Journal of Management Studies 41:7 November 2004
0022-2380
Human Resource Management and the Permeable
Organization: The Case of the Multi-Client Call
Centre*
Jill Rubery, Marilyn Carroll, Fang Lee Cooke,
Irena Grugulis and Jill Earnshaw
Manchester School of Management, UMIST; Manchester School of Management,
UMIST; Manchester School of Management, UMIST; Bradford University School of
Management; Manchester School of Management, UMIST
 Despite the interest over recent years in the fragmentation of
organizations and the development of contracting, little attention has been paid to
the impact of the associated inter-organizational relationships on the internal
organization of employment. Inter-organizational relations have been introduced
primarily as a means of externalizing – and potentially rendering invisible –
employment issues and employment relations. In a context where inter-organizational
relationships appear to be growing in volume and diversity, this constitutes a
significant gap in the literature that this paper in part aims to fill. The purpose of the
paper is two-fold: to develop a framework for considering the internal and external
organizational influences on employment and to apply this framework within a case
study of a multi-client outsourcing call centre. We explore the interactions between
internal objectives, client demands and the use of external contracting in relation to
three dimensions of employment policy: managing the wage-effort bargain,
managing flexibility and managing commitment and performance. It is the interplay
between these factors in a dynamic context that provides, we suggest, the basis for a
more general framework for considering human resource policy in permeable
organizations.
INTRODUCTION
Despite the interest over recent years in the fragmentation of organizations and
the development of contracting (Castells, 1996; Nohria and Eccles, 1992), little
attention has been paid to the impact of the associated inter-organizational relationships on the internal organization of employment. Inter-organizational relaAddress for reprints: Jill Rubery, Manchester School of Management, UMIST, PO Box 88, Manchester M60 1QD, UK ( [email protected]).
© Blackwell Publishing Ltd 2004. Published by Blackwell Publishing, 9600 Garsington Road, Oxford, OX4 2DQ ,
UK and 350 Main Street, Malden, MA 02148, USA.
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tions have been introduced primarily as a means of externalizing – and potentially rendering invisible – employment issues and employment relations. For
example, Lepak and Snell (1999), following Leonard-Barton (1995), suggest that
contracting be used in areas where labour can effectively be treated as a commodity. In a context where inter-organizational relationships appear to be growing
in volume and diversity, this constitutes a significant gap in the literature that this
paper, in part, aims to fill. The purpose of the paper is two-fold: to develop a
framework for considering the internal and external organizational influences on
employment and to apply this framework within a case study of a multi-client outsourcing call centre.
INTERNAL AND EXTERNAL INFLUENCES ON HUMAN RESOURCE
POLICY: TOWARDS A MORE GENERAL FRAMEWORK
Recent interest in the resource-based view of the firm (Barney, 1991; Boxall, 1998)
has identified the internal development of human resources and the promotion of
organizational commitment as keys to competitive success. The associated process
school of corporate strategy (Purcell, 2001) emphasizes the nurturing of internal
resources, including human resources, in contrast to the rationalist or design school
that sees comparative advantage as secured through adjusting the internal resource
to the external environment. The resource-focused approach accords importance
to the development of internally strong and consistent human resource policies.
This internal focus coexists with a parallel literature on contracting out and
network organizations (Rubery et al., 2002). Reconciliation of these apparently
conflicting trends has been achieved by regarding externalization as a means of
promoting internal coherence and consistency by allowing concentration on core
competencies (Lepak and Snell, 1999). This approach is found in the flexible firm
model where the focus is on the core contracting organization, with little direct
attention paid to the employment strategies of the supplier firms situated on the
outer ring of the model. By implication these are designated as peripheral firms
but we know that many of the organizations operating as suppliers are large companies, including multinationals (Centre for Public Services, 2003).
The focus on a stable, protected core has been recognized as providing a rather
static picture of the interactions between organizations and their external environments. In particular, the work of Cappelli et al. (1997) in the USA and of
Ackroyd and Proctor (1998) in the UK has pointed to the destabilization of the
core as a consequence of the development of outsourcing and market-mediated
employment opportunities.[1] The retention of activities within the core is dependent upon a constant review of the options for externalization (Ackroyd and
Proctor, 1998) and the relative benefits of the formation of inter-organizational
relationships. Such an approach is supported by research that finds that the boundary between core and peripheral activities varies even in similar organizations,
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dependent upon both the specific internal policies of organizations and the external contracting opportunities (Purcell and Purcell, 1998).
Most studies of contracting have concentrated on the form of relations between
organizations (Deakin and Michie, 1997) and have not normally addressed the
employment implications of these relationships. Where these implications have
been considered, the focus has either been on the impact of the shifting of risk
from the dominant contractor to the largely small dependent suppliers (Harrison,
1994; Rainnie, 1991), or on the scope for diffusing human resource policies down
manufacturing supply chains (Beaumont et al., 1996; Hunter et al., 1996; Scarbrough, 2000; Turnbull et al., 1993). A common finding of these latter studies is
that there may be a mismatch between the aspirations for an integrated supply
chain based on high commitment human resource policies and the form of contracting relations adopted. The impact depends, inter alia, on the institutional
environment that shapes the contracting culture and practices (Lane and Bachmann, 1998). The supply chain is, nevertheless, identified as an important motivator for change (Hunter et al., 1996; Scarbrough, 2000) even if its influence on
employment relations is more complex than that implied by simple distinctions
between relational and transactional contracting. The supplier neither operates, as
in relational contracting, as an extension of the contracting firm trusted to operate
in the interests of the contractor nor, as in transactional contracting, as an independent entity subject to impersonal market forces rather than to specific client
demands.
Scarbrough’s recent study of three companies in supply chains reveals the
potential influence of clients. In one company, one of its four clients had worked
with the supplier to introduce a new system of work organization for its products.
It insisted upon a no redundancy policy for this line and thereby created problems
and tensions in other parts of the factory where no such guarantee was given.
Moreover, this insistence on no redundancy was not backed up by guaranteed sales
to the client. This example of ‘corporate colonization’ reveals the potential clash
between client requirements and internal human resource policies. While Scarbrough’s study found an inconsistency between the internal management of
employment and the client’s interventions, Kinnie et al. (2000) identified a multiclient call centre that had been able to divide its contracts into those requiring
transactional interactions with customers, and those requiring ‘relationship building and understanding brand values’ (op. cit., p. 151). Short term temporary staff
were used on the former and a dedicated team of permanent staff on the latter,
differences in human resource policies that were underpinned by the length of
contracts with clients and by the budget available for staff. In this particular case
the notion of adjusting internal policies to match external requirements – a ‘best
fit’ approach to human resource management – seemed to provide a viable strategy. However, as clients are embedded in different value chains and have divergent business strategies dependent upon their own positioning within the market
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(Miles and Snow, 1984; Schuler and Jackson, 1987), such a neat matching between
contract specification and work requirements cannot be guaranteed, as we identify below in our own case study.
There are relatively few studies like that of Kinnie et al. (2000) of the role of
clients in shaping employment relations in service organizations.[2] However, the
introduction of clients into the analysis adds another layer of complexity to a
sector that has already been identified in the literature as subject to external
influence, exercised through the direct contact of service workers with customers
(Korczynski, 2001). According to Leidner (1993), the traditional linear control
between employers and employees might better be represented in the service sector
as a triangle since customers, employees and employers act upon and react to one
another. An even more complex situation arises in the multi-client call centre as here
the customers become agents not of the employer but of the client, thereby introducing new possibilities for conflict and tension between meeting the customer
demands and the organizational goals of the employing organization.
From this brief overview we can identify a need for human resource policy to
be analysed within a framework which moves beyond a bounded organizational
analysis and considers the tensions and interactions between the internal and
external environment.
A Framework for Analysis
To develop an integrated analytical framework, we need to consider our case study
organization as both a supplier and a contractor. Not only are we considering a
multi-client call centre but also an organization that uses agency staff for over half
its workforce. As a supplier it is subject to the influence of external clients on internal employment policy and outcomes. As a contractor it may use outsourcing to
a temporary work agency as a form of safety valve, to provide an additional means
of responding to client demands. However, we know from research (Callaghan and
Thompson, 2002; Deery et al., 2002; Geary, 1992; Knights and McCabe, 2003;
Ward et al., 2001), that contracting may generate new problems and tensions in
turn. Organizations thus need to be viewed as embedded in a web of relations,
both internal and external, and it is the interactions between these relationships
that requires exploration (Grimshaw and Rubery, 1998).
An additional feature of our case study workplace is that it is part of a multidivisional organization operating in a range of different markets.[3] Purcell and
others (Boxall, 1998; Kinnie et al., 2000; Legge, 1989, 1995; Purcell, 1989; Purcell
and Ahlstrand, 1994) have argued that there is no simple way to provide both
internal consistency and alignment to external demands where these vary between
divisions. Where internal management has to resolve these differences under the
pressure of external client demands, the problems intensify. The framework we
use for analysing the tensions between the internal and external influences, as set
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out in Table I, focuses primarily on issues at one specific workplace within the
organization. However, in introducing and discussing our case study, we describe
the corporate context and make reference, where relevant, to distinctions between
corporate and workplace-level policies.
Table I provides a schematic overview of potential interactions between internal objectives, client demands and the use of an external labour supply agency on
three different dimensions of employment policy:
• Managing the wage-effort bargain.
• Managing flexibility.
• Managing commitment and performance.
Each of these represents a key dimension of the management of the internalized
employment relationship. Employees, when entering into an open-ended commitment to use their labour in the interests of the organization, seek guarantees
both as to the rewards that they will receive and protections against arbitrary and
discretionary behaviour (Marsden, 1999). Taken together, these requirements tend
towards the development of internal pay and reward systems that are, in industrial relations terms, ‘felt to be fair’ (Brown et al., 2002), even if the criteria for
assessing fairness are more concerned with notions of consistency (Baron and
Kreps, 1999; Boxall and Purcell, 2002) and transparency than with any absolute
definition of justice or equity (Hyman and Brough, 1975). This need for a consistent system applies to non-union as well as union firms, not least because consistent procedure is an implicit concept in much of employment law and codes of
practice on human resource management. Moreover all firms have an interest in
minimizing transaction costs and meeting workforce expectations, and research
has found that union de-recognition may even lead to greater standardization of
pay structures and systems where this offers opportunities for simplifying employment arrangements (Brown et al., 1998; Deakin, 1999).[4] Consistency is also an
implicit requirement of the policy of promoting strong and integrated human
resource policies (Boxall and Purcell, 2002, p. 56). If the different elements of
human resource policy are to be reinforcing, it follows that each of the separate
practices should also follow some consistent principle.
Flexibility, the second dimension considered, is the ability to deploy labour to
meet the changing requirements of the business. In part flexibility for employers
is provided by the internalized employment relationship; it is the efficiency of
authority relations in comparison to repeat contracting that is identified as explaining the emergence and survival of the open-ended internal employment relationship (Simon, 1991, p. 38). However, flexibility is also limited by the standard
conditions that have developed to provide employees with some degree of protection against arbitrary and changing work and working-time requirements.
Thus not all internal objectives are consistent and reinforcing, and employing
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Table I. Inter-organizational relations and human resource management
Internal employment
policies/objectives
Managing the wage-effort bargain
Pay/skill/effort
relationship
Differentials need to be
considered ‘fair’/consistent
to reinforce psychological
contract/limit managerial
discretion
Managing flexibility
Job security should
reinforce internal
consistency/hierarchyrecruitment and retention
strategies
Working time – regular
times to reinforce hr
package/variable to
maximize operational
efficiency/lower costs
Functional flexibility to
facilitate deployment and/or
basis for pay/career
progression
Managing employee commitment and
Commitment of
employees through strong
organizational culture
Performance appraisal
and discipline – consistent
procedure backed by
incentives and sanctions
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Client pressure/influences
Use of external
agency/labour supply
Pay/skill/effort relationship
Client contracts may not provide
consistent relationship between
implied pay, skills and work
intensity
Clients may intervene directly,
e.g. bonus payments etc.
Transferred staff retain clientbased pay under TUPE
Employees may extend pay
comparisons to client
organization
Pay/skill/effort
relationship
Use of external agency
to create new core/
periphery hierarchy
between temps and
permanent
Job security may depend on
contract security/specifications
Job security of internal
staff protected by use of
external agency
Working time – client opening
hours, pattern of demand
variation
Working time –
variable to maximize
operational efficiency/
meet client demands
where internal staff less
flexible
Functional flexibility –
training costly if high
turnover
Functional flexibility may be
restricted by client specifications
performance
Commitment of employees
to client as well as employing
organization
Performance appraisal and
discipline – clients may
intervene in performance
assessment with implications for
career/discipline
Commitment of
agency workers
to agency (employer),
supplier and client
Performance appraisal
and discipline – control
of performance by
supplier/client but not
linked to system of
incentives/sanctions as
non-employees
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organizations may resort to external contracting to overcome some of the constraints of standardized internal conditions (Baron and Kreps, 1999, p. 453).
The third element, managing commitment and performance, is at the heart of
recent human resource management debates (Guest, 1998). Management needs
to enlist the active cooperation of employees to ensure that they use their free will
and human intelligence in the interests of the organization and not against the
organization (Simon, 1991, p. 32). Thus policies and practices are designed in an
effort to foster employee commitment to the organization through, for example,
psychological contracts or developing a strong organizational culture. Individual
performance appraisal and development policies are advocated as a means of both
motivating and monitoring employee performance (Sisson and Storey, 2000,
pp. 87–90).
In each of these three dimensions there are potential areas of conflict with
clients and client contract specifications (see column two, Table I). Even within
integrated organizations, tensions between divergent interests may only be resolvable through political processes and compromises (Purcell, 2001). However,
internal compromise may be facilitated through some acceptance of common
overarching organizational goals (Simon, 1991, p. 32) promoted through organizational culture or organizational power relations (Purcell, 2001). This common
objective is lacking in inter-organizational relations and may be provided only partially by the development of high trust relational contracting. Contracting out does
not remove the tensions and conflicts inherent within the employment relationship
but displaces them to the supplier organization (Colling, 2000). As issues of control
and motivation remain, the client may feel the need to intervene in the internal
functioning of the supplier organization and thereby compromise the direct relationship between a single employer and its employees. Further sources of conflict
or inconsistency may arise because of the presence of multiple clients who may
not only be at different stages in the lifecycle of company development (Miles and
Snow, 1984; Schuler and Jackson, 1987) but also situated in different value chains
providing varying returns to capital. Moreover, the proximate reasons that lead
organizations to outsource may include not only the search for lower labour costs
but also a need for technological expertise, flexible capacity or more flexible operating and opening hours. Clients may therefore intervene along different dimensions, with different degrees of power and different capacities to fund their specific
requirements. The active intervention by clients also brings into play the specific
influences of the agents, the boundary spanners. Their personalities and priorities
may introduce an additional layer of variation, over and above differences in styles
that can be expected between internal managers (Boxall, 1998, p. 14).
The third column in Table I looks at contracting from the other direction, that
of contracting out to a temporary work agency. Use of an agency may allow
management to mobilize opportunities in the external market, perhaps to meet
specific client demands, without compromising internal consistency. However, a
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particular feature of the use of a temporary work agency, as opposed to other
forms of external contracting, is that the agency staff are managed within the same
workplace, usually by the supplier organization that is, in turn, the client of the
agency. This means that the extent to which the agency provides a means of escaping from the constraints of the internal employment contract may be limited due
to the co-location of, and need for cooperation between, the internally employed
staff and the agency staff. Issues of fair comparison may cross the core-periphery
divide (Earnshaw et al., 2002). At the same time, concerns with performance and
productivity may induce the supplier organization to cut across the responsibilities of the agency as the employer of the temporary agency staff. We need, therefore, to understand in what areas and in what respects the use of an external
agency may help resolve potential inconsistencies between internal objectives and
client demands and where the presence of the agency may lead to additional complexities and even perverse effects.
THE CASE STUDY COMPANY AND ITS CLIENTS
The case study through which we explore these conflicting pressures is an organization specializing in customer relationship management with roots in the utilities
sector, known here as ‘Total Customer Solutions’ (TCS). It operates a number of
call centres throughout the UK on behalf of clients from both the public and
private sectors. Our research was carried out at a variety of levels in the organization; a number of senior managers at headquarters were interviewed and further
exploratory interviews carried out at specific divisions of the company. Two sites
were selected for intensive investigation, one a single employer call centre (Cooke
et al., 2004; Marchington et al., 2003) and the other, the focus for the discussion
here, a multi-client supplier call centre (TCS-NW) set up on a greenfield site some
three years prior to the research.
TCS adopts very different human resource policies in different segments of its
business, retaining union recognition and relatively high wages in plants that it
inherited from its utility company past, but setting pay according to local market
rates in its greenfield sites (specifically in relation to the rates at which temporary
work agencies had been able to recruit staff for the site). Further differences in
terms and conditions between, and indeed within, sites are associated with the
take-over of staff from clients or from other subcontractors, since rates of pay for
transferred staff are protected under the Transfer of Undertakings (Protection of
Employment) Regulations, 1981 (TUPE). From our interviews it was clear that,
for management, this diversity of conditions across the company was felt to be
‘unmanageable’ in the longer term. Staff flexibility and career development were
being inhibited by the diversity, as this trade union official interviewed in the
context of the single client call centre site makes clear:
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. . . you have done a deal with [for example] Company Y based on call handling times of X based on the rates and then you work it back into what the
rates of pay are and therefore the different contracts are worth different
amounts of money to TCS which means they have to adjust their salary levels
accordingly. That will cause a problem . . . if people switch from product to
product. If they are dedicated to a certain contract then that is not a problem.
(Trade Union Senior National Officer)
At the multi-client site, the provision of services to a range of clients brought these
issues into play even within the same workplace. At the time of the research in
2000–01 the establishment served five clients and had been expanding, with the
numbers working on site reaching over 1000. Recruitment had been completely
outsourced to ‘Beststaff ’, a nationwide temporary work agency, and approximately
half of the staff were agency workers. Site expansion coupled with high rates of
staff turnover meant that Beststaff needed five staff on site simply to carry out
recruitment. All recruits were initially given a Beststaff contract for services but
with the prospect of a permanent TCS contract of employment after a satisfactory period of work (usually six months). However, as we discuss below, such offers
were by no means automatic in practice. No union was recognized but a site-wide
employee forum had been established, with representatives from each contract, to
discuss local issues.
In total the research at TCS involved interviews with over 60 people, with
around a third at the multi-client call centre, TCS-NW. Of these, nine were with
management including the General Manager, Human Resource Manager, section
managers, team managers, a team coach and the on-site temporary work agency
co-ordinator. Our focus is on the management issues discussed with general and
line managers but this material is supplemented by insights into these issues
gleaned from 12 semi-structured interviews with Customer Service Representatives (CSRs), six of whom were permanent TCS employees and six temporary
agency workers. The interviews covered managers and CSRs in each of the five
contracts.
Table II provides information on the individual client contracts, staff numbers,
operating hours, training and nature of work. The five clients have been fictionalized here as: Utilityco, a utility company that had recently taken over Energyco
and continued Energyco’s TCS-NW contract; Gambleco, the betting division of
a larger company; Catalogco, a mail order company; Truckco, a vehicle rental and
breakdown company; and Phoneco, a mobile phone service provider.
For reasons of commercial confidentiality we were not allowed to try to speak
to the clients directly.[5] We were, therefore, reliant on TCS management accounts,
supplemented by publicly available material in the press and elsewhere, to identify the clients’ motivations for outsourcing. These appeared to cover the whole
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Table II. TCS north west clients
Term of
contract
Contract
term value
Date of
launch
Estimated
annual calls
Number of staff
(headcount)
Percentage
of agency
staff
Operating
hours
Initial
training
time
Type of work
Utilityco
(formerly
Energyco)
Energyco
5 years
Utilityco
1 year
£7 m
Nov 1998
(Energyco)
Dec 2000
(Utilityco)
509,600
300
60%
8am–8pm
(Mon–Fri)
8am–midday
(Sat)
2–3
weeks
Billing queries
Registrations
Debt collection
Data input
Gambleco
5 years
£30 m
June 1998
2,200,000
220
90%
9.30am–
midnight
(7 days)
2–3 days
Telephone betting
Catalogco
1 year
£2 m
Feb 2000
1,180,000
130
80%
9am–9pm
1 week
Catalogue sales
(inbound and
outbound)
Truckco
5 years
£5 m
Oct 2000
431,600
–
24 hours
1 week
Truck rental enquiries
Bookings
Breakdowns
Phoneco
16 months
(Figure not
available)
Nov 2000
(Figure not
available)
20–35%
8am–
midnight
(365 days)
1 week
New registrations
Pin unlocks
Balance enquiries
Credit card recharges
30
270
J. Rubery et al.
Client
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spectrum of possible factors. Catalogco was attracted by TCS-NW’s technological and organizational expertise and the opportunity to improve upon performance in its outdated in-house call centre. Gambleco, Phoneco and Utilityco/
Energyco were interested in the speed at which the call centre could be set up and
recruitment expanded and contracted. Truckco was using outsourcing to provide
24 hour access for customers. Information on industrial relations and cost reduction factors was not provided by TCS-NW but Gambleco had entered into a
partnership agreement covering its non-gambling internal activities. Outsourcing
may therefore have been a means of keeping its betting division outside that
agreement. Energyco had been a new entrant to the utility industry, competing on
the basis of outsourcing all activities to low cost suppliers. When Energyco went
bankrupt, Utilityco, according to TCS-NW managers, continued to use TCS-NW
to avoid bringing in-house the complex problems associated with the failed
Energyco.
MANAGING HUMAN RESOURCES IN A MULTI-CLIENT
ENVIRONMENT
A call centre provides conditions that could be expected to generate a high level
of inter-contract flexibility and internal cohesion. This call centre was no exception as all operations made use of similar technology and most staff were employed
in one job category on the same, or very similar, rates of pay. However, the existence of five separate contracts with different specifications had led management
to manage each contract effectively as a profit centre – according to the Human
Resource Manager ‘each contract runs like a company’. Despite the divisionalization, TCS management still sought to develop consistent internal policies and
common cultures and approaches, as we explore below. That there were difficulties in achieving these within a context of homogeneous technologies, job grades
and sources of labour supply is perhaps just that much more surprising.
Managing the Wage-Effort Relationship
Internal pay differentials are usually rationalized or legitimized by some criteria,
including the skill or status level of the job and/or the effort required (Brown et
al., 2002, pp. 196–7). We know from industrial relations, labour process and, above
all, the sex discrimination literature (Acker, 1989; Hastings, 2000) that which jobs
are deemed skilled and which workers worthy of supplementary or effort-related
payments is socially constructed. Nevertheless, organizations still need some principles to underpin their pay system and the wage-effort bargain. At TCS-NW the
policy adopted was to provide a largely flat rate pay structure for CSRs, only
slightly differentiated for skills and performance. The main pay hierarchy was
between direct employees and agency staff: the latter received an hourly rate
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whereas the former were on a salaried pay scale linked to an annual appraisal
system. The inferior terms of the agency staff extended to benefits, for although
holiday entitlement, after a qualifying period, was similar, only the permanent
employees were entitled to sick pay and to membership of the pension scheme.
This espoused pay and benefit system allowed the offer of a permanent contract
to be used as a retention strategy.
This core/periphery pay hierarchy should, in principle, have reflected skills and
experience, with all staff initially hired on an agency contract but with the ‘carrot’
of a TCS contract after six months’ satisfactory performance. In practice, as a
consequence of the problems of managing the diverse client contracts, a number
of anomalies in this wage-effort system had emerged. First, the offer of permanent contracts was not being systematically followed through. Phoneco had insisted
that 80 per cent of the staff working on its contract should be on TCS contracts;
therefore agency staff who were recruited onto Phoneco work were quickly converted onto TCS contracts whereas others were waiting longer than six months.
Neither the individual concerned nor the agency was informed as to the reason:
‘to be honest, I don’t know what they’re being monitored on’ (Beststaff Coordinator). The problem appeared to lie not in the performance of the staff but the
uncertainty associated with the contracts. The second problem with the consistency of the pay structure was that the divisions between directly employed and
agency staff did not fully reflect differences in skills or job requirements. The
directly employed staff could be awarded small additional payments of up to £500
per annum related to skills, including multi-skilling but agency staff were only eligible to receive even lower increments, awarded on the basis of competences and
behaviour not skills after three months and six months in the job. Yet it was agency
staff who were more likely to work on the more stressful and difficult jobs or to
be required to develop multi-skilling. Some permanent staff were employed on
client contracts requiring dedicated staff so that agency staff had to be included
in the multi-skilling programme to provide an adequate pool of trainees. However,
where agency staff were trained to work across contracts or were required to work
on the more stressful Utilityco contract, they still received inferior pay to their permanent counterparts. As a consequence, the issue of relativities between TCS and
agency staff had become an issue in the employee forum:
What they call multi-skilled, a multi-skilled person who works for TCS is on
more money than a multi-skilled person in Beststaff, so this is an on-going issue
at the moment as well in the employee forum. (Permanent CSR, Gambleco)
At TCS, contract specifications and requirements had not allowed the development
of either a common approach to pay according to skill and experience or a common
standard of work intensity. Although the work was apparently similar, different skills
were in fact required: Utilityco CSRs needed strong customer service skills plus con© Blackwell Publishing Ltd 2004
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siderable business and process knowledge, whilst Catalogco staff, particularly those
doing outbound calls, needed selling skills, acquired at least in part through previous experience of selling. The Truckco work involved a mixture of selling and customer service skills. Staff on this contract were also required to have significant
product knowledge and to liaise with Truckco field sales and depot staff. A flat structure avoided the need to create an ordered hierarchy of these different competences
and was retained despite differences in training times from two to three days to two
to three weeks (see Table II). TCS-NW had turned down a request from Utilityco
for a higher pay rate to reflect the more complex and stressful nature of the work.
By so doing it signalled a preference for pay rates to remain broadly comparable
between contracts. It had only been willing to accede to certain requests for differences in pay that could be easily explained to staff and that would not undermine
the distinction between permanent and temporary staff. For example, Catalogco
was allowed to specify a higher rate for outbound sales and to require those CSRs
to have previous outbound sales experience. Catalogco and Truckco were also
allowed to provide incentive bonuses.
Behind the flat structure lay major differences in work intensity related to contract specification. Contracts for four of the clients specified the number of calls
to be handled, call wait times or call abandon rates, all of which exerted pressure
on the nature and intensity of work. In contrast the Phoneco contract merely specified the number of ‘logged in’ hours which TCS-NW had to provide. Differences
in contractual call answering rates reflected the varying priorities of clients regarding the customer’s interaction with the CSR. Gambleco wanted the call to be as
short as possible because lost calls could not be retrieved after a race had been
run. Catalogco staff were trained to end the call ‘in a friendly manner’ once the
optimum sale had been achieved. Phoneco emphasized the ‘quality’ of the interaction, irrespective of call length. Ninety per cent of Phoneco work involved new
mobile phone registrations – a very straightforward transaction – but it was this
contract that allowed for the lowest level of work intensity as Phoneco CSRs spent
20–30 per cent of their time waiting for calls in order to meet the logged in hours
requirement. These differences in specifications restricted the ability of TCS-NW
to equalize work intensity. The Utilityco contract specified separately how many
people must be employed on the phone call operation and the back office work,
thereby reducing the discretion of the internal managers to use flexible deployment to even out work intensity, even within the same contract. Stress levels also
varied across contracts, with the Utilityco work being the most pressured. Here
TCS-NW provided customer services for quarterly billed commercial and domestic customers and, as a team coach from the Utilityco contract pointed out, ‘they
[customers] are not going to ring you up and say “thank you for sending me a
wrong bill” ’. Those working on the Utilityco contract were subject to further pressures as they were still trying to deal with the mis-selling of tariffs to customers by
another subcontractor of Energyco.
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Instead of confining the field of vision to similar workers at the workplace
(Baron and Kreps, 1999), employees within a multi-client environment may extend
comparisons with respect to fair remuneration to client organizations, particularly
when they are expected to identify with the client and present it to the external
world. In the case of Catalogco the TCS staff became aggrieved that even though
they were required to act as if they worked for Catalogco when answering the
phone, discounts available to Catalogco’s own staff were not extended to them.
Thus the differences in the specifications and the potential variability in the mix
of client contracts precluded the development of an internal pay hierarchy reflective of skill or work experience. Instead TCS-NW chose to focus its pay hierarchy
on the division between core and periphery or agency staff but even this internal
policy was disrupted by differences in client contracts that inhibited its smooth
application and introduced external comparisons into assessments of fairness and
consistency.
Managing Flexibility
TCS-NW faced two sets of flexibility requirements. Flexibility in deployment and
cost of labour was required to meet internal needs; that is, to manage uncertainties over renewal of contracts and variations in the overall volume and pattern of
business, minimize the cost implications of demand variation and ensure a ready
supply of labour to respond to changes in demand.
These internal objectives had to be balanced alongside the specific flexibility
objectives and requirements of the clients. For example, Phoneco was interested
in flexibility to meet seasonal demand, Truckco in 24 hours’ public access and
Gambleco in maximizing bets in the run up to races. All clients, moreover, specified variable opening hours (see Table II). More generally, TCS-NW was under
pressure to orient its flexibility strategies to maximize service to the clients’
customers rather than to pursue more general efficiency and cost minimization
strategies.
The use of a temporary work agency was the most important means by which
TCS-NW sought to square the circle of meeting clients’ specifications while
achieving internal flexibility. The agency was used to recruit staff quickly to deliver
a rapid set-up time to clients. Temporary agency staff were also deployed to meet
client demands that directly employed staff resisted (for example unpopular shift
times). In addition, agency staff provided a means of rapid downsizing should the
need arise. These contributions to flexibility by the temporary work agency coexisted with the use of temporary staff to provide an internal hierarchy of pay
and job security, as discussed above.
However, as with all policies that are used to fulfil too many objectives (Tinbergen, 1956), the deployment of temporary agency staff for multiple purposes
resulted in some contradictory outcomes. As we have already noted, the consis© Blackwell Publishing Ltd 2004
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tency of the core/periphery strategy was not maintained because the offer of permanent contracts was influenced more by client specifications than by the tenure
or performance of the individual worker. Turnover was a particular problem
among agency staff, possibly reinforced by TCS-NW reneging on the offer of a
permanent contract. TCS-NW had a target overall turnover figure of 20 per cent
but in practice it had rates much in excess of this (as high as 70 per cent on the
Utilityco contract for example) and even for Phoneco, 12 months into the contract, the achieved permanent contract share was 15 per cent below the target of
80 per cent, partly as a consequence of recruitment and retention problems.
At TCS-NW to overcome the problems of the high turnover rate, management
had stated its intention of increasing the share of permanent staff to 80 per cent.
Such a move was contingent on replacing numerical flexibility by functional flexibility through cross-contract working. A business case had been developed for
multi-skilling, to be implemented first on the Gambleco contract to cope with the
huge peaks in demand immediately before a big race or match. However, the strategy had not been widely applied because of the training costs involved in multiskilling in a context of high labour turnover. The treatment of each contract as a
profit centre presented further difficulties; staff time had to be accounted for, both
for cost reasons and to fulfil contract specifications, so that sharing of labour
required staff to log off and then on to another contract. Where clients were
closely involved in training and in monitoring the performance of TCS staff, multiskilling and redeployment across contracts was even more problematic as this
would involve the external client in extending their influence across a wider share
of the workforce. Moreover, it was not clear that the client would welcome a dilution of identification with the specific client contract.
The client contracts were differentiated not only by skills and training but also
by operating hours. All contracts had different operating hours and variations in
demand within those hours and for Gambleco working times were directly linked
to the racing schedule. Recruitment was made more difficult for Beststaff by the
need to tailor hours to client requirements and by problems of redeployment
between contracts caused by differences in shift patterns. Although both full-time
and part-time contracts were available at TCS-NW, this diversity was used to fit
variations by client and not to facilitate recruitment and retention. It was the
agency staff who were in particular supposed to provide this flexibility but in practice TCS-NW managers complained too many staff were recruited who wanted
standard or part-time hours. Nevertheless it was the newly recruited agency staff
who were expected to fill unpopular working time schedules and indeed to work
extra hours when required.
They used to say, ‘if you don’t like it you know where the door is’. That was the
attitude – we were only temporary. But really, the bulk of the workforce is temporary. (Former Agency CSR, Catalogco, now Permanent)
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However, this use of external agency staff as the means to resolve internal conflicts was only partially successful. There were clear internal conflicts between the
three pressures to meet client specifications, to achieve cost effective deployment
of resources and to establish human resource policies designed to retain experienced staff. In this context agency staff appeared to provide a useful safety valve
but many recruits were voting with their feet, obviously not considering a permanent contract a sufficient ‘carrot’ to encourage them to provide the flexibility
required by both TCS-NW and the external client. The use of the agency staff
thus became part of the problem as well as the flexible solution (Ward et al., 2001).
Managing Employee Commitment and Performance
Within fragmented and decentralized organizations the effective management of
human resources has been increasingly seen as dependent upon a strong organizational culture, to provide the glue necessary for the coordination of internal
employment (Evans, 1992). TCS had developed at corporate level a set of core
values to underpin its business strategy. These were stated to be a commitment to
customer service, respect for the individual, a performance-based approach, flexibility and decisiveness and quality. All subdivisions, including TCS-NW, were
expected to use these core values as a means of securing employees’ commitment
and of providing a unifying force in the workplace. These values, according to
managers and team leaders, permeated the management of the diverse contracts:
. . . whether you are on Phoneco, Gambleco or Catalogco your managers will
be coming from the angle of those five core values and managing it in much
the same way. (Section Manager, Catalogco)
Some managers claimed that TCS consciously sought out clients whose values
were similar. However, this matching of values appeared to apply only to Catalogco and, more specifically, Phoneco, where the synergies between the management teams were repeatedly stressed:
Phoneco, as a customer of ours, are very, very keen on the culture aspect, on
the quality aspect, very much focused on the people within their organization,
as are TCS. But we have got to reflect that in the way that we manage the contract as well and we feel, in order to get that quality and the culture that we
want, that we do need to go to the 80 per cent permanent. There is a difference in budget from contract to contract . . . and we have got the money within
our budget account to have those people. (Section Manager, Phoneco)
For the Beststaff On-site Co-ordinator, however, it was the differences between the
contracts, the characteristics of the client, rather than the TCS culture, that made
the difference:
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Phoneco is a good one because they offer a lot of contracts on a regular basis
which keeps motivation high. It’s easy, it’s fun. Utilityco, I personally feel, is
quite, is one where I can see a real low morale. That’s one of the ones, and the
home shopping catalogue. Catalogco and Utilityco, out of our twenty starters
on a Monday, by the end of the week there’ll be about thirteen.
Moreover, according to one CSR who had worked across contracts, the experience of the client in managing external relations had a major impact on the experience of work within TCS-NW:
I’d say Gambleco is more organized [than Catalogco], a lot more organized.
But I don’t know whether that’s because it’s been going longer. There seems
more direction there. They know exactly what they want off you and where it’s
going. And I think the managers were all very experienced. In Catalogco I think
it’s just new and, like I’ve said, the turnover of managers is really rapid, and
that is what’s wrong. (Permanent CSR, Catalogco)
Variations in management style are found within organizations but clients add an
additional layer of diversity, largely outside the control of the supplier organization and at odds with the development of a common site-wide culture. Indeed,
our interviews with CSRs cast considerable doubt on whether this notion of a
TCS company culture and core values penetrated much below the junior managerial ranks. In stark contrast to the managers, none of the CSRs mentioned the
company’s ‘values’ or their contribution to their experience of work, except in so
far as it resulted in a more relaxed attitude to the management of call centres. As
one CSR commented:
I’ve worked in [Homeshopco] and [Poolsco] and I think the atmosphere here
. . . I was a bit shocked when I first came because people talk, being able to talk
and feel free to walk around, because other places I’ve worked in, you’ve sort
of sat at a desk and you haven’t moved. (Agency CSR, Catalogco)
This positive assessment was not unanimous; other CSRs complained about being
under pressure not to leave their seats for toilet breaks etc. indicating, perhaps, differences in the application of these values among the contract areas and team
managers.
One of the main ways in which TCS-NW sought to develop its company culture
and to foster organizational commitment was through its site-wide ‘Performance
and Development’ process. Individuals were supposed to have monthly one-to-one
performance and development (P and D) meetings with their team managers to
discuss how they were working towards agreed goals. Most importantly, according
to a Catalogco Section Manager, this approach spanned both permanent and
agency staff:
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Well, there is an overall HR personal development plan which we run for the
TCS direct contract employees but, as far as possible, we run exactly the same
plan for our agency people. So if you can picture, a permanent member of staff
would have a monthly one to one with their team manager, which would be a
review of their performance that month, and a discussion about what they
needed to do to develop. And that is documented and put in their personal file.
That also happens for the agency staff. It is not just for permanent staff. We do
it for them as well. The only difference would be the permanent staff, at the
end of the year, have a kind of end of year appraisal which all links into pay
rises and different things.
This quote reveals not only the presence of the common culture approach but also
its weakness. TCS-NW was both unable (not being the employer) and, apparently,
unwilling (by not providing for performance-based pay in their contract with the
agency) to back up the common P and D system with a similar commitment on
pay for agency staff. Furthermore, TCS-NW did not seem to be following through
on its own policy of rewarding agency staff with permanent contracts. Lack of
communication and apparent failure to deliver on promises were, therefore, undermining the potentially cohesive effects of TCS’s declared policy of a common
culture.
Moreover, all efforts at cohesion and uniformity within TCS-NW were made in
a context where client involvement created further confusion in relation to organizational identity and commitment, over and above that existing between TCSNW and the agency. Staff were required to present themselves on the telephone
as an employee of the client (‘Welcome to Phoneco . . .’) leading customers to
believe that they were, in fact, dealing with the client company, an important factor
in reinforcing the identification of the employee or agency worker with the client.
In many cases client company managers were themselves directly involved in
developing identification of TCS and agency staff with its company image and
objectives. Some clients, notably Catalogco and Phoneco, undertook direct training of ‘their own staff ’ within TCS-NW. Truckco wanted the staff to wear Truckco
uniforms even though they were working off-site at the end of a phone line and
employed by TCS (or Beststaff). This request was, in fact, turned down by TCSNW, although the CSRs did don T-shirts with Truckco logos on special occasions,
such as the official launch day.
The effect of this triangular relationship between the client, the supplier and
the agency (or four-sided if we include the customers of the clients) was, not surprisingly, to hinder the development of a strong organizational identity at TCS.
Very varied opinions were expressed by the CSRs we interviewed when asked
whom they regarded as their employer. Some identified with the client, others saw
the agency as their main point of reference and yet others, TCS.
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The triangular relationship also impacted on issues of staff performance assessment and career development. Promotion opportunities were limited but, where
they existed, the gatekeeper was often the client not the employer; Gambleco, for
example, operated a ‘premier line’ for customers who bet large amounts and
selected the CSRs to work on this line on the basis of their own performance monitoring. Under several of the contracts the clients listened in to calls and fed back
their assessments directly to staff with the knowledge of TCS-NW, thereby influencing the employer’s assessment of the staff member’s performance. TCS-NW
was proud of its inclusive policy towards the temporary agency staff and felt it
was important in developing a cohesive attitude and approach. However, the cohesiveness was limited by the formal differences in contractual status. The performance appraisals did not result in pay rises for the agency staff and in those cases
where TCS-NW was tempted to apply a common disciplinary approach, this practice was in conflict with the duties and obligations of Beststaff:
It will be the fifth time that they’re late before we see them and then they’ll
[TCS-NW] say ‘we don’t want them back’. And we’re like, we’ve never spoken
to them! You’re asking us to remove somebody that we’ve never seen to reprimand. That’s the problem. (Beststaff Coordinator)
Thus the attempts by TCS-NW to create a common culture and organizational
identity across the site foundered on two counts. Firstly, the influence of the external clients cut across TCS’s attempts to develop strong cultural values and organizational identity across the company and at workplace. Secondly, TCS-NW’s
reluctance to take on the obligations of employer for all its on-site workforce
restricted the opportunities to develop consistent and coherent staff development
and disciplinary policies.
DISCUSSION AND CONCLUSIONS
This case study provides a clear demonstration of the need to analyse the design
and implementation of human resource policies through a framework which keeps
the internal and external influences constantly in view and which identifies the
dynamic interaction between these influences. TCS-NW managers had espoused
three core elements to their human resource policies, each of which was apparently aligned with their business or market position. However, the policy had not
been fully implemented in any of these elements owing to factors associated with
the interventions of clients or with the role of the temporary work agency staff or
both. The first element was the adoption of a core/periphery division between
direct employees and temporary staff, to provide an internal hierarchy among
CSRs that was not based on the nature of work or work intensity, in order to
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facilitate adjustment to client demand and requirements. However, this clear
core/periphery divide was called into question by the differences in specifications
in client contracts covering the use of temporary staff. Access to a permanent contract, therefore, became more an issue of the nature of the client than of experience or performance. The second element, that of TCS-NW’s flexibility strategy,
was complicated by the behaviour of temporary agency staff on the one hand,
and by the diversity of client contracts and client specifications on the other. The
numerical flexibility strategy – using the temporary work agency to facilitate rapid
recruitment and adjustment to changes in demand – came at a cost of high
turnover and training costs. These costs prompted consideration of multi-skilling
strategies, but these were not being fully implemented owing to the high turnover,
which reduced the capacity to change, and the contract specifications and training requirements which created barriers to staff working on multi-contracts.
Finally, the strategy of using core values and establishment-wide performance and
development appraisal to provide internal cohesion and organizational identity
could not be fully reconciled with the fragmented employment system. Policies said
to be designed to treat all staff the same failed, in practice, to deliver the same
benefits to all workers and, in any case, cut across the employer responsibilities of
the agency. Furthermore, the diversity in employment experience offered by the
various client contracts indicated that a matching between TCS’s core values and
that of the system of work organization was exceptional, or even coincidental,
rather than a factor that could be found throughout the TCS-NW operation.
This analysis supports the Ackroyd and Proctor (1998) perspective that the flexible firm in the UK, far from providing a means of protecting the core, increases
the exposure of the internal employment practices to influence and control
from the external environment. It also provides further evidence that in supply
chains the external organization may extend its tentacles inside the organization
to reshape the internal human resource practices (Scarbrough, 2000). Moreover,
in contrast to the case discussed by Kinnie et al. (2000), it provides empirical evidence of an organization where there is no simple matching between the characteristics of the client contract and the nature of the work being subcontracted.
Differences in clients’ position within value chains and in their market orientation
mean that suppliers may have to manage a series of contracts with very different
implied levels of work intensity, job security, quality considerations or wage costs.
These differences between clients add another layer of complexity to the management of human resources, over and above that which has been found within,
for example, multi-divisional organizations. As Boxall and Purcell put it, ‘Striving
for consistency is important but, at the end of the day, there is still an element of
paradox in the way people are managed’ (2002, p. 57). No simple solution exists
for the management problem of how to generate a strong internal message and
align human resource policy with external business requirements. Evans, in the
context of multinational companies, has identified the dualist pressure to decen© Blackwell Publishing Ltd 2004
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tralize and centralize human resource policies as reflecting ‘the deep dynamics of
development’, as the tension between these pressures is ever present and never
‘resolved once and for all’ (1992, p. 103). Too much divisionalization dilutes the
internal message and creates inconsistency (Boxall, 1998; Legge, 1989). Indeed
slavish adaptation to external requirements, as implied by the best fit approach to
human resource management or by the customer-approach to business strategy
(MacDonald, 1995) is incompatible with management adopting a strategic
approach (Kinnie et al., 2000; Purcell, 1999) involving not merely reacting to but
actively managing the external environment (Boxall and Purcell, 2002). These
problems are exacerbated in the context of a need to accommodate client requirements. ‘Internal fit’, therefore, means more than consistency and involves the
dynamic management of tensions between the internal and the external.
While TCS showed little sign of having developed a strong strategic approach
to its human resource policy, the employment system at TCS’s North West call
centre can in part be regarded as a (moving) compromise between client demands
and internal objectives. The compromises that TCS-NW had made between these
pressures were undoubtedly influenced by contingent factors such as the fact that
TCS-NW had been growing rapidly, enabling it to offer permanent contracts to
CSRs despite the lack of permanent agreements with clients. Retention and
recruitment problems were also eased by the fact that there were good opportunities for rapid promotion to team leader and management. An important factor,
therefore, in shaping TCS-NW’s responses to clients’ requests was whether these
were compatible with, or in conflict with, TCS-NW’s own business strategy and
trajectory. However, the ability of organizations such as TCS to build a distinctive
culture and expertise is dependent on its relative power in the product market and
the extent of internal pressure towards consistency and fairness. The lack of a
trade union presence at TCS-NW meant that less emphasis may have been placed
on internal consistency and the implementation of internal human resource policies than where there are procedures in place to monitor both consistency and
implementation from a workers’ perspective. Even so, TCS-NW failed to deliver
in its limited objectives of internal cohesion as management struggled to balance
client demands and to deal with the problems, as well as the opportunities, generated by the reliance on temporary work agency staff.
The kind of organization studied here may be argued to be a special case since
a multi-client call centre is probably located at the far end of a spectrum based
on the permeability of the organization to external influence. However, if organizations are to engage increasingly in network or subcontract relations, then the
experience of suppliers must be included within the ambit of human resource
management literature. Client interventions in the internal management of supplier organizations can be expected to be more significant the more that client
organizations are, as in the resource-based view of the firm, concerned to develop
their own company-specific strengths and comparative advantage. Yet at present
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J. Rubery et al.
supplier organizations are in danger of becoming the black holes of human
resource analysis. This black hole terminology has been used by Guest and
Conway (1999) for organizations that neither develop strong human resource
strategies nor follow traditional industrial relations practices. Many supplier organizations can be expected to fall into this black hole as their capacity to develop
consistent and strong human resource policies is moderated by the need to manage
external pressures, particularly those of clients. Rather than treating such organizations as a special case we need to move towards a more general framework where
internal and external influences on the management of human resources are seen
as mutually constituted, iterative and interactive. It is the interplay between these
factors in a dynamic context that provides the basis for analysing human resource
policy in permeable organizations.
NOTES
*The research for this paper was financed under grant L212252038 of the ESRC Future of Work
programme. The project is investigating ‘changing organizational forms and the reshaping of work’.
It involves a number of in-depth case studies of a variety of organizational forms, including franchises, employment agencies, Private Finance Initiatives, partnerships, supply chain relationships,
and outsourcing. The full research team is Mick Marchington, Jill Rubery, Hugh Willmott, Jill Earnshaw, Damian Grimshaw, Irena Grugulis, John Hassard, Marilyn Carroll, Fang Lee Cooke, Gail
Hebson and Steven Vincent. For full details see Marchington et al. (2004).
[1] See also Rubery (1998) for a parallel argument re the impact of part-time work on full-time
employment.
[2] Except for studies of contracting out of public services (Colling, 1995; Escott and Whitfield,
1995).
[3] The potential tension between centralized and decentralized human resource is even greater in
multinational companies (Evans, 1992).
[4] Even if trade unions are still important in reducing managerial discretion in the application of
human resource policies and in developing fair and consistent approaches to pay and rewards.
It should be noted that the greater standardization may be at the expense of recognizing skill
differences between workers.
[5] While we could not speak to the clients, we were allowed to speak to a range of staff who experienced different types of interactions with clients, including the temporary work agency coordinator, thereby allowing us to build up a picture of client interventions as they were perceived
by different categories of staff in TCS.
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