Employee Resourcing
MASTER OF SCIENCE
HUMAN RESOURCES MANAGEMENT
MODULE 1
THE CONTEXT OF EMPLOYEE RESOURCING
INTRODUCTION: THE SCOPE OF ER
ER or people resourcing is ‘that part of personnel and development which focuses on the
recruitment and release of individuals from organisations, as well as the management of their
performance and potential while employed by the organisation.’
ER involves staffing (recruitment, selection, retention, and dismissal), administration (policy
development, procedural development, and documentation) and change management (the
importance of the resourcing function as a change agent). There is general agreement on
‘recruitment and release’ areas, however there is less agreement on the boundaries of the
‘management of performance’ dimension of ER. There are factors such as diversity management,
equal opportunities, selection and evaluation and performance management, exit management
and also reward management.
ER has played a key role in many influential models of HRM. It is seen as a crucial area of ‘policy
choice’ in the Harvard model where ER policy choices revolve around human resource flows, i.e.
the way people enter/move into, are placed/ move around, exit/ move out of the organisation.
Depending on how the organisation assesses the interests of various stakeholders, the
organisation looks at the situational characteristics of its workforce to determine its business
strategy and management philosophy.
Globalisation and
diversity
Informatisation and
ICT
Structure/labour
market
Knowledge/ skill/
talent management
Performance/
contract/ ethics
HR Strategy changes
Changes to ER
strategy
ER Policies- HRP, R&S, PM,
career/ talent management
Changes in ER in context: the course framework
ER IN CONTEXT: THE CHANGING WORLD OF WORK AND ORGANISATIONS
There are a number of contextual themes relevant to an understanding of the changing nature of
ER such as;
 globalisation and privatisation
 the growing interest in environmental and ecological concerns
 the changing nature of customer expectations
 increasing competitiveness
 changing customer expectations
 the impact of demographic change in ER
There are, according to the IPD, a number of driving forces that are seen as affecting the way
organisations are responding, how this is affecting the way people are organised and managed
and what this means for employees and managers. These are seen as;
 increasing demand for customised products and services;
 customer satisfaction standards increasingly established by global competition;
 reductions in international trade barriers;
 industrialisation of the Pacific Rim;
 slow growth in mature economies;
 new overseas competitors in production and service sectors;
 rapidly changing, easily transferable technology;
 public-sector constraints- higher value, finance, privatisation, market-testing;
 increasing concern for the environment and social well-being.
THE BUSINESS ENVIRONMENT
Two major trends shaping the contemporary business environment are globalisation and
informatisation. These have increased the unpredictability and dynamism of the business
environment and many HR departments have sought to transform themselves in response to
these challenges.
THE IMPACT OF GLOBALISATION
Globalisation affects organisational viability through its impact on organisational fitness. It can
refer to many different economic, political and social phenomena and when organisations are
exposed to global competition, their survival and viability are brought into question. Enterprises
can be transformed leading to enhanced viability or they can be pushed into restructuring due to
increased competition. If they can respond to these two challenges, they will need to transform
the management and HRM processes, including their ER processes. If they are successful in
achieving this through enhanced efficiency and effectiveness, they enhance viability.
Globalisation affects organisational fitness as they attempt to change their paradigms. ER and
HRM practices are shaped by specific institutional features in their country of origin. It involves;
 a stretching of social, political and economic activities across frontiers, regions and
continents;
 an intensification, or the growing magnitude, of interconnectedness and flows of trade,
investment, finance, migration, culture, etc.;
 a speeding up of global interactions and processes, as the development of worldwide
systems of transport and communication increases the velocity of diffusion of ideas,
goods, information, people and capital;
 a growing extensity, intensity and velocity of global interactions that can be associated
with their deepening impact such that the effects of distant events can be highly
significant elsewhere and boundaries between domestic and global affairs becomes
more fluid.
So globalisation can be thought of as ‘the widening, intensifying, speeding up and growing impact
of worldwide interconnectedness.’
Organisational fitness
Viability
Globalisation
ORGANISATIONAL AND
ER/HR TRANSFORMATION
Effectiveness
Impact of ICT
Competition
Enterprise
Efficiency
The impact of globalisation and ICT on ER
THE IMPACT OF INFORMATISATION
This is the process through which information technologies have transformed economic and social
relations such that cultural and economic barriers are reduced.
 The technological innovations will provoke radical cultural and social changes which will
be fundamentally different from the status quo.
 In the post-industrial, information-based society, knowledge, or the production of
information values, will be the driving force of society, rather than industrial
technologies.
 The convergence of technologies will precipitate further changes that promise to
fundamentally alter the human landscape.
It is a process of change that features the use of informatisation and IT to such an extent that they
are dominant forces in commanding economic, political, social and cultural development. It shapes
cultural and civic discourse, including not just computers and the internet but other related
technologies that involve the transfer of information such as film, satellite TV and
telecommunications. As societies and economies re-orient themselves around technologies, there
are inevitable consequences for ER.
GLOBALISATION AND CHANGING ER PRACTICES
One example of the impact of globalisation on ER is provided by China and by the way in which its
HR policies and ER strategies have been affected by the impact of ICT and by its entry to the WTO.
The impact of WTO accession includes;
 it helps to encourage effective competition in organisations;
 it brings challenges;
 it encourages international cooperation;
 there will be more privatisation and reduction in state trading;
 it brings internationalisation in product standards;
 there will be rights to invest and establish subsidiaries;
 companies will have the right to choose their own joint venture partners;
 cultural conflicts will appear as China’s enterprises balance political and commercial
connections;
 there will be changes in the effectiveness and efficiencies of companies;

there will be a greater failure rate for companies that do not understand the meaning
and implication of new regulations;
The significant impacts for ER include;
 enhanced competition and efficiency in Chinese companies;
 increased pressure on companies to select and recruit highly skilled staff and
encouraging performance management growth and the sacking of less productive
workers;
 putting a greater premium on talent management and career development;
 allowing inefficient companies to fail increasing pressure on welfare systems;
 encouraging greater FDI and IJV in China and encouraging Chinese companies to
acquire Western companies and invest abroad;
Transformational change leads to a new and uncharted future. Recent enterprise and property
ownership have affected state-owned enterprises but these are still subject to an array of local,
regional and national regulations. There is little evidence to suggest that countries such as China,
Japan and South Korea are converging to an ‘East Asian’ HRM/ER model. China can be said to be
moving towards a Western model especially in terms of IJV, FIE and larger SOE and entry into the
WTO is likely to lead to downsizing and restructuring.
MNCs in developed East Asian countries are often engaged in transferring production to China and
Malaysia based on a common HRM/ER model of Taylorism- low trust, commitment, investment
relationships. Firms are characterised by low-skilled workers, mass-production, insecure
employment with rudimentary training given to workers.
CHANGING PATTERNS OF ER IN CHINA
Before the open-door policy of 1979, China’s model of ER was heavily associated with a command
economy and a centrally planned system of public ownership and limited autonomy granted to
enterprises; the Iron Rice Bowl of lifetime employment and lack of enterprise control over hiring
and firing. It can be argued that HRM and ER in China has now moved to a hybrid model where the
aspects of the old model permeate to within pure Western HRM and ER models, in particular, in
some IJVs and FIEs. Pre 1982, the government was heavily involved in enterprise management, the
provision of lifetime employment, central fixing of wages but post 1982 there has been increasing
moves to a market-oriented system.
In the 1980s and 1990s, very significantly, employment contracts were introduced but overstaffing and low labour turnover is still evident. Informal recruiting is still common and interviews
predominate over other methods of assessment with harmonious relationships still being a
priority. Employee dismissal is easier but still rare. Pay differences are determined primarily by
nepotism, seniority and political orientation and welfare benefits are often provided as well as
pensions and insurance funds.
Changing paradigms of ER in China have affected recruitment, selection and firing; appraisal and
promotion; training; pay and benefits; communication; welfare provision; HR planning.
It is still premature to state that strategic HRM in China has moved towards a Western model but
there has been a marked move away from the previous centrally planned system. Change has
been slow and there are widespread variations in the pace of change. HR functions in China is
underdeveloped, reactive and operationally oriented. Guanxi still needs to be considered and is an
important facet of career development as well as status and ‘face’. Unemployment is still high at
approximately 10% but entry into the WTO may help. The WTO is seeking to shape the rules of the
game to help globalisation and many private sector employers are evading their social protection
responsibilities. So even though China has undergone radical economic reforms it cannot simply
transfer HRM and ER from Western models.
WTO entry
Informatisation
Economic reforms
ER IN A CROSS-CULTURAL CONTEXT: THE CASE OF MAURITIUS
Mauritius is a small island and a one-time UK colony and is an interesting case of ER in a crosscultural context in terms of the Western ‘transfer’ of ER policies and practices. Its exports include
textiles and clothing and growing financial and tourism services. It is conventionally linked to
countries in S Africa and is a regional player in the political and economic arena. With Western
multinationals and IJVs, it is exposed to global influences on management and HRM practices. It
has a varied community which is now exploiting its geographical, religious, family and ancestral
ties to Asia to aid development. It also has a varied religious and linguistic picture with English, the
official language, being spoken as well as French and many other Asian languages. Despite
harmony within (endogamous) groups, ethnic tension and rioting is still an underlying issue.
Various government posts are occupied through nepotism and there is a commitment to a
Western-style parliamentary democracy with coalition tendencies and an official ideology of
ethnic appeasement. The civil service practices a merit-based, bureaucratic HRM/ER practice with
a belief that ethnic nepotism and political favouritism is pervasive. Task forces have been set up
that advocate ‘reform’ but recent studies have shown the service is mostly unreformed and that
ER is largely non-strategic with many colonial-era features still present. Promotion is based on
confidential reports and is based on seniority and written explanations are required for ‘over the
head’ promotions. PRP systems are absent and ethnic and political patronage is believed to be
pervasive in all areas of ER.
What are the implications of this case? The case raises the question of the limits of the successful
transfer of ER practices in a cross-cultural context. There is no political will to bring about change
to a strategic ER. Discretionary powers that are a tool of abuse will have to be devolved.
Commissions and focus groups may act positively to contain nepotism and favouritism. The
transfer of HRM and ER practices would need to be adjusted to take into account the specific
needs of Mauritians. Globalisation impacts on enterprise reforms and ER policies. As an uppermiddle-income country, it no longer enjoys preferential treatment in international trade and has
to rely on innovation to increase wealth and employment creation. One government-inspired way
is Cyber Island and it is now moving forward with skills and knowledge improvement. But how
much up to the challenge are the Mauritian HR practitioners? HR individuals and graduates doubt
that changes in the workplace will be successful when senior managers are unexcited about any
such change or because political, and other, interference block initiatives to improving personnel
practices. A survey of HRM alumni reported low levels of competence in many areas of HRM and
key areas considered poor or average included;
 the use of IT;
 establishing credibility as HR professionals;
 the ability to speak confidently before an audience;
 the ability to link the HR function to the bottom line of the organisation;
 financial acumen;
 knowledge of how to set up international HRM programmes;
Also, an impoverished HR function may not stem from the calibre of trained professionals but may
be indicative of other structural and cultural ills. So even though the government may have
recognised the challenges of globalisation, ICT and the knowledge economy may bring, company
bosses and HR practitioners may not have the vision/skills to respond to these ER challenges.
THE IMPLICATIONS OF GLOBALISATION FOR EMPLOYEE RESOURCING IN MNCS
Because of the global nature of business, new demands are being placed on organisational
performance and ER. International assignments are now being used for staffing and control etc. as
vehicles for improving managers’ skills and knowledge. Many managers are involved in managing
IJVs, mergers, acquisitions and are operating in diverse environments with multicultural teams. HR
and ER strategies have a key role to play in ensuring that;
 organisational structures and systems enhance international effectiveness to achieve
global integration and local responsiveness;
 organisational cultures are fostered that value diversity while creating a sense of
unified mission;
 HR/ER systems are installed to attract, place, retain and develop managers with the
knowledge, skills and attitudes required to perform effectively in a global environment.
GLOBALISATION, DIVERSITY AND CHANGING TRADITIONAL MINDSETS AT IBC
In 1987, Bedford Commercial Vehicles (part of Vauxhall, GM) was facing closure. Poor labour
relations and intense foreign competition was resulting in £2million per month. In 1987, GM
undertook an IJV with Isuzu which took a 40% stake and appointed a Japanese executive as CEO. It
gave Isuzu a strategic foothold into the European market and several years later, IBC was
profitable. So what were the commercial and cultural adaptations that were made to allow the
Anglo-Japanese venture with American parents to expand into Europe and global markets?
The strategic changes revolved around several structural initiatives which were supported by T&D.
The combined impact resulted in an unprecedented change of culture in one of the traditional
heartlands of British car manufacturing. The turnaround strategy consisted of;
 a new employee agreement where the workforce were all on the same terms and
conditions guaranteeing an uninterrupted production line;
 a new inventory production system to eliminate waste;
 organising the entire workforce into teams to devolve decision making;
 setting up of skills training and development opportunities to facilitate these changes;
At the start of the venture there was suspicion and ‘sweatshop’ perception among British
employees was rife. Effective meetings, feedback and a Westernised attitude was required. A
chance for workers to contribute to strategic changes was given. Initial fears were allayed and
there was constant improvement and development.
MANAGING DIVERSITY IN MULTICULTURAL TEAMS
This is likely to be of growing importance to international enterprises as ‘the central operating
mode for a global enterprise is the creation, organisation and management of multicultural teams
and this is the key to future global competitiveness.’
Many organisations, especially parochial and ethnocentric ones, have tried to ignore or suppress
multicultural teams. Initially, cultural differences present difficulties, but if managed actively, they
can be an asset and a resource and can lead to greater flexibility and openness and to the
avoidance of ‘groupthink’. Homogeneous and cohesive teams suppress new or challenging ideas.
To use cultural differences effectively, members need to display cultural self-awareness and crosscultural awareness. Employees are attracted to organisations who work in this way and many
international organisations recognise this and operate this manner.
THE CASE OF DIVERSITY IN BA IN 1992
BA made attempts to change its bureaucratic culture in the 1980s and was ‘privatised’ in 1982
after receiving regular government subsidies. In terms of Lewin’s model of change, unfreezing- i.e.
increasing receptivity to change- was precipitated by downsizing, devolution of autonomy to
operating units, appointment of a new management team and CEO. A range of development
programmes was introduced all aimed at identifying dysfunctional management styles and
introducing a more participative style. Various structural changes such as cross-functional, multilevel diagonal task forces with a more bottom-up, less-centralised budgeting process. Staff
support mechanisms were introduced alongside a bonus systems and a user-friendly management
system. Refreezing- i.e. embedding/institutionalising change- was achieved through management
commitment and promotion and PRP. The transition phase help by a management transition team
was successful and despite various problems, BA has consistently registered as one of the most
profitable airlines and can be considered as truly ‘global’. Customer service has been seen as
crucial with an emphasis on training and development promoting a customer-oriented image. An
ultimately more productive approach was to use the dimension of valuing difference, building on
gender difference, equal opportunity and diversity with workshops held to explore these business
imperatives. BA has seen this as a source of competitive advantage. But care needed to be taken in
identifying the specific culture of the target audience.
BA IN 2008
This case illustrates how ER and HR models and paradigms can change under the impact of
competition and corporate strategy. After BA’s attempts to move to a more strategic ‘soft’ HRM, it
then sought to regroup and move back to a traditional ‘personnel management’ approach fused
with aspects of HRM. There were attempts at restructuring, industrial relations problems, strikes
and competition from no-frills airlines. It entered into the Oneworld Alliance in 1999 but was still
affected by problems. Its new CEO was ruthless and there were plans to reform employment
practices. There were planned withdrawals from regional airports acknowledging its failure to
compete. In 2006, BA launched a radical overhaul of its regional network with significant price cuts
to compete with intense European competition. ‘BA Connect’ was introduced and in 2006, it
began making a profit. No jobs were axed but management reductions were planned in a separate
move to increase competitiveness.
MANAGING DIVERSITY AND ITS IMPLICATIONS FOR ER
Demographic changes in the population are mirrored in the demographic changes in the
workforce increasing diversity in organisations. Organisations need to appreciate the potential
benefits of diversity so that a positive climate for diversity is created and maintained.
MANAGING DIVERSITY AND EQUAL OPPORTUNITY
In the UK, a way of addressing diversity is through the legal and social frameworks that formed the
basis of the Equal Opportunities paradigm. Partly derived from the US, it diverged in some aspects
such as age discrimination and affirmative action. Discriminating against age or qualifications still
needs to be addressed. The EO paradigm was seen in terms of two perspectives; the liberal and
the radical. The liberal approach tended to see inequality with regard to race and gender as a
distortion of an otherwise rational labour market which would be corrected by rational ER
procedures and positive action in recruitment and training leading to procedural justice (but not
US-style affirmative action or positive discrimination in favour of under-represented groups). More
radical critics saw the liberal approach as ineffective in promoting change with formal procedures.
The use of quotas and preferential selection was called for to secure distributive justice. However
a concern over favouritism and reverse discrimination ensured that radical approaches did not
become mainstream.
Managing diversity (MD) has been argued to confer business benefits as compared with the
perception that EO costs money. MD was seen as signifying a more strategic, proactive, ,long-term
and corporate-wide approach whereas EO is seen as piecemeal, tactical reactions to external
triggers such as legislation and not really focussing on culture or values. However, as some
countries do not see people as resources in some countries, MD may not be culturally appropriate
in all societies. It has also been argued that MD may ignore social justice and ethical arguments
and that it may be driven by senior white men as a way of de-grouping people and individualising
initiatives in a way that dilutes the aims and philosophy of EO.
THE BUSINESS CASE FOR MANAGING DIVERSITY
Fairness and equity can be regarded as reasons enough for organisations to implement MD
policies. MD’s strength comes from its business case. Employees of organisations will soon be
from all areas of under-represented groups and with people having more economic independence,
they have become important customers. and wish to have the same opportunities as white
employees but to also be able to do things ‘their own way’. If diversity is not managed effectively,
the costs can be high. If managed effectively, labour turnover and absenteeism and their costs will
be reduced. Other reasons why effective MD is an organisational asset include;
 easier to recruit people with qualities an organisation requires;
 as ethnic and minority groups grow, they will buy from organisations who are diverse and
support diversity;
 diversity leads to organisations becoming creative and innovative, which will...
 improve organisational problem-solving;
 effective MD will enhance organisational flexibility
Archival studies in the US financial sector have shown positive relationships between top-team
heterogeneity and strategic change but heterogeneity has been defined in terms of age, education
and functional experience rather than in terms of race, gender or nationality.
As well as inhibiting groupthink, it has been suggested that diversity may have positive impacts on
performance such as better listening skills from women. However there is little empirical evidence
that effective MD impacts positively on job or organisational performance and more longitudinal
research is required.
MD has been seen by some as a way of changing organisational rules from and exclusive concept
based on white men to a more heterogeneous organisational culture or an inclusive concept. At
the apex of the organisation, it may still be white men making the rules. Therefore MD is
supported on the merits of a business case whereas EO is seen as an add-on to the organisation’s
culture and not as an integral part of it.
Most organisations who adopt MD do so because it makes good business sense. It is seen as an
effective method of recruiting good-calibre staff as not off-putting to potential high-calibre
employees from traditional groups.
MODULE 2 THE STRATEGIC SIGNIFICANCE OF EMPLOYEE RESOURCING
INTRODUCTION: ER, PRODUCTIVITY AND PERFORMANCE
In recent years attention has been paid in the UK to issues of productivity or workforce efficiency
with a concern that it has fallen. Productivity growth fell to 0% in 2006 with output per hour
dropping. Employment continued to grow faster than the economy dragging down productivity. In
2004 productivity in Germany, Italy and the US was 20% higher than that of the UK and output per
hour was about 15% lower than in France and the US. Low productivity has been blamed on low
levels of skill while economists have blamed such issues as taxation, public spending and pensionfund deficits. The Work Foundation in the UK argues that instead of focussing on economic issues
a more useful focus on the productivity gap is to look at performance rather than productivity. A
high-performance index which assesses the difference between high and low performers,
identifies 5 key areas that organisations need to manage for high performance;
 customers and markets
 shareholders and governance
 stakeholders
 people
 innovation and creativity
HUMAN CAPITAL MANAGEMENT
The DTI has pointed to the importance of human capital and to the need for companies to report
on their human capital management to their shareholders as well showing how HCM contributes
to business performance and strategy. Human capital decisions can inform business decisions and
enable better judgements about growth potential and performance. A key issue is how to analyse,
measure and evaluate the contribution of people practices to the creation of value. Various data is
used such as CSR, diversity, demographics. ER data is also useful such as recruitment figures,
employee turnover, appraisal data and tracking of talent flows.
THE STRATEGIC SIGNIFICANCE OF HRM AND ER IN PARTICULAR
In the late 1980s, as part of the move away from personnel management to HRM, many US and
European organisations began thinking of their ER processes as major levers to support strategic
and cultural change. With the rise of skill-based competition, competitive advantage was
increasingly seen as developing and exploiting ‘core competencies’ of the organisation’s
knowledge assets. As a way of delivering behaviours necessary to support organisational
strategies, ER initiatives have become increasingly important. ER processes can ensure that
employees with requisite skills are assessed, placed in appropriate job, appraised, developed and
rewarded against relevant competency criteria.
A significant development has been the increasing importance given by academics, consultants
and management to HRM. HRM is often seen as a philosophy of people management based on the
premise that human resources are uniquely important to sustain business success. Due to the
recognition of people’s skills, knowledge, motivation and commitment, the personnel department
of Harvard University became known as HRM. The new direction for HR is now often called
business partnering in the UK with some senior practitioners seeing their role as dominantly that
of a strategic business partner and many also seeing themselves as change agents. There has been
some regret that these new definitions suggest a move away from employee-facing or employee
advocates with employee issues subordinated to business issues.
HRM, ER AND ORGANISATIONAL PERFORMANCE
In recent years there have been articles claiming to measure and demonstrate the link between an
organisation’s HRM and its performance. Researchers view the organisation as a ‘black box’ and to
unlock this box, the focus has been on what bundles of HR make an impact on performance. One
target has been high-performance work systems (HPWS) also termed high commitment, high
involvement or high road practices. In this view, ER plays a key role. The list of HPWS includes;
 personnel selection
 attitude assessment
 performance appraisal
 labour-management participation
 incentive compensation
 intensive recruiting
 job design
 intensive training
 grievance procedures
 promotion criteria
 information sharing
The assumption is that these affect employee attitudes such as commitment and motivation and
enhances competence. Much emphasis has been placed on motivation.
One view emphasises discretionary effort which is composed of motivation, skills and
opportunities to participate which are enhanced by HPWS leading to discretionary effort and
higher performance, commitment, trust and communication. But managers need to motivate
employees using facilitative techniques such as coaching and mentoring but many are failing to
provide this.
Another view is the importance of the 3Rs- relationships, respect, recognition and the exchanges
between managers and employees are often leader-member exchanges.
A study has seen the causal chain between HRM and organisational performances in terms of 5
linkages;
 intended policies to actual practices
 actual practices to experienced practices
 experienced practices to employee reactions
 employee reactions to employee outcomes
 employee outcomes to unit-level outcomes
The study showed that good quality management leadership behaviour was associated with
higher levels of organisational commitment and a positive job experience. The combined effect of
leadership behaviour and satisfying perceived HR practices had a greater impact than either by
itself.
FLEXIBILITY AND LABOUR MARKETS
The ‘labour market’ refers to the way work is distributed within a society consisting of workers
looking for paid jobs and employers looking to fill vacant positions. An organisation’s employment
system is the outcome of the combined effects of firms’ labour requirements, organisational
constraints, pressure from workers, the labour market environment and the wider institutional
environment. There are 3 types of labour market;
i. the open or unstructured external labour market
ii. the occupational labour market
iii. the internal labour market
EXTERNAL LABOUR MARKETS
Employers hire employees from outside the organisation and are not interested in long-term
employment relations with them. Firms are more interested in numerical flexibility. The labour
market is often unstructured and consists of manual and unskilled workers. Employment rights are
limited with trade union representation very weak. In contemporary Britain, most of these jobs
are performed by migrant workers. Employees are exposed to market forces and are considered
as disposable commodities. Organisations follow a low-cost strategy and pay minimum wages. The
external labour market has an impact on an organisation’s training and development strategy and
those that follow a cost-reduction strategy will employ people who already have the skills they
desire or provide core or basic training. However, focussing entirely on the external labour market
can have drawbacks such as disruption to the production process in case of high levels of
unplanned turnover, time spent on repetitive recruitment and selection for the same positions,
induction training costs, etc.
OCCUPATIONAL LABOUR MARKETS
When workers have skills that can be transferred from one firm to another, this gives rise to an
occupational labour market. The skills and knowledge are acquired through formal education,
training and certification. The assumption is that the labour already possesses the skills needed by
the company when they are recruited. The occupational labour market is structured on an
occupational basis by the qualifications and skills acquired. This market has institutional regulation
and trade unions have power to prevent members from facing competition as well as more
negotiating rules that can restrict workers from joining an occupation.
INTERNAL LABOUR MARKETS
In this case, the terms and conditions of employment are determined internally by the
organisation rather than by external competitive forces. The employment relationship is internal
and recruitment is limited to lower levels and junior positions. This market is highly structured
with hierarchical progression and job ladders enabling management to retain and motivate its
labour force through relational psychological contracts where employees expect job security,
deferred benefits and job ladders and internal promotion. This market is highly valued by
management and receives institutional regulations with set rules such as pay structures, job
descriptions and specifications. Management is more willing to invest in training but these may be
firm-specific and untransferable. Management may use internalisation as a retention tool as well
as promotion rather than incurring costs on external recruitment. Management encourage
employees to exercise responsible autonomy and uses positive policies to build trust, encourage
empowerment and commitment as well as enhancing flexibility and team-working. Focussing
solely on the internal market can have its drawbacks such as high training costs, level of
experience being limited to within the organisation and ‘seniority rules’ in promotion which may
expose organisations to the high-calibre staff being poached.
EMPLOYMENT RELATIONS AND FLEXIBILITY IN ER
Other institutional and environmental factors influence the employment relations system in an
organisation. These factors can be constraints such as size, financial and managerial resources.
Larger companies can offer better terms and conditions of employment, more job ladders and
better opportunities than smaller firms. Large firms are more likely to internalise their
employment systems and to use functional flexibility- multiskilling and multitasking. Importantly,
employees can exert pressure and influence on how the employment system develops. Trade
unions can be used as a bargaining tool between employees and management.
Another aspect influencing the employment system is the financial return to the company. In
some countries, short-term financial performance is important and so managers may not consider
long-term training investment as cost-effective. These firms may not provide long-term
employment security and look at using shift patterns and linking wages to individual and team
performance. UK organisations are increasingly making use of temporal and financial flexibility. In
this case, the employment system is more externalised than internalised. Other countries do not
have pressure on short-term profit maximisation and there is more scope to internalise
employment systems. These firms invest more costs and time in training and provide employment
security.
The employment relationship is defined more in terms of the internal production requirements of
the firm and also external conditions such as low unemployment, economic growth and trade
unions. An organisation’s employment system is also influenced by non-labour market factors
such as the family. The man is normally seen as the bread-winner and dynamics such as social
divisions and demographics play a role and it has still not been possible to eliminate discrimination
completely.
Technology has also played a role as Western countries move from manufacturing to services
economies. Skills in manufacturing are firm-specific whereas in services, employment has been
concentrated at two poles- management at one end and low-skilled jobs at the other and these
changes have blurred the distinction between the use of internal and external labour.
Offshoring work as a means of cheaper production has weakened trade unions and left employees
more vulnerable to management decisions. In the UK, where short-term profitability is important,
a well-used strategy is downsizing and then externalising the labour market. Also delayering and
devolution are common responses by organisations putting pressure on reducing costs.
On the other hand, some organisations such as Nike are becoming virtual organisations where
cheap production sites are dispersed globally. The employee relationship is external, there are few
hierarchies and there is a performance-based control. so organisational boundaries are becoming
blurred.
Thus, in the UK, externalising the employment system is done to reduce costs and morale is often
overlooked. A simple approach to understand internal and external labour systems is by looking at
Atkinson’s flexible firm model where he uses terms such as numerical, financial and functional
flexibility and workers who are either core or peripheral. Transferring this model from theory to
practice is difficult and it reflects management contradictions in reducing costs and maintaining
flexibility. Demarcation between core and peripheral workers creates friction and conflict.
Some organisations adopt different strategies such as focussing on skills, knowledge and attitudes.
Also, recognising that employees are best source of competitive advantage, even in turbulent
times, has a dramatic effect on strategy thinking. An organisation that focuses on its internal
labour market must be willing to invest heavily in T&D. Delayering and flatter organisations has
meant that job ladders are reduced but organisations must think about other career options such
as horizontal and lateral career moves, project work and secondment. Removing strict pay
structures in favour of PRP, ensuring employee commitment through profit-sharing and share
ownership is also necessary. By moving towards a soft HRM approach, firms can retain high-calibre
individuals as their core workers while outsourcing low-skilled employees goes in some to applying
the flexible firm model.
HR OUTSOURCING AND SHARED SERVICE CENTRES
This is the use of a third-party service provider to perform an activity usually performed in-house.
It is the transfer of a distinct business function from inside the business to an external third party.
Some advocate costs as the main reason and others point to the adverse effects of layoff.
Outsourcing involves transfer of staff to enable an organisation to specialise in core activities and
exposing the process to market disciplines, so driving down costs. Periodic renewal of the
outsourcing contract acts as an incentive and offers greater flexibility in employment practice. It
gives firms the opportunity to make use of services that are at the desired level and quality
without having to achieve them themselves.
Human resources outsourcing (HRO) is driven by a desire to save money, access to innovative IT
solutions and enhanced focus on performance and service measurement.
HRO is defined as placing responsibility for various elements of the HR function with a 3rd party
provider. HR staff are also in a position where they are employee champions or strategic partners.
HR services are being more technologically advanced allowing closer relationships between
provider and client. A growing number of outsourcing agencies provide services ranging from
payroll, training, performance management, selection and recruitment. There has also been a
growth of HR shared services, often in two forms.
Firstly, large organisations set up shared services to provide HR services to their own departments
and subsidiaries and also external client organisations- a form of HRO.
Secondly, large or multi-establishment organisations may set up shared service centres (SSCs) as a
way of recentralising their HR and creating an internal market in HR. So this is a form of HRO
where it involves services to external clients but not where it serves internal clients. Also, the
provision of consulting services to client organisations can be seen to be HRO as the setting up of
SSCs is popular in large MNCs.
THE EFFECTIVENESS OF HRD
At a time where labour costs can be identified as controllable costs, some companies may feel that
if some of their ER activities were outsourced to HR specialists, it would result in cost savings.
Savings on not investing in new HR technology, responsibility being passed to provider, savings in
infrastructure as well as reduction in HR staffing levels all seem attractive. Using temporary
workers to cover workload fluctuation may enhance workforce flexibility and productivity. HRO
may appear to be a choice of governance that makes sense.
There has been increasing concern about the quality of HR functions in organisations. HRO may be
seen as enabling a greater service quality: according to agency theory, the interests between
principal and agent may be misaligned and HRO may overcome this problem and improve client
satisfaction. Joint alliances create opportunities for mutual learning and knowledge transfer which
can then be brought back in-house.
HRO for small and medium sized companies can be seen as a way of minimising risks and obtaining
objective advice untainted by organisational politics. It is often argued that the strategic parts of
HR should remain in-house with non-core or peripheral routines being outsourced. The non-core
work is highly vulnerable to outsourcing but it is sometimes difficult to determine which is core
and which is non-core as well as knowing the criteria for evaluating this.
Routine data processing and administrative tasks, payroll and selection and recruitment (skilled
and non-skilled or casual) are particularly suitable for outsourcing.
However, HRO may result in downsizing which leads to low morale and loss of commitment and
even loss of information and knowledge, disrupting the organisational culture.
Outsourcing may not lead to cost savings but organisations may see improvement and flexibility as
more important. The costs that are associated with outsourcing include;
 legal costs
 problems of trust
 poor levels of service
 poor communications
 loss of skilled employees
 loss of corporate memory
Before a firm outsources and finds an outsourcing partner, it needs to decide on what functions
will be outsourced and this is a strategic decision taken by senior management.
The popularity of outsourcing, especially selection and recruitment, means that CV reviewing is
given to specialists and not line managers, a bigger pool of candidates is available, reduction in
organisational costs of hiring the wrong person.
By outsourcing certain HR functions, the HR department can focus on strategic issues. Talent
management, succession planning, leadership development are often neglected and these issues
can have a long-term impact on business. HR is promoted from a provider of services to strategic
business partner. Therefore, HRO can be seen as a way of paying lower wages and, at the same
time, gaining better HR services.
Technological obsolescence is removed and up-to-date, integrated IT in the form of HRIS is
provided as well as professional expertise. HRO does not automatically signify cost savings. Many
organisations have found costs have gone up but trying to save costs at the expense of lower
quality is not in any organisation’s interest. It is essential that the right provider who has the right
cultural fit is found.
Contract preparation is a time-consuming process spelling out every aspect of the service
provided. Trust is an important issue as some organisations use the provider to draw up the legal
contract as well. So when things go wrong, costs can go far beyond what was previously budgeted.
Different organisations operate their HR differently and may even disregard HR as giving them a
strategic advantage. HR specialists who lose their jobs as a result of downsizing HR departments or
outsourcing may go to service providers with their experience. HRO providers may end up
becoming call-centres with no job ladders or promotion prospects. There may be no motivation to
upgrade skills or get broader organisational experience and there is a danger of moving into a ‘silo
mentality’. The problems linked to scientific management return as jobs become repetitive,
mundane and routine resulting in loss of corporate memory that some of the experts may bring
with them. But this can result in HRO staff becoming specialised, albeit in routine tasks. This
means that the HR department will have staff experts in specific aspects of HR functions.
Associated with this is the difficulty of staff keeping up to date with a vastly changing HRIS but this
is more easily done in HRO firms where HR departments and HR employees can take advantage of
technological advances from HRO providers.
Firms are now under more increasing pressure to demonstrate effectiveness and efficiency and
need to achieve internal transformation in order to be treated as strategic partners in business.
HR will gain credibility, as ‘line management want people advising them who have already sat in
the operational chair and therefore understand the way their people think and work.’ Therefore
HRO will help HR get to high levels of performance by eliminating its operational aspect and
keeping those aspects that are critical for survival.
OTHER OPTIONS
Outsourcing HR does not involve the erasure of an organisation’s HR department. Companies have
options available to them such as;
 keeping the entire HR function internal (Shared Service Centres)
 keeping it internal with some external support from consultants
 keeping it mainly internal plus some external outsourcing of routine functions
 making HR mainly an external function with strategic aspects kept inside the organisation
Even if the last option is adopted, there are several different models including;
 HRO to a technology-led specialist supplier
 setting up a joint venture company with an IT specialist to handle HR administration with
possible external expansion later
 outsourcing HR and other services to a service provider
 setting up a ‘virtual HR department’ to handle routine HR
Internal functions may be able to deliver similar levels of service at lower cost.
Each firm takes into account its unique factors in order to reach a solution and these factors
include;
 size
 strategy- e.g. pursuing innovation or cost reduction, ‘prospectors’ may outsource more
than ‘defenders’




environmental uncertainty
internal HR capabilities
coherence or internal integration of HR activities- e.g. supportive ‘bundles’ of practices
whether the organisation is dealing with core or non-core employees
In particular, resource-based theory indicates that core skills should be developed and maintained
internally rather than being outsourced. Non-strategic activities are ideal for HRO and careful
thought has to be given on outsourcing as this can have a great impact on HRM.
Consultation with stakeholders about the feasibility of outsourcing is required. Even though HRO
can facilitate technological change at minimum investment and can give HR focus and pace, there
needs to be a ‘partnership’ with the supplier and HRO needs to be considered as a change
management programme.
Extensive consultation and communication is required to ensure that each party knows who owns
what.
MODULE 3:
APPROACHES TO EMPLOYEE RESOURCING
INTRODUCTION: APPROACHES TO ER
The CIPD Standards for People Resourcing set out three paradigms for addressing resourcing
issues;
 the traditional paradigm
 the contingency-based paradigm
 new paradigms
The traditional paradigm as it is applied to selection is also called the psychometric objective
paradigm. There are also newer and alternative paradigms called the knowledge/power paradigm,
the knowledge management paradigm and the customer-service paradigm.
THE TRADITIONAL PARADIGM
Taylor argues that the traditional (text-book, professional, good practice) approach to ER assumes;
 organisations are large or medium sized and traditionally structured, with a hierarchy, clear
lines of accountability, and well-defined roles for employees.
 ER is a chronological process mirroring employment: HRP, job analysis, recruitment,
selection, performance management, dismissal and resignation.
 organisations exercise control over and implied stable environment allowing policy
documents and job descriptions to be created.
 people work under employment contracts.
 organisations operate in competitive environments.
CONTINGENCY -BASED PARADIGMS
This approach accepts that there should be different approaches to ER in different situations.
Factors that would affect this are size, structure, type of workforce, type of organisation and is
also applicable to ‘virtual’ organisations where the work is contracted out. Contingency-based ER
is often associated with strategic ER and is also linked to strategic management. The strategic
process emerges within the organisation and cascades down the line. ER processes are seen as
major levers to support strategic and cultural changes. Once core competencies are identified, ER
and HRM processes can be installed to ensure that employees with the requisite skills are
appraised, developed and rewarded against the relevant competency criteria. The HRM agenda
emphasises the link between people policies and business strategies, unlike personnel
management which ignores it. This interpretation of strategic HRM owes much to the Michigan
Business School Model which is harder and less-humanistic than the Harvard model and considers
employees as resources in the same way as other business resources. People must be;
 obtained as cheaply as possible
 used sparingly
 developed and exploited as much as possible
People should be matched to business needs- the model is strongly influenced by strategic
management literature. Therefore, HRM is seen as a strategic process making the most effective
use of an organisation’s resources. This approach stresses the quantitative, calculative and
business-strategic aspects of managing the headcount resource in a rational way. It focuses on the
importance of strategic fit where human resource policies and practices are linked to the strategic
objectives of the organisation with the aim being increased competitive advantage. In this model,
ER plays a key role in driving performance: selection and appraisal play major roles.
A matching model of ER is often implicit or explicit depending on the strategic implication for the
nature, role and importance of RM and selection. ER are usually seen as secondary processes
reacting to business strategy. Other recent models such as the resource-based views offer promise
in developing better ER models. HRM-inspired change encourages a focus on the organisational
change lever of ER. This interest in strategic HRM led to an interest in vertical integration (the
alignment of HR policies with corporate strategy), horizontal integration (the alignment of HR
practices such as R&S, training, appraisal in a coherent and connected way), and devolution
(making line managers responsible for many HR practices such as R&S, performance management
systems, T&D).
ER, KNOWLEDGE AND POWER PERSPECTIVES
Most treatments of ER tend not to focus on the wider perspectives or on the interests of multiple
or competing stakeholders. However this approach does not just focus on advice, prescription and
best practice. It consciously seeks to acknowledge that there are multiple stakeholders with an
interest in HRM and, in particular, ER, including line managers, contractors, search consultants and
recruiting agencies who may have conflicting or competing demands, values, expectations and
agendas. The question of power, politics, ethics, knowledge, equal opportunities is raised within
the ER process because it is inextricably linked to the mechanism of assessing, grading, tracking
and shifting of employees/individuals.
The CIPD has set out three approaches to ER: traditional, new and contingency-based paradigms.
It is unclear as to whether these are competing, or even incommensurable, paradigms or that they
are complementary with no approach being the right or best one. ER is part of the government of
organisations and the regulation of individuals and, in particular, the assessment/appraisal
instrument is seen as part of the technology of power and regulation. In fact, governmentality is a
concept used to draw attention to the diverse and various processes and techniques that are
sought to administer the lives of individuals and associations through links to political objectives.
For example, ‘knowing’ individuals in terms of a set of qualities or competencies which can reveal
much of organisations as well as people.
It has been argued that changes in assessment and appraisal processes and criteria are associated
with the emphasis, within HRM-style change on the increased emphasis on flexibility which are
associated with moves towards Japanisation or flexibility and a move away from bureaucratic
procedures.
KNOWLEDGE MANAGEMENT AND ER
Knowledge is increasingly bring claimed to be a key critical resource and source of competitive
advantage in the modern global economy. Research in the UK has shown that knowledge-intensive
sectors account for over 40% of employment, higher than the EU average. Knowledge-intensive
sectors include IT, finance, education and health care. This is a key to Britain’s success attributed
to the flexibility of the labour market. Much recent work on knowledge management (KM) has
come from information management (IM) perspectives. If HRM/ER is to set the agenda for KM and
adequately respond to the challenges set for it, a more robust model of KM and HRM needs to be
developed to guide research in this area.
The concept of intellectual capital has also become important for KM as success goes to those who
manage their intellectual capital wisely.
The knowledge society can be defined as one in which intellectual capital is consciously developed
to provide competitive advantage that reflects managerial and operational changes required to
succeed in a global economy. The nature of work has changed from an industrial society to the
knowledge economy or knowledge-driven society.
FROM STRATEGIC MANAGEMENT TO KNOWLEDGE MANAGEMENT
In popular and academic literature, it is said that we are moving towards becoming a knowledge
society. Knowledge is an important commercial and social commodity that explicitly features in
decision making. The belief that knowledge is of primary importance is part of the knowledge
management paradigm: a shift from the dominant paradigm of strategic management. This new
paradigm supports openness, empowerment and individual creativity as opposed to the rational
strategic paradigm which supports distortion, disempowerment and managerial discipline and
therefore shows a more positivist perspective. In the knowledge management perspective,
individuals are encouraged to be more knowledgeable for the benefit of the organisation. Seen
from the perspective of the strategic management paradigm, this can be viewed as a possible
weakening of role power for senior managers and as a consequence, the new paradigm may not
be totally embraced by those corporations whose power brokers feel threatened by this change.
THE NATURE OF KNOWLEDGE MANAGEMENT
Knowledge management is the creation of knowledge and its interpretation, dissemination and
application, retention and refinement. It is a critical source of competitive advantage and it
creates intellectual capital. Within psychology and educational research on expertise, researchers
have distinguished formal or declarative knowledge (knowing that) from procedural knowledge
(knowing how) and conditional knowledge (knowing when and where, or under what conditions).
A general framework for the understanding of KM is referring to the terms tacit knowledgeexperiential, and explicit knowledge, expressed and transferable knowledge that includes
cognitive and technical elements. These definitions are included in the well-known SECI model for
knowledge creation.
Explicit knowledge
Tacit knowledge
Tacit knowledge
Explicit knowledge
Externalisation
Socialisation
Reflective; peer-to-peer
Creates conceptual knowledge
through knowledge articulation
using language. Dialogue and
collective reflection needed.
Existential; face-to-face
Creates sympathised
knowledge through sharing
experiences, and development
of mental models and technical
skills. Language unnecessary.
Internalisation
Combination
Collective; on-site
Creates operational knowledge
through learning by doing.
Explicit knowledge like manuals
or verbal stories helpful
Systematic; collaborative
Creates systemic knowledge
through the systemising of
ideas. May involve many
media, and can lead to new
knowledge through adding,
combining and categorising
The SECI cycle of Knowledge Creation
Conversion involves four processes, all of which convert between tacit and/or explicit knowledge.
Socialisation is the process by which synthesised knowledge is created through the sharing of
experiences between people as they develop shared mental models and technical skills. Since it is
fundamentally experiential, it connects people through their tacit knowledge.
Externalisation comes next, as tacit knowledge is made explicit. The creation of conceptual
knowledge occurs through knowledge articulation in a communication process that uses language
in dialogue and collective reflection. The use of expressions of communication is often inadequate,
inconsistent, and insufficient. They leave gaps between images and expression, while promoting
reflection and interaction. This therefore triggers dialogue.
The next process is combination. Explicit knowledge is transformed through its integration by
adding, combining and categorising knowledge. This integration of knowledge is also seen as a
systemising process.
Finally explicit knowledge is made tacit by its internalisation. This is a learning process and occurs
through the behavioural development of operational knowledge. It uses explicit knowledge, such
as manuals or storytelling, where appropriate.
ER AND MANAGING KNOWLEDGE WORKERS
KM can be seen to be closely related to ER and HRM especially if HRM incorporates information
and communication technologies (ICT) as support mechanisms in the human interaction process.
Typical ‘KM arenas’ are activities associated with, among others;
 ascertaining that effective work is delivered
 educating and developing employees
 capturing, transferring and organising knowledge
 motivating, facilitating and empowering employees
 creating cultural and knowledge-sharing conditions
The implications for HR professionals are not insignificant and need to deal with such issues as;
 how to build a talent pool
 how to set up and run diversity management programmes
 how to harness tacit knowledge
 how to increase flexibility and manage change
As knowledge becomes the key strategic resource of the future its creation, transfer and
deployment processes need to be fully understood.
Opportunities will need to be offered for employees’ personal and professional growth and in
some organisations, this may take place without an HR department.
A resource-based view of the firm provides support to both configurations since what is essential
is that human resources are viewed as a pool of knowledge, skills and insight that can provide a
source of sustained competitive advantage.
Not only is attracting the right high-calibre individuals, developing and retaining them as well, but
organisations should develop the systems, structures and cultures that are responsive to the
opportunities presented by ICT. Daily tasks of human resource development in building a learning
organisation are;
 assisting employees in creating and using knowledge
 establishing appropriate networks
 engaging in double-loop learning
Managing knowledge is recognised as a key organisational asset and its creation, dissemination
and application as a critical source of competitive advantage. It can be seen as requiring a blend of
core skills and competences in information management as well as HRM and ER, including the
structures and cultures that facilitate organisation, team and individual learning and the sharing of
knowledge and information.
Attracting, developing, rewarding, motivating and rewarding these knowledge workers is the
responsibility of HRM and ER. The growing importance of KM is seen as a consequence of moving
from an industrialised to an information-based economy and the rise of knowledge workers and
symbolic analysts in advanced (post-)industrial society with knowledge and expertise being used
to solve organisational problems. Knowledge formation and acquisition, knowledge absorption
and knowledge retention are key processes. Technology cannot fully capture and manage
innovative thinking and HRM/ER needs greater attention in promoting information sharing. A
technology-driven view is now becoming dominant with HR being sidelined. However, KM is a
process and not a technology linked to the way people work and a supportive culture is necessary
such as performance management, good practice in selection and recruitment and an appropriate
HR role in overcoming resistance to sharing information.
It appears that only KM initiatives grounded in organisational culture are likely to succeed and it is
imperative that KM be integrated with ER, HRM, IM, and competitive strategy. Employees may be
reluctant to share that which is seen to be vital to their value, job security and identity.
KNOWLEDGE IN THE COMPUTER GAMES INDUSTRY
Computer and video games are probably the first new cultural industry to emerge from the
microelectronics revolution. Computer and video games are increasingly organised into a core of
publishers with global distribution networks who finance the development of games through
advances against royalties as well as their marketing, development studios that undertake
programming, design and testing with specialists inputting music, sound, licensing, recruitment
and legal services. Relationships with distribution and retail etc. are handled by publishers, the
core relationship with publishers and developers being tense. Publishers engage in vertical
integration (acquisition of developers) to control the flow of products that feed their distribution
network while developers have tended to split from acquired studios to gain greater creative and
financial freedom. A good example of splitting to create new studios is Atomic Planet.
According to research, the UK entertainment market generated £934m in 2000, expected to grow
to £1017m in 2003. The European and world markets were expected to reach $8b and $27b
respectively. British game developers are major players in the global market with about 35% share
and employed around 21500 people in 1999. In 2001, there were about 250 small developmental
studios in the UK with small teams of about 5 to 15 people. More sophisticated studios employ
more people. Growth is expected with companies, such as Sony, providing more powerful and
creative technology.
KM AND THE FUTURE OF ER
It is asserted that new policies and practices are required when taking a KM perspective on ER.
There is little agreement on what specific changes are required in organisational structure and
culture and ER roles. KM has attracted much attention as the global economy becomes more
knowledge-driven but little attention has been given to the implications it will have on ER and
career management.
External knowledge must be sought to enable a competitive advantage based around knowledge
creation and development. The knowledge supply chain must be managed effectively and this
chain may be more important than labour supply. The implications to employment are profound
as the mechanisms to secure knowledge from contracting, performance assessment and reward
management may need to be very different from the mechanisms needed to secure labour. Selfemployment and portfolio careers will become more important as knowledge becomes viewed as
‘personal equity’. Different organisations will therefore pursue different strategies.
In baseball team organisations, HR’s role in KM may be seen predominantly as servicing the
knowledge needs of star performers and coordinating changing knowledge specialism. In clubs,
there may be greater emphasis on group contribution, the development of systems for codifying
and disseminating collective knowledge and translating knowledge into collective assets. In
academies, there may be a mixture of KM policies, differentiated according to employment
position. In fortresses, there is likely to be an absence of a policy or only a weak policy or a
constantly fluctuating policy.
Psychological contract types, organisational strategies, knowledge management policy and career type
TYPE
Defender
Prospector
Analyser
Reactor
BUSINESS
STRATEGY
ER STRATEGY
Small
number of
stable
products
Make, promote
and develop
from internal
labour market
First to
market
Buy/hire
expertise as
needed from
external labour
market
Blend of
above
Inconsistent
hybrid
Blend of above
Inconsistent
hybrid
CAREER
TYPE
Club
Baseball
team
CONTRACT
Relational
Transactional
Both,
Academy
differentiated
Fortress
Inconsistent
hybrid
ANCHOR
CLUSTER
FOCUS
KM POLICY
Security, stability,
life-style, general Basic, formal
Collective
Career
managerial,
active planning management distributions
dedication
Technical,
functional,
entrepreneurial
creativity,
challenge,
autonomy,
independence
General
managerial,
technical,
functional,
challenge
Challenge
Multidirectional
Active
management,
active planning,
Career
planning
Individual
services
Mutual
Differentiated
Unclear
Weak/absent
multidirectional
Formal basic
Increasingly, individuals may come to manage their own careers with limited reliance on
organisations. Knowledge-based technical speciality, cross-functional, international experience,
collaborative leadership and self-management skills, continuous learning and personal traits may
become key attributes of successful careers in organisations comprised of ‘cellular coalitions of
self-employed knowledge workers’.
The increasing importance of KM allows employees to satisfy their personal aspirations of their
career anchors and increases their internal and external knowledge market.
The individual levels within career anchors become to take more prominence as KM becomes
increasingly significant to HRM, ER and in particular, career management.
There are distinctions made between human, structural and customer capital which are of vital
importance to ER.
Human capital refers to skills, knowledge and abilities of personnel focussing on skill-building by
organisations and people.
Structural capital refers to the way in which individuals and organisations are connected with
knowledge, expertise and data through technologies and processes as well organisational
structures, culture, systems and procedures, especially communication flows and channels. ER is
central in protecting intellectual capital and enhancing collaborative activity.
Customer capital, the value of the franchise and its ongoing relationships with those o whom it
sells, is normally the most poorly managed asset and one strategy is to engage customers in
selection, recruitment or career management to enhance commitment and increase corporate
value from the interaction of these 3 components of intellectual capital, especially in the
transformation of tacit knowledge.
Focussing on HRM and ER adds financial value whether using accounting or perceptual measures
of performance. However financial valuation systems often fail to see the investments value of ER,
only looking at their costs. Responding to the challenges of KM may help ER overcome this
problem as KM involves the recognition of tacit and explicit knowledge residing in stakeholders.
A CUSTOMER SERVICE APPROACH TO ER
Customer service (CS) involves addressing customers’ needs and concerns and satisfying them as
quickly as possible. Organisations are now focussing on CS because it is easier to keep existing
customers than to acquire new ones.
Customers have more choice from competitors and organisations can now differentiate products
and services in terms of CS rather than price. To succeed with a customer service strategy (CSS)
concept, organisations start by building a customer orientation within the company.
A CS culture needs to be developed where the company is educated about the importance of CS. It
is then possible to foresee a culture shift. The essential stage involves understanding customer
needs and 5 crucial attributes are;
 reliability
 empathy
 assurance
 responsiveness
 tangibles
A key issue in any CSS involves ensuring service quality. Quality management (QM) is important
and quality and a successful CSS can be enhanced by customer relationship management (CRM)
which can be seen as the management of customer relations from a marketing perspective. CRM
takes a long-term relationship perspective focussing on customers and return on customer
investment instead of market share.
For CRM to be effective, it will involve identifying and establishing relationships with customers in
order to maintain and enhance (or even terminating) relationships through mutual exchange and
fulfilment of promises. Only then can an effective CSS be successful.
Integrate CS with
company culture
Promote CS culture
Gain top management
support
Continuous
improvement and quality
management
Set standards for
delivering CS
Understand customer
needs
A corporate customer service model
APPLYING THE CUSTOMER S ERVICE MODEL TO ER
The CS model can be applied to ER and shows how the CSS can help HR in the process of moving
from point A to point B. The human resources departments have the capabilities to input to all
stages of a CS programme.
ER Customer Service Strategy
Point A
ER Present
Point B
ER Future
Oriented
Developing
an ER customer service strategy
Operational
Reactive
Administrative
Proactive
Strategic
Business Partner
Developing an ER customer service strategy
PROMOTING A CS CULTURE
ER/HR needs to build a customer orientation and educate people about CS and its valuable
differentiator of service quality in all levels of the organisation.
All employees should be involved in the planning process to instil a feeling of ownership and
commitment.
HR/ER must take a lead in promoting a change in shifting attitudes and at the same time recognise
that it also has to change.
GAINING TOP MANAGEMENT SUPPORT
HR/ER needs to gain top management support and explain how CS can help in the retention of
loyal customers. This is crucial as changes would have to be led from the top. ER/HR must ensure
that support is continuing and senior management commitment can have dramatic results.
CUSTOMERS AND ER
One way of enhancing CS and developing a CSS is to conceptualise the organisation in terms of its
internal and external customers. The concept of customer is expanding. The growing trend now is
to enlarge the CS aspect to incorporate people from within the organisation, whereby internal CS
will lead to a greater number of satisfied internal customers, reflecting on the service they provide
to delight external customers therefore leading to repeat investment in the company and higher
profits.
The list is not exhaustive and can be broken down to include senior managers, line managers etc.
Each of these customers receives service from ER and react according to the perception of how
good the CS from that department is.
ER must ensure that CS is fully understood and must sell itself to ensure that customers know that
its job is not just to recruit but to provide value-added service. It does this by giving individual
attention to its customers and ensuring it delivers the right service.
Top
management
Trade
unions
Shareholders
IT
managers
ER processes
Production
managers
Finance
managers
Marketing
managers
Employees
Identifying the customers of ER
UNDERSTANDING CUSTOMER NEEDS
Customers’ needs can be assessed through research mechanisms such as;
 customer surveys
 staff attitude surveys
 focus groups
 database analysis
 informal meetings
To ensure that CSS does not fail before starting, action needs to be taken on this research.
Meetings with various stakeholders for example or keeping a database of customers to know them
well are important and the key to success is to understand the specific needs of each customer.
ER AND CUSTOMER RELATIONSHIP MANAGEMENT (CRM)
From a CRM perspective, ER needs to define itself as a service business, take a process
management perspective and, where required, collaborate with others in partnership, alliances
and networks. ER has to locate its customer base and know which customers are crucial for its
survival.
ER needs to raise its profile considerably through regular contact. It can act as an internal
consultant and be proactive and a problem-solver. It must be seen as delivering so that customers
will not look elsewhere and, for example, to outsource ER/HR services. CRM will help ER/HR
maintain a common network of satisfied customers.
One important benefit from this is that HR can tackle any problem from its infancy and thus save
on resources.
SETTING STANDARDS FOR DELIVERING CS
Standards can be in relation to the appearance of personnel, the physical layout of the company
or procedural issues such as time lines- ER/HR agrees standards with customers and makes sure a
response is given as and when promised (reliability), and a prompt and efficient response is given
(responsiveness). These standards have to be realistic with staff involvement (empowerment)
being important. Standards should achievable and also be regularly reviewed and updated.
ER, CONTINUOUS IMPROVEMENT AND QUALITY MANAGEMENT
Quality management (QM) and continuous improvement (CI) are closely linked. QM emphasises
quality in everything that is undertaken and CI suggests that there is always room for
improvement. There is never a finishing point. CI can be assessed through quality circles where
employees come up with the solutions to problems themselves and go to superiors to get
approval to action the solution. ER/HR can act as facilitator, encouraging participation through, for
example, the intranet, internal mail or a suggestions box. ER/HR then look at suggestions and
propose rewards to the employees suggesting useful ideas.
INTEGRATING ER CUSTOMER SERVICE WITH COMPANY CULTURE
ER/HR has to make sure that there is a vertical fit when implementing a CSS. The ER/HR strategy of
CS needs to be aligned with the organisation’s mission, vision and values. There should be
horizontal integration through the levers of HR functions including ER and HR must continually
prove its actions and services that employees are the most important assets.
MODULE 4:
HUMAN RESOURCE PLANNING
INTRODUCTION
Human resource planning (HRP), or workforce planning can provide organisations with a strategic
basis for making workforce decisions. It is a means of taking today’s decisions with tomorrow in
mind ensuring that organisations have the right people in the right places with the right skills at
the right times. It ensures that HR requirements are defined and that plans are made for satisfying
those requirements. HRP is one of the fundamental processes that form the basis for HRM. In the
stable and predictable years following WWII, manpower planning, as it was termed (linked to
manpower control and manpower modelling) played a major role in ER/HRM. Manpower
specialists and not HR were in charge of this ‘mechanistic’ process which took a ‘hard’,
quantitative perspective outlined in 4 phases;
 investigating (analysing the external environment, external and internal labour markets),
 forecasting (future and projected requirements, demand, and internal and external supply)
 planning (of HR plans)
 utilisation (comparing plans against success and performance criteria or ‘evaluation’)
In the 1970s, the phase was more technical and statistical. In the 1980s and 1990s, emphasis was
placed on flexibility and manpower planning was seen as bureaucratic, rigid and even irrelevant.
The word ‘planning’ denoted predictability and control which was not applicable to people
management. Companies are not just interested in numbers but the knowledge, skills and abilities
and this means that HRP is not just concerned with having the right numbers in place, which was
the key concern of earlier models.
Competition, scarcity of skilled personnel necessitate greater planning and sound resource
management which must work in both the local and global talent markets.
HRP can enable organisations to control labour costs and reduce numbers to protect long-term
employment security of the workforce. It allows firms to consider alternative forms of contract, or
to subcontract and outsource.
There are 4 main reasons why HRP is important;
 it encourages employers to develop clear an d explicit links between business and HR plans
and so integrate both more efficiently
 it allows for better control over staffing costs; supply and demand can be matched and
rational decision-making over recruitment, relocation of staff, transfer of risk, etc.
 it enables employers to make more informed assessments of the skills and attitudes of
their staff and therefore, helps to prepare for integrated HR strategies
 it provides a profile of current staff such as age, gender, race and disability which is
important for equal opportunities employers and also statistics/data collection.
The primary purpose of developing a workforce plan is to enable a coordinated approach to
addressing the HR priorities of the organisation. HRP has been given renewed impetus because of;
 the increasing availability and use of HRIS allowing the development of future scenario
approaches
 renewed skills shortages in several areas
 the increasing demand for knowledge workers
 a greater understanding of both supply and demand issues
HRP seeks to forecast whether there is likely to be a mismatch between supply and demand of
labour and to plan appropriately. In order to derive HR plans, several sets of issues need to be
considered which are all conducted in the light of corporate strategic plans.
 demand forecasting; forecasts of future demand for labour (organisational requirements)
 supply forecasting (a); forecasts of internal supply (internal availability)
 supply forecasting (b); forecast of external supply (external availability)
 productive forecasting; taking planned or potential performance improvements into
account
 HR requirement forecasting; determining HR requirements by taking the demand forecast
into account and adjusting it to take into account labour wastage, working hours,
productivity improvements, etc.
 action planning; developing plans to address identified imbalances such as recruiting,
training, productivity, retention, redundancy, etc.
THE HRP PROCESS AND ITS LIMITATIONS
There are several steps involved in the HRP process that must be included in any comprehensive
HR planning effort if the organisation is to accomplish its mission, goals and objectives;
 identification of competences needed in the future
 an analysis of the present workforce and its competences
 a comparison of future needs with present workforce capabilities to identify competency
gaps and surpluses
 an evaluation process to ensure that the workforce competency plan remains valid and
that objectives are being met
The process below suggests that the HRP consists of separate activities which it does not. In
reality, HRP is not as tidy or sequential but consists of gathering and analysing relevant
information in order to make informed decisions.
Environment
Business objective
Project demand for HR
Assess
internal
supply
Gap?
Reconcile
Human resource plans
An overview of the HRP process
Assess
external
supply
FORECASTING FUTURE DEMAND
This is the process of estimating the future needs of the organisation by reference to corporate
and functional plans and forecasts of future activity levels.
Objective methods involve the projection of past trends (taking account of areas like technology
and organisational strategies) using time trends, work-study methods and ratio analysis.
Subjective methods simply reflect managerial judgement (top-down or bottom-up) and succession
planning, supervisor estimates, charts and statistics all play a role here. Problems such as ‘empire
building’ and ‘organisational politics’ may inflate estimates.
Forecasting demand relies on product market projections and their implications on numbers,
types, skills of employees. This could involve activities such as;
 identifying key business issues (e.g. EU expansion, new technology, mergers, competition)
 determining the HR implications of these developments.
Methods available here include;
managerial judgement: managerial estimates
ratio-trend analysis: calculating a ratio between activity levels and staff numbers, and/or a ratio of
one staff group to another
econometric models: statistical analysis of relationships between relevant variables such as sales
or investment, movements in these variables, and supply variables such as labour wastage,
promotions, transfers. Accuracy of results will depend on the accuracy of the assumptions.
work-study methods: measuring work operations in order to calculate the length of operations
and required staff numbers to complete tasks.
ASSESSING INTERNAL SUPPLY
Once forecasting is complete, HRP moves on to assessing the internal supply of human resources
and factors that affect their usage. This may involve estimates of wastage/turnover and internal
job movements such as;
 an analysis of the status quo
o an analysis of statistics relating to current staff
o attitude surveys of current staff
 an analysis of future trends
o analysis of absence figures
o analysis of turnover
o analysis of retirement trends
 an analysis of company policy and procedures
In forecasting the internal supply of human resources, organisations need to;
 analyse existing resources by way of occupation, level of skills, length of service, status, etc.
 analyse wastage
 assess the impact of working conditions such as working hours, holidays, overtime,
retirement, absenteeism, shift systems and flexible working, etc.
 forecast the outputs of T&D schemes
 explore utilisation strategies such as multiskilling, new technology and job redesign
ANALYSIS OF TURNOVER
This refers to ‘all terminations not formally initiated by the employer’ or ‘voluntary cessation of
membership of an organisation by an employee’.
Research has shown that organisations see turnover as having a negative effect or organisational
performance. Where the turnover is above 10%, most organisations report a negative effect.
Some organisations though, may want to increase turnover as it may be functional in providing;
 new blood into the organisation
 new energy for the organisation
 greater opportunities for promotion
 the opportunity to engage in strategic
for current employees
poaching of staff from competitors
 enhanced wage control opportunities
 the avoidance of complacency
 removal of poorly performing
employees
However, turnover may be dysfunctional in increasing;
 costs of reappointment

 loss of key, valued staff

 loss of productivity and quality

loss of (tacit) knowledge
low morale
disruption of teamwork
So a certain level of turnover can be beneficial by avoiding stagnation and inbreeding therefore
introducing new ideas and experimentation. It can create promotion opportunities, increase
motivation and control wages in slack periods by not replacing people who leave (natural
wastage). The major costs to include when calculating turnover costs include;
administration of the resignation
 recruitment costs
 administration of recruitment and
 selection costs
selection
 costs of cover
 induction costs
The minimum figure can then be multiplied by an estimate of turnover rate to arrive at the annual
cost of turnover. Turnover might be measured by a wastage index or labour turnover index. This is
a useful index for comparative purposes for internal and external benchmarking. Another measure
is a stability index, which focuses on stability rather than wastage. It can discount high turnover in
the early days and provides a good indicator on the proportion of long-term staff or the extent to
which turnover problems are specific to new entrants (induction crises). Other measures include
survival rates, which establish how many recruits are still in post after a specified time period, and
half-life of a cohort, which is the interval required for the recruited cohort to decay through
turnover, to half its original size. Other qualitative measures include exit interviews and leaver
questionnaires which are conducted soon after resignation.
Turnover can be affected by a range of factors, some at organisational or individual level and some
at a national or economic level. These include;
external factors: unemployment rate, wage differentials, availability of alternative jobs
organisational factors: technology, goals, values, policies, practices, rewards, supervision, size
work-group, job content
sectoral factors: image, reputation, growth, etc.
occupational factors: hierarchical level, status, professionalism, skill levels
individual/ psychological factors: age, tenure, interests, family responsibilities, job satisfaction,
commitment, motivation
FORECASTING EXTERNAL SUPPLY
Organisations often pay less attention to forecasting external supply and are then surprised by
skills shortages and events such as a demographic time-bomb which is a drop in the numbers of
young people and the relative rise in proportion of older workers as society ages. Forecasting
external supply may require analysis of;
 demographic and social trends
 skills bank in the area, and local unemployment levels
 likely competitors for similar labour, and the opening or closure of workplaces
 local, regional, national, international government policies such as working hours and EO
 employer reputations
 cost/availability of housing, transport/travel to work patterns
 number of graduates in specific fields and educational institutional output
 government and industry training schemes
Factors that have affected labour supply include declining birth rates, labour shortages, a changing
gender mix with more women working, impact of new technology, reduced demand for low-level
skills, increased demand for high-level skills and professionals/managers.
Environment scanning is useful to increase knowledge of the external market in which
organisations may need to recruit from. The assessment of demographic profile meant noting age
and gender but now includes other dimensions such as religion or ethnicity.
OUTPUTS OF HRP
A critical issue occurs if there is an imbalance between supply and demand and decisions will be
required on action needed to fill the gap. These decisions will form the organisation’s human
resource plan. The likely outputs of the HRP process include actions in such areas as;
 HR supply plans: e.g. recruitment
 retention strategies
activities, PR and branding
 downsizing, release and outplacement
 HRD initiatives arising from supply and
strategies
utilisation initiatives
 PM activities
 reward management programmes
 diversity initiatives
 utilisation plans such as flexible working
practices
Organisations can make various responses to labour shortages. They can react tactically or
strategically and can either try to increase the supply of labour or reduce the demand for it. In
Atkinson’s original model, based on the analysis of responses to the demographic downturn, some
organisations showed a ‘do nothing’ response, perhaps by letting entry standards slip. Some
‘competed’, reactively intensifying recruitment and pay; some ‘substituted’ looking at untapped
sources of supply and perhaps retraining available staff while some ‘acted’ by improving pay and
company image, for example.
TACTICAL
‘ON THE CHIN’
DO NOTHING
STANDARDS DECLINE
OVERTIME
COMPETE
INTENSIFY RECRUITMENT
School liaison
Increase pay
Reduce demand
SUBSTITUTE
CREATE
RETAIN OLDER STAFF
TRAINING
Reduce wastage
STRATEGIC
RESPONSES TO LABOUR SHORTAGES
Increase supply
Improved development
Attitude surveys, whether quantitative or qualitative, or focus groups may be used to assess
employee satisfaction and commitment. There may be many reasons why employees leave, some
of which may be within the control of the employer. Reasons include lack of training and career
development, management style, lack of information about performance requirements. However,
it is not enough to have a static picture of how many people are employed at any one time. The
organisation needs to see how the workforce is changing over time and much data is needed by
HRP for it to be effective such as;
 who is leaving and why? Factors would include job type, grade, length of service, gender.
 the type of organisational response is of strategic importance: should more effective
training be introduced, or job redesign or perhaps cultural changes are required?
 data can be held in individual or aggregated form to give fuller pictures of groups or
departments
 HR policies will need to be introduced covering redundancies, retirement, flexible working,
union agreements.
Some of these responses may or may not be appropriate depending on the problem or cause.
There will not always be just ‘one right answer’ and the organisational choice is not just about
hiring and firing employees.
The effectiveness of HRP can be evaluated using 3 criteria. These are the extent to which;
 outputs continue to meet changing circumstances
 they achieve cost and productivity objectives
 they are re-planned to meet changing circumstances
HRP AT THE SECTORAL LEVEL
Context for
firm strategy
and rivalry
Factor (input)
conditions
 Factor (input) quantity and cost
 Natural resources
 Human resources
 Capital resources
 Physical infrastructure
 Administrative infrastructure
 Scientific and technological
infrastructure
 Factor quality
 Factor specialisation
 A local context that encourages
appropriate forms of investment
and sustained upgrading
 Vigorous competition among
local based rivals
Related and
supporting
industries
 Presence of capable, locally-based
suppliers
 Presence of competitive related
industries

Demand
conditions
 Sophisticated and demanding
local customer(s)
 Customer needs that anticipate
those elsewhere
 Unusual local demand in
specialised segments that can
be served globally
The Porter Diamond
The Porter Diamond Model for the competitive advantage of nations offers a model that can help
understand the comparative position of a nation in global competition. The model can also be
used for major geographic regions. Traditionally, economic theory mentions the following factors
for comparative advantage for regions or countries:
 land
 labour
 location
 local population size
 natural resources (minerals, energy)
Because these five factors can hardly be influenced, this fits in a rather passive (inherited) view
regarding national economic opportunity. The Porter diamond also makes use of the term
‘clusters’. Clusters are geographic concentrations of interconnected companies, specialised
suppliers, service providers, and associated institutions in a particular field. They grow on locations
where enough resources and competences accumulate and reach a critical threshold, giving it a
key position in a given economic branch of activity, with a decisive, sustainable, competitive
advantage over others places, or even a world supremacy in that field. Clusters can influence
competition in three ways:
 They can increase the productivity of the companies in the cluster.
 They can drive innovation in the field.
 They can stimulate new businesses in the field.
The role of government in the model is to act as a catalyst and challenger; it is to encourage- or
even push- companies to raise their aspirations and move to higher levels of competitive
performance.
ADVANTAGES, DISADVANTAGES AND LIMITATIONS OF HRP
Manpower planning tended to focus on statistics, techniques and modelling methodologies, often
used reactively, with labour seen as a cost, and with an emphasis on numbers and quantity rather
than on skills and quality. As with most strategic planning, HRP assumes that planning is a rational
process yet organisations have to act on an imperfect knowledge and in a complex and dynamic
political, social, cultural and interpersonal context. The environment is turbulent and constantly
changing and the organisation has to operate within many constraints. This suggests that the HRP
process model is inherently weak as a representation of how mangers go about HRP and is not
reflect reality. Rather than being a top-down, logical, linked and systematic approach controlled by
senior managers, it is often a reconstruction or rationalisation ‘after the event’. In addition, the
HRP planning model often;
 ignores the possibility that knowledge about organisational requirements may reside
elsewhere such as the frontline, and downplays the possibility of bottom-up HRP
 minimises the difficulties of gathering accurate data
 overemphasises managers’ decision-making as rational when it may be biased
 downplays the point that it is not always easy (or possible) to make the required changes
even if they have been reliably identified
However, though HRP does not always generate the outcome benefits claimed for it, it may
deliver process benefits. It may be very helpful to give staff the opportunity to go through the
planning process and scenario planning and also if plans are viewed as adaptable rather than cast
in stone. In reality, there is limited involvement of the HR function and accurate forecasting may
not be possible. Problems may include;
 it is virtually impossible to make accurate forecasts in the current dynamic, global business
climate
 the statistical approach often relies heavily on the continuing relevance of past trends


HR specialists have little involvement in the HRP process
managers may resist a statistical approach, preferring intuition, muddling through or ad
hoc reactive responses to perceived crises.
THE ROLE OF HR INFORMATION SYSTEMS
HR information systems (HRIS) can support the decision-making process in HRP. HRP involves
volumes of data that need collection, storage, manipulation, integration and analysis which would
be immensely time-consuming without HRIS. Information can help to reduce uncertainty and can
be used to evaluate existing performance of the organisation, to recognise existing problems, to
determine or evaluate alternative strategy and to monitor results of previous decisions.
Information can help to determine that a problem exists and also, what kind of problem it is
together with the appropriate solution. The use of IT in HRIS is important because technology can;
 underpin and enable every function of HRM, including HRP
 be the differentiator between competing organisations in recruitment and in training for
example
 allow integration of HR with the rest of the organisation
Many HRIS are changed repeatedly because they fail to deliver what they were purchased for. This
can be due to poor management, implementation failure or incomplete implementation of the
current system by staff. There are many choices with HR technology such as Enterprise Resource
Planning (ERP), niche or mainstream products, integration with other systems or applications or
stand-alone.
There are several problems in choosing a new HRIS. The organisation;
 may replace one technological non-solution with another non-solution
 may suffer from ‘system compliance’ (‘we can’t do that as the system won’t allow it’)
 may not think about transforming its HR function until after buying the system
 may not anticipate future organisational needs such as mergers and acquisitions
 may not explore existing technology and utilise that and so saving the cost of a user licence
 may use IT to draw up the specification without it being approved by the HR function
HRIS are often claimed to generate the following benefits for organisations;
 operational: they may help routine, high-volume decisions, in areas such as:
 absence control
 labour turnover
 accident reports
 productivity measurements
 cost reductions through automation
 tactical:
they improve expert decisions over time in areas such as:
 identifying candidates for promotion
 evaluating recruitment sources
 identifying training needs
 strategic:
they enable exploratory analysis of ‘fuzzy’ problem areas such as:
 the impacts of salary increases
 the balance between setting sales and recruitment targets
PROVISION OF DATA FOR DECISION MAKING
The most obvious benefit of HRIS is the ability to give HR decision makers reports in different
forms to inform decision making.
At the operational level, HRIS can be used to plan and control processes such as recruitment and
selection or keeping to a training budget. It can keep track of all stages of preparation along with
costs at each point to ensure the function does not go over budget.
Taking a long-term view, an HRIS can be used to give better management control such as
approaching retirements, looking at performance ratings, skills, promotion potential and career
track record.
The level of sophistication is likely to be present only in large companies and more importantly,
organisations need the personal systems to provide the information in the first place. Various
factors affect the use of HRIS;
 the structure of the personnel function
the drive to introduce HRIS is likely to come from personnel specialists and therefore, their
needs may dominate the decision-making process.
 the presence of personnel specialists
personnel specialists’ expertise in dealing with IT systems may be a factor
 HR’s influence on the system specification
the system is likely to be more effective if HR can influence this
 HR’s ability to demonstrate cost-reduction potential
if it can do this, senior managers are more likely to give the go-ahead
 an organisational preference for quantitative rather than qualitative data
if this is the case, organisations are more likely to invest in an HRIS
 the willingness of personnel specialists to allow line managers to use the system
if this is the case, the system is more likely to be used. HRIS can help in devolving decisionmaking to line managers giving them information about their staff. Personnel specialists
may have their power reduced and also, line managers may not want, or be trusted with,
the information.
MONITORING AND AUDITING FOR EQUALITY AND DIVERSITY
It is argued that the collection, analysis and interpretation of data relating to the employment
experiences of all groups in a workforce will serve several purposes. These relate to baseline data
that is good-quality, detailed and precise information, which will allow the identification of issues
which need to be addresses and provide a basis for planning and a benchmark for progress and
future impact evaluation. Frameworks for effective auditing and monitoring specify several target
areas. These include dimensions that would differentiate between disadvantaged and dominant
groups as well as processes that mediate entry into and progression through an organisation such
as selection, recruitment, performance management, promotion and also mechanisms such as
parental leave, child care, flexible working, harassment and grievance procedures and any
initiative that could contribute to a supportive environment. The act of collating and analysing
such information sends out a positive message that the organisation takes issues such as
discrimination seriously. However, it may be possible that the only action to be taken is the
collection and storage of data with a report produced every now and again. Quantitative measure
may also not be as significant as subjective measures- ‘how employees feel’. The importance of
capturing how people feel about their experiences is also significant as knowing your organisation
in terms of culture, attitude, opinion, and systems and procedures through attitude surveys is an
important requirement.
MODULE 5:
RECRUITMENT AND SELECTION
INTRODUCTION: THE PURPOSES OF RECRUITMENT AND SELECTION
In all areas of life, people are constantly making decisions and this is also true for organisations;
who to employ, promote, train or dismiss. Unless suitable people are assessed and selected, the
organisation will fail to achieve its strategic objectives and will run into a variety of personnel
problems: high turnover, low productivity and high rates of absenteeism. Jobs offered by
organisations will differ in their skill and ability demands and the differences between people will
be relevant to these resourcing decisions. Therefore, recruitment and selection are of great
interest in HRM theory, research and practice.
In the best practice model of selection and assessment, a matching model is explicit- to match the
right people with the right jobs, that is, attracting candidates that have the required skills while
putting off those who do not, so as not to overload the process.
The selection process is selecting those whose performance best predicts future job performance
and suitability for the job. This requires that the job be analysed in terms of its requirements, a
process called job analysis which is the identification of the vital features of the job. Once job tasks
have been identified, a job description can be drawn up stipulating tasks, duties and
responsibilities as well as minimum standards of competence. From this, a person (or personnel)
specification can be drawn up and this is a definition of the kind of person being looked for to
perform the job effectively and is usually described in terms of the knowledge, skills and
abilities/attributes (KSAs) necessary for successful job performance but is now expressed in terms
of competencies or competences. This enables applicants to be assessed in some way, through
tests, interviews or their predictors to enable the best match between job and person.
Increasingly, organisations are more interested in the fit with the team or organisation rather than
matching the job alone. This has led organisations towards a social process or exchange model and
selection and recruitment is now a much more subjective, political process.
The process of resourcing an organisation is often termed staffing. It is a formal process of
ensuring that organisations have qualified workers at all levels to meet short- and long-term
business objectives. This is one of the critical functions of effective HRM and it is rare to match the
requirements of a job perfectly with the skills and abilities of people available. HRM places great
emphasis on the selection process.
Recruitment is the process of attracting qualified candidates to apply for vacant positions within
an organisation and depends upon factors such as company image, salary, perks and career
potential. An important component of this process is writing the job description which must be
specific and exact to attract the right candidates. The core of the JD includes the nature of the job,
its scope, job title, its authority and responsibilities as well as indications of educational
backgrounds and perhaps salary ranges.
Recruitment leads to the next stage of the process- staff selection where decisions are made as to
who will be chosen to fill the position. The logical action would be to recruit internally from the
organisation and first preference is to promote internally to reduce turnover and increase staff
morale. If there are no suitable internal candidates, external recruitment channels need to be
activated. These channels include referrals, agencies, media advertising in newspapers or internet.
The process of staff selection involves evaluating candidates through application forms, CVs and
interviews and then shortlisting the best candidates. Further (written) tests, interviews and
background/ reference checks are carried out and if all the criteria are fulfilled, the individual may
be offered the job. However, successful hiring is also a very intuitive act which involves risk and
the objective/best practice model is to reduce and mange that risk.
RECRUITMENT
Recruitment begins by attempting to answer the question: “How do we know what employees we
need?” In order to ensure an adequate answer, the following should be considered;
 carrying out a job analysis
 drawing up a job description
 devising a person specification
JOB ANALYSIS
Jobs are the building blocks of organisations. For the psychometric-objective model, the focus is on
the job and of matching people to the job. The job is analysed to generate a person specification
to allow appropriate people to be attracted to the organisation through the recruitment process.
Applicants are assessed in terms of how closely their profiles match the specification and
candidates are selected in terms of closeness of fit.
However, jobs are dynamic and can change because of internal and external forces. The model
assumes there is ‘one best way’ to do the job and that the job is static and unchanging which is
questionable and these assumptions are questioned in the social process or social exchange model
of recruitment, assessment and selection.
All job analysis (JA) methods comprise of two components; the job description (JD) which outlines
the job’s tasks, duties and responsibilities, and the job specification (JS) which is a list of things
that people need to bring with them to the job. Questions that need to be answered in order to
determine what needs to included in the JD or JS;
 the purpose of the job or more precisely, the contributions of the job towards the overall
organisational objectives
 the essential functions that are critical to the performance of the job.
Next, the job settings and work conditions must be analysed looking at safety, location of work,
number of employees and physical conditions of the job. Finally, the organisation must determine
the job qualification or minimum skill required to perform essential functions of the job. The JD
needs to be translated into a person specification to define what kind of person is needed to
perform the job effectively.
After a JA, the organisation should develop evaluative performance criteria to help validate the
selection system. These should be relevant in terms of immediate level criteria (behaviours),
intermediate criteria (performance results) and ultimate criteria (organisational contribution). The
last criteria may take several years to gather due to influences of organisational constraints.
Performance criteria may be composed of production data, judgemental data or personal data but
none of these is satisfactory on its own as a measure of performance. So behaviourally anchored
rating scales, or BARS (giving clear definitions of the attribute to be evaluated, and descriptions of
observable behaviour that reflect that characteristic) and behavioural observation scales, or BOS,
have been developed to minimise observer errors in rating performance and enhance inter-rater
agreement.
JA therefore involves a systematic process of collecting facts about the tasks, responsibilities and
contexts of a job and can be done in several ways;
 observation of the job-holder (difficult for intellectual work)
 self-description by the job-holder (prone to self-inflation)
 questionnaire survey (position analysis questionnaire, job components inventory or work
profiling system)
 interviews with job-holders



the critical incident technique where job-holder provide incidents of effective and
ineffective performance allowing the interviewer to assess the KSAOs that make a real
difference to performance
hierarchical task analysis
other methods such as repertory grid analysis to elicit the constructs that people use in
thinking about jobs and performance, and diary methods
Job design is the specification of the contents, methods and relationships to other jobs to satisfy
organisational requirements and the personal needs of the job-holder. Job design helps
organisations design jobs that are satisfying for employees and provide clear career paths and
facilitate short- and long-term achievement. The mental state of the employee is the primary
consideration and successful changes in job design/specification is employee acceptance of the
changes. Job analysis may appear to be time-consuming but the consequences of not doing it need
to be considered. The outcome is a specification of;
 the job title
 the job objectives
 the actions necessary to complete the task
 the tools, equipment and aids used
 the required performance standards
PERSON-JOB (ORGANISATION ) FIT
This involves questions of person-job fit (does the person match job requirements?) personorganisation fit (will the person ‘fit in’ with the team, company, organisational culture?)
There are different kinds of matching or ‘fit’ that organisations might look for in recruitment and
selection. They may wish to assess ‘job-fit’, the traditional occupational psychology area or use
psychometric tests to assess attitudes and skills.
Job fit
Skills
Abilities
Organisational fit
Personality
Value
Goals
Attributes
Higher
Satisfaction
Commitment
Performance
Lower
Stress
Turnover
Absence
Selection, socialisation and fit
RECRUITMENT PRACTICES: ATTRACTING CANDIDATES
It should not be automatically assumed that the organisation needs to recruit a direct replacement
for a vacancy: the necessity for the post should be reviewed and whether job redesign is required
or job-holders reallocated to other duties as well as internal promotion or training of existing staff
is required.
Through HRP, as a review of organisational requirements, a new position may need to be
developed.
CHANGING RECRUITMENT PRACTICES
There is currently a war for talent making it hard for organisations to attract suitable candidates. It
is in the interest of organisations to attract as large a number of suitable candidates while
discouraging unsuitable ones.
Vehicles for attraction include advertising, recruitment agencies, headhunters, internal advertising
(either before or during external advertising), or word of mouth (which may be unfair for certain
groups). Realistic job previews (RJP) give the candidates realistic job information which can reduce
turnover but can also deter good applicants and reduce applicant numbers. Application forms can
make screening easier and well-structured forms can enhance reliability (yielding same results
under similar conditions). Internet use is widely used with online applications. Also selection tests
or biodata forms may be used with processing being carried out by the organisation or an external
agencies.
Emerging areas of interest in R&S have been the increasing importance of ‘employer branding’,
becoming ‘employers of choice’ and ‘talent management’.
SELECTION
Selection attempts to answer the question: How do we choose the best person?
There are a variety of selection techniques with no ‘one right way’ although there are evaluative
criteria or evaluative standards against which we can test a candidate’s suitability. Evaluative
standards are the standards by which the quality of a selection procedure is assessed such as
reliability, validity, interpretability and practicality.
Utility is also a term used to assess the benefit-cost ration associated with a particular course of
action.
Reliability essentially refers to consistency of which there are several kinds;
 test-retest (consistency of measurement at different time points)
 tester (two different assessors arrive at the similarly consistent measurements)
 test (whether the test shows consistency in relation to item distance)
Reliability is expressed in terms of a correlation coefficient r, which measures the relationship of
scores obtained from the test at different times, between two testers using the same test, or of
two items purporting to measure the same dimension or construct.
Validity is a complex construct composed of;
 face validity: does the test feel valid to the candidates (affecting candidate reactions)?
 content validity: the degree to which the content matter matches the purpose intended
 construct validity: does the test measure what it is supposed to measure?
 criterion-related validity: probably the most important aspect of validity, especially
‘predictive validity’, it measures the relationship between scores on predictor, such as tests
or interviews, and criterion such as job performance, performance appraisal, promotion,
output and turnover.
A problem with these measures is that it may not measure real job performance as a job holder
may do well at job level but do poorly at the team or organisational level.
The relationship between predictor and criterion is expressed as a correlation coefficient. The
purpose is to avoid false positives (people who score highly on tests but poorly on criterion) and
false negatives (people who perform poorly on tests but highly on criterion).
Validation strategies require large numbers of candidates and much research has been done with
governments and the military. Ideally, to do the calculations, organisations must also recruit poor
performers at the point of testing and to get round this, analysts adopt a concurrent validation
strategy, testing existing staff and exploring correlations with concurrent performers and assuming
that current staff are motivated to do well on tests as well as applicants.
Range restriction is also an important issue: it is unlikely that applicants for a CEO position will
have an IQ of less than 100, or janitor positions, much above 100.
SELECTION TECHNIQUES
Applicants are often pre-selected using information obtained from CVs or biodata. It is possible to
classify selection techniques in terms of whether they seek to assess past, present or future
behaviour. The logic of past methods is that ‘past behaviour predicts future behaviour’.
 Past (e.g. track record, experience)
o references
o biodata
o peer observation
o structured/criterion-related or behavioural
o astrology
interviews


Present (e.g. current performance)
o graphology
o ability tests
o aptitude tests
o self-assessment
o
o
o
o
Future (e.g. future intentions)
o situational interviews
o hypothetical interviews
personality inventories
unstructured interviews
work samples
assessment centres
Research has sought to establish the validity of such assessment techniques, the principle being
that on a range of 0 to 1, 0 is ‘chance prediction’ and 1 is ‘perfect prediction’.
Perfect prediction
1.0
0.9
0.8
0.7
0.6
0.5
0.4
Chance prediction
0.3
0.2
0.1
0.0
{
{
Structured interviews
Ability test
Work sample
Assessment centre
Biodata
Personality assessment
Unstructured interview
References
Graphology
Astrology
Accuracy of predictors compared
Techniques such as references, graphology and astrology do poorly while others do well and some
moderately well. Interviews have received bad press with psychometricians viewing it as lacking
reliability and validity. Information gathered is prone to a number of biases such as horn/halo
effects, recency and stereotypes errors but these are typically found in unstructured interviews.
There are several types of structured interview ranging from the situational interview where
future-oriented responses are sought from hypothetical situations (derived from job analyses) to
the patterned behaviour description interview where questions are posed on the basis of a job
analysis which enquire as to how candidates dealt with situations in the past (initiative, leadership,
judgement).
PSYCHOMETRIC TESTS
Occupational psychologists are concerned with consistent patterns of differences displayed by
people, especially those of personality (differences in temperament) and cognitive ability (capacity
to process information). Such differences are assessed by psychometric tests which include;
 general and specific ability tests (i.e. manual dexterity, aptitude, numerical, verbal, spatial)
 tests of occupational preferences
 tests of personality
General
intelligence
Verbal:
educational
Verbal
Spatial:
mechanical
Numerical
Mechanical
Manual
Vernon’s model of cognitive ability
Situational factors
Personality construct
Big five:
Emotional stability
Agreeableness
Extroversion
Openness to experience
Conscientiousness
Work competencies
Overall performance
Analysis and judgement
Decision-making
Interpersonal sensitivity
Resilience
Energy and initiative
etc.
Work proficiency
Genetic and environmental
factors
Job demands
Links between personality, competence and performance
Jung (1923) first postulated a basic difference between extroverts (who are sociable and talkative)
and introverts (who prefer solitude). More recently, a five-factor theory (Big Five) of personality
has become generally accepted. The dimensions are;
 extroversion- introversion
 neuroticism- stability (related to anxiety)
 agreeableness (warm)
 conscientiousness (well-organised, concerned with goals and plans)
 openness to experience (imaginative and flexible)
These dimensions were empirically based with theory assigned post hoc. Research has shown that
there are some important relationships between personality factors and job performance.
ASSESSING EMOTIONAL INTELLIGENCE
People vary in their capacity to process information. Emotional intelligence (EI) is the ability to
perceive accurately, appraise, and express emotion; the ability to understand emotion and
emotional knowledge; and the ability to regulate emotions to promote emotional and intellectual
growth. This can be taken further and associated with leadership and business success. Cognitive
processes are influenced by emotional factors and these affect success in all areas of life. EI is seen
as a bedrock for emotional competencies. The best managers are seen to make decisions based on
combinations of self-management and relationship skills and an awareness of how their behaviour
affects others. Goleman developed the Emotional Competence Inventory which is meant to be
filled in by the individual and also peers, superiors, customers, subordinates, etc. It covers;
 self-awareness
self-confidence and accuracy of emotional self-assessments and
recognition of emotions, being open to feedback and knowing strengths and weaknesses
 self-management
self-control, self-regulation, adaptability, initiative, being focussed,
trustworthy, ethical, responsible, persistence, comfortable with new ideas, commitment
 social awareness
empathy, organisational awareness, anticipating needs of others,
coaching and mentoring, unbiased respect, understanding power relations and networks
 relationship management
social skills, aspirations, influence, developing others,
fostering teamwork, leading by example, championing change, negotiation, building
bonds/ synergy
Dulewicz and Higgs developed an EI scale in the UK that measures EI in terms of the emotional
intelligence quotient (EIQ). EI consists of 7 dimensions;
 self-awareness: awareness of feelings, can manage them
 emotional resilience: can maintain performance under pressure
 motivation: has drive/ energy to attain challenging goals/ targets
 interpersonal sensitivity: shows sensitivity, empathy to others
 influence: can influence/ persuade others
 intuitiveness: can make decisions on reason/ intuition
 conscientiousness and integrity: is consistent in words/ action, ethical standards
EI is important in leadership becoming more important the higher up one is in a company. Leaders
who often ‘derail’ show deficiencies in emotional competence. However, others have
distinguished trait EI, assessed through psychometrics and correlated with personality factors,
from ability EI, assessed through ability, not self-report, measures. An important question is
whether EI is an ability construct, like intelligence, or whether it is a trait concept, like personality.
INTEGRITY TESTS
There is increasing interest in integrity: behaving in ways that reflect broadly shared values in
areas such as trustworthiness, honesty, unwillingness to take advantage of others. Integrity is
often associated with EI and almost everyone will show integrity in some situations and almost
everyone will show dishonesty or untrustworthiness in others. The situation and norms that
operate in the workplace such as ethics, lateness, stealing will all influence how much ‘integrity’ is
displayed. Honest people show more integrity across a wide range of behaviours than dishonest
people. Integrity seems to be a product of both personal factors (values, attitudes) and situational
factors (norms, opportunities, rewards and sanctions). To influence integrity at work, a solution
would be to change the situation: better monitoring and security procedures, publicising efforts to
reduce dishonesty, ensuring ethical leadership. Another route is to ‘change the person’ through,
say, training, or investigation and dismissal and also through recruitment, assessment and
screening. ‘Recruiting for integrity’ may be very important in situations where there are many
opportunities for dishonest acts. Some organisational norms may also tolerate some degree of
dishonesty, for example, corrupt police forces. Integrity tests are advocated as a strategy to
minimise ‘counter-productive’ behaviour and are used more in retail and banking, but, rarely used
for managerial and executive staff! There are basically two types of integrity test;
Overt, where scales such as customer relations or drug avoidance seek to assess admissions of
dishonesty and individuals’ perceptions of their own or others’ dishonesty, as well as their
perceptions of norms regarding counterproductive behaviour.
Tests more closely resembling personality-based tests where individuals are presented with items
describing characteristic behaviours, interests and activities. Tests often contain ‘normal’
personality dimensions and reliability scales. They measure dimensions such as thrill-seeking,
resistance to authority and aspects of the Big 5. Scores on such tests are correlated with sabotage,
theft, drug abuse and measures of shrinkage. The two tests show similar levels of validity for
predicting future performance, comparable to other kinds of psychometric tests, with few major
group differences, except for women scoring higher on integrity tests than men. Overt tests tend
to be validated against polygraph tests and indices of theft; personality tests are validated against
supervisory ratings or personnel data. Alternatives to integrity tests include;
 integrity interviews
 references
 polygraph tests
 background checks
However, none of these has been shown to be more effective than integrity tests. Honest but
anxious people may fail such tests and dishonest but calm people may pass them. Some states and
countries have outlawed their use.
Current employees may have their behaviour monitored through surveillance and can raise
considerations of invasion of privacy. However, organisational factors such as loose norms where
there is no clear expectations on, say, theft, socialisation of new recruits to tolerate theft, lack of
accountability for ethical behaviour, scapegoating, etc. usually have a stronger impact on
dishonesty than personal variables: bad barrels have more impact than bad apples!
IPSATIVE TESTS OF PERSONALITY AND STYLE
Unlike psychometric tests and inventories, ipsative tests, seek to avoid the ‘social desirability’
problems inherent in many psychometric tests- where individuals may intentionally present a
distorted, socially desirable picture- by using a different test structure requiring a choice between
two statements or adjectives that appear equally desirable or undesirable, instead of answering
‘true’ or ‘false’. Ipsative tests are more useful for personal and team development than for
selection and many psychometricians have suggested their suspect reliability and validity. Popular
tests include the Belbin team role profiling and the Myers-Briggs approach to personality and
learning styles;
BELBIN TEAM ROLE PROFILING
This profiling instrument has developed over the years and takes the form of a simple
questionnaire, completed by the individual and then by their peer group for the purpose of
assessing preferred behaviours and therefore characteristics that are either beneficial or
detrimental to a team. The test tries to
 define an individual’s current preferences (snapshot)
 identify their typical team behaviour
 assess their suitability for a team role, chosen from 1 of 9 types
Team role type
Description
Team contribution
Allowable weaknesses
Plant
Creative, imaginative,
unorthodox
Solves difficult problems
Ignores incidentals. Too preoccupied to
communicate effectively
Resource
investigator
Extrovert, enthusiastic,
communicative
Explores opportunities
Over-optimistic. Loses interest once
initial enthusiasm has passed
Coordinator
Mature, confident, a good
chairperson
Shaper
Challenging, dynamic,
thrives on pressure
Monitor evaluator
Sober, strategic and
discerning, sees all options
Judges accurately
Lacks drive and ability to inspire others
Teamworker
Cooperative, mild,
perceptive and diplomatic
Listens, builds, averts
friction
Indecisive in crunch situations
Implementer
Disciplined, reliable,
conservative and efficient
Turns ideas into practical
actions
Somewhat inflexible. Slow to respond
to new possibilities
Completer
Painstaking, conscientious,
Delivers on time
anxious, searches out errors
Inclined to worry unduly. Reluctant to
delegate
Specialist
Single-minded, self-starting, Provides knowledge and
dedicated
skills in rare supply
Contributes on a narrow front only.
Dwells on technicalities
Clarifies goals, promotes
decision making, delegates
well
Drive and courage to
overcome obstacles
Can be seen as manipulative. Offloads
personal work
Prone to prevarication. Offends
people’s feelings
Until 2001, the analysis was based on a questionnaire made up of 7 sections of 10 descriptive
statements. Originally, the profile was a self-scoring one called the Self-Perception Inventory (SPI)
but has now been replaced by the Belbin Interplace computer system which can more reliably;
 improve self-awareness and personal effectiveness
 foster mutual trust and understanding between work colleagues
 match people to jobs for the purpose of selection and career planning
 enhance team building and team development
SPI is no longer recommended by Belbin Associates as it lacks the balance of peer/observer input
and does not offer responsible advice. Observer assessment has been added to provide feedback
and is intended to give a more robust profile than assessment based purely on self-reporting.
Belbin assessments are not strictly psychometric personality tests because they measure preferred
behaviour. 9 clusters of behaviour are assessed, called team roles.
Certain types of profile combinations are potentially likely to result in tensions and conflicts.
Belbin uses the 9 team roles to create 4 work roles- a mix of tasks and responsibilities undertaken
by individuals or within a team. It has a colour classification system to clearly differentiate
between 4 work roles. This avoids ambiguities and misunderstandings by allocating ‘colour-coded’
tasks to a ‘colour-coded’ personality which is a system finding great favour in a time-constrained
environment. Membership of any team should not remain static as this is dysfunctional and
facilitating career moves within a company is one way of furthering perspectives and offers the
advantage of becoming a ‘bigger person’. Another way is to swap members with other team
members to widen and deepen understanding.
There remains doubts as to the psychometric properties of the Belbin inventory. It is claimed that
the model displays adequate convergent validity (the degree to which an operation is similar to
other operations that it theoretically should be similar to), alongside weak discriminant validity
(the degree to which an operation is not similar to other operations that it theoretically should not
be similar to).
THE MYERS-BRIGGS/MBTI APPROACH TO PERSONALITY
In 1923, Jung developed his influential model of personality as a dynamic and organised set of
characteristics possessed by a person which uniquely influences his/her cognitions, motivations
and behaviours in various situations. Cognitions is the capacity for information processing through
psychological and/or related conceptual connections, and behaviour is the actions/reactions of
individuals in relation to their environment. The behaviour may be conscious or unconscious, overt
or covert, voluntary or involuntary. Jung articulated the following proposition;
 past experience and expectations about the future influences behaviour and personality
 individuals are capable of constant and creative development
 personality is an open system which is receptive to inputs and exchanges. Behaviour is a
subsystem of personality which can change as a result of inputs from, or interactions with,
the individual’s external environment. So the influence of others can have a significant
impact on an individual’s behaviour.
Jung’s theory postulates two attitudinal orientations and four basic psychological functions. The
attitudinal orientations comprise extroversion and introversion, which relate to the focus of
attention and flow of psychic energy of an individual. Attitudes and functions are often presented
through 3 enantiomer (pair-wise interactive) dimensions of the human psyche;
 extrovert and introvert as attitudes
 sensing and intuition as perception functions
 thinking and feeling as judgement functions
These were integrated by Myers and Briggs into the Myers-Briggs Type Indicator and its purpose is
to make the theory of psychological types, described by Jung, understandable and useful.
Attribute
Structure
Decision
Information
Worldoriented
Function
Nature
Function
Nature
Judging
Are flexible in a spontaneous way, seeking to
Need planned processes and
experience and understand phenomena rather
regulation. Highly structured Perceiving
than to control them.
lives, adhering to plans
Energised by resourcefulness. More interested
in others’ intentions than in their own
Thinking
Involves logical
consequences for choices of
action. Connects to judging
rather than intake of simple
information
Sensing
Involves perception rather
than judging information.
Preference is for sensing
relating to the tangible and
manifest
Introvert
Focus on the inner world of
ideas and experiences,
Extrovert
reflecting on thoughts,
memories and feelings
Feeling
Involves evaluating information and is
associated with emotional responses. Connects
with purely subjective perspective of
situations. Oriented towards personal values
Connected to the unconscious. Comes from
complex integration of much information.
Consequence is to see the bigger picture,
focussing
on the structured relationships and
Intuition
connection between facts and finding patterns.
Tends to accommodate the abstract and
conceptual
Focus on the external world and
participatory activities and actions within it.
It is based on the internal world.
The theory declares that seemingly random variation in behaviour is quite orderly and consistent
being due to perception and judgemental preferences of individuals. Perception involves ways of
becoming aware cognitively and phenomenally, while judgement involves reaching conclusions
about what is perceived. The 4 preference dimensions of the MBTI accumulate into a set of 16
permutations of dichotomies that result in 16 personality types. These form the basis of the model
and so, the MBTI.
DICHOTOMIES
EXTRAVERSION
INTROVERSION
SENSING
INTUITION
THINKING
FEELING
JUDGING
PERCEIVING
To code these types, the MBTI adopts a set of ordered letters:
The first letter (E or I) indicates the person’s most favoured energy source.
The second letter (S or N) indicates the person’s most favoured perceiving mental process.
The third letter (T or F) indicates the person’s most favoured judging mental process.
The fourth letter (J or P) indicates the person’s kind of mental process that leads to an outside
world orientation.
The tendency is to understand each of the 16 types as the sum of its essential parts, for example,
ESTJ = E + S + T + J. But, it is the interaction of the 4 preferences that is important and the unique
mental patterns that these interactions determine. Thus, INTJ is seen to be the most independent
minded of the 16 types, and ISTP is seen as having an intuitive, investigatory aptitude.
LEARNING STYLES
Honey and Mumford’s personality inventory is a development of Kolb’s earlier work on learning
styles and his 4 stage learning cycle. Theirs is a measure of style or preference, rather than of level.
Attribute
Function
Nature
Function
Activist
Theorists
Accommodator
Likes doing things, carrying out plans and
experiments, being involved in new experiences
Activist
Reflector
Diverger
Adopts unconventional attitudes; is emotionally
inhibited and innovative
Theorist
Pragmatist
Converger
Theorist
Reflector
Assimilator
Holds conventional attitudes; demonstrates
practical application of ideas; is emotionally
inhibited and adopts conventional logic
Has ability to create theoretical models; interested
in theoretical soundness rather than its practical
application
INTERNET TESTING
Internet testing has increased in popularity over the years (5% of large UK companies in 2006 were
using it). It is expected to increase rapidly in future years. It is possible to not only recreate a
computerised test but to add audio and video enhancements as well as virtual reality. In addition,
social networking sites and organisational-based sites may be important developments for
recruitment and selection. Social networking technology is presenting unforeseen challenges and
to an extent, unknown threats and opportunities to organisations, HR functions and ER.
The use of the internet for marketing, sales, b2b, etc. is well-established though not fully
understood. The experience and understanding are of limited value in Web 2.0 applications which
are new phenomena and which have key and critical characteristics in providing power and
control over content and processes to independent people and groups. This characteristic shows
the importance and interest Web 2.0 to HR and ER professionals. The dichotomy, though, that is
presented in the potential implications to ER is the threats and opportunities presented by internal
and ‘controllable’ use of Web 2.0 technology versus the threats and opportunities presented by
external and ‘uncontrolled’ use of Web 2.0 technology. Implications include control of, and use of,
the internet at work, monitoring internet content/social networking, and ER processes such as
recruitment, selection, PM, talent management, brand management, and learning and
development.
ASSESSMENT CENTRES
Assessment centres, unlike their close relatives, development centres, are used primarily for
selection purposes, though they may have an element of development attached to them. A slight
variation of assessment centres is that of an extended interview, written exercises and led group
activities. The term ‘assessment centre’ as used here refers to;
 a process and not a place
 the use of structured combinations of techniques
 the assessment of people in groups
 the assessment of participants by groups of trained observers
 the use of situational tests
 the assessment of candidates on multiple dimensions (as derived from a thorough JA)
Key questions that need to be addressed include such issues as;
 what is the centre’s essential purpose?
 how will participants be selected?
 who runs the centre?
 how does the centre integrate with existing policies and practices?
 how will long-term effects be evaluated?
By focussing on these and other questions, many of
assessment and development centres such as;
 poor planning and inadequate JA

 poorly designed exercises

 insufficient pre-centre work

the pitfalls can be avoided that afflict
unqualified/ poorly trained facilitators
inadequate participant preparation
misuse of data
One of the keys to creating a successful centre is to develop the necessary competencies which
are a range of criteria traditionally known as dimensions, skills, characteristics, abilities, attributes
or qualities. The concept of competencies evolved from the notion of core competencies, which
moved from individual level to organisational level. The concept of competency has been criticised
for entrenching organisational power by reducing personal characteristics to quantifiable units,
but the concept has proved resilient and has even flourished in both the public and private sector.
Competencies clearly differ between roles and job descriptions but it is generally agreed that
managerial competencies can be generalised to about 30 generic competencies. However, the key
to using a competency-based approach in a centre is simplicity: they should be easily understood
and interpreted with explicit explanations on the competencies that are being sought to develop.
One way to differentiate between competencies is by using critical incidents analysis and then to
identify specific behaviours that reflect these.
Problem-solving competencies





monitoring developments
gathering information
analysing information
gathering alternative approaches
making effective decisions
Task management competencies






showing concern for excellence
setting and prioritising goals
planning and organising work
delegating responsibilities
controlling the work of others
coordinating the work of others
Self-management competencies
People management competencies
 managing own work
 managing stress
 developing own competencies





establishing effective relations
developing the competence of others
persuading and influencing of others
initiating group activity
developing commitment
Williams and Dobson’s (1991) management competency model
Once competencies have been identified, they can be used to match up organisational outputs to
show which competencies are important to different sections of an organisation. More usually,
they are matched up with tasks and roles that performed by centre participants. Finally and most
importantly, competencies for the basis for the competency matrix that is used to create the tasks
that will be utilised within the centre. They must also be matched up with suitable centre exercises
which will have a mix of role-play and written exercises that can be further subdivided into
individual or group exercises. Some of the dimensions on which participants may be assessed and
some of the exercises used to reveal performance against these dimensions could be;
Business sense
decisiveness
organisation and planning
energy
oral communications
resilience
impact
social sensitivity
Personality questionnaire
leaderless group discussion
in-basket exercise
interview simulation
business presentation
DEVELOPMENT CENTRES
A development centre consists of multiple participants undertaking multiple activities with
multiple observers assessing their performance. Their strengths and weaknesses are assessed
against a profile of behaviours or competencies that are identified as critical to job/role
performance through a critical incident interviews with job-holders. The stages include;
 identify the criteria against which performance will be assessed; e.g. through JA, CIA or
repertory grids, (an interview method identifying ways a person construes their experience
 identify activities that post-holders engage in; e.g. a sequential activities
 devising a matrix indicating which dimensions are to be assessed against which exercise as
not all dimensions will be assessed in each activity
 training the assessors in the use of the matrix, how to score and how to give feedback
 running the centre and ensuring that each person is assessed by at least 2 assessors during
the day
 the assessors meeting to agree an assessment for each participant, giving feedback on
performance to mutually identify training needs, organisational development needs that
seem to run against the cohort and might apply organisation-wide.
The difference between a development centre and an assessment centre is the centre’s focus and
in what the centre’s results are used for. An assessment centre gives pass/fail decisions, a
development centre gives recommendations on development/promotion options and decisions.
In both, behaviour is observed, detailed performance feedback provided, and dimensions
observed are keyed to competences. However, in a development centre, the output is used to
inform a personal development plan and enable development activities to be more focussed.
Define objectives, gain commitment
Define competencies
Select and develop exercises, design programme
Train assessors
Run pilot
Implementation
Review and evaluation
Stages of development/assessment centre design
Development and assessment centres can be placed on a continuum from ‘pure development’ to
‘pure assessment’ with many organisations running ‘hybrid’ centres mixing both.
Development
Assessment
100% development
50/50 assessment centre
100% assessment centre
centre
for potential
>75% assessment centre for
75% assessment centre
internal
selection/promotion
for career development
The assessment centre continuum
SEQUENCING ASSESSMENT AND SELECTION PROCESSES
It is likely that a company will sequence its selection process using different techniques at various
points in time. For example, initial applicants may be asked to fill in a scored, competency-based
application form and those who score highly may be invited to an assessment centre and those
who score highly on this may be invited to a structured, competency-based interview. The ones
who score highly on this may then be offered positions within the company.
AN ALTERNATIVE MODEL OF SELECTION AND ASSESSMENT
Recruitment and selection is a two-way, decision-making process: the candidate is also making a
decision as to whether to enter into an ongoing relationship with the organisation and this
decision can be terminated at any stage. Questions will be flowing through the candidate’s mind
and both sides are continually engaged in impression management. This is explicitly recognised by
the social process or social exchange model of assessment and selection which sees assessment as
a two-way decision-making with the applicant as an active decision maker. Both parties have
expectations but neither party is seen as fixed; both are dynamic and changing. If the process is
successful, expectations will be congruent and a viable social contract emerges. The fit is also one
of expectations, culture and values. Selection is seen as applicant socialisation and if the applicant
is made to feel ‘too special’ in the selection process, expectations of employment may be
unrealistically high. It may be difficult for each party to assess how much is image management or
deliberate falsification. The candidate can try and project a different personality for the purposes
of interview and recruiters may not give a full picture about the job, prospects, salary,
management style etc. Such deception can have negative outcomes- the work can be more
demanding than expected or a promised open culture can be one of distrust. Each party is trying
to influence the image it presents to the other party. This is seen as an inevitable factor in the
social process model- not to be eliminated as in the psychometric-objective model, but explicitly
made part of the selection process.
EVALUATING THE RECRUITMENT AND SELECTION PROCESS
Two important questions to ask are “How do we hang on to them once we get them?” and “How
do we know that we made the right decision?”. The issues here are those of retention of
candidates and how to assess the value of the selection system to the organisation. The personal
and organisational costs of poor selection decisions may be significant, reducing organisational
efficiency. The roles of validity of different selection procedures and accurate JA are important and
utility theory has helped give ER specialists the methodology to identify S&R financial benefits.
Utility modes provide a framework to compare the outcomes of different options and to assess
ROI obtainable from recruiting high performers using valid procedures compared with using less
accurate selection methods. It is better in cost-benefit terms to use a good method of recruitment
and a poor selection method than to use a poor recruitment source and a good selection method.
MODULE 6 PERFORMANCE MANAGEMENT
INTRODUCTION
Recent interest in HRM research has been in exploring the relationships between aspects of HRM
and organisational performance. In terms of ER, this has meant a move away from contracts of
employment to contacts for performance. Effective performance management (PM) can clarify
roles, identify training needs and makes staff feel valued. A comprehensive PM will incorporate
the performance appraisal (PA) alongside initiatives such as coaching, counselling and PRP. It
usually involves;
 performance agreement: defining objectives, identifying development needs
 performance monitoring: reviewing performance
 performance reinforcement: recognising and rewarding performance
 performance enhancement: coaching, counselling, T&D
This module will concentrate on the first 2 steps; that is, performance appraisal (PA) leading to
performance agreement, leading to performance planning and performance evaluation.
PERFORMANCE APPRAISAL DEFINED
PA is the cornerstone of PM which is the systematic procedure for assessing job performance on a
regular basis. At a minimum, it involves an interview between employee and manager and
completion of an appraisal form. More effective systems involve regular feedback on
performance, regular discussions as well as involvement of other stakeholders in reviewing and
enhancing performance. Writers maintain that when an organisation’s is designed and applied
correctly, ‘it is a key mechanism for aligning the efforts of individuals with the aims and goals of
the organisation, and for identifying and rewarding those employees who best exemplify, model
and contribute to organisational goals’. However, evidence suggests that there are problems with
the implementation of PA with high levels of dissatisfaction with PM. Much work on PM has
concentrated on seeking to understand employee attitude and perception towards the appraisal
and PM system and in identifying the factors that explain the lack of satisfaction in it. One
approach is to use an organisational justice perspective (Module 5).
THE IMPORTANCE OF PERFORMANCE MANAGEMENT IN ER
PM plays a critical role in many HRM models. The influential Michigan or matching model sees the
goal of HRM as driving performance (as defined by corporate strategy). Selection focuses on
selecting people for performance, and development focuses on enhancing performance. Appraisal
of performance plays a crucial role in this model by focussing on the assessment of current
performance. The link to reward management is then used to reward high performance and also
to provide incentives to encourage higher performance. It is claimed that PM is often seen as the
cornerstone of strategic HRM.
Appraisal information also helps in strategy implementation, for example, by specifying and
defining what needs to be done, and to what level, to implement a strategy successfully. PA also
helps organisations to facilitate cultural change as staff are appraised against a set of
organisational core competencies which are framed in behavioural terms. PA is arguably the most
contentious and least popular activity in HRM and managers do not appear to like doing it,
employees see no point in it and it is left to the ‘guardians’ of organisational appraisal policy and
procedures (HR managers), to see their work fall into disrepute. Appraisal is seen as central to
management control through its use of measuring and monitoring behaviour which can point
towards reasons of its contentiousness.
TRENDS IN PERFORMANCE MANAGEMENT
Research in the UK has shown that virtually all organisations have used PA to identify training
needs but have used it less to make reward decisions. PA has been extended to many public
services in the UK such as schools and universities. There is also the use of balanced scorecards
which focus not just on financial measures, but also on customer service, internal business
processes, and innovation and learning measures. Other models have added employee satisfaction
as a fifth dimension and this recognises that different stakeholders have different perceptions
about which potential measures of performance are important. There has also been a shift
towards using input as well as output measures: measures of the ‘how’ as well as the ‘what’ of job
performance. Linked to this is the shift away from job-related criteria to person-related criteria. A
further trend has been to encourage employees to be more responsible for assessing their own
performance and goal achievement with greater reliance on responding to feedback, selfassessment and commenting on one’s own performance. In addition, the time focus of PM has
shifted away from current performance (the focus of management by objectives) to recent past
performance (the focus of performance-related pay) and to future performance (the focus of
development efforts and concerns over competencies).
Despite thorough and rigorous PM schemes being implemented, many organisations and
individuals remain sceptical over the value of performance appraisal, and unhappy with the way it
is practised. Appraisees’ satisfaction with their PA system can be influenced by the extent of their;
 participation in setting goals
 involvement in the interview discussion
 feedback on performance received
 knowledge of appraisers’ expectations
 knowledge of the PM system
They also expect PA evaluations to be linked specifically to the job they do and PA systems
therefore need to adequately allow for and recognise differences in employees, their
contributions and their performance.
AN APPROPRIATE MODEL OF PERFORMANCE MANAGEMENT
There is a body of research in the universalist ‘best practice’ tradition that seeks to demonstrate
the extent to which particular bundles of best-practice HRM explain the variation in companies’
profitability and performance levels. However, others in the contingency or best-fit schools claim
that universal, rigid prescriptions fail to acknowledge organisational differences in size, design and
operation and the ‘one size fits all’ is only a useful guidance tool or providing the broad principles
of system architecture of HRM.
Two main approaches to PA can be identified which advocate either developmental or
judgemental approaches to appraisal. Developmental approaches are concerned with motivating
an employee and agreeing aims and objectives (in line with organisational goals) for a forthcoming
period. Judgemental approaches are concerned with providing evaluations and assessments of
employees’ (past) performance. This normally involves deciding on levels of pay or reward and
should, if undertaken effectively, be fair, consistent, based on objective observation of individuals’
behaviour at work. Difficulties occur when these two approaches are confused. The conventional
view of appraisal is focussed on a developmental approach and development-oriented approaches
are generally preferred by appraisees. However, many organisations confuse this by linking pay
awards to PA outcomes and hence confound developmental and judgemental approaches. This
implies that when organisations want to link pay and performance through appraisal, they should
adopt a genuinely judgemental approach. The nature of the PM system and the individuals being
appraised are key factors influencing PA effectiveness. The organisation is important because it
acts as a major constraint an so, PM systems are therefore unique to their contexts.
ORGANISATION
INDIVIDUALS
Development of individuals via
coaching, counselling, career
planning
Where do I stand? Where can I
go? Valid performance feedback
Conflict
Basis for reward and other
personnel decisions
Conflict
Conflict
Conflict
What can I get out of this?
Reward and maintenance of selfimage
Conflicts in performance appraisal
The organisation may be trying to use PA for both development and for reward purposes and
these two functions may come into conflict. The individual may be trying to gain accurate
information on where they stand and where they can realistically go, while also trying to present
themselves in a possibly unrealistic light in order to gain monetary and other rewards. Often in PA
the appraiser is acting both as a judge- rating behaviour and making decisions on pay, promotion,
and training and development, for example, and also as a counsellor- trying to understand the
reasons for apparently poor performance, to motivate the appraisee to try harder and to help
support the appraisee.
In different organisations, there will be different mixes of judge-like and counsellor-like
evaluations. If the focus is on past performance and results, the system is heavily reliant on
documentation and led by the manager, then the outcome is likely to be defensiveness, resistance
and at best compliance by the appraisee. If, however, the focus is on future growth rather than
past performance, on skills (‘how’ of achievement) rather than on results (the ‘what’ of
achievement), and is part of a shared dialogue between manager and employee, the outcome is
more likely to be energy, commitment and enthusiasm on the part of the employee instead of
compliance.
The relationship between manager and employee is not static and simple, but dynamic and
complex. Cost of revamping PM systems may disillusion and confuse employees and managers
may lack the time and skills to make appraisal more effective.
The appraisal balance between evaluation and development in an organisation is likely to be
related to its culture and structure.
Hierarchical, authoritarian organisations may not welcome peer feedback whereas in a matrix
organisation, appraisees may not be committed to the appraisal process if their project colleagues
are not involved in the process.
How wide the span of control is also likely to affect who appraises whom.
Managers can underrate or overrate subordinates for various reasons and may also be subject to
biases similar to those of selection interviewers. Managers need to also manage conflicts within
PA such as the balance between;
 people and processes
 input (skills, competencies, behaviours) and output (internal business measures)
 individual and team performance
 assessment and development (‘you can’t grow a cow by weighing it’)
In many jobs, there are many intangibles qualities that cannot be measured and the pursuit of
quantifiable, tangible measures may be at the expense of these intangibles. Much work is done
within groups and their work is not observed. Evaluators have mixed motives for evaluating
performance and social processes enter all phases of the rating process. Organisations are often
recommended to use multiple raters, reviews and ratings and also to provide better appraisal
training and more objective frameworks such as BARS or competence frameworks. In addition,
forced distribution may be used to reduce ‘leniency’ error.
Others argue that because ‘performance’ is not knowable, observable objective reality cannot be
accurately represented. Appraisal may serve primarily as a tool for management control,
legitimising managerial authority.
WHAT SHOULD BE APPRAISED ?
Some PA schemes assess competences or competencies such as job knowledge and reliability
while other organisations have sought to assess results (outputs) rather than skills or
competencies (inputs), usually expressed in terms of objectives or targets. Some hybrid schemes
seek to assess both target achievement and the competences/behaviour used to achieve them.
IS 360 APPRAISAL THE PANACEA?
Some organisations use 360 or multi-source, multi-rater (MSMR) appraisal systems to overcome
some of the inherent problems in traditional top-down appraisal systems. Different observes are
involved each with their distinctive assessment of performance.
360 feedback
Skip one level superior
Immediate
superior
Internal
clients
SELF-REVIEW
Peers, colleagues,
co-workers
External
clients
Subordinates
Who is doing the observing?
In part, the move away from traditional top-down assessments seems related to changes towards
flatter and more fluid structures, autonomous work units and wider, supervisory spans of control
and all of this legitimises the involvement of subordinates and peers. Using the 360 appraisal is
a way of overcoming problems identified in the traditional appraisal method. Internet and webbased technology is also likely to make the rating/feedback process less cumbersome and time-
consuming and this is likely to grow. Factors which can affect MSMR feedback is development
versus reward, confidentiality/anonymity of raters, frequency and timeliness of feedback and how
feedback is provided. Organisational factors such as an organisation’s climate, managerial style
and hierarchical levels are also important.
The 360 system is often seen as being more appropriate to flatter structures, teamwork and
greater involvement.
ALTERNATIVE APPROACHES TO PERFORMANCE MANAGEMENT
An alternative approach that attempts to go beyond the descriptive or prescriptive approaches
has been developed and this contingency model distinguishes between the ability of the
organisation to measure output and behaviour. If the organisation has a high ability to measure
outputs and a high knowledge of the transformational process, it may base appraisal on behaviour
or outputs. However, it may be able to appraise only outputs, lacking knowledge of the
transformation process (e.g. sales); it may be able to observe behaviour but not assess outputs
(e.g. research) or it may have imperfect knowledge on the transformation process or a poor ability
to measure outputs. This can lead to experimenting with other forms of appraisal such as selfassessment, peer appraisal and customer appraisal.
PERFORMANCE MANAGEMENT IN KNOWLEDGE-BASED ORGANISATIONS
Intellectual capital is often the principal asset of knowledge-based organisations and their PMS
seeks to maintain and enhance the value of this human asset base. There is increased recognition
of the value of intellectual and human capital to the importance of information and knowledge in
the new economy and this is an important determinant of competitiveness. Bundles of HR
practices confirm the importance of linking PA to organisation strategy as well as ensuring
congruence with complementary HR practice through the concepts of vertical and horizontal
integration. This means that if PA acts within a wider PMS instead of forming a part of a
comprehensive HR bundle, it will have a positive impact.
PA can also facilitate meaningful exchanges between knowledge workers and managers, which
contributes to a greater employee ‘voice’ which in turn is an essential complement to highcommitment work practices.
Traditional PA sits uneasily with the characteristics of many professional job roles and a particular
type of PA is therefore required for knowledge-based organisations that have flatter hierarchies
and need to maximise employee flexibility due to competitive dynamics.
‘MANAGERIAL AND INDIVIDUALISTIC ’ OR ‘DEVELOPMENTAL AND COLLEGIAL ’?
There is a dilemma of achieving a suitable balance between the aims of control and commitment,
or judge and helper.
A hierarchy of objectives is incorporated into many contemporary PM approaches that emphasise
control and stipulate and assess an individual’s contribution to the organisation. The performance
improvement cycle within these appraisal schemes requires employees to justify their
development needs by demonstrating their relevance to the attainment of organisational
objectives and reward decisions are based strongly by an evaluation of an employee’s success in
achieving them. This approach is often seen as unwarranted and workable in knowledge-based
institutions.
In contrast, a developmental approach to PA is to give professionals themselves the primary
responsibility to identify aspects of their roles in which development is desired and possible.
This more collegial system is based on trust, self-evaluation and peer review and is deliberately
separated from the processes of reward and promotion.
EFFECTIVE PERFORMANCE A PPRAISAL SYSTEMS IN UNIVERSITIES AND COLLEGES
Various perspectives on appraisal have described it as unnecessary, as counter-productive, as
failing to deliver what it promises or as a surveillance technique for asserting management
control. Organisations best able to avoid such scenarios should be academic institutions running
programmes in business strategy and HRM. As a proportion of core staff in such institutionsprofessionals whose attributes are these organisations’ key strength- will be much higher than in
most other organisations, this should give the motivation and development of these knowledge
workers particular importance in PM. However, anecdotal evidence and literature all suggest that
such confidence is misplaced.
The apparent disparity between what is taught and what is practised in HE and FE stimulate
research to obtain expert witness perspectives in PA from those most centrally involved in the
activity. The way in which people management strategies are formulated and implemented may
be more important in achieving competitive advantage than the nature of the strategy itself.
Indeed, researchers have neglected the political aspects of the appraisal process. One method of
developing an effective and ethical PMS seeks to achieve stakeholder synthesis by involving key
stakeholders in the development of performance objectives and measures. Many organisations
have powerful stakeholder groups, operating in their own ethos and all with their own objectives.
Staff within each type of organisations are archetypal professionals- potentially mobile and not
easily controlled by non-specialist managers or administrators. Moreover, such organisations are
all striving to identify and operate effective PMS that their stakeholder groups will ‘buy into’.
Appropriate performance measures were identified via a consensus-seeking process, embedding
them within an organisation’s aims and culture in a way that engaged commitment from all
stakeholders. The process involved;
 identifying key stakeholder groups
 conducting structured interviews with key stakeholders to agree strategic objectives using
SWOT and PEST analysis
 using the Delphi technique to obtain and analyse the views of different stakeholders
 relating results to senior stakeholder groups for further analysis
If, after this process, genuinely different interests remain, these competing interests are
transformed into competing claims so that each group’s requirements are viewed openly in
relation to the resources available and rival claims. So those responsible for PA in academic
institutions utilise a stakeholder synthesis approach. System designers could realise that an
imposed PA system may achieve enforced compliance with the bickering and guerrilla warfare that
may follow in its wake, or it is a mock bureaucracy, where PA is just a ‘ritual dance’ carried out for
external audiences and for the unfortunate participants, it is a ‘zero sum game’.
The stakeholder synthesis method may be time-consuming to some or a challenge to management
control, but it can produce an effective and robust PA system that recognises the interests of all
stakeholders while, at the same time, giving importance to the concerns of the knowledge workers
whose commitment is central to organisation success. In this way, universities and colleges that
practice what they preach can use relevant, valid and developmental performance criteria, and
above all are seen as within lecturers’ control by those assessed by them.
MODULE 7
CAREER AND TALENT MANAGEMENT
INTRODUCTION
Careers have often been seen in terms of movement with hierarchical structures or jobs with
metaphors such as career ladder, path or track. Career management is associated with efforts of
an organisation to develop and retain ‘key’ employees through individual career plans. Some
organisations use individual career planning to help individuals identify personal drivers and
values, develop networks, and build transferable competencies and capabilities and apply those to
their personal and career development (such career planning may include self-managed learning).
These initiatives are often aimed at graduates and other new entrants and is now under the
banner of talent management (TM).
The traditional approach of careers was formulated in the mid-20th century, founded chiefly on
assumptions of steady upward or vertical movement within a relatively stable hierarchy of jobs.
Organisations and employees face many challenges including globalisation, technological change,
growth of networks and ‘virtual’ organisations, and downsizing, which all generate career
unpredictability and uncertainty.
In this context, there is focus on the boundaryless career, the boundaryless organisation: careers
now are much less predictable, involving more functional, national and organisational boundaries,
as well as more lateral movement. Individuals are becoming ‘agents of their own career’ and
employability security, not employment security, is seen as the new driver of many careers. These
models are not necessarily new- protean careers- a career that is driven by the person and not the
organisation is a concept that has been around for some time.
In addition, there are a number of conceptual problems with such terms as a psychological
contract. Who are the parties to the contract and if it is implicit, is it a contract? How does the
concept of the ‘career model’ apply to unskilled workers? Also, in practice, the old ‘employment
security contract’ was often restricted to male managers and skilled, unionised staff in large
bureaucracies.
There is also an emerging partnership model of careers emerging based on adult-adult
relationships rather the paternalistic parent-dependent child model of earlier employment
security careers. This model emphasises importance of staff showing high performance,
commitment, flexibility, growth orientation, and challenge in exchange for the organisation
offering growth and enhanced marketability/ employability, both internally and externally. In this
model, organisations need to demonstrate continued support for employee career development
and to take responsibility with employees, managers and HR functions, for building and rebuilding
trust and common purpose to facilitate the renegotiation of psychological contracts. Therefore,
organisations need to provide opportunities for self-assessment, benchmarking, development, and
lateral and other moves, as well as training managers as career coaches and career counsellors.
Organisations need to also provide career resource centres and learning centres as well as other
career management practices.
CAREER MANAGEMENT AND CAREER PLANNING PRACTICES
This involves mechanisms to identify potential (e.g. appraisal schemes, development centres, oneto-one counselling) as well as to share information about career possibilities (job postings, career
workshops, online information on vacancies). They involve processes to develop career potential,
such as coaching and mentoring programmes, in-house training and educational programmes.
Research has shown that most career management practices can be classified into 5 groups;





developmental assignments such internal/external secondment, job shadowing,
international assignments
career information and advice such as career counselling, coaching and workshops
initiatives aimed at specific groups such as ‘high-potentials’, succession planning, graduate
entry schemes
use of internal job markets such as online-vacancy boards and open internal markets
basic career support such as setting development objectives, providing formal/ internal
development reviews, and providing informal support from HR
CAREER PLANNING AND CAREER RESILIENCE
Some companies adopt this approach which encourages employees to take individual
responsibility for their career development, continuously reassessing their skills, interests, values
and goals, developing career strategies, and implementing a development plan to broaden their
experience in support of career objectives.
SETTING AND EVALUATING CAREER GOALS
A key part of career resilience is being able to set career goals. Possible options to consider
include;
Vertical movement- up is normally considered as the traditional route that people have taken but
there are other ways to move within an organisation that can provide satisfaction and success
Lateral movement- moving across an organisation or taking a different job at the same level,
maybe without changing status or pay. It is an excellent way to broaden skill bases and experience.
Job enrichment- an option available to everybody at any time. Every job can be enriched by
expanding or changing responsibilities, adding additional challenge.
Realignment/ downward movement- is taking a job at a lower level and is a good move for people
who move from, say, a technical position to a managerial position. It can be a way of changing
career direction in an organisation.
Exploration/ external- this involves leaving the organisation perhaps because your needs and the
company’s needs do not match, or perhaps you want to become entrepreneurial.
In addition, it is also important to benchmark one’s skills against what the market requires and this
is the mark of a career resilient person. Benchmarking is the practice of comparing your skills with
a standard of excellence, and with what the market is currently requiring. In order to stay ahead of
the pace of change, the process of regular benchmarking enables a person to determine which
skills to develop next. The objectives of benchmarking are to;
 measure competitiveness in the marketplace
 identify potential gaps in skills, knowledge and experience
 gather information for career development plans
CAREER AND MANAGEMENT DEVELOPMENT PRACTICES IN THE UK
In the 1980s, three influential reports into education, training and development of British
managers were published. Each report identified several major weaknesses in the system of career
and management development (CMD) in the UK especially in comparison to major competitors.
Implications for Britain’s economic efficiency and relative economic decline included;
the late split between organisational ownership and management control
 low status of managers compared with financiers, professionals, and civil servants
 a poorly developed link between technical and managerial functions
 slow development of managerial identity in the UK


the prevailing assumptions that managers were born and not made
lack of linkage between education and managerial training
Events in the 1980s that led to an increased interest in CMD including the recession, a greater
government interest, turnaround of companies (such as BA) attributed to training, and the growth
of university activity in MBA programmes and other management courses.
Factors that are likely to stimulate CMD activity are;
 the ability to manage complexity
 internal labour markets with open career structures
 HRD aiding recruitment
Factors that are likely to inhibit CMD include;
 a preoccupation with immediate tasks
 a lack of background qualifications
 perception of training as a low-status activity
TALENT MANAGEMENT IN ER
Now, more than ever, it is imperative that organisations manage people well. Talent and talent
management are at the top of the corporate agenda. The dynamic nature of global business is
putting an ever-increasing pressure on companies to be constantly on the lookout for exceptional
talent in the market.
The war for talent is a strategic business challenge and a critical driver of corporate performance
with talent management being critical to every company’s success.
3 fundamental forces are fuelling the war for talent;
 Irreversible shift from the industrial to the information age- the increasing impact of
technology has changed the face of ER and made boundaries between organisations
permeable, enhancing collaboration and intensifying competition. As technology infiltrates
every facet of the workplace, the implications for talent management become more
profound.
 Intensifying demand for high-calibre talent- over the next decade or so, the demand for
talented people will far exceed the availability of skilled workers at all levels and in all
industries. This is referred to as a talent war, a skill shortage, or a seller’s market.
 Growing propensity to switch companies- demographic trends, an increasing need and a
shortage of skilled labour, greater geographic mobility of labour, and the concept of a ‘job
for life’ have placed more power in the hands of workers with transferable skills. Skilled
workers are increasingly moving from job to job as a deliberate choice to increase and
enhance their knowledge base and, therefore, their future employability and earnings
potential.
Attracting and recruiting key workers is only half the battle in the war on talent; the other half is
keeping them. The war on talent not only provides a helpful human perspective on human capital
development, it will be one of the main problems that businesses will have to confront in the 21st
century.
TM is now seen as a key ingredient of organisational success because the value of an enterprise is
directly related to its success in talent management and the growth of human capital as an asset.
Organisations need to pay attention to the strategic importance of managing talent flows through
the company. Terms used include talent pool and the talent pipeline.
THE ORIGINS OF TALENT MANAGEMENT
TM as a systems concept in ER had its origins in the US where client-server technology, OCR and
EO opportunity reporting made applicant tracking possible and necessary for most large firms.
Broadly speaking, TM refers to;
 identification
 engagement and retention
 development
 deployment
of those employees who are particularly valuable to an organisation, either in terms of
their high potential for the future or because they are fulfilling business/ operation-critical roles.
TM has in the past linked to recruitment, PM or performance development but these were seen in
a narrow focus and as separate components rather than a common approach underpinning all
three activities. The phrase has worked its way up the HR agenda and also the priorities of the
organisation as a whole. It is not new and has been around for a long time but it is a concept
whose time has.
DEFINING TALENT
TM is concerned with having the right people in the right roles in the right environment with the
right manager to enable maximum performance. There are several definitions of TM. For example,
it is defined as ‘the integrated set of processes, programmes and technologies designed to develop,
deploy and connect key talent and critical skill sets to drive business priorities’. In general terms,
talent is seen as ‘the sum of a person’s abilities- his or her intrinsic gifts, skills, knowledge,
experience, intelligence, judgement, attitude, character and drive and includes the ability to learn
and grow’. Opportunity needs to be added to the definition as employees may have the abilities
but may not be given the opportunity to display them in the workplace. Talent is an attribute that
needs direction for it to be used constructively and effectively to give individuals, who have the
capability, to make a significant difference to the current and future performance of the company.
Some organisations may develop behavioural frameworks to identify and assess talent and to
assist in developing a shared language and understanding, including achievements of targets.
In general terms, talent refers to individuals who can make the greatest difference to
organisational performance either through their immediate contribution or through their
potential, or both.
DRIVERS OF TALENT MANAGEMENT
New technologies, changing business models, market globalisation have all increased the demand
for talented people. Meanwhile, the aging workforce is leaving many organisations with their
critical workforce approaching retirement and perhaps with an inadequate supply of younger
talent.
Workforce reduction has temporarily slowed down the major battles for talent but it has added a
premium on ensuring that the talent remaining is high-performing and well-suited to the strategic
needs of business. This means that organisations, if they are not doing so, should be reviewing
their approaches to talent management.
TM therefore involves individual and organisational development in response to a changing and
complex operating environment, and includes the creation and maintenance of a supportive,
people-oriented organisation culture.
The concept of TM is based on the conscious, deliberate approach undertaken by an organisation
to attract, develop, deploy and retain people with aptitude and abilities to meet current and
future organisational needs, with a key objective being to ensure that there is a supply of talent in
the ‘talent pool’ or ‘talent pipeline’ to meet those needs.
OBJECTIVES OF TALENT MANAGEMENT
There is a distinctive difference between individual talent needs and organisational requirements.
From the perspective of talent, career advancement and personal concern are of most concern,
and from the perspective of the organisation, improved performance and succession planning will
be the target of TM. Also, succession planning, the planned replacement of key staff, is conducive
to the success of an organisation. In some companies, TM may be limited to succession planning
while in others, it may involve a comprehensive set of strategies. Some companies have an
inclusive, egalitarian approach, giving opportunities for all employees to be included in the talent
pool, and other companies may have an exclusive or closed and elitist approach, restricting
membership to certain groups or grades.
COMPONENTS OF TALENT M ANAGEMENT
There are several models, all fairly similar, of TM that have been put forward. One model (Morton)
depicts 6 categories of activities of TM, based on the experiences of 30 organisations;
 recruitment
 professional development
 leadership/ high-potential development
 workforce planning and culture
 retention
 performance management, feedback/ measurement
Another model (Fitz-enz) argues that TM encompasses 6 human resource services;
 staffing
 performance management
 leadership development
 training and education
 succession planning
 retention
The perspective developed in this module sees TM as involving 4 ER processes;
 attracting talent
 retaining talent
 developing talent
 transitioning talent
ATTRACTING TALENT
Under this section, two ER activities should be integrated into the TM management process;
employee attraction and recruitment and selection. The situation is made difficult when local and
international labour markets are problematic. The ability to recruit external talent is influenced by
the image of the industry, sector of the organisation, alignment of individual and organisational
culture and perhaps the offering competitive reward packages.
Employee attraction: when attracting talent, it is helpful to have a strong and easily identifiable
brand image that reflects core values of the organisation. The organisation’s talent requirements
must be clear and accurate to enable a ‘fit’ between organisation, individual and role. When
creating a brand, an organisation must think about the type of talent it wishes to attract as people
are attracted to organisations and roles for differing reasons.
Recruitment and selection: when considering any form of R&S, it is important to have a defined
process that is visible across the firm to clarify the responsibility and activity of each R&S process.
This process will need to be flexible enough to ensure that talent is not overlooked during a
particular recruitment process simply because the individual does not meet the specific
requirements of the role. Using competency-based recruitment and having visibility in terms of
competency requirements for all roles can help, as can recruiting managers with an open and
flexible mindset so that they are constantly searching for talent that will benefit the organisation.
RETAINING TALENT
Talented people will stay with a company only if they feel it has the right culture and provides
them with self-fulfilment, a sense of accomplishment and fun. Without the right mix of values,
attitudes, terms and benefits, managers may leave. An important factor that should be considered
is emotional attachment. The challenge of managing talent from an employee’s viewpoint is not
just managing quantitative solutions such as more money and golden hellos, as these are easily
matched and topped by competitors. Although these are important, long-term commitment to an
organisation is driven by some kind of emotional attachment and this is, in essence, a variation of
the old psychological contract. A sense of emotional attachment can be achieved by;
 recruiting and developing employees who share the same values, attitudes and beliefs that
the organisation’s success is built upon
 developing those employees so that they have true commitment and sense of belonging
 ensuring talented individuals achieve a sense of accomplishment and fulfilment in their
roles
 fostering relationships through coaching/ mentoring and encouraging inter-departmental
networks
By undertaking such activities, organisations will develop an employee’s emotional attachment,
thereby protecting them from leaving, either by headhunters or of their own accord. They are
then more likely to apply and develop their talents in the long-term interests of the organisation.
DEVELOPING TALENT
People-related activities that fall under this heading involve the following;
 Training and development: a fundamental part of TM as it rarely arrives fully developed.
Talent reviews and selection and recruitment processes identify potential in individuals
which needs to be maximised through focussed T&D
 Coaching and mentoring: this is key to developing and retaining talent. Development of
talent is not restricted to training courses. Much individual development occurs through
stretching people’s roles, using coaching and mentoring supported by well-designed
training interventions. Line managers need to understand the principles of coaching and
mentoring.
 Performance management: regardless of the focus of talent management activity- whether
it is about developing specific pools of talent or a broader approach aimed at developing
organisational capability- there needs to be a transparent PMS that supports the provision
and continuous development of talent. Basing the performance management process on
the assessment and development of competencies greatly assists this aspect.
 Succession planning: traditional succession planning has become less effective because
organisations have become ‘flatter’ and because traditionally, succession planning lacked
transparency and occurred ‘behind closed doors’. With the focus being on past
performance rather on future potential, few people were asking questions about the talent
that their organisations required for the future.
The move to consider all employees as having the potential to show talent will have a significant
impact on succession planning, creating a need for it to be responsive to the business-planning
process. It can no longer focus on a small pool of employees who may have demonstrated early on
in their careers that they had potential: it needs to incorporate individuals from every level of an
organisation who are able to demonstrate talent.
In future, the succession planning process will be based on how organisations use information
about talent to plan ahead. In some companies, TM seem to be a new name for succession
planning but TM is much broader than succession planning.
TRANSITIONING TALENT
The benefits of offering exiting employees quality transition programmes far outweigh the costs
and risks of not providing them. If talented individuals leave on good terms, and there is an
opportunity to stay in touch, there may be possibilities for them to rejoin in the future, having
perhaps broadened and deepened their experience in the meantime. In addition, employees who
leave may put business in the way of their former company.
It is important that any TM initiative is aligned vertically with corporate strategy and horizontally
with other HR processes such as recruitment, appraisal and reward, and, in particular, career
development and performance management. Key questions for PM include whether those in a
talent pool should be appraised more closely, whether appraisal should play a major role in
selection for a talent pool, and what the role of ongoing appraisal should be.
In some sectors such as banking, one form of demarcation of staff is between those employees
who are seen as direct revenue generators (the front office) and those who support them (the
middle and back offices). Two ER challenges faced in managing front-office personnel in this
sector are managing stars and the development of player-managers.
Front office personnel are often very visible, well paid, and sought after by firms’ competitors.
Stars are the men and women in critical jobs whose performance is crucial to their organisation’s
success, especially in professional service firms.
Their ranks include younger professionals as well as seasoned executives with the potential to
continue contributing to their firm’s success. This means that they are also the individuals who
have the highest future value to their organisation.
Player-managers are managers who are also players, where for example, they manage a team of
investment bankers but also still do it themselves.
As well as generic human capital, the other form of human capital is firm-specific. This second type
of human capital reflects the value of employees who are unique to a single firm.
MODULE 8
THE CHANGING CONTEXT OF ER: BEYOND BOUNDARIES
INTRODUCTION
This module is concerned with how ER is evolving. In particular, attention is drawn to ‘extended’ or
networked organisational forms and the ways ER ‘goes beyond boundaries’, as well as the various
contexts in which ER now operates.
ER BEYOND BOUNDARIES
The acquisition of organisations and the coming together of two or more organisations to form a
new entity, often from different countries, is becoming more common in an increasing global and
competitive landscape. Sometimes the acquired business continues as a separate entity with little
change to its HR/ER, with only gradual changes in structures, processes and personnel whilst
others may involve changes, including ER changes that are more dramatic and rapid.
Many mergers and acquisitions ‘fail’ in the terms of not delivering on their initial objectives: often
due to misunderstanding of people and ER issues, resulting in low commitment, job insecurity,
stress and cultural conflict. Expectations need to be managed and information given, with the new
‘vision’, being communicated well. Some sort of pre-merger cultural analysis of both parties may
be useful to identify tension points and this can be an excellent starting point as a major issue is
cultural compatibility.
ER IN NETWORKED ORGANISATIONS
Inter-organisational relationships in national and global supply chains have become increasingly
important in manufacturing and public service delivery. Organisations have increasingly become
embedded in networks of strategic alliances, insourcing and outsourcing, partnerships and joint
ventures. The large organisation of today is often described as ‘boundaryless’.
The classic networked organisation involves a web of inter-related business processes where
collaboration and competition are in creative tension, enabled by sophisticated ICT processes.
Formal, bureaucratic, vertical structures (Fordism) are replaced by horizontal linkages and mutual
dependencies and, to some degree, coercive tactics may be in operation. Core employees may be
seconded to multi-employer project teams, giving a major role to ER in areas such as career and
TM, PM and R&S.
In this context, dynamic organisations (DO) have arisen. These seeks to gain a series of temporary
competitive advantages that add up to, over time, a sustainable competitive advantage that
requires marketplace agility. These are seen as a bundle of allied ventures rather than the
traditional ‘bounded’ organisation, such as Google. Dos require a core meta-competence on which
their strategy depends: a bundled set of specific competences to create an ever-changing portfolio
of ventures steered around a cycle of exploration, exploitation, adaptation and exit.
Exploration involves generating and testing new idea. Exploitation involves transforming these to a
marketable solution before competitors, and to generate revenue. Adaptation involves spotting
emerging threats early and mounting immediate responses. Exit involves abandoning unpromising
ideas and cannibalising marketplace offerings through endless reallocation of resources, resource
alignment and resource fluidity.
Constantly transitioning from one HR configuration to another to keep human resources aligned in
an ongoing way to achieve sustainable competitive advantage is referred to as workforce
scalability. This involves the evolution of the human resource configuration on four dimensions:
headcount, competence mix, deployment pattern and contribution.
Headcount refers to full-time equivalents (number of employees x number of hours worked).
Competitive mix refers to how knowledge and skills are distributed and deployment pattern
reflects their assignments across organisational and/ or physical locations. Contribution refers to
the organisational value of the tasks performed. Scalability refers to meeting these challenges
successfully and refers to alignment and fluidity and for a DO, alignment is a constantly moving
target which makes fluidity crucial- the speed and ease with which transitions are made from
configuration to another. It involves classic ER processes such as the accession of new recruits,
internal allocation of employees and release of redundant or non-performing ones as well the
having an adaptable organisational culture with supportive HR and ER systems and functions.
Alignment can be achieved by avoiding having too few or too many employees, competence
mismatches, person-task misallocation which can pursued top down (through HRP) or bottom-up
(developing a shared mindset so that employees sense environmental shifts and initiate salient,
strategic moves themselves). This involves creating a common cause (vision and purpose) and
contextual clarity (people and role fit).
Fluidity can be achieved by facilitating external staffing and internal transitions simultaneously.
Externally, this involves acquiring talent through various channels, including the contracting and
partnering strategies discussed above (e.g. partnering with universities to streamline effective
recruitment). In addition, releasing employees through outplacement (providing counselling, job
search assistance and generous and fair severance packages) may be necessary. Internally,
capability may be enhanced through enriching the talent pool and facilitating connectivity.
Enrichment may involve selecting employees for diversity and cultural fit, looking at career
resilience and extensive employee T&D. Connectivity might be fostered by building social capital,
trust and cooperation so that employees share information about where talent is needed and
form teams quickly. Barriers to communication need to be broken down and infrastructures that
develop such things as CoPs and social practices need to be developed.
Opportunities need to be provided to staff through expanded role orientations so that
assignments are not seen as out of bounds. This can be achieved through discretionary-based
work design where instead of a rigid job description, core tasks and responsibilities are specified
with zones of discretion giving employees empowerment over certain tasks. This enriches the
talent pool and release talent from one activity to another and minimises turf wars.
Motivation to make moves quickly and easily may be enhanced through incentives such as profitsharing and stock options, increasing pay without promotion as well as 360 evaluation.
INTERNATIONAL AND COMPARATIVE ER
How ER is managed across borders in different countries (comparative ER) has become more
important due to increasing globalisation and the rise of countries such as China and India. How
international enterprises manage their employee resources (international ER) has also become a
related topic of increasing interest.
COMPARATIVE ER
ER is performed differently in different countries. In Europe, there may be similarities in
interviewing techniques and in some countries, candidates are more likely to be faced with
psychometric tests than in others. Hand-written applications may be preferred in some countries
so that graphologists can assess them while in some, references are still taken up, a process that is
lacking in validity.
The globalisation thesis argues that a truly global economy is emerging or has emerged. National
economies and their management models (including HR and ER models), are losing their
distinctiveness: the convergence thesis. Trade liberalisation and restrictions have been eased.
Various trading blocs have been established such as the EU, the Triad, NAFTA and APEC. At the
firm level, firms have adopted a common response to the international demands of the
competitive environment and a new organisational model is emerging: the transnational firm. This
model enables firms to manage simultaneously the competitive drivers of global efficiency,
multinational responsiveness and worldwide learning. Some authors argue that there is one best
way that firms should follow if they wish to be successful in the global economy. MNCs are being
transformed into transnational companies, which are footloose capital, without specific nationality
but with a strong corporate identity. Others argue that nations remain important and ER policy
and practice remain diverse across the globe. They argue that globalisation has been overstated:
most trade is not global, but uneven, mostly regional and conducted between relatively distinct
national economies. MNCs are not transnational, but national companies with international
business operations where major decisions are still rooted in their home country.
Institutionalists argue for the importance of different national institutions or business systems in
explaining comparative differences in HRM and ER. Culturalists argue for the continuing
importance of national culture in explaining such difference. The claim is that organisational
patterns and processes, and managerial beliefs and behaviours, are driven by shared
understandings and ideas. The institutional approaches will be discussed here in more detail.
Institutionalists claim that organisations are socially constituted and reflect national difference
rooted in institutional setting. They analyse their interaction with business and management
(national business systems). The interaction of the state, financial and educational systems, the
industrial relations system with HR and ER processes may be seen as collaborative business
environments (e.g. Germany and Japan), or competitive (e.g. US and UK). To understand ER, it is
necessary to not only look at the institutionalist and culturalist perspective but also to see that
individuals and organisations can, within parameters, make different strategic choices.
NATIONAL CULTURE AND ER
Culture is often seen as the commonly held and relatively stable set of beliefs, attitudes and values
that exist within an organisation or society and this influences the way that it undertakes and
implements its decision-making, resolves its problems, and the way it behaves in general.
Culture is embodied in symbols, rituals, heroes that are reflected in organisational communication:
manners, dress code, social rules, norms and role models. Like macroscopic (national) culture,
microscopic (organisational) culture also comprises corporate values, norms, feelings, hopes and
aspirations.
There has been much interest in understanding and how to differentiate between culture ever
since Hofstede performed his work. A number of other approaches have been proposed such as
Trompenaars’ and Schwarz’s approaches. Hofstede’s model classifies cultures across five
dimensions of measurement based on cultural value. This derives from his view that culture is a
collective program of the minds of a group that differentiates them from other groups. It results in
a computing metaphor that sees culture as the software of the mind. His principal purpose was to
differentiate between the assumed shared values held in organisations (microscopic culture), and
the unique values that could be identified as specific to national (macroscopic) cultures. His five
dimensions are;
 individual versus collective orientation
 power-distance orientation
 uncertainty avoidance orientation
 masculinity-femininity, or dominant-values orientation
 short-term versus long-term orientation, or ‘Confucian dynamism’
Hofstede integrated these dimensions into national models;
 village market- low uncertainty avoidance, individualism, low power distance (UK)
 well-oiled machine- high uncertainty avoidance and power distance (Germany)
 pyramid- high power distance
 family- high collectivism and power distance (India, Middle East, some Asian countries)
These typologies are related to ER in that the recruitment and selection criteria will systematically
vary. In the UK, the stress will be in negotiation, communication skills perhaps assessed through
assessment centres and psychometric tests; in Germany, the stress will be on technical knowledge
assessed through the education/ apprenticeship system; in France, a stress on analytical skills and
on ‘elite’ potential assessed through education systems and elite institutions; in much of Asia, a
stress on family connections; in Nordic countries, with their high ‘femininity’ scores, both genders
are more likely to pursue more personally satisfying rather that hierarchically oriented careers. In
addition, these cultural dimensions seem associated with other dimensions of ER, with countries
that are high on uncertainty avoidance (e.g. Japan and Germany) making more use of expatriates
(parent-country nationals) to control overseas operations than organisations from countries with
low uncertainty avoidance (e.g. USA, UK and the Nordic countries).
Schwarz built on Hofstede’s approach and listed 56 different values believed to be comprehensive
and recognised in all cultures, using both individual and culture-level analyses. He believed that
there were difficulties with Hofstede’s classifications; for instance, collectivism and individualism
have values that are in common but the dichotomy implies a polar distinction. His main model
includes these seven dimensions;
 conservatism
 intellectual autonomy
 hierarchy
 egalitarian commitment
 mastery
 harmony
 affective autonomy
Trompenaars may be seen as developing Hofstede’s model and also identifying a number of
dimensions through a different, dilemma-based, methodology. These are;
 universalism (rules and procedures) versus pluralism (relationships)
 individualism versus communitarianism
 specific (superficial relationships) versus diffuse (deep relationships)
 neutrality (concealing emotions) versus affectivity (showing emotions)
 inner directed versus outer (environment) directed
 achieved status (who one is) versus ascribed status (what one does)
 sequential time versus synchronic time
This model is closely related to Hofstede’s model. Of these seven dimensions, two are directly
related with Hofstede’s dimensions, namely, collectivism/ individualism and to a lesser extent,
power distance. Communitarianism/ individualism also seem to be identical to Hofstede’s
collectivism/ individualism. Achievement/ ascription which describes how status is accorded,
appears to be linked to Hofstede’s power distance index if it is accepted that status is accorded by
nature rather than achievement; it also reflects a greater willingness to accept power distances.
However, Hofstede’s power index relates not only to how status is accorded, but also to the
acceptable power distance within a society, an area not looked on by Trompenaars whose other
dimensions appear to focus on some resulting effects of underlying value dimensions. So, the
neutral/ emotional dimension describes the extent to which feelings are openly expressed, a
normative behaviour rather than value. Universalism/ particularism describes a preference for
rules rather than trusting relationships and this could be interpreted as part of Hofstede’s
uncertainty avoidance dimension on one side and on the other, and to some extent, the
collectivist/ individualist dimension.
The Trompenaars diffuse/specific value classification that describes range of involvement would
appear to be new. However, the human-time relationship would appear to be Hall’s polychromic/
monochronic time perceptions. Finally, the human-nature relationship appears to be closely
connected with the human-nature relationship in Kluckhohn and Strodbeck’s theory of value.
The four principal variables identified by Hofstede can be compared with the related set of
variables from Schwartz.
Cultural variable
Nature
Hofstede’s variables
Power distance
Uncertainty avoidance
Masculinity/femininity
Individualism/collectivism
Degree of acceptance as legitimate that power is unequally distributed in
institutions
Degree of discomfort with uncertainty and ambiguity, leading to the
support of beliefs that promise certainty and the maintenance of
institutions that protect conformity
A preference for accomplishment, heroism, severity and material success
as opposed to a preference for relationships, modesty, and attention to
the weak qualities of life
A preference for socially closed surroundings where individuals care for
themselves and immediate kin, as opposed to dependencies on groups
of others
Schwartz’s variables
Conservation
Security, conformity and tradition are priorities, and maintaining the
established order of things.
Hierarchy
Legitimacy of ascription of roles and fixed resources such as social
power, authority, humility, and wealth
Intellectual autonomy
Values that stimulate autonomy to pursue goals and intellectual
interests, including curiosity, open-mindedness, creativity
Affective autonomy
Promotion and protection of attainment in positive affective experiences
such as pleasure, excitement, and variety
Competency
Values that polarise the dominance of surroundings through selfaffirmation, such as ambition, success and risk
Harmony
Concepts relating to being ‘one with’, as in unity with nature, and
protection of the environment
Egalitarian compromise
Includes concepts such as equality, social justice, and responsibility.
Characteristics of culture for Hofstede and for Schwarz
Although Hofstede’s work has received much criticism, many researchers continue to rely on his
work even in studies that do not include countries covered in the early research.
CHINESE CULTURE AS AN EXEMPLAR OF THE INFLUENCE OF CULTURE ON ER
Hofstede assumes that national territory corresponds to cultural homogeneity but China is not
homogenous. There are strong regional differences with many religious and ethnic cultures and
sub-cultures. Problems with his use of the words ‘individualism’ and ‘collectivism’ have different
meanings to different countries. For instance, employee loyalty- Japanese employees may be loyal
to their organisations and Chinese employees may be more loyal to their families. But both adopt
the principle of collectivism which differs from Western individualism. The fifth dimension of
Confucian dynamism, or long-term orientation, was identified much later than his original work
and China and other Confucian-influenced countries scored very highly on this dimension than
other parts of the worlds.
Other studies of Chinese culture take different approaches using Confucianism directly which is
seen as influencing the way employees perceive the organisation as a symbolic family, amplified
by early Maoist ideology that emphasised group rewards. This implies a stress on hierarchy, order,
authority and mutual obligations. Harmony and benefits in exchange for loyalty with a concern for
face, respect and integrity and the avoidance of direct criticism being important.
Confucianism is an important and influential foundation for Chinese culture and behaviour
providing the moral doctrine of human relationship, social structures, personal behaviour and
ethics. Its principles extol loyalty, love, obedience, obligation and submission, seniority and trust.
A recent focus on efficiency, productivity and performance-based rewards have threatened these
traditions and values leading to sub-cultural generational differences. Studies reveal that
dominant constructs included respect for seniority, communication efficiency and selfless
contribution and analysis showed 8 critical sets of relationships;
 hierarchy
 harmony
 bureaucracy
 security
 equality
 loyalty
 family aspects
 stability
Factor analysis of this data revealed 5 themes;
 equality
 security
 loyalty


harmony
bureaucracy
Culture arguments, such as those of Hofstede, linking Chinese economic performance to Confucian
values, neglect the ways culture changes: cultures interact and influence each other. Confucianism
stresses holism, realism, pragmatism. Chinese culture flourished more when open to other
cultures (Tang dynasty) than when culturally closed (Qing dynasty). Ideas have been blended with
foreign ideas, indigenous elements reinterpreted and cultural elements refocused.
An about-face on Confucian values may occur if li (profit) is put ahead of yi (justice). Guanxi
(networks, connections) which may once have been good for business and efficient financial
channels may now be seen as developing into ‘cosy’ relationships.
Ethnic overseas Chinese family business emphasises interpersonal or relational trust rather than
institutional trust, paternalistic authority, and personal ties, accessing capital through social
networks. Differences from Western cultural values emerge in terms of trust (personal versus
institutional), identity (e.g. individual versus collectivism), and authority (hierarchy versus
autonomy as reflected in power distance) These effect organisational structure and interorganisational relationships. Simple structures such as centralised decision-making, paternalism,
nepotism, focus on cash flow and specialisation based on owner’s expertise are common features
of business. Firms are adaptive and opportunistic, sharing information that is hard to obtain, often
accessed through inside information, contacts, bribery and Guanxi relationships. drawbacks to this
model include limitation of growth, nepotism and a lack of integration with professional
‘outsiders’.
Chinese culture is very distinct from Western culture, primarily as a result of its community nature
as opposed to what is referred to as the utility paradigm of the West (Newell).
Characteristics
Utility paradigm
Community paradigm
Nature of knowledge
Objectively defined concepts and
facts
Tacit and socially constructed
Knowledge acquisition
Can be captured and codified
Developed through group-based
knowledge sharing
Best practice for organisational
improvement
Objective rules universally applied
to all organisations
Principles that organisations use
to locally define their own rules
Knowledge migration
Transfer through formal explicit
processes (e.g. notes) enhanced
by exposure to exemplars
Personal/ local knowledge
developed through group learning
processes that create experience
Dominant metaphor
Memory
Group processes
Critical success factors
Identified by Western narrative
Trust and belonging
Relating the Western commodity and the Chinese community paradigm of culture
Guanxi, or personal networks and interpersonal relations are of key importance when conducting
business and authority is based on interpersonal relations rather than legal rationality. Guanxi is
essential if approval is to be granted to access any kind of business in China, producing personal
obligations such as responses to requests for assistance by someone in the network.
Another cultural attribute is loss of face. Chinese do not attempt to convince others that they
know best and so dialogue and encouragement are more important than linear communication
and persuasion. A study showed that about 70 values affect the Chinese belief system which run
across 8 categories;
 national traits
 business philosophy
 interpersonal relations
 personal traits
 family/ social orientation
 time orientation
 work attitude
 relationship with nature
Of particular interest are 6 generic categories;
 respect
 honour
 synergy
 allegiances
 learning
 sensibility
ER AND CULTURE IN THE MIDDLE EAST
The ME is the birthplace of monotheism and the conduit for the transfer of much Chinese, Indian
and classical knowledge to the West during the European Middle Ages. In recent years there has
been a lot of investment from MNCs and with its strategic importance in the energy sector (gas
and oil), it has given rise to significant actors in finance, tourism and property (e.g. Turkey, Iran,
GCC countries).
One issue is in actually defining what constitutes the ME with some including Cyprus, Turkey. It is a
diverse area in terms of religion, language, governance, economy, and labour, with some countries
reliant on external labour and some being major importers of labour. Literacy and education levels
vary but common themes run across the region;
 the influence of national and international politics on ER
 the impact of religion, ethnicity and culture on ER
 the influence of Western multinationals on ER
 the significance of gender in ER
In most of the region, there is widespread gender inequality in career paths, especially in rural
areas, though in other countries, upper class women are afforded better career opportunities than
in most Western countries. For example, reported discrimination in Turkey is lower than the EU
average with women playing an active, economic roles, including senior level. In Iran, gender
segregation has opened up many career opportunities for university-educated women, even with
the role of women reduced due to the Islamic Revolution.
In addition, economic nationalism such as ‘Arabisation’ has restricted the autonomy of HRM,
where locals may see public-sector employment as a right, resulting in Western or Asian
expatriates filling all levels within the private sector, often with little employment security.
It has been pointed out that perhaps there is no such thing as the ‘Middle Eastern HRM model’,
i.e. a model with Middle Eastern characteristics. There is a mosaic of policies and practices
developed in different historical contexts. For example, North African organisations are more
influenced by European countries, in particular, French policies in relation to gender equality and
the right to strike. Public sector HRM is based on extensive legal foundations, detailed regulations
and centralised decision making. There is little evidence of strategic HRM and explicit HR strategy
links between HR activity and corporate strategic planning and integration of HR practices. This is
partly because an Anglo-Saxon concept such as HRM is unfamiliar and partly because real power
lies with a powerful ruling elite or monarchy.
Israel is partly influenced by European (British) practice such as EO laws and US concepts of HRM
strategy. There is also evidence of convergence between public and private sector HR practice.
Some have characterised management styles in the Arab world, especially in the Gulf states, as
distinctive and constituting a fourth paradigm where the style is held to consist of;
 family businesses
 autocratic but consultative ownership
 a rhetoric of consultative decision making within an essential hierarchical structure where
joint decision making may be seen as a weakness, and one-to-one consultation is
preferred.
From Hofstede’s perspective, Arab cultures are seen as masculine, relatively long-term in
orientation, middling on individualism, uncertainty avoidance and power distance.
Some have noted that HRM often reflects Islamic values and that an Islamic work ethic can be
identified, influencing a range of attitudes towards organisational change and commitment. A
distinctive feature of Arab HRM is held to be the role of networks. Like the Chinese Guanxi,
interpersonal connections are rooted in family and kinship, but also extend into business life. This
phenomena is often termed wasta (or piston in French-influenced North Africa). In the Arab world,
this is often ‘professionalised’ with ‘mediators’ interceding on behalf of clients to obtain
advantages in jobs, tax breaks, information, and favours. In public-sector organisations, this
embraces R&S, compensation, promotion and other ER activities. Wasta is less-publicly
acknowledged and many condemn such activities as illegal or unethical, unlike the guanxi in China,
while these same critics seek wasta benefits for themselves and relatives. In Iran, nepotism is
common and in Turkey, favouritism is still an issue.
However, HRM policies in the ME are adopted and implemented within specific national contexts
that are influenced by culture, political ideology, economic conditions, the legal system as well as
confessional differences in religion. The public sector remains dominant with some countries such
as Turkey and Jordan embarking on privatisation programmes. This is accompanied by a change in
HR practice away from a centralised service model towards the expansion of T&D, PM and ER
initiatives. There has been government intervention to reduce layoffs, replace expatriates and
develop local managers. Job security in the public sector has been reduced resulting in high
unemployment. generally, MNC apply ‘strategic’ HRM more than local firms though with greater
pressure on performance. Large private-sector firms tend to offer higher pay, though lower job
security than many public-sector organisations. In Gulf countries, pay is higher in the public sector
with employees reluctant to take up private-sector employment; public sector jobs are perceived
by some locals as a ‘right’. Here, T&D and appraisal programmes are far more extensive in the
public sector. The public sector gives locals priority in recruitment, whereas the private sector
often employs expatriates; public organisations tend to use written procedures, rules, job analyses
and structured training programmes.
The ME public sector faces significant challenges, including declining real incomes, political
interference, poor management and difficult working conditions all of which lead to
demoralisation and demotivation. Problems of moonlighting, retention and corruption are also
common. HRM systems are outdated and ineffective with low salaries, inability to fire low
performers, no performance standards, no rewards for performance, difficulty in attracting
talented people, promotion based on seniority and nepotism and ineffective management.
Some countries are reforming their HR infrastructure but due to a lack of professional HR players,
long-term strategies are absent.
ER in the ME, as well as elsewhere, needs to enforce impartiality, transparency and openness in its
decision making and can learn from regional and global experiences
ER IN RUSSIA
Few books have explored HRM in Russia as it has generally been treated as ‘Eastern Europe’.
However, the size, multi-ethnic composition, fast-growing economy and increasing international
collaboration with foreign companies demand a deeper, more complex analysis of business in
Russia, in particular, of HRM and ER.
National politics continue to influence ER/HR. Challenges for ER and for HRM in general, include
seeking out the best expertise, committing significant resources to ER, overcoming the lack of
evaluation of HR activities, and addressing the lack of specific skills. HRM practices can affect
performance of employees and enhance organisational performance in general.
Recruitment channels in Russia consist of the internal labour market, and the ‘extended internal
labour market’ or the social network of the firm’s current workers which both deliver different
costs and benefits to the firm.
In the Russian context, former employees maintain contact and may return after employment
elsewhere, and firms prefer to recruit from the extended internal labour market rather than the
external one.
Deriving from the Soviet era, and perhaps deeper Russian cultural traditions, personal,
particularistic relationships influence paternalistic recruitment practices, and loyalty to the boss is
a major selection criterion. This contrasts with the meritocratic criteria often regarded in the West
as good practice. Recruitment is often highly centralised in the hands of the CEO, with informal
criteria dominating, and the HR function reduced to administering paperwork.
ER IN MULTINATIONAL ENTERPRISES
Internationalisation and the effective use of international employee resources located outside the
home/parent country are major issues affecting firms in an increasingly global economy. A key
question is: Why do multinational enterprises (MNEs) adopt different ER policies and practices in
such areas as recruitment and selection, performance management, talent management and
career development?
A MNE’s ER policies and practices can be seen as the product of the interaction between three
factors;
 Home (parent) country factors relating to its HRM system; e.g. American, British or
Japanese systems. MNEs often remain deeply rooted in the national business systems of
their country of origin (rather than being global, rootless and footloose entities)
 Host country (local) factors: cultural context, local regulations and practices
 Firm-specific factors: e.g. senior management’s attitudes towards internationalisation, the
international strategy, structure and corporate culture of the firm
It has been argued that an MNE can choose four generic orientations to ER, depending on its
orientation to ‘foreign people, ideas and resources’;
 Ethnocentric the international approach where the MNE exports the home system,
making strategic decisions at headquarters (mother-daughter relationship with
subsidiaries) and filling key positions with parent-country nationals
 Polycentric the multinational or multi-domestic approach where an MNE adapts its ER
policies to the local ER system (e.g. the role of guanxi in China, wasta in the ME, loyalty and
extended internal labour market of Russia). Foreign, local, subsidiaries enjoy autonomy as
‘sisters’ and HCN occupy key positions. This strategy is common in places where local
responsiveness is important such as advertising and food industries. This strategy
minimises standardisation as each subsidiary goes its own way and can lead to innovation
and creativity remaining more localised instead of dispersed throughout the global ‘firm’.
 Geocentric
the global approach and through global sourcing of talent, promotes
employees to positions and subsidiaries regardless of nationality. It is likely to employ
TCNs. This approach is designed to maximise global standardisation as well as global
learning and global ‘dispersal’ of innovation and creativity (through seminars, international
transfer of employees, and training) and also maximises local responsiveness by using
HCNs or ‘cosmopolitan’ TCNs instead of ‘ethnocentric’ PCNs. This orientation is
characteristic of transnational companies which seek to maximise global efficiency,
national responsiveness and worldwide learning. A subsidiary may therefore create a new
HR/ER system that is different from both the home and local systems.
 Regiocentric the regional approach where the MNC employs managers from a particular
region (e.g. EU, US, East Asia), enjoying regional (but not global) autonomy with common
ER policies being developed across a region (but not globally).
Global staffing is a key aspect of HRM in the global firm and is seen as a key ER practice in
controlling and coordinating dispersed global operations. One reason for this is the continuing
problematic performance of expatriates which is costly in human and financial terms for the
individual and organisation with indirect costs involved such as reputation and loss of business. So
talent management has emerged as a key issues for organisations and is crucial to MNEs as they
seek to internationalise their operations, resulting in greater international diversity in workforces.
Cultural distance between countries is also an issue: where subsidiaries are located in ’distant’
countries, MNCs seem to prefer to deploy PCNs even though these people may be less than willing
to go to these locations. Also, the age of the subsidiary affects choice: the longer a subsidiary has
been in operation, the fewer PCNs may be used as the need for control diminishes in longstanding, successful affiliations. Companies have several motives for using international transfers;
 to fill positions with technically qualified staff
 to facilitate management development
 to facilitate organisation development through knowledge transfer and standardising
corporate structure, culture and policy
In addition, companies may use PCNs for various purposes, often mixed for any one assignment,
believing that;
 they have a better understanding of, and commitment to, corporate strategies;
 they will accept HQ-determined rules more easily
 liaison with corporate HQ will be easier, sharing a common language and social
connections
 they are more likely to exercise control on behalf of the company
Expatriates may experience, however, various degrees of ‘failure’: early return and
underperformance (more likely for US than European expatriates). They may struggle to adapt to
culture, language, family separation or, if families are with them, their failure to adapt. These
adjustment/ adaptation problems may be reduced if careful attention is paid to systematic ER. The
recruitment method of the PCN is important (formal or informal recruitment), the selection
criteria (loyalty, commitment, performance, competence) needs to be considered.
Rarely is the nature of the ‘job’ taken into account. Is it to:
 fill a position?
 open a new branch or process?
 operate in a joint venture?
 transfer knowledge to locals?
 or a mix of these?
Rarely is the subsidiary taken into account: doing so, though, may build trust. The person’s
motives for going are also not often considered. Is it:
 to travel?
 to have fun and enjoy an adventure?
 to escape a job, career or personal difficulty?
 to pursue an interest in international issues?
 to pursue an interest in the specific country or culture?
 to advance a career?
In addition, whether these motives are aligned with company expectations or are in conflict with
them is important, but again, it is not often considered.
If the assignment is long-term, it is worth investing in a more systematic process of ER. For
example, does the candidate:
 have experience of living or being educated abroad?
 speak more than language?
 demonstrate openness to new experiences, have a lack of ethnocentrism, and show
empathy and respect?
 show good communication skills, including non-verbal communication?
 show an interest in an international career, or the specific job, company, and/ or culture?
 show a tendency to avoid over-narrow stereotyping?
 show adaptability, flexibility, and tolerance of ambiguity?
The organisation will also need to take EO and diversity issues into account when recruiting,
selecting and monitoring and national laws need to be considered. In addition, pre-assignment
and post-assignment training needs to be considered as these investments can save time and
money. It is important to maintain appraisals for the expatriate, though this raises difficulties;
as much of the performance is ‘out of sight’, how much input should the local boss have?
 to whom should s/he show loyalty and commitment: the HQ, the local subsidiary, or both?
 is the date on which the performance is based comparable given global volatility and
variance conditions, laws, technology, market maturity?

how much weight should be given to ‘non-job’ factors: acting as ambassador, engaging in
knowledge transfer, mentoring, dealing with local officials, managing family issues?
Approaches such as 360 feedback and the use of balanced scorecards are useful in these
situations. Because of these issues, companies may seek alternative strategies to employing PCNs
as expatriates. Their cost, and the ‘localisation’ pressures put on them by some governments to
employ locals mean that they may seek to employ HCNs. These have distinct advantages;
 they are often cheaper to employ (in terms of salaries, travel, accommodation, and family
costs)
 they are familiar with the language, local laws, culture, and government officials, allowing
the company to present a ‘local’ face which may help its reputation with key stakeholders
However, the company may doubt their loyalty or commitment to act in the interests of corporate
control- they may find communication with corporate HQ difficult, not knowing the language
fluently or the people well; and they may be blocking ‘developmental’ international opportunities
for talented, promising, high-potential PCNs. Another alternative is to use TCNs as a compromise
between seeking global (PCNs) and local (HCNs) advantage. They may be cheaper than PCNs, and
are often cosmopolitan ‘career internationals’ with good international experience and good
linguistic skills. Local resentment may occur with TCNs being seen as blocking HCN opportunity.
Other alternatives may be to practise inpatriation by bringing subsidiary staff, TCNs and HCNS to
HQ to transfer knowledge or perhaps to build multicultural teams. Virtual assignments through
international collaboration on projects through videoconferencing, email, and telephone rather
than physical travel are becoming more common. In addition, the use of a greater variety of
shorter assignments (troubleshooting, contractual assignments, rotational assignments,
knowledge transfer activities, training, personal development) is also increasing.
So in the ER processes of MNEs, both transfer (of home to affiliates) and adaptation (of ER to local
practices) processes are occurring. These transfer processes are often over knowledge transfer,
whether of technology or of ER processes.
INTERNATIONAL KNOWLEDGE TRANSFER AND ER
Three factors have been found to affect knowledge transfer;
 a knowledge-sharing environment
 information and communication technologies
 organisational structure
These three elements are prerequisites for any organisation keen to pursue knowledge transfer.
The process of transfer is often seen as covering several stages from identifying the knowledge to
the actual process of transferring the knowledge to its final utilisation by the receiving unit. This
route normally occurs as a transfer from headquarters to overseas subsidiary although it could be
reverse transfer the other way. A firm’s ER processes may constitute a significant source of
competitive advantage over local, indigenous firms.
The movement of knowledge between different geographical locations is central to the process of
adding value in MNEs. Terms used to describe this process include knowledge diffusion and
knowledge transfer (export sales and new product development discuss knowledge transfer across
cultural and linguistic boundaries). Another term is the phrase mutual knowledge creation as it
refers to the negotiation of new understanding. Within joint ventures, one-way transplant
programmes are often less successful than more collaborative process-oriented approaches that
make use of local expertise to help in delivery that suits local conditions.
A more constructivist term is knowledge migration which occurs from a knowledge source, the
knowledge base, often in the West, such as the corporate HQ, to a knowledge destination or sink,
often in the ‘South’ or ‘East’, such as an affiliate or joint venture in China, Russia or Middle East.
The process may be facilitated by a knowledge intermediary such as a consultant, project team or
expatriates.
Knowledge migration between 2 actors, one
operating as source and the other as a sink
via knowledge intermediaries
Knowledge
sink
Knowledge
source
Environment
Actor 1,2
Knowledge
Parent country business system
Parent country culture
Parent country ER system
Learning orientation
Knowledge intermediary
Note: an actor may be an
individual or a coherent group
Cultural distance
Motivation
Willingness
Environment
Actor 2,1
Knowledge
Host country business system
Host country culture
Host country ER system
Absorptive capacity
Knowledge migration in MNEs and international joint ventures
Knowledge can diffuse in both directions, which occurs when a destination becomes a source and
vice versa. A knowledge intermediary or knowledge broker may work in partnership with the
source and sink to assist in knowledge migration across, for example, cultural boundaries. This
person may be an expatriate manager and the effectiveness of this depends on their willingness
and their ability, which in turn depends on the learning orientation of the source and its strategic
objectives.
Effectiveness of transfer is also affected by parent-country and host-country characteristics such
as culture, national institutional/business systems, including the ER system, and also the cultural
difference between the source and the sink. In addition, the learning capacity or absorptive
capacity of the sink affects how well transfer occurs.
TRANSFERRING ER KNOWLEDGE : THE CASE OF CHINA
Much of the knowledge base in China has been imported in a linear fashion from the West
through textbook translation and the use of Western teachers, trainers and education of foreign
Chinese students in western universities. An alternative model of knowledge is one of social
construction, knowledge sharing, participation in social networks and interaction between Chinese
and western ideas and people.
Mental models are developed by people to make sense of their experiences, and the difficulty of
articulating and transferring tacit knowledge, essential to effective management. Knowledge has
to be continually reinterpreted, recreated or reconstituted rather than transferred to ‘create a
unique bundle of management knowledge, deeply embedded in the unique social, political,
cultural and economic context of China’. Western management can also have much to learn from
China in terms of its emphasis on networks and stakeholders: knowledge flows are not simply one
way from West sources to Eastern destinations.
Expatriates are the key to transferring knowledge to subsidiaries. The transfer of knowledge
involves three parties; HR expatriates, Chinese HR personnel, and the subsidiary itself and to
achieve successful transfer, these parties have different tasks to perform in the knowledge
migration process.
The ability and willingness of Chinese HR personnel to learn will determine how well they acquire
HRM knowledge. Equally, the ability and motivation of HR expatriates to share their knowledge
can determine how well they transfer it. The transfer process is affected by a number of factors
such as cultural difference, language and communication, working relationships, motivation and
willingness, and also the absorptive capacity of the sink. The subsidiary operates in a multicultural
environment in which cultural differences flow back and forth.
For a Chinese subsidiary, three levels of cultural differences exist- national, organisational and
individual. National, because of the size and, therefore, regional differences in the people, and
organisational because of the difference between corporate culture and the culture of the
subsidiary. The subsidiary operates in the host nation and is suffused with local influences. Thirdly,
because the subsidiary is made up of an international workforce, there are differences in the
personal values between expatriates and local personnel in terms of management styles and
attitudes.
Expatriates consider cultural adaptation to culture shock a key factor which determines whether
an international assignment will succeed or fail. Cultural adaptation is not the sole responsibility of
the expatriate however, Chinese employees should be aware of these differences and adapt to
them accordingly. Effective communication is vital for the transfer of ER knowledge.
Language is the most important factor in improving communication and many studies have shown
that deficient language skills can hinder transfer: expatriates with proficient language skills are
better able to succeed in assignments and the ability to speak the Chinese dialect can greatly
enhance the expatriate to adjust to a multicultural environment.
Communication can be improved further when language skills are linked to an understanding of
cultural background.
A good working relationship is also important in stimulating trust and creating bonds.
An important factor in Chinese business is guanxi and being connected through this network
allows people to be members of this group. Chinese employees are more willing to share
information within the group than outside the group.
Motivation is also a critical factor in knowledge transfer because without it, actual transfer could
be compromised.
Personal growth, job satisfaction and monetary rewards are also required. For example, Chinese
HR personnel can draw motivation from job satisfaction and from increased employability and
career advancement after having gained ER knowledge and experience. HR expatriates, on the
other hand, can draw motivation from task achievement and job satisfaction, as well as career
development.
INTERNATIONAL JOINT VENTURES AND ER
Many international companies have entered into a variety of strategic partnerships, ranging from
mergers and acquisitions through joint ventures to limited projects such as co-production.
Issues that need to be addressed range from a clash of national and corporate cultures to ‘Trojan
Horse’ fears- potential competitors being allowed access to home markets, core competencies and
advanced technologies.
Some see alliances as inferior to firms in knowledge integration due to the absence of a common
language, social norms, organisational routines and institutionalised modes of decision making
that limits the capacity to conduct the low-cost knowledge-integration activities that characterise
firms.
International joint ventures (IJVs) are different in structure from mergers, acquisitions and
intricate partnerships as they are legally distinct organisations formed by two or more sponsoring
partners originating in two or more countries.
Alliances are generic forms of cooperation, and equity joint ventures a special case cemented by
ownership sharing through equity holdings. IJVs have become very popular allowing organisations
to deal with complex environments more ably. They have become common in Central and Eastern
Europe (post-Soviet Union era) and also China.
Partners seek access to geographic or product markets and know that using the IJF route creates
more value than going in on their own.
China has more established IJVs than any other country being an important emerging market.
They were the first form of FDIs sanctioned by the Chinese government, receiving preferential
treatment and protective rules shielding them from uncertainty.
Although joint ventures are an increasingly popular form of voluntary cooperation between
organisations of different sizes, sectors, geographical locations, joint ventures and, in particular,
IJVs, often fail. Such failures are associated with cultural differences in the main, HRM practices
and differing management styles.
The strategic motivation for IJV varies depending on the organisations involved and with their
interests:
 Horizontal alliances occur between competitors in an industry through functional need.
This can reduce costs and risks by sharing expertise. Another form of collaboration is crosslicensing agreements to enable risks across international markets to be reduced
 Vertical alliances occur between organisations sharing the control of operations, e.g. a
supply-delivery chain
 Diagonal alliances occurs across organisations in different sectors pooling knowledge,
expertise, resources, or technology
IJV situation
Interest (which may
diverge or be
misinterpreted)
Purpose (which may differ
or be differently expressed)
Knowledge migration
and transfer
Cooperation in research
and development
Share cost of innovation
Lead time to development
Share basic knowledge
of innovation
New markets
Joint working with hostcountry organisation to
develop market
Developing joint control
processes with host-country
organisation
Share product and
market knowledge
Accessing segmented
specialist local market
Help in facilitating access
to local markets
Guide technical knowledge
to keep up with
development in technology
Expand market share in
stagnant or crowded
markets
Help by facilitating market
access to new markets
Share product
knowledge
Develop new goals
Share technical
knowledge
Develop market share
Share marketing
knowledge for given
sectors
Example IJV situations and their characteristics
The table shows examples of different IJV situations and their characteristic interests, purposes
and knowledge transfer focus. Firms lack complete control over strategy and structure in IJVs and
these need continual negotiation and renegotiation.
As many of half of all IJVs fail with cultural differences being cited as the main cause as well as
managerial styles which is a manifestation of culture.
A major issue for research in IJVs has been partner selection as the outcomes will be influenced by
the nature of the chosen partner. Each partner is likely to have different strategic objectives which
will influence the skills and resources available. They are more likely to succeed if the partners
have complimentary missions, resource and managerial capabilities, as well as other attributes
which help to create a strategic fit.
Another focus is that of strategic choice especially the strategic interests of foreign MNCs. The
interests of local partners is often overlooked which is surprising as the partner's strategic
objectives also impact on the choice of both IJV partner and structure. Over time, changes will
alter a partner’s incentive to continue the IJV strategy, necessitating restructure, otherwise the IJV
may fail.
Owing to the high interaction of HR/ER practices, IJVs constitute complex entities. There are
different corporate and national backgrounds to consider who may also be HCNs, TCNs and PCNs,
from the collaborating partner. Clearly HR and ER play a significant role in the success of IJVs.
Of importance are;
 the appropriate selection of IJV personnel
 the use of experienced PCNs
 cross-cultural training
 joint training of HCNs and PCNs
 providing special compensation to expatriates
 using HCNs in key positions
 building a unique IJV culture, taking elements of both host and home culture as well as new
elements not found in either
5 issues seem particularly crucial for HRM/ER in IJVs;
 who controls a particular manager
 the trade-off in time spent between operational and strategic tasks
 the appraisal of performance in the IJV
 loyalty issues over identification with the IJV or parent
 how to achieve career progression through an IJV
Other issues of particular importance to ER in IJVs include;
 using experienced HCNs familiar with local market and culture
 minimising expatriation costs
 using high-quality, experienced PCNs at the start of IJV operations to promote interpartner learning and bridge cultural differences
 using local partners to deal with corruption and bureaucracy
 overcoming ER-related problems by utilising local partner’s experience and familiarity with
local ER practices
Partners may limit the status, number and tenure of people engaged in a venture, minimising
opportunities for sustained learning. Some managers may be assigned to a venture over its
lifetime whereas others may assign more time-limited expatriates.
Clearly, alliances and partnerships involve more than just sharing money, technology and
products; they also involve sharing people and HR/ ER practices. IJVs often generate a collision or
blending or national or corporate cultures and styles. As well as team building and two-way
communication, projects may require initial ‘dating’ and trust-building on smaller scale projects.
They may also require attention to issues such as job design and ER, such as;
 whose technologies will be used?
 attention to issues of recruitment selection and HRP, e.g. what numbers, skills, mix or
responsibilities are to be selected?
 who do staff work for?
 how are disagreements and grievances handled?
 if the venture fails, who do its employees work for?
 how will T&D be applied?
 in appraisal issues, whose standards will be used (e.g. subjective, long-term goals, team
appraisal, indirect feedback)?
IJVs provide significant opportunities for organisational learning and especially the transfer of
culturally embedded knowledge.
A vital part of the learning infrastructure includes HRM/ ER policies supporting the protection of
competitive advantage and influencing the direction of IJVs, in particular, the transfer and
accumulation of knowledge.
ER failures that may limit how much learning takes place, or how much knowledge is transferred,
include;
 HR planning activities may fail to communicate strategic intent
 short-term and static planning horizons may give such activities low priority
 insufficient lead time is allowed for staffing decisions
 a resource-poor strategy is adopted
 low-quality staff are assigned to the IJV
 the IJV depends on the partner for staffing
The knowledge sink and source may exist as the ‘parents’ of the alliance and for Schuler, this
interactive process enables crucial alliance learning. It enables parents to learn;
 more about each other
 more from each other
 more from the alliance itself
Some ‘rules’ for successful international ventures include;
Characteristics
interests
should be long-term and mutual
purposes
strategic aims and objectives should be compatible and
complementary
influence and
knowledge transfer
should be sharing, facilitated by relevant ER practices
the whole
the competencies of the alliance should be greater than that of any
one partner
culture
cultural compatibility is important
trust
trust between organisations is essential, reducing need for elaborate
procedures
interconnections
open communications between organisations is important
relational change
change in partner relationships can be volatile and require
restructuring
ETHICS, INTEGRITY AND ER
Most discussions of ethics and HRM see the issues involved as developing codes of governance,
fairness, performance indicators and ‘best practice’ guidelines. Other concerns include child
labour, health and safety standards, and environmental pollution.
Ethics has a major role to play in ER as it relates to such issues as EO, diversity discrimination in
employment, R&S, appraisal and PM, and talent/ career development; all issues where the
interests of the individual may come into conflict with those of the organisation.
Ethics also plays a major role in international and comparative ER. In a global organisation, what
should a manger do if a practice seen in the home country is seen as legal and acceptable in the
host country? Should a manager in China or the ME use guanxi or wasta as an ER tool? Do these
culturally-acceptable host country actions raise ethical issues for Western managers?
In addition, problems of corruption and bribery remain in many countries including Western
industrialised ones. Here, companies may take advantage by employing low-wage workers, by
moving operations ‘off-shore’, or by outsourcing work to low-wage economies. Such practices are
not unknown in Western countries where exploitation of migrant labour, use of sweat-shops, and
home-working may occur.
A recent development is the principle of corporate social responsibility (CSR) and an appreciation
of the role that HR can play in developing CSR initiatives. Company websites and reports routinely
include sections on CSR which cover a variety of local and global concerns.
CSR is an evolving but disputed concept with potentially far-reaching implications for ER. However,
its practice is very uneven, with codes of practice being poorly monitored and poorly enforced.
Ethics is a nuanced arena of debate that leaves itself open to broad range of interpretations.
Probably the most important factor to note is that employees may operate from completely
different ethical perspectives.
Consequentialists will look to the moral value of the outcomes of their actions.
Deontologists will focus more on the motivation behind their actions.
ETHICAL ISSUES IN ER IN THE MIDDLE EAST
In much of the ME, the influence of often family-based ‘connection’ (wasta or piston) affects much
of ER, especially in such areas as recruitment, selection, promotion, and performance
management. This raises ethical issues over nepotism, bribery and corruption. If one adopts a
relativist ethical position, one may feel relaxed about this; it fits in with Arab or Islamic culture.
People are expected to put their families and friends first which ‘harmonises’ and ‘humanises’ the
workplace. Connections to rich and powerful families may ‘force’ managers to promote or fail to
discipline poor performers, and of course, this is not just an issue in the ME.
However, many people in the ME and outside have challenged these practices in the name of
more universalist principles such as fairness, transparency, meritocracy, as well as more utilitarian
principles such as enhancing efficiency and effectiveness. These challenges have often been raised
with regard to government service employment. Ethical challenges across much of the public
sector in the ME include;
 limiting the size and fiscal weight of the civil service
 restructuring the civil service
 setting and implementing anti-corruption and integrity standards
 making institutional/ procedural anti-corruption frameworks effective
 improving scrutiny over government and civil service action
Some countries such as Tunisia, Yemen and Dubai, have reformed and modernised their civil
services introducing flexibility and incentives but in many other countries, the public-sector pay
structures encourage bribery and (petty) corruption, especially in agencies that deal with the
public. Many countries lack effective ethics regimes and integrity provisions to control discretion
and prevent conflicts of interest, allowing favouritism and nepotism to flourish. Public-sector ER
and HRM policies and practices in the ME can therefore be deficient in various ways;



The overall institutional framework may not state or enforce basic ethical/ integrity
principles, or limit political and personal influences on ER decisions such as R&S,
promotion, performance management and career development.
A lack of HR planning data and an overall ER policy that fails to emphasise merit and
competence may lead to the exclusion or disproportionate representation of certain
religious or ethnic groups, or of women.
An absence of a fair, equal and transparent recruitment policy (Module 5) may lead to
favouritism, nepotism, and corruption, and a tarnishing of the image of public-sector
employment.







An absence of sound selection and placement policies based on merit and competence
may lead to invalid and biased selection criteria, subjectivity, favouritism, and
discrimination, and an absence of diversity or equal opportunity.
A weak PMS may reduce accountability through ill-defined jobs, reducing fairness in
assignments and inhibiting monitoring and measurement.
Discrimination in rewards based on personal or political factors, such as personal, family or
clan loyalty, may be widespread.
Training and development may also be subject to abuse and corruption through bribery,
non-competitive contracts, and favouritism in training nominations.
Promotions and career advancement may also be based on personal or political criteria, or
offered to those who provide ‘inducements’.
Disciplinary procedures may be subject to corruption and malpractice, with a lack of
fairness or transparency.
After officials leave employment, they may still seek to advance personal interest through
bids for business, use of information and influence, and re-engagement as consultants or
contractors.
Of course, many of these challenges also exist in many developing countries, as well as many
advanced industrial countries, and local HR researchers and practitioners have begun to recognise
and address them.
To avoid or minimise unethical practice, HRM strategy generally needs to adopt integrated
approaches based on competence, merit and professionalism, balancing ministerial and
organisational autonomy and accountability in HRM, as decentralisation may lead to increased
discretion for corruption and favouritism. Alternative approaches to developing ethics/ integrity
regimes may need to be developed in culturally appropriate ways, not just the transfer of Western
models. It may also be useful to benchmark initiatives against best practices worldwide, perhaps
complemented by religious-based integrity efforts where appropriate (e.g. Islamic-based ethical
initiatives).