadvantage. Then write down the reasons why you
think they face this disadvantage.
it more difficult to find a suitable mentor. One reason for this is that
there are very few senior female managers to perform the mentoring
role.
• Devolution of the personnel/HR function. In recent times,
certain HR activities, including grievance handling, have been devolved
to line managers. Traditionally, the personnel department would play
the role of independent arbiter. In relation to equal opportunities
issues, questions have been raised as to whether line managers possess
the expertise and have undergone the training necessary to handle such
issues sensitively (Trades Union Congress, 1994).
• Performance appraisal and merit pay systems. The evidence
suggests that women receive poorer performance appraisal ratings
than men do (Bevan and Thompson, 1992). This issue relates to the
argument stated earlier, that women are less inclined to attribute
success to themselves in performance appraisal situations. The result
is that, as well as receiving lower merit pay awards, women could also
find themselves overlooked in terms of promotion opportunities.
• Notions of organisational commitment. This has implications
particularly for women who bear the main burden for childcare.
It may be the case that they become viewed as less committed if
they take time off as a result of domestic responsibilities, or if the
main mechanism by which ‘commitment’ can be demonstrated is by
working late or unsocial hours. This is a particular problem in the UK
where the concept of ‘presenteeism’ has taken hold in recent times.
‘Presenteeism’ relates to the concept of employees (typically managers
and professionals) being in the workplace when they do not really need
to be there, in order to try to appear committed to their organisation.
Women who have domestic responsibilities will be unable to engage
in such ‘presenteeism’, and they may appear to be less committed as a
result (Simpson, 1998).
• Lack of family-friendly practices. To highlight this issue, only 16
per cent of women in top jobs are mothers, although in the UK in 2010
66.5 per cent of mothers worked. This compares to the 67.3 per cent
of women who work, but have no children. This suggests that in order
to be promoted they have had to sacrifice motherhood. By contrast,
the proportion of men in top jobs who have children is about 84 per
cent. This demonstrates the extent to which motherhood continues to
make a significant difference to women’s opportunities. Women are still
in a position of having to choose between having a family and having
a career. This situation is worsened by the lack of family-friendly
policies, such as crèches or help with the cost of childcare. See also the
report published by the AAUW on the pay gap for information on the
‘motherhood penalty’.
How widespread is the adoption of family-friendly initiatives? The
evidence demonstrates that the UK has the worst childcare provision in the
EU (Mason, 2001). For example, the 1998 Workplace Employee Relations
Survey demonstrates that where women under the age of 40 with at least
one dependent child are concerned (in other words, those who are most
likely to need access to family-friendly practices) only seven per cent have
access to a workplace nursery or help with childcare costs, only 36 per
cent have the right to parental leave, and only 27 per cent have access to
job-sharing. The situation for non-management staff is particularly poor:
only five per cent have access to a workplace nursery or help with the cost
of childcare, and only 24 per cent have access to job-sharing. Even among
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Activity
Thinking about an organisation with which you are familiar, do you think the organisation
operates a liberal or radical approach to equal opportunities?
To what extent did the problems highlighted above exist with regard to the equal
opportunities policy in the company you have in mind?
Activity
Before reading the next section make a list of all the reasons you can think of as to why it
might make good business sense to implement sound equal opportunities policies.
The types of business arguments that commentators have put forward are
as follows:
• labour market issues
• retention issues
• company image
• product development
• changing management styles.
We consider each of these issues below.
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work arrangements had reached partnership level. However, the figures quoted
above (Deloitte had 990 partners of whom 14 per cent were women) for 2012
show that even companies who take steps to develop their female workforce
still face an uphill struggle.
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There is, therefore, a range of initiatives, both legal and non-legal, that
governments can introduce to either encourage or compel companies
to take equal opportunities issues more seriously. These initiatives are
important not simply in terms of forcing companies to adhere to the law,
but also from a symbolic perspective. Government policy and the law set
the tone concerning the minimum standards by which employers and
society as a whole should treat women. By introducing new initiatives
and new legislation, the government is sending an important message to
employers that it is not acceptable to discriminate against women, and
that discrimination is viewed as socially unacceptable behaviour.
Activity
In relation to your own country, to what extent has the government introduced initiatives
to promote equality of opportunity? To what extent do you think these initiatives have
been successful?
Is there a role for unions to bring about a change in the way in which
equal opportunities issues are handled? The argument here is that trade
unions can use their influence in several ways to secure improvements in
equal opportunities practice (Dickens, 1999):
• Basing their arguments on the principle of fairness and justice, not just
on a business case, the union can ensure equal opportunities policies
are implemented for everyone across the organisation, and not just for
managerial or professional employees.
• The union can encourage companies not to withdraw their support
for equal opportunities when it no longer makes business sense (for
example, when the labour market weakens).
• The union can monitor when companies are living up to the letter of
the law and give financial and legal support to those members who
take an equal opportunities case to an employment tribunal.
• Union representatives can provide a communication channel by
which the views of women with regard equality initiatives can be
taken into account. Because the union rep need not say who exactly
raised an issue, members are more likely to use this channel as it gives
anonymity to aggrieved employees.
It may well be in the interests of unions themselves to promote equal
opportunities issues more vigorously. Typically, unions have been bad at
this. However, as the proportion of women in the labour market continues
to increase, and as the sorts of jobs (in engineering and manufacturing,
for example) from which unions have traditionally drawn their members,
continue to dry up, it makes sense for them to take equal opportunities
issues more seriously, as a mechanism by which they can appeal to new
female members.
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11.8 Self-employment
Self-employed women say they particularly value the independence and
flexibility that self-employment gives them in terms of combining work
and home life. They also see self-employment as an opportunity to escape
organisations dominated by male senior management and male-oriented
attitudes (Gracie, 1998).
However, there are some potential problems for women wishing to
go down this route. For example, there is evidence that women face
difficulties in terms of securing access to venture capital from banks. Many
of the women who have been successful in building their own businesses
have done so without a great deal of support from the banks or stock
market. As such, there may be limitations as to the extent to which self-
employment is a viable option for women.
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Notes
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Notes
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Chapter 12: Labour economics
12.1 Introduction
This chapter continues with the analysis of how firms use the labour they
employ (first discussed in Chapter 1). Specifically, how much flexibility
should they build in to their deployment of labour, and should they, as far
as possible, rely on promotions to fill vacancies rather than always hiring
from the external labour market?
Before looking at these two very important issues, however, it is sensible
to look at the more basic question of the firm’s demand for labour. Every
organisation has to decide:
• how many people to employ
• how many hours per week they want from their different employees
• what sorts of people to hire
• what sorts of contractual arrangements to have with their different
types of employees.
In order to discuss these decisions we need to analyse what forces
influence the amount of labour a firm wants at any time, how it reacts
to changes in those forces and how it wants to deploy the labour it
engages. This is a complex discussion based on principles drawn from
labour economics. This chapter’s special focus is captured in the following
sections, which cover:
• the standard theory explaining the firm’s demand for labour
refinements to that standard theory
• the analysis of numerical flexibility
• the merits of internal labour markets.
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12.2.1 The demand for labour and the demand for the product
The demand for labour moves in the same direction as product demand
(e.g. it goes down when product demand falls). Product demand itself
depends on a number of determinants such as the price of the product,
income levels and, for any one firm, competition from others (e.g. through
changes in the quality of products). The major reason for a change in a
firm’s demand for labour in the short and medium term (say, over a typical
business cycle) is usually a change in the demand for its products.
Activity
Think of an example of technical change and assess whether it resulted in job losses or
job gains.
Activity
Think of three examples of fixed labour costs and indicate precisely how and why they are
likely to affect levels of labour productivity and labour demand.
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Firms experience such organisational changes all the time. There is always
some gap between the ideal and the reality but, from time to time, the gap
is attacked more vigorously. When a firm faces a crisis, for example, it is
likely to look at its organisational slack with greater urgency. In principle,
such changes have the same twin effects as those described above for
orthodox ‘technical change’ but in practice they are very likely indeed to
result in a fall in labour demand. This is why the scale of redundancies
that firms announce is so often larger than would be justified by the
immediate loss of sales – essentially, firms often use recessions as the
occasion to squeeze out some organisational slack as well.
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cheaper than hiring more people (even if the firm has to pay premium
wage rates for overtime work3) because hiring normally involves 3
Many production
substantial fixed labour costs (you have to advertise for staff, interview workers are paid ‘time
them, train them, etc.). There are many variations on this hours of work and a half’ or ‘double
time’ when their actual
theme; for example, rather than specify hours to be worked per week,
hours of work exceed
some firms specify the number of hours to be worked per year (annual an agreed basic working
hours contracts). This gives them considerable flexibility to deploy their week.
labour within the year without necessarily paying premium wage rates for
overtime working.
A second contractual arrangement that is often linked to numerical
flexibility is hiring part-time rather than full-time workers. It is sometimes
claimed that firms find it easier (which really means cheaper) to hire and
fire part-timers.
If the change in sales is durable the firm will typically start to adjust the
number of people it employs. This distinguishes the short-run from the
longer-run demand for labour. It is commonly thought that it takes more
than a year for the typical employer to adjust employment fully to a lasting
change in sales.
A third arrangement is to hire new employees but to offer them a contract
of fixed duration, say, six months. The normal expectation might be that
they will leave at the end of the six months, so that separation costs will
be low. A rolling plan of such contracts gives the firm a greater degree
of numerical flexibility because there is more built-in ‘natural wastage’
(of course, it has the disadvantage of raising total hiring costs because
eventually more people have to be interviewed, entered into the firm’s
records, etc.).
The fourth arrangement and a flexible alternative to hiring or firing is to
use different types of employment contract. The traditional contract in very
many labour markets is for someone to be employed as a full-time worker
for an indefinite duration. It is commonly claimed nowadays that a good
way to secure numerical flexibility is to make more use of ‘outsourcing’4, 4
See next section 12.3.5
of part-time workers or of fixed-term workers. In fact, the analysis of these on outsourcing
alternatives is very complex. The key thing to remember is that although
they are sometimes used to achieve numerical flexibility, they are also used
for other purposes too. So we have to be extremely careful not to confuse
these purposes when we are trying to understand them.
It is very important to realise that these arrangements, all very frequently
used, are not as straightforward as they might seem at first glance. First,
they might not succeed in delivering numerical flexibility, or at least not as
we have defined it. More important, they are very often used for purposes
that have nothing to do with numerical flexibility. To see this we will
examine outsourcing and part-time working in the way that managers do
in the real world.
12.3.5 Outsourcing
Outsourcing is where a firm uses the employees of another firm to perform
some of its work. So, if a firm’s order book improves it can choose to take
on more employees itself or to subcontract some of the work to another
firm. Doing the first of these imposes commitments; if the order book
subsequently deteriorates, the firm has to lay people off (so that, having
incurred the costs of hiring and induction, and possibly of training as
well, it now faces the costs of separation). Outsourcing, or subcontracting,
promises greater flexibility, in that the outsourcing contract can simply
be not renewed. A common form of outsourcing is the use of agency staff
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(i.e. temporary workers or ‘temps’) who are the employees of some outside
agency and come to work in the firm for a stated period; some ‘temping’
labour markets (e.g. for secretarial services) are very well developed and
one can hire a temp for a month, a week or even for a single day.
Some forms of outsourcing can certainly give numerical flexibility. But this
is not automatic. Recall that numerical flexibility is not fundamentally the
physical matter of taking on or getting rid of employees; rather it is the
financial matter of containing the costs of adjustment so that unit costs are
on average contained in the face of business fluctuations.
Temporary staff are often expensive; for example, an agency secretary in
London might easily be paid 25 per cent more per week than a regular
secretary. But the hiring and separation costs are generally a lot lower for
the agency secretary. So, the variable labour costs of temps can be high
and their fixed labour costs can be low; on the productivity side, temps
might be more or less costly depending on the situation. The balance of
costs for the two types of labour, therefore, depends on circumstances.
So this kind of outsourcing certainly allows the firm to adjust its physical
labour supply easily but it is not guaranteed to contain unit labour costs,
and hence truly secure numerical flexibility in the way we have defined it.
Activity
Find out how, and precisely why, an example of outsourcing in the city where you live
would raise or lower labour costs.
An even more important point about outsourcing is that it very often has
nothing to do with flexibility as such. A firm may outsource, say, its IT
function because the outside IT supplier is larger and more specialist – it
may therefore be much cheaper, on a permanent basis. This has nothing
to do with a sensible response to risks and uncertainties or to shocks, but
plenty to do with economies of scale and specialisation.
Another reason for outsourcing is that many firms develop a rigid
internal wage structure (i.e. a set of relative wages within the firm which
employees use to establish their entitlements). It is often difficult for such
a structure, once established, to be easily altered (and it often becomes
a part of the psychological contract). In the external labour market,
however, relative wages may well change more frequently. The result may
be that parts of a firm’s internal wage structure cease to reflect external
realities. Thus, large firms often find themselves paying their low-skilled
workers far more than the external labour market; as another example,
the wages for IT specialists in the public sector often lag far behind market
reality. These misalignments are a source of inefficiency; the firm’s low-
skilled labour costs are unnecessarily high in the first example, and it can’t
hire or retain enough competent people in the second. One solution is to
outsource and get back in touch with market reality.
So, outsourcing often (and maybe even usually) has nothing to do with
numerical flexibility. We should certainly not make the mistake of equating
the two.
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in the sense of being a cheap way to respond to external shocks. But the
full analysis of part-time employees is far more complex.
There has been a very large expansion in the use of part-time workers
in many countries, often over many years. Much of this growth concerns
women, often mothers, who prefer to work only part-time. Many
employers always want at least a fraction of their labour force only on a
part-time basis. But this is not necessarily connected with flexibility, in the
sense of adapting to unexpected external shocks; rather, it is a permanent
situation.
Take the example of a retail shop that enjoys a peak demand in the
evenings and on weekends. The shop will always want to employ
part-time sales assistants to work at those peak times (they would be
underemployed for the rest of the time if they were employed on a full-
time basis). If the economy goes into recession and sales fall off, it is not
clear that the shop’s managers would then wish to lay off mostly the part-
timers; there would still be a concentration of demand at peak times for
which part-timers are still the obvious solution. The managers may prefer
to lay-off full-timers.
The preferred option clearly rests on a careful examination of the
differential unit labour cost implications. This means comparing hiring
costs, separation costs, labour costs and productivity of the two groups.
The costs of hiring part-timers might be below those of full-timers, but it
is not obvious why this should be so; the labour costs (wages and fringe
benefits) of part-timers might also be lower, but that would argue against
keeping any full-timers at all; and relative productivity would turn on
things like the pattern of peak demand. In general, the use of part-timers
seems to have little to do with growing risk and uncertainty and much
more to do with underlying labour supply preferences and employers’
demands about precisely when they wish their labour to be available. It
is therefore no surprise to learn that very many part-time workers are
‘permanents’ (i.e. they work for the same employer for a very long time
but always on a part-time basis).
Activity
In which firms are ILMs likely to be useful, and where are they likely to be a source of
inefficiency?
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A final, and very important point on internal labour markets is that they
are not the same thing wherever they are used. This takes us on to their
implications for HR policy.
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12.6 Summary
To reinforce a point made in the first chapter, HR policies in one area have
important implications for those in another. If a firm decides that an ILM
has advantages it must tailor its other HR policies to make sure that there
is overall consistency. Further, and this is again a typical feature of HR
arrangements, the fact that a firm has an ILM is only the beginning; ILMs
come in more than one form, so that the firm still has important detailed
decisions to make when it decides precisely how to use such an institution.
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Chapter 13: HR strategies and high performance work systems
13.1 Introduction
This chapter examines what is meant by ‘HR strategy’ and how good HR
strategies should embrace all the main issues which have been raised in
previous chapters.
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Pfeffer, J. The human equation. (Boston: Harvard Business School Press, 1998)
[ISBN 0875848419].
Schuler, R. and S. Jackson ‘Linking competitive strategies with HRM practices’,
Academy of Management Executive 1(3) 1987, pp.207–19.
Walton, R. ‘From control to commitment in the workplace’, Harvard Business
Review 63(2) 1985, pp.77–84. (HF5001: OC, P1482).
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13.7 Comment
There are a number of unresolved questions on HR strategy. But nearly all
commentators agree that the issue of the choice and composition of HR
strategies is now central to the study of HR. There is growing evidence
to support the existence of robust links between profits (or labour
productivity) and internally coherent bundles of HR policies which also
link with other decisions made by the firm. This means we have to ask
additional questions when looking at individual HR policy areas. It is no
longer sufficient to ask whether the firm is, say, putting enough into its
training activities and getting an appropriate return on them. It is now
also necessary to ask whether those activities support the rest of the HR
package in the right way, and to ask similar questions for all the many
other HR policy areas.
13.8.1 Globalisation
Globalisation has meant that the principal competitors of a rapidly
increasing number of organisations are either foreign-based, or part
of an multinational firm or alliance. We are used to multinational or
transnational firms in manufacturing (General Motors, Unilever, Coca
Cola, etc.), but they have also become just as prominent in the much
larger service sector, in the travel industry, in leisure services, in insurance,
in finance and in legal services, etc.
This process of internationalisation can affect virtually all firms in at
least two ways. First, it increases the severity of the competition they
face and thereby forces them actively to analyse all their management
decisions more carefully. Second, the existence of so many multinationals
powerfully and directly disseminates new management thinking in
all areas of management practice. Think about what happens when
multinational X buys company Y in country Z – sooner or later, in one
way or another, company Y tends to adopt some or all of the management
practices of X. Dissemination also takes place through observation and
imitation. For example, when the Japanese automobile company Nissan
began operations in England in the 1980s it demonstrated totally new
possibilities to the British car industry, and the indigenous firms rapidly
began to imitate what they saw.
This has most obviously happened in the area of production techniques
(think, in general, of the spread of ‘Japanese’ practices like TQM and
lean production), but it is also taking place in HR. So, human resource
techniques that originate in, say, Japan or the US, get readily transmitted
to, say, Europe or East Asia. None of this happens instantly or immediately,
but a growing number of managers do steadily become aware of new
choices and practices that would otherwise have been unrecognised.
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Chapter 13: HR strategies and high performance work systems
Activity
a. Think of a particular workplace you know and think of a core employee in that
workplace.
b. Specify which of the above behaviours the ideal employee would possess in that
situation.
c. Now specify which HR practices the employer needs to install in order to get that
combination of behaviours.
d. Do the same exercise for a very different kind of workplace/employee.
The really tricky part here is with the employment relationship. This is
usually seen as an exchange relationship between the employee and the
employer. At its simplest, the employee gives time or effort in exchange for
money, and the employer gives money in exchange for effort. The essential
point to grasp is that the employment relationship is an unusually complex
social relationship, for three main reasons:
1. The parties do not share the same interests.
2. They have seriously incomplete information about one another.
3. There are very many aspects/dimensions to the relationship.
It is sometimes said that the employer and the employee have the same
interests (for example, ‘fundamentally, we are all on the same side’, or
‘we are all members of the same team’), so that both do, or should, take a
unitarist perspective (i.e. both want the same things). This is nonsense. A
better starting point is to say that the typical employee wants to maximise
the ratio of wage to effort, while the employer wants to maximise the ratio
of effort to wage. At one level, their interests are irreducibly opposed.
This is only a starting point, however. To suggest interests are only in
opposition is a mistake. Both parties normally have an interest in the
other being ‘healthy’, both normally want the relationship to continue;
so the employee wants the employer to be sufficiently successful that
he will have a job in the future, and the employer wants the employee
to be sufficiently content to stay in the job. The interests of the two
parties are simultaneously in agreement and in opposition. This itself
doesn’t make the employment relationship unusual. It is common for
exchange relationships to be based on this combination of commonality
and opposition; for example, I want low prices from my supermarket but
it wants high prices; we both, however, want the other to be there next
week.
The employer hires the employee; she wants him to do various things,
give effort, show initiative, etc. (i.e. to display the optimal combination
of the kind of role behaviours set out above). The trouble is that she can’t
guarantee to get what she wants. If she had full information she could
specify precisely what she wanted; she would also know what she got, and
could ensure, subject to the constraints of the external labour market, that
she got what she wanted. In reality she is not in this position because she
has incomplete information.
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choice of practices within each of these areas are different for the two
HR approaches. What he was essentially distinguishing were two very
different underlying employment relationships or psychological contracts.
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Part 6: Conclusion
Part 6: Conclusion
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Notes
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Chapter 14: Studying HR management
In this subject guide we have provided you with a framework for thinking
about how to study HR management based around four categories:
capabilities, motivation, work organisations and employment relations.
While other taxonomies are possible, we argue that this framework
provides an elegant way of viewing the activities of the HR function in the
21st century, and therefore also a good learning framework for studying
HR management
To repeat what we said at the beginning: this subject guide is not a
textbook, and certainly not a ‘how to’ handbook. HR management is a
broad discipline, a mixture of art and science, requiring an eclectic way of
thinking and a focus on problem-solving.
To understand HR management you need to understand some theory
from across the spectrum of the social sciences – economics, psychology,
sociology, etc. You need to understand how these theories have been
tested empirically. You need to be aware of cases illustrating both good
and bad examples of HR management practices. You need to know which
are the key HR management journals – both academic and practitioner
focused – and you need to know something about how the HR profession
is organised in different countries. You will need to know other things too
– including some law and some accounting – but these are often country
specific and therefore not something that we have dwelt upon in this
international subject guide.
This subject guide is a start – indeed, if you assimilate all the material it
contains and follow up on the key readings, then you will be well placed
to deal with the examination. But remember, most important of all are
intellectual curiosity and critical mind-set. We hope that this subject guide
will have encouraged you to have both.
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Notes
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Appendix 1: Full list of further reading for the course
Books
American Association of University Women (AAUW) ‘The Simple Truth about
the Pay Gap’ 2012 edition (www.aauw.org).
Arnold, J., C. Cooper and I. Robertson Work psychology. (London: Pitman,
1998) [ISBN 9780273628682] Chapter 11.
Bach, S. (ed.) Managing human resources: personnel management in transition.
(London: Blackwell, 2005) fourth edition [ISBN 9781405118507].
Boxall, P., J. Purcell and P. Wright Oxford handbook of human resource
management. (Oxford: Oxford University Press, 2007) [ISBN
9780199282517].
Claydon, T. and J. Beardwell Human resource management: a contemporary
approach. (Harlow: Prentice Hall, 2007) fifth edition [ISBN
9780273707639] Chapter 1 ‘An introduction to HRM’ and Chapter 2
‘Strategic human resource management’.
Conway, N. and R. Briner Understanding psychological contracts at work: a
critical evaluation of theory and research. (Oxford: Oxford University Press,
2005) [ISBN 9780199280643]. Chapter 3 ‘What is the psychological
contract? Defining the concept’, Chapter 5 ‘How does the psychological
contract affect behaviour, attitudes and emotion? The importance of
psychological contract breach’.
Dell, D.N. Ainspan, T. Bodenberg, K. Troy and J. Hickey ‘Engaging employees
through your brand’, New York: The Conference Board, 2001.
Evans, J. ‘Pay’ in G. Hollinshead, P. Nicholls and S. Tailby (eds) Employee
relations. (London: Pitman, 2003) second edition [ISBN 9780273655862].
Fisher, C. ‘Performance management and performance management’ in J.
Leopold, L. Harris and T. Watson The strategic managing of human resources.
(Harlow: Prentice Hall, 2005) [ISBN 9780273674306].
Keep E. and S. James ‘Recruitment and selection – the great neglected topic’,
SKOPE Research paper No 88 February 2010.
Kirton, G. and A-M. Greene The dynamics of managing diversity: a critical
approach. (Oxford: Elsevier Butterworth-Heinemann, 2005) second edition
[ISBN 9780750662178] Chapters 5 and 6.
Leopold, J., L. Harris and T. Watson The strategic managing of human resources.
(Harlow: Prentice Hall, 2005) [ISBN 9780273674306].
Lucas, R., B. Lupton and H. Mathieson Human resource management in an
international context. (London: CIPD, 2006) [ISBN 9781843981091]
Chapter 6 recruitment and selection.
Oldham G. and J. Hackman ‘Not what it was and not what it will be: the future
of job design research’, Journal of Organizational Behaviour, 31(2–3) 2010,
pp.463–79.
Porter, L., G. Bigley and R. Steers Motivation and work behaviour. (New York:
McGraw-Hill Higher Education) seventh edition [ISBN 9780071131027].
Storey, J. (ed.) Human resource management: a critical text. (London: Thomson
Learning, 2007) third edition [ISBN 9781844806157].
Tong, D.Y.K. and C.N. Sivanand ‘E-recruitment service providers review.
International and Malaysian’, Employee Relations 27(1) 2005, pp.103–17.
Wilkinson, A., D. Lewin, M. Marchington and P.J. Gollan (eds) The Oxford
handbook of participation in organisations. (Oxford: Oxford University Press,
2011) [ISBN 9780199207268].
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Journal articles
Bacon, N. and P. Blyton ‘Union co-operation in a context of job insecurity:
negotiated outcomes from teamworking’, British Journal of Industrial
Relations 44(2) 2006, pp.215–37.
Barclay, J. ‘Improving selection interviews with structure: organisations’ use of
“behavioural” interviews’, Personnel Review 30(1) 2001, pp.81–101.
Barrick, M., M. Mount and T. Judge ‘Personality and performance at the
beginning of the new millennium: what do we know and where do we go
next?’, International Journal of Selection and Assessment 9 (1/2) 2001.
Bolino, M.C., W.H. Turnley and B.P. Niehoff ‘The other side of the story:
re-examining prevailing assumptions about organizational citizenship
behavior’, Human Resource Management Review 14(2) 2004, pp.229–46.
Capelli, P. ‘Making the most of on-line recruiting’, Harvard Business Review
79(3) 2001, pp.139–48.
Cullinane, N. and T. Dundon ‘The psychological contract: a critical review’,
International Journal of Managment Reviews 8(2) 2006, pp.113–29.
Dickens, L. ‘Beyond the business case: a three-pronged approach to equality
action’, Human Resource Management Journal 9(1) 1999, pp.9–19.
Dickens, L. ‘Re-regulation for gender equality: from “either/or” to “both’’’,
Industrial Relations Journal 37(4) 2006, pp.299–309.
Dundon, T., A. Wikinson, M. Marchington and P. Ackers ‘The meaning and
purpose of employee voice’, International Journal of Human resource
Management 15(6) 2004, pp.1149–70.
Fernandez-Alles, M., G. Cuevas-Rodriguez and R. Valle-Cabrera ‘How symbolic
remuneration contributes to the legitimacy of the company: an institutional
explanation’, Human Relations 59(7) 2006, pp.961–92.
Frege, C. ‘A critical assessment of the theoretical and empirical research on works
councils’, British Journal of Industrial Relations 40(2) 2002, pp.221–48.
Fried, Y. and G. Ferris ‘The validity of the job characteristics model: a review
and meta-analysis’, Personnel Psychology 40, 1987, pp.287–322.
Grint, K. ‘What’s wrong with performance appraisal? A critique and a
suggestion’, Human Resource Management Journal 3/3 Spring 1993,
pp.61–77.
Grugulis, I. ‘The contribution of National Vocational Qualifications to the
growth of skills in the UK’, British Journal of Industrial Relations 41(3)
2003, pp.457–75.
Guest, D. ‘Is the psychological contract worth taking seriously?’, Journal of
Organizational Behavior 19 Special issue, 1998, pp.649–64.
Heery, E. ‘Sources of change in trade unions’, Work, Employment and Society 19,
2005, pp.91–106.
Hoque, K. ‘The impact of Investors in People on employer-provided
training, the equality of training provision and the “training apartheid”
phenomenon’, Industrial Relations Journal 39(1) 2008, pp.43–62.
Hoque, K. and M. Noon ‘Equal opportunities policy and practice in Britain:
evaluating the “empty shell” hypothesis’, Work, Employment and Society
18(3) 2004, pp.481–506.
Huselid, M. ‘The impact of human resource management practices on turnover,
productivity, and corporate financial performance’, Academy of Management
Journal 38(3) 1995, pp.645–70.
Jewson, N. and D. Mason ‘The theory and practice of equal opportunities
policies: liberal and radical approaches’, Sociological Review 34(2) 1986,
pp.307–34.
Kim, T, and K. Leung ‘Forming and reacting to overall fairness: a cross-cultural
comparison’, Organizational Behavior and Human Decision Processes 104(1)
2007, pp.83–95.
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Appendix 2: Sample examination paper
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c. ‘Herzberg was essentially right, but for the wrong reasons’. Discuss.
(10 marks)
7. a. In the context of employee involvement and participation, what is
meant by each of the terms ‘consultation’, ‘collective bargaining’
and ‘co-determination’? Give examples of each. (10 marks)
b. In what ways can employee involvement in workplace decision-
making help management to achieve its organisational objectives?
(15 marks)
8. a. Explain what is meant by ‘equal opportunities’ in a work context.
(5 marks)
a. What are the business arguments (as opposed to the ethical
arguments) for equal opportunities in the workplace? (10 marks)
b. Evaluate the relative merits of adopting a ‘liberal’ rather than a
‘radical’ approach to equal opportunities in the workplace.
(10 marks)
END OF PAPER
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Appendix 3: Guidelines for answering sample examination questions
Chapter 4
The following are the issues that need to be addressed:
• definition and conceptualisation of OCB
• antecedents of OCB
• can managers control or manage the antecedents?
The antecedents of OCB can be categorised into the following: personality,
social exchange constructs and organisational commitment. It will be
difficult for managers to change an individual’s personality so it is not
possible for managers to influence OCB by changing an individual’s
personality. However, managers have more control over the remaining
antecedents such as justice, perceived organisational support and
organisational commitment. Therefore, the answer to the question needs
to focus on how managers can influence these antecedents and the
supporting empirical evidence.
Chapter 6
Define individual performance-related pay. Highlight the fact that there are
different sorts of individual performance-related pay scheme: piecework,
commission and pay linked to an appraisal of the individual.
• Define motivation.
• Distinguish between different theories of motivation: content theories
and process theories.
• Note that content theories focus on whether pay in a general sense,
not just individual performance-related pay, is likely to motivate. In
other words pay will motivate if it is an important need. According to
Maslow, pay is one need in a hierarchy of needs and once satisfied will
no longer motivate. Herzberg views pay as a hygiene factor rather than
motivator. It is therefore more likely to demotivate than motivate.
• Note that there are different sorts of process theories, for instance
expectancy theory and equity theory. They suggest that individual
performance-related pay will motivate if the pay scheme is designed
to ensure that the main tenants of the theories are met. For example,
according to expectancy theory, individual goals need to be clear; there
should be a clear link between pay and goals; and employees should
value the pay received.
• Examine the different types of individual performance-related pay
scheme (commission, piecework and merit pay) comparing and
contrasting whether their design features accord with the tenets of
different theories.
• Examine the kind of operational ‘problems’ that may arise with
individual performance-related pay in practice which may distort the
tenets of the different theories so undermining pay’s motivational
impact. Draw on the work of research such as Marsden and Richardson
(1994) and Kohn (1993) to support your argument.
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Chapter 7
• Give a brief definition of performance appraisal.
• This question is based on an assumption – the assumption being that
organisations continue to use performance appraisal. Confirm this
assumption is valid. Quote Bach (2000) and Redman (2001) who both
highlight the widespread and increasing use of performance appraisal
across workplaces in different countries.
• The rest of the question requires you to set out first the operational
difficulties associated with appraisal and then the reasons why
organisations might continue to use appraisal despite these problems.
• In discussing the operational problems draw upon the ‘orthodox’
critique distinguished by Bach (2000). This assumes that there is some
shared benefit for management and employees in an efficient and
effective appraisal system but recognises that some difficulties have to
be overcome and addressed.
• These difficulties include those associated with the judgemental
character of appraisal, those linked to the target-setting stage where
problems can arise in setting viable and meaningful goals and those
related to the assessment stage which may be distorted by a number
of effects, for instance, ‘halo’ and ‘recency’ effects. Also refer to
Longnecker and Ludwig’s (1990) framework for analysing the ways
in which managers might inflate or deflate performance ratings for
negative and positive reasons.
• Despite these problems suggest that management might continue to
use performance appraisal for two sets of reasons. The first can be
labelled managerial reasons. Thus appraisal is useful in informing a
whole range of decisions including those related to reward, training
and development. You can quote the reasons listed by Foot and Hook
(1999). You can also use goal-setting theories to suggest that under
certain circumstances appraisal may motivate employees. Quote Arnold
et al.’s summary of research of goal setting. A second set of reasons
is associated with management’s search for control. Draw upon the
‘radical critique’ to discuss how appraisal can be viewed as means of
managerial control over employees.
Chapter 10
The following are the issues you need to address:
• Different facets of justice (distributive, procedural and interactional)
• Why does justice matter for individuals?
• Why does justice matter for organisations?
• Theoretical explanations of why procedural justice is important to
individuals.
• Self-interest model/instrumental.
• Individuals seek control over processes because they are concerned
with the outcomes – if individuals have a voice, this is likely to lead to
equitable outcomes in the long term.
• Relational/group value.
• Fair procedures communicates to individuals that they are important
to the organisation. Being treated in a dignified and respectful way
enhances an individual’s feeling of self worth.
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Appendix 3: Guidelines for answering sample examination questions
Chapter 12
1. Internal labour markets are administrative systems for allocating
labour. They are characterised by the following: pricing and allocation
of labour governed by a set of administrative rules and procedures;
prescribed ports of entry and exit, other jobs filled by internal
promotion or transfers, wages set according to an internal matrix with
differentials prescribed by custom and practice, on-the-job firm specific
training; set promotion criteria, relatively stable employment/reduced
job turnover and commitment and identity effects. There are many
possible examples of ILMs, including first-tier Japanese manufacturing
companies which emphasise life-time employment professional
services firms such as accountants, consultants and lawyers (where
ILMs are often combined with tournament effects), and public sector
organisations such as the UK Civil Service. Candidates should point
out characteristics of the external labour market which differ from
ILMs (for example, recruitment at all levels, wages set by reference to
current market data, a reduced focus on firm-specific training, higher
staff turnover, etc.). The key reference is Doeringer and Piore (1971).
2. ILMs can be advantageous to employers where there are firm-
specific skills and knowledge, can lead to enhanced employee loyalty
through escalating commitment, can provide enhanced motivational
and screening capabilities and can give rise to staffing economies
and beneficial cohort effects. ILMs may be associated with high-
performance work organisations. Disadvantages include the following:
ILMs can be expensive, ILMS can be inflexible, ILMs can be insular,
ILMs can breed mediocrity and conformity and ILMs can be excessively
bureaucratic.
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Chapter 13
1. An HR strategy will have two components: an analysis phase (what is
the business strategy, what stands in the way of achieving the business
strategy from an HR perspective, what can be done from an HR
perspective to improve the chances of achieving the business strategy)?
and an action phase (setting out the HR policy and programme choices.
This is consistent with the conception of an HR strategy as ‘the pattern
of decisions regarding the policies and practices associated with the HR
systems’ (see Bamberger and Meshoulam, 2000). Another commentator
talks about HR strategies in terms of philosophy, polices, programmes,
practices, and processes. A good way to think about the main elements
of an HR strategy is that they should ensure an organisation has the
right number of employees, employees have the appropriate levels
of skills and knowledge, employees exhibit the right behaviours and
employees are appropriately motivated and reward (see Bratton and
Gold, 2012).
2. The argument follows from the merits or otherwise of the resource-
based view of the firm. Some scholars argue that sustained competitive
advantage is achieved by building distinctive skills and capabilities,
not by analysing a firm’s external market position. Reference might be
made to a firm’s architecture, routines, distinctive capabilities, dynamic
capabilities and knowledge. Counter arguments stress the importance
of the firm’s market position as regards customers, suppliers,
competitors, etc. and point out that the RBV may confuse cause and
effect – distinctive HR capabilities are a consequence of working in a
high performing organisation rather than a cause.
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