unit6_assignment
RECONSIDERING BOUNDARIES:
HUMAN RESOURCE MANAGEMENT
IN A NETWORKED WORLD
J U A N I S W A R T A N D N I C H O L A S K I N N I E
In the twenty-fi rst century, work activities tend to span organizational bound-
aries and take place in projects or networks. This cross-boundary working
has major implications for current HRM models that are more suited to an
industrial economy, which assumes a single employer and where work is
carried out within a set of clearly defi ned boundaries. We draw on a decade
of empirical research in cross-boundary contexts to identify: (1) three types
of networks (interactive, interwoven, and integrated) that vary according to
their boundary properties, the focus of the work activity, and the prominent
identifi cation; (2) the particular structural, relational, and knowledge-based
tensions (Phelps, Heidl, & Wadhwa, 2012) that are inherent in each networked
context; and (3) three HRM models (buffering, borrowing, and balancing) that
are appropriate to sustain networked working in these contexts. The main
contribution of the article is the identifi cation of HRM models in networked
contexts. © 2014 Wiley Periodicals, Inc.
Keywords: commitment, human capital, strategic issue management, restructuring, strategic HR
Correspondence to: Juani Swart, Work and Employment Research Centre, School of Management, University of
Bath, Bath BA2 7AY, United Kingdom, Phone: +44 (0)1225 38 3108, E-mail: J.A.Swart@bath.ac.uk.
Human Resource Management, March–April 2014, Vol. 53, No. 2. Pp. 291–310
© 2014 Wiley Periodicals, Inc.
Published online in Wiley Online Library (wileyonlinelibrary.com).
DOI:10.1002/hrm.21551
Introduction
T he aim of this article is to develop a typology of HRM models that ad- dresses the challenges inherent in contemporary forms of organizing. An analysis of present-day work il-
lustrates that we have moved from operating within a single set of clearly defined organi- zational boundaries to a networked way of working where products and services are co- created (Donnelly, 2009, 2011; Fincham, 1999; Marchington, Grimshaw, Rubery, & Willmott, 2005; Marchington, Rubery, & Grimshaw,
2011; Powell & Grodal, 2005; Rubery, Cooke, Marchington, & Earnshaw, 2003; Singh & Fleming, 2010; Sturdy & Wright, 2011; Wuchty, Jones, & Uzzi, 2007). We therefore cannot merely focus on HRM practices within the firm and need to ask: How are HRM models configured within networked contexts? We ad- dress this question by drawing on a decade of research into cross-boundary working, pre- dominantly in professional services firms (PSFs), which are highly appropriate for this research question given that they are consid- ered to be representative of contemporary
292 HUMAN RESOURCE MANAGEMENT, MARCH–APRIL 2014
Human Resource Management DOI: 10.1002/hrm
A series of tensions
will inevitably be
inherent within
networked working,
and we need to
pinpoint precisely
how HRM practices
are adopted across
various networked
contexts to seek
to resolve these
challenges.
forms of organizing (Malhotra & Morris, 2009).
The raison d’être of a configuration of HRM practices is to enable effective working both individually and collectively. The way in which we work has changed significantly dur- ing the past couple of decades. Organizations in a knowledge-based economy rely not only on their own knowledge and skills to generate valuable outputs but they also draw on inter- organizational resources to create sustained competitive advantage (Fisher, Wasserman, Wolf, & Hannan Wears, 2008; Lepak & Snell, 2007; Marchington et al., 2005, 2011; Rubery et al., 2003; Swart, 2011). Work therefore tends to be carried out in cross-boundary contexts
and, consequently, firms man- age people they do not directly employ and employ people they do not manage. Clients become involved in the HRM practices of the employing organization, con- tributing, for example, to estab- lishing recruitment standards, assessing candidates, and render- ing the final employment deci- sion (Kinnie & Parsons, 2004).
If this “networked working” is so familiar to us, why are cur- rent HRM models more suited to an industrial economy where employees are encouraged to iden- tify with just one employer who has strategic control over the HRM practices (i.e., resourcing, devel- opment, and performance and reward management)? It is because of this misalignment between twenty-first-century working and theoretical models that we need to
re-examine fundamentally the boundaries of the firm and activities of contemporary work- ing in order to develop our understanding of extant HRM models that are fit for purpose to facilitate the achievement of individual-, firm-, and network-level objectives. A series of tensions will inevitably be inherent within networked working, and we need to pinpoint precisely how HRM practices are adopted across various networked contexts to seek to resolve these challenges.
The main contribution of the article is the identification of three networked HRM mod- els that address the tensions inherent in con- temporary forms of organizing. We develop these three models in various ways. First, we illustrate that networked working is a promi- nent feature of current-day employment by adopting an activity perspective (Kogut & Zander, 1996) to identify the boundaries of work activities and, hence, employment models. Second, we acknowledge network variation and identify three prominent net- work types from our data analysis—namely interactive, interwoven, and integrated net- works, which vary according to: (1) bound- ary properties, (2) work activity focus, and (3) the prominent identification. Third, we discuss the structural, relational, and knowledge-based (Phelps et al., 2011) tensions that exist in each networked context between the network and firms and between employ- ees and firms. Finally, we identify, from our data analysis, appropriate networked HRM models (i.e., buffering, borrowing, and balanc- ing) and illustrate how each model addresses its associative tensions. We argue that HRM practices have an impact on the boundaries of the firm, which in turn influences the flow of human capital between the various stake- holders in the network.
Previous Research: The Networked Way of Working
If work is no longer organized only within a single organization, then we need to identify an appropriate unit of analysis for contempo- rary HRM models. We follow a logic presented by Kogut and Zander (1996), which states that boundaries are created by activities. Furthermore, research indicates that work ac- tivities and the associative outputs of eco- nomic value extend beyond the boundaries of the firm (Marchington et al., 2005, 2011; Nikolova, Reihlen, & Schlapfner, 2009; Phelps et al., 2012; Sturdy &Wright, 2011) to include clients, collaborators, and competitors. The activity of work in a networked way, such as inter-organizational project teams, has theo- retical implications for HRM practices at both the organizational and the individual level.
RECONSIDERING BOUNDARIES: HUMAN RESOURCE MANAGEMENT IN A NETWORKED WORLD 293
Human Resource Management DOI: 10.1002/hrm
The conduct and
performance of
firms can be more
fully understood
by examining the
synergies and
tensions within
the network of
relationships within
which they are
embedded.
In the section that follows, we put forward the organizational perspective by drawing on network theory (Burt, 1992; Dyer & Nobeoka, 2000; Granovetter, 1973; Gulati, Nohria, & Zaheer, 2000; Moliterno & Mahony, 2011; Podolny, 2001; Powell & Grodal, 2005). We then discuss the individual experience of working across boundaries by drawing on the theoretical construct of liminality.
Networked Working: The Organizational Context
We define networked working as the co- creation of products and services that have economic value for stakeholders extending beyond the boundaries of a single organiza- tion. The conduct and performance of firms can be more fully understood by examining the synergies and tensions within the net- work of relationships within which they are embedded (Brusoni, Prencipe, & Pavitt, 2001; Dyer & Nobeoka, 2000; Granovetter, 1995; Gulati et al., 2000, p. 203; Powell, Koput, & Smith-Doerr, 1996). This relational approach is often contrasted with the atomistic approach, which focuses mainly on “within-firm vari- ables” to explain various outcomes. The rela- tional approach considers the structural and sociopolitical domains of the social context within which firms operate in order to under- stand between-firm differences (Gulati et al., 2000; Uzzi, 1997). This suggests that we need to consider how suppliers, partners, clients, and customers influence the way in which people are managed. However, the relational perspective also calls for the reconsideration of the very focus of HRM practices (i.e., our definition of an “employee”). That is to say, we can no longer assume that one firm has “legal control” over its employees (Marchington et al., 2005, 2011; Rubery et al., 2003). This means that the HRM practices are also no longer the property of a single firm but they become the strategic imperative for a network of organizations. This may lead to ten- sions between the network and its members as organizations continue to compete for human capital.
The dominant categories in the literature on networked working include communities
and projects (Dal Fiore, 2007, p. 860), each of which has distinctive characteristics. The driving force of communities is to maximize social control on individuality, while net- works seek to maximize individual control on social interaction. Communities tend to be sustained through shared identity as well as shared practice (Wenger, 2000); however, they do not typically operate to achieve commercial outputs and function more as socializing entities. The lens of a community becomes less useful for the study of cross- boundary working as we are interested in the activities that produce outputs of eco- nomic value. In such contexts the resource base extends beyond the boundaries of the firm (Fey & Birkinshaw, 2005) to include intra- and inter-organiza- tional knowledge (Kaše, Paauwe, & Zupan, 2009) and it re-configures around existing members.
Work activities in networks share similar characteristics with project forms of organiz- ing (Drucker, 1998; Nonaka & Takeuchi, 1995) and project-based learning, but they also differ from projects in particular ways. First, in current literature, projects are often considered to exist within the boundaries of the firm (Bredin & Soderlund, 2011; Scarbrough et al., 2004); however, networked working extends beyond the firm boundaries. Second, the focal resource in projects is often thought to be human capi- tal within the organization, but networked working is reliant upon multidimensional resources such as know-how and, crucially, relationships that often act as the glue that holds the network together (Swart & Kinnie, 2013). Third, the theoretical lens of a project is often lenticular (Turner, Swart, & Maylor, 2012), although the practice may differ. We focus on contemporary organizational forms, which extend beyond intra-organizational projects to include inter-organizational proj- ects such as integrated project teams (IPTs) and draw attention to the dynamic and itera- tive nature of networked working wherein the
294 HUMAN RESOURCE MANAGEMENT, MARCH–APRIL 2014
Human Resource Management DOI: 10.1002/hrm
Professional
contract workers
would often identify
more with their
profession than an
employer or client
and may opt for
cutting-edge skill
development rather
than employment
security.
client and several other stakeholders play an active role in managing people and shaping knowledge-based outputs. We are also mind- ful of the tensions, such as conflicting objec- tives and competition over scarce resources that exist between various stakeholders in the network and illustrate how networked HRM practices seek to manage these challenges.
In summary, we argue that it is appropri- ate to take an activity perspective (Kogut & Zander, 1996) to identify the boundaries of employment models in the twenty-first cen- tury. When we do so, it becomes apparent that organizations operate within networks to “get things done.” This networked work- ing calls for HRM models to move from “own-
ing and controlling” employment relationships and resources to an interactive model of generating human capital synergies at the level of the network.
We now examine the proper- ties of working within a network from an individual viewpoint by adopting a liminality perspective (Beech, 2011; Garsten, 1999), as it accurately depicts the qualities of the networked space and provides key insights into the challenges that need to be addressed.
Networked Working: An Individual Perspective
The act of working across organi- zational boundaries means that employees experience work in a
different way. They occupy a liminal space, being “betwixt and between” organizations (Garsten, 1999, p. 603), operating at the lim- its of existing social structures. Employees oc- cupying this liminal space may experience a sense of freedom but also insecurity. They find themselves floating between their firm and their client, but anchored to neither (O’Mahoney, 2007, p. 11). Indeed, Beech (2011, p. 288) argues that the identities of “employees” in this liminal space are formed through a dialogue between themselves and the parties with whom they interact. Tempest and Starkey (2004, p. 507) state that
liminality breeds ambiguity because if offers both risks and opportunities for the individ- ual and the organization. This is associated with “instabilities in the social context, the ongoing multiplicity of meanings and the substitutability of the liminar” (Beech, 2011, p. 288).
The liminal context has specific charac- teristics. First, there are multiple time-target demands from various stakeholders placed on the individuals (Fincham, 1999), which may create both synergies and conflicts (Donnelly, 2006, 2009, 2011; Purcell, Kinnie, Swart, Rayton, & Hutchinson, 2009). Synergies are associated with the creation of value for all stakeholders involved. In other cases, there will be conflict over objectives, costs, time spent, skills developed, and other operational issues. The second characteristic relates to the emotive aspects of working where the indi- vidual may experience competing pulls from various agents with whom they can identify. Whereas more traditional employees could identify with their organization, the liminar anchors their identity in their “skill,” and this therefore puts employability before identifi- cation with an organization or client (Swart & Kinnie, 2013). Employees may be urged to put the interests of the client first, and may also be based on a client site, all of which fosters identification with the client. Professional contract workers would often identify more with their profession than an employer or cli- ent and may opt for cutting-edge skill devel- opment rather than employment security. Third, a sense of commitment is thought to influence extra-role behavior and, ultimately, network performance (i.e., employees tend to go the extra mile for the agent in the network to whom they are committed; Becker, 2009; Bentein, Stinglhamber, & Vandenberghe, 2002; Purcell et al., 2009). Each stakeholder may therefore compete for the individual’s commitment.
In the following section we present the research methods we adopted across a decade of research to identify: (1) network variation, (2) employment challenges and tensions within networked working, and (3) HRM models in this networked context.
RECONSIDERING BOUNDARIES: HUMAN RESOURCE MANAGEMENT IN A NETWORKED WORLD 295
Human Resource Management DOI: 10.1002/hrm
Method
We draw on two research projects wherein which we identified a variety of responses to networked working. The first was conducted within 13 PSFs and adopted the multiple-case logic suggested by Eisenhardt (1989). The case organizations were particularly suited to under- stand the HRM responses to networked work- ing because they work so closely with their cli- ents and other network partners (Malhotra & Morris, 2009). The sample therefore included law firms, management consultancies/ outsourcing, software houses, and creative agencies (see Table I). We selected the client interface process (e.g., the bidding process or consultancy project) as the unit of analysis because this allowed us to focus on cross- boundary working. These units of analysis were identified in collaboration with each case study firm. We conducted 150 inter- views, lasting between 60 and 90 minutes, all of which were recorded and transcribed. A stage-based approach to the collection of qualitative data was adopted in each case. First, we conducted in-depth interviews with a representative sample of managing part- ners, directors, senior managers, and HR staff at all levels. During these interviews, we asked about the strategic challenges to the firm, the nature and management of resources (which we defined as human, social, and organiza- tional capital), and the HRM practices that were adopted. It was at this stage that we identified the dominant cross-boundary unit for further analysis. At the next stage we in- terviewed professionals responsible for man- aging their client-interface processes (i.e., principal consultants, practice managers, or chief knowledge officers) and asked them about the resources that had to be managed
at each stage of the process. In stage three, we interviewed professionals who were engaged in the client-interface process on a daily basis (e.g., line managers, lawyers, and consul- tants). We asked detailed questions about the prominent resources that they relied upon at each stage of the client-engagement process and how HR practices contributed, in reality, to the development and management of each asset.
In the second project, we sought to under- stand the impact of networked working on employee attitudes. We focused in particular on commitment to the various stakeholders in the network (i.e., the organization, client, team, and profession). Here we asked specific questions about the synergies and conflicts between these attitudes and how that impacts on employee behaviors. In this article, we draw on a single case of a retail organization within the research project to illustrate what we consider the most advanced form of net- worked working. In this case we conducted 38 interviews with senior managers, direc- tors, and line managers.
All our qualitative data were then exam- ined using thematic analysis. We coded our data to identify: (1) the particular variation in networked contexts (see Table II); (2) the tensions inherent in each context between the network (such as the project) and the firm and between the firm and the employees, and (3) the HRM practices that are associated with each networked context (see Table III). At this stage we could identify the key HRM responses to networked working. Then we con- ducted parallel coding (i.e., cross-referring the tensions with the HRM practices), wherein which we identified precisely how HRM prac- tices are used to manage specific networked tensions.1
T A B L E I The Professional Services Firms’ Case Studies
Sector Law Management Consulting/
Outsourcing Creative Software
Senior staff 12 24 25 7
Middle managers 22 16 31 3
Junior staff 7 2 1 0
Interviews 41 42 57 10
296 HUMAN RESOURCE MANAGEMENT, MARCH–APRIL 2014
Human Resource Management DOI: 10.1002/hrm
Degree of network integration
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RECONSIDERING BOUNDARIES: HUMAN RESOURCE MANAGEMENT IN A NETWORKED WORLD 297
Human Resource Management DOI: 10.1002/hrm
T A
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tw o
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Human Resource Management DOI: 10.1002/hrm
We acknowledge
that each network
model is not an ideal
type, yet our data
analysis indicates
that these are
prominent ways of
networked working.
Each network type
has its own set
of tensions that
exist between the
network and the
firms and between
the firms and the
employees.
The Networked Context: Variation and Multiplicity
In this section we focus on network variation, as this has a direct impact on the appropriate- ness of the networked HRM model. We iden- tify three types of networks—interactive, interwoven, and integrative. The data analy- sis indicates that each network type differs ac- cording to their: (1) boundary properties, (2) work activity focus, and (3) prominent identification (see Table II). We acknowledge that each network model is not an ideal type, yet our data analysis indicates that these are prominent ways of networked working. Each
network type has its own set of tensions that exist between the network and the firms and be- tween the firms and the employ- ees. We use an established frame- work (Phelps et al., 2012) to categorize these tensions into: (1) structural (i.e., those associated with employment boundaries), (2) relational (i.e., the tensions that exist in the relationships between the network and the firms and the firms and the employees), and (3) tensions that result from the properties of the knowledge in the network. The identification of these tensions puts us in a position to understand how the HRM models are used to manage the challenges inherent in twenty- first-century forms of organizing.
Interactive Networking
In this network type, organizations work with partners and suppliers to provide products and services to cli- ents. The aim is to meet the needs of clients by actively engaging with network partners while “protect-
ing” firm-specific skills, often via strong com- mitment to the organization. The network is held together via frequent interaction between the various stakeholders at senior levels within each partner. Here both long-term contracts, where outputs are co-constructed, and shorter,
highly competitive contracts exist wherein the network partners collaborate with one another based on their skill specificity. The focus of each organization is on “protecting” or buffer- ing scarce skills in order to maintain networked relationships. Products and services are gener- ated via a focus on internal organizational pro- cesses, which “deliver” multiple outputs to multiple partners in the network.
This network type is associated with two employment boundary tensions. First, profes- sionals work across client projects, which may be characterized by different HRM practices such as performance and reward targets. Hence, the firm is faced with the challenge of estab- lishing internal employment practice equity. Second, clients and other network partners may put pressure on the firm to adopt specific HRM practices such as training and develop- ment. The firm therefore needs to manage the boundary between its own HRM practices and network partners’ employment practices.
The relational tensions between the net- work and the firms are associated with the ambiguous power relationships and client demands. Professionals have power based on their expertise, while clients have economic power. In this context, client needs are often nebulous, which provides the client with a considerable degree of power; yet, they rely on the application of specialists’ knowledge to meet their demands. This requires high degrees of trust, as solutions may need to be developed over extended periods of time. Furthermore, as the market changes, the PSFs’ skills may become less attractive, which puts pressure on their ability to “protect” their employees. For example, clients may no longer be prepared to pay for highly creative award-winning TV advertisements, preferring instead the more measureable benefits of a digital marketing campaign. It is in the firm’s interest to maintain long-term client rela- tionships; however, they need to manage the relational distance between themselves and their clients, as the delivery of products and services to longer-term clients may result in the client demanding that specific employ- ees continue to work on their accounts, thereby creating conditions within which employees do not have optimal opportunities for skill
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The relational
tensions between
the network and the
firms are associated
with the ambiguous
power relationships
and client demands.
Professionals have
power based on
their expertise,
while clients have
economic power.
development. There are further conflicts that exist between the firm and the employee. First, our data indicates that employees need to meet multiple, often conflicting objectives (i.e., professional, via cutting-edge skill devel- opment, and organizational, which is often dominated by a cost perspective and could be mainly client-focused). Professionals may also occupy a liminal space as they are rotated between several client project teams, possibly with conflicting client demands. This also presents skill development tensions, which stem from the difficulty in generating deep specialisms while rotating staff between proj- ects. Finally, the professionals’ organizational commitment may be weakened if they are intensively engaged in client work, often on a client site. This could ultimately result in the loss of valuable human capital.
The properties of the knowledge in this network also present particular tensions. Clients buy specialist solutions while simul- taneously seeking to minimize costs. The knowledge outputs generated will balance cost and quality, which may not be optimal for the professional firm or the employee’s skill development. The firm also has a com- petitive interest in renewing knowledge, but clients may not be willing to absorb costs associated with the experimentation risks. Finally, employees may be asked to develop client-specific skills, which make them less employable. The advantage of this is that human capital remains relatively protected within the boundaries of the firm, and devel- opment and retention of employees is there- fore optimized.
Interwoven Networking
The prominent characteristic of this network type is the collaboration of several firms to produce a particular network-level output. Professionals work across organizational boundaries to work, for example, in an inte- grated project team (IPT). Defense contractors may collaborate to build a new warship, or architects, civil engineers, and building contractors work together on a major con- struction site. Other examples are found in consulting (Nikolova et al., 2009) and the
National Health Service (Marchington et al., 2011). Employees will be seconded to the project from their own organizations and may work together on a shared physical site and will often share domain knowledge such as naval engineering, but parties will have their own areas of specialism and, hence, the skill sets are complementary. Individuals re- main members of their own organizations but work on the project for both defined and open-ended time periods, even as long as a decade.
There are several reasons for engaging in this networked activity, which can be linked to layers of “co-opetitive” forces.2 At the level of the network there may be a need to gain a national advantage, such as retaining/establishing a capability and to identify and shape opera- tional requirements or to establish industry standards. At the level of the firm the most basic motive would be to gain revenue (i.e., to win work and reduce costs). There are further benefits associ- ated with having the first-mover advantage in terms of technical output as well as market brand- ing (e.g., to become known for a specialist skill). Firms would want to maintain their network relationships because of several cooperative forces at play at the level of the firm—for example, to provide market credibility and generate brand value. Finally, there are knowledge-based rea- sons for sustaining the network (i.e., to provide an exciting envi- ronment for development of professional skills and to authenticate the firm’s profes- sional knowledge). This network does not move toward integration over time because firms have existence outside the network wherein shareholders and employees require a separate existence. The individual firms also need to maintain a competitive momentum, for example, through the use of their own “skunk works”3 to innovate to stay ahead of the game. Finally, the network comprises complementary skill sets wherein firms will
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Human Resource Management DOI: 10.1002/hrm
Professional
pride, which is
linked to working
on a high-profile
project, needs to
be balanced with
personal costs such
as moving away
from one’s family
and professional
group in the firm.
Individuals may
often experience
anxiety over current
learning and future
prospects if their
project is not high-
profile.
hardly ever collaborate with firms that “know similar things.”
These benefits coexist within a set of challenges among the network, the partner firms, and the employees. First, we iden- tify a set of employment boundary tensions that are associated with working both for an employing organization and for the network. The network itself would need to establish employment equity since several of its con- tributing firms will have different employ- ment conditions (e.g., the number of days’ leave). Equitable network-level employment conditions therefore need to be negotiated and established. There may also be interfirm
pressure to change employment conditions as professionals are exposed to variations in employ- ment practices in the industry. Finally, in any given organization, employees will work across several networks, resulting in possible inequity in employment condi- tions within the firm.
The relational tensions bet- ween the network and the firm entail the agreement of outputs, since there could be differences at both national and firm levels over basic goals and who gets access to resources. Firms may also not col- laborate easily because they may still be competing in other areas. Thus, there are tensions between the “best” professional solution and the most cost-effective solu- tion, which puts pressure on the opportunities to develop cutting- edge skills. Employees may spend several years working in one net- work, which becomes the anchor for identification and could impact on organization commit- ment because individuals may be physically and psychologically distant from the organization. This may lead, for example, to the release of confidential financial
information as the project takes on a life of its own. The network and the firms also compete for scarce resources such as valuable technical
skills. This is combined with firm-specific resourcing tensions that result from the need to rotate staff between the network and other organizational project teams in order to ben- efit from investment in skill development. Finally, there are trust-related tensions as firms simultaneously develop highly skilled profes- sionals and are required to share this exper- tise with both collaborators and competitors. Further relational tensions exist between the firm and the employee. The most notable of these is the maintenance of the motivational contract, as the project may last more than a decade and will draw on different special- isms during different time periods. Firms need to focus on keeping employment costs down as specialists negotiate salary increases to compensate for personal cost in working on the project. Professional pride, which is linked to working on a high-profile project, needs to be balanced with personal costs such as moving away from one’s family and pro- fessional group in the firm. Individuals may often experience anxiety over current learn- ing and future prospects if their project is not high-profile.
The properties of the knowledge in the network present specific challenges. As the network becomes the focal point for the professional’s work, their knowledge be comes so specialized that it may not easily be inte- grated into the PSF. This is intensified by the fact that employees will often be physically in a different location. It is important to keep the boundaries of the firm relatively fluid to allow for the adoption of leading-edge expe- rience within the firm’s particular specialism. This fluidity needs to be managed carefully, as individual network partners would seek to retain their skills and expertise. The net- work itself may suffer from learning chal- lenges given the specialist nature of the various skill sets (e.g., an aerospace engineer may have to work closely with a hydrody- namics specialist on a submarine-launched missile: they may speak very different tech- nical languages). This results in firms facing skill-development challenges, as they need to invest in both specialist skill development and relational skills that can assist in knowl- edge integration.
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Questions exist
about the ability
of the firms in the
network to absorb
the knowledge
available at the
network level.
Some firms may
believe that network
practices are less
relevant to their
local situation.
Integrative Networking
The core characteristic of this network type is the sophisticated nature of collaboration. Organizational boundaries are highly perme- able and the networked activities are so focal that they become a separate, often virtual and legal organization that would typically have its own HR practices and management struc- tures. The aim of this kind of collaboration is concerned with improving the performance of the network (i.e., sharing best practice). Individuals would therefore identify with their employing organization and the net- worked organization. The advantage of this form of networking is the efficiency it gener- ates, but there are also several conflicting in- terests associated with the network type.
The particular employment boundary tensions in this model relate to the duplica- tion and potential inconsistencies between network- and firm-level HRM practices. For example, network-level incentive schemes may reward behaviors that are not typically rewarded at the firm level, leading to ques- tions being raised about the links between effort and reward. Employees experience other network partners’ HRM practices via secondments and may put pressure on their employer to adopt these practices.
The relational tensions are linked to the combination of continued collaboration and competition. Individual firms may be reluc- tant to share knowledge with competitors for fear of losing their advantage. There is also a risk of the client dominating the network. In our case examples, we found that a pres- tigious client will make key decisions that illustrate power. Individual firms also have to manage the time invested in collaboration that results from the duplication of organi- zational procedures such as progress reports. Tensions between the individual and the firm include feelings of separation from the net- work if employees have not personally expe- rienced the firm-level and individual benefits, such as career opportunities. Individuals may also not want to tie the development of their skill set to only one network. They may, for example, want to work in several networks in order to increase their employability. In
particular, different client work provides the opportunity to develop a diverse skill base. Finally, the firms face a retention challenge as employees take up positions across the network, making themselves both attractive, through their enhanced skill sets, and visible as potential employees.
There are three kinds of tensions asso- ciated with the properties of knowledge. First, questions exist about the ability of the firms in the network to absorb the knowl- edge available at the network level. Some firms may believe that network practices are less relevant to their local situation. Second, there may be process and practice challenges associated with their adoption. For example, firms may not have the IT systems necessary to implement a quality monitoring procedure available from the network. Finally, manag- ers in the firm may lack the nec- essary experience of managing at the network level to identify the potential opportunities to apply wider network practices within their own organization.
HRM Models in a Networked Context
In this section we present the three networked HRM models: buffering the network, borrowing from the network, and balancing the network. We discuss the defining characteristics and then compare the three models using the same criteria (i.e., internal and external resourcing, development, perfor- mance management, reward and involvement; see Table III). In particular, we pay attention to how HRM practices are used to manage the networked tensions we identi- fied earlier.
Buffering the Network: Human Capital Agility
In this context, the HRM practices exist at the level of the firm (see Figure 1). Firms thus re- tain flexibility to respond to changing
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network demands while anchoring knowledge and specialist skills within the organizational boundaries. This is achieved by linking HRM systems to organizational values, which illus- trates awareness of the intensity of the oppor- tunities to join a collaborator or a client in a cross-boundary setting.
Resourcing practices focus on the fit with organizational values, yet they maintain the need for flexibility in order to respond to a variety of client demands. In one case, “High Trust” took technical skills for granted and paid close attention to values. A firmwide cul- ture was established by encouraging staff to share knowledge, pass on contacts, and del- egate client work to others. The fit between the employee and the firm enabled the reten- tion of key skills, which secured continued participation in the network. Importantly, the values-driven HRM practices provided a foundation from which the firm could push back against the adoption of costly practices such as excessive rewards for unique skills. The dominant logic that the firms used to manage cost tensions is that the culture and branding of the firm provided an employabil- ity advantage.
This focus on values and flexibility is also reflected in job design and resource alloca- tion practices. Job-design facilitates multi- skilling, which supports cooperation between
teams. A flexible resourcing model is used when allocating staff to client project teams. “Blueprint” rotated staff between client proj- ects to develop firm-specific skills, which were not easily transported to other organiza- tions, that enabled the retention of valuable human capital in the face of competition. This also provided staff with development opportunities. In this model, relationships are described as the most important crite- ria for staff allocation to teams. This strat- egy creates an infrastructure for knowledge flow within and between project teams and reflects the emphasis on process agility, which allows organizations to deploy resources across diverse network demands. The fluid job design enabled the organization to man- age tensions between professional, organiza- tional, and client objectives, as employees do not become “locked into” a dominant client or professional logic.
Development practices concentrate on a broad range of skills in order to anticipate future network demands, thereby providing a context wherein employees can experiment. There is an increased willingness to opt for more creative solutions as client trust in the firm grows, which in turn provides opportu- nities for the development of unique skills. This approach is also reliant upon socially sensitive mentoring relationships, which
FIGURE 1. Buffering the Network: Human Capital Agility
Client Client
Project teams
Boundary of the HRM model
Permeability of the boundaries
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Performance
management and
reward systems
are linked with
cultural and
strategic objectives
that strengthen
commitment to the
organization, as
opposed to the client
and the profession
only.
create an environment for skill development, which is not dominated by client demands. The fluidity on the one hand and the deeply valued mentoring processes on the other result in a mix of specialist and generalist skills that underpin the sustained advantage of the network.
Performance management and reward systems are linked with cultural and strate- gic objectives that strengthen commitment to the organization, as opposed to the cli- ent and the profession only. The capability of the firm takes precedent over “standard individual rewards,” which enable the firm to respond flexibly within a changing mar- ket. The power of the process agility was articulated by an interviewee as “anyone who comes here has to show they can bring in the fees—show they can get hands dirty and build a team through sheer hard work. You sacrifice a decade but you get the reward.” Bonuses tend to be linked to group or organizational perfor- mance. The performance and reward system fits with the notion of values-driven HRM practices, which enable the firm to develop and retain human capital, while at the same time focusing on client relationships, which maintain the network. It also puts the firm in a position of differentiation whereby they do not come under pressure to adopt standard- ized or costly employment practices.
Our data analysis indicated that involve- ment practices are likely to encourage com- mitment to the organization and also flexibility to work effectively within the network. Opportunities for participation in the day-to-day operations encourage knowl- edge flow, which aids the identification with the firm. The employee’s involvement in the allocation of work enables employees to balance competing forces of commitment, which is especially important when organi- zational, client, and professional objectives have to be achieved. In several case studies, cross-functional teams are used to enable par- ticipation in decision making and to develop firm-specific skills. We found this to be criti- cally important in creating a sense of belong- ing, which develops organizational networks and builds trust both internally and at the level of the network. It therefore enables the
firm to develop and retain firm-specific skills, thereby providing the firm with a sustainable competitive advantage and securing the sus- tainability of the network.
Borrowing From the Network: Leveraging Complementarity
In this model, HRM practices exist at the level of the firm with some practices, such as re- sourcing, emergent at the level of the network (Figure 2). It is important to leverage resources from other stakeholders in the network for the achievement of network- and firm-level objectives. Organizations that adopt this model tend to focus on the devel- opment of complementary skills, which will benefit the network while leveraging the learning to benefit the individual and the firm.
In order to achieve both net- work- and firm-level objectives, the focus is on attracting pro- fession-specific skills (Swart & Kinnie, 2010), which will benefit the firm’s reputation and enable collaboration within the indus- try (e.g., aerodynamicists and aerospace engineers who may have complementary [i.e., differ- ing] professional knowledge but who also hold sufficient com- mon expertise to enable interac- tion). The reason for this is that a bid would be won in partnership and would require immediate col- laboration to achieve the agreed- upon outputs. Indeed, the complementarity of the skill base is often the deciding factor in the winning of the bid. This approach enables the firm to benefit from market opportunities that are focused on profes- sional knowledge and allows them to attract the best employees. In “GlobalConsult,” con- sultants were drawn from within the firm as well as from associate firms to develop a highly specialized capability in the facilita- tion of large-scale change programs. This interplay of firm-, profession-, and network- specific knowledge enabled the firms to
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manage tensions associated with their capa- bility to learn from the network and to work optimally across complementary skill sets.
The internal resourcing process is complex since the firm continuously faces tensions between pursuing a deep expertise approach, which involves keeping project teams together over long periods, and providing employees with new opportunities for challenging work. The firm is also faced with the (often errone- ous) assumptions of employees that the work of long-term project teams will become staid and unexciting compared with opportuni- ties in the “home,” firms which can appear more dynamic. Our data indicate that varying approaches are used to maintain internal flu- idity, via staff rotation between projects and the use of external associates to build flexibil- ity across projects. Internal resource alloca- tion is aimed at balancing the needs of the network, the firm, and the employee while maintaining the motivational contract across the network and within the firm.
The resourcing of the project itself is also characterized by personal/professional tensions since employees may not want to benefit from the opportunity to work on a high- profile project for fear of isolation. A process of “stepping up” or exposing the professional to more senior jobs in the project is used to
retain human capital and to manage possible escalating employment costs. Another mech- anism used to retain skills was that of informal and sometimes formal “non-poaching agree- ments.” This encouraged trust and strength- ened relationships, which enabled networks themselves to be more competitive.
Development is focused on deepen- ing professional skills that enable future business winning. Practice groups within “GlobalConsult” worked collaboratively with other internal practice groups, external facili- tators based in clients, and other external skill experts to build unique capabilities. The network was dependent not only on highly skilled human capital but also on strong, trusting relationships, which enabled pro- fessionals with complementary skill sets to work together closely to sustain the network. The development of what our interviewees referred to as “T-shaped” professionals, which include both deep technical skills as well as “relational” skills, was evident in several cases. Indeed, herein lies the challenge of this HRM model; a powerful network partner may seek to benefit from the resource investment of other stakeholders without making their own human capital investments. It is therefore crucial that cooperative relationships underpin the devel- opment of both profession- (e.g., engineering)
FIGURE 2. Borrowing From the Network: Leveraging Complementarity
Project
Direct employees
Consultants Self-employed
Agency/contractors
Permeable boundaries
Boundary of the HRM model
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and network- (e.g., defense) specific skills and relationships while anchoring and integrat- ing the benefits that occur from the network into organization-specific processes.
The relative importance of profession- related training and development varied across the case studies. In some less innovative networks, professional knowledge is “bought” rather than “made,” and the emphasis is on using this knowledge effectively within the organization and the network. In other highly innovative networks, where solutions are emergent, network partners rely on the devel- opment of cutting-edge skills across organiza- tional boundaries. In this context the individual partners invest in the initial profession-specific development (e.g., to train and recruit a skilled engineer), and as the project unfolds, all stake- holders will bear the cost of innovation. Once cutting-edge skills are developed at the level of the network, the individual firms aim to maxi- mize their learning by rotating staff between networked projects.
Performance and reward practices exist at the level of the firm; hence, performance feed- back is taken from the network and included in the firm’s performance management sys- tem, which is associated with achieving net- work and firm targets. Reward is subsequently based on multiple criteria, which include quality and cost measures. In most cases, we
found an alignment between the network objectives and the firm and individual objec- tives, as it was in the network partners’ inter- est to complete a contract within a specific time and cost. This strengthened commit- ment to both the firm and the network and encouraged collaboration. Rewards, such as promotion and partnership, were also used to retain employees and lock skills into future competitive bidding.
There is a high degree of involvement in the networked activities. In several cases, employees would be closely involved in nego- tiating project specification and resource allocation. Continued tensions bet ween the quality of knowledge generated and costs has to be managed; hence, relationship building and opportunities for involvement became critical factors in sustaining the network.
Balancing the Network: Multidimensional Agility
In this model, a portfolio of HRM practices exists at the level of the network and within the firm (Figure 3). Unlike traditional HRM models that focus on human capital, this net- worked model reflects the importance of strong social relationships and network-level processes. These relationships fill the liminal
FIGURE 3. Balancing the Network: Multidimensional Agility
Retailer
3PL
3PL
3PL
3PLOne Team Steering Group Workstreams HR practices
Knowledge sharing
HR practices
Boundary of the HRM model
Permeable boundaries
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The networked
HRM model results
in the generation
of flexible human
capital, which
can be effectively
deployed across the
network as well as
within the individual
firms. These
efficiencies resulted
in very significant
cost savings and
have generated
further networked
ways of working.
space between the parties; they are the glue that holds the network together.
Networked HRM practices were established by a retail organization and its third-party logistical partners (3PLs). The shared aims were to collaborate to improve the performance of the network by sharing best practice. The firms continued to operate as a network and did not integrate vertically because they compete for other client business while collaborating in the network. Senior managers regard the enhancement of talent management through- out the network (called One Team) as one of their clear objectives. They advertised all rel- evant job vacancies across the network via the
shared website, which meant that employees had opportunities for career development in ways that they would not otherwise have been aware. This encouraged staff to move between network part- ners and supported the retention of human capital in the network, which is critical in an industry that has transferable skills.
The networked organization was resourced from a variety of levels from each partner, which meant that junior staff found themselves working alongside quite senior staff from other part- ners and they could “get them- selves noticed,” which provided further career opportunities. All employees were encouraged to wear the One Team uniform rather than their employing orga- nization’s uniform, which further encouraged a sense of belonging to the network. Informal devel- opment was enabled as members had autonomy over how they achieved the network objectives. The members had the freedom to develop new ideas and to inno-
vate. Alongside these more informal develop- ment opportunities, there were more formal network-level training activities that aimed to encourage the sharing of best practices across the network and allowed for the adoption of learning into the firms.
Performance management practices are generally established at the level of the net- work with efficiency targets set for each firm and performance measured weekly. Each net- work partner has information on its own per- formance and that of others within a league table. This encourages performance improve- ments that are highly visible throughout the network. There are also network-level reward mechanisms that recognize the contribution of individual employees, which provide an incentive for employees to commit to both their firm and the network and to share rather than hoard their knowledge. The multiplicity of performance and reward criteria addressed the tensions inherent in the power struggle between the various partners’ performance targets.
It is important to understand that the net- worked HRM model results in the generation of flexible human capital, which can be effec- tively deployed across the network as well as within the individual firms. These efficiencies resulted in very significant cost savings and have generated further networked ways of working.
Conclusion and Implications
This article examined the boundaries of contemporary HRM models, wherein work activities take place across organizations, in networks. It is from within this focus that it sought to identify appropriate HRM models in these contemporary contexts. We adopted an activity perspective (Kogut & Zander, 1996) to identify, from a decade of empirical research, three types of networked working— interaction, interwoven, and integrated, which vary according to: (1) the properties of the boundaries, (2) the focal point of work activ- ity, and (3) the prominent identification (see Table II). Inherent in each network type is a series of tensions and conflicts that exist be- tween the network and the firms and between the firm and its employees (Donnelly, 2006, 2009, 2011; Purcell et al., 2009). We catego- rized these into structural, relational, and knowledge-based tensions (Phelps et al., 2012). In the final section of the article, we drew on our data analysis to develop a
RECONSIDERING BOUNDARIES: HUMAN RESOURCE MANAGEMENT IN A NETWORKED WORLD 307
Human Resource Management DOI: 10.1002/hrm
The networked
HRM models
developed from our
data indicate that
it is not only human
capital that should
take center stage
in twenty-first-
century forms of
organizing, but that
both social capital
and networked
processes should be
at the heart of future
HRM models.
typology of HRM models that exists within a networked context—(1) buffering the net- work, (2) borrowing from the network, and (3) balancing the network—and we indicated how each model is used to manage its associa- tive network-specific challenges. This is where contemporary HRM models can make such an important strategic contribution to net- worked working because they enable firms to both protect and share human capital in ways that are appropriate to their extant net- work type.
Importantly, the data analysis indicates that in a networked world it is not only human capital but also the relational capa- bilities of the firm that take center stage. This, we argue, is the focus of the networked HRM model, which has important implica- tions for each of the individual HR practices. For example, resourcing would need a much clearer focus on the ability to build and main- tain relationships. The development of skills that facilitate relationship building and, spe- cifically, team-based effectiveness would be at the heart of the networked HRM model. This relational aspect would also be reflected in performance and reward management.
We have also indicated that each net- worked HRM model has a set of defining characteristics—for example, fluidity is at the heart of the buffering model, leveraging experience at the level of the network is cen- tral for the borrowing model, and duality of membership and HRM practices, which result in network-level efficiency, define the balanc- ing model. Integral to our discussion is the notion that networked HRM models play a strategic role in the management of the boundary of the firm. The organization may select to have very fluid boundaries in order to benefit most from collaborative working and the subsequent cutting-edge skill acquisi- tion. Alternatively, organizations may select to have relatively impermeable boundaries in order to develop firm-specific skills and to retain key skills via strong values and a dis- tinctive culture. This does not keep the orga- nization from operating effectively in the network, but it represents an alternative stra- tegic response to the network. We have indi- cated in our analysis that the selected HRM
practices play a strategic role in determining the properties of the firm boundaries in each of the three HRM models.
This holds particular theoretical and prac- tical implications. First, it urges HRM schol- ars to rethink the notions of the boundaries of the firm and, subsequently, the very defini- tion of an employee (Fisher et al., 2008; Lepak & Snell, 2007; Marchington et al., 2005, 2011; Rubery et al., 2003). Second, it calls for the need to re-examine the theoretical assump- tions that exist in current HRM models, which tend to correlate HRM practices with a single employer. Finally, the networked HRM models developed from our data indicate that it is not only human capital that should take center stage in twenty-first-cen- tury forms of organizing, but that both social capital and networked processes should be at the heart of future HRM models.
Our research has some limi- tations. We studied PSFs that represent particular types of net- worked working and knowledge co-production. Future work may benefit from cross-comparison across various industry settings. We have also conducted our research over an extended period of time, which would have an impact on how we understand network dynamics and the HRM practices within each network type. Finally, our research is based within the United Kingdom, which would have an impact on both the way in which cross- boundary contexts emerge and how they are managed. This pro- vides a fruitful avenue for future research to explore national and international networks and address how the HRM models we have identified here impact upon the sustainability of networked working.
In summary, the article contributes to the identification of networked HRM models. We argued that networked working is a contem- porary form of organizing and illustrated that appropriate HRM models need to be identified
308 HUMAN RESOURCE MANAGEMENT, MARCH–APRIL 2014
Human Resource Management DOI: 10.1002/hrm
to develop both current theoretical models and practice. We presented three forms of networked working and developed a typol- ogy of networked HRM models (i.e., buffering the network, borrowing from the network, and balancing the network). It is within this complex milieu of tensions that we need to develop a set of robust HRM responses that would enable networked working.
Notes
1. Detailed codings are available from the authors.
2. Term originally used to describe a situation where
fi rms cooperate together—for example, to design a
new product to save costs and maximize innovation,
but then compete when actually selling that product.
See Brandenburger and Nalebuff (2002).
3. A phrase typically used to refer to groups with-
in organizations that are given a high degree of
autonomy and operate outside the normal manage-
ment structures to concentrate on innovative
projects. See Bennis and Biederman (1998) for a
discussion of this in the context of the aircraft fi rm
Lockheed.
JUANI SWART specializes in knowledge management and the management of knowl- edge workers. She is head of the organization studies group and director of the Work
and Employment Research Centre (WERC). She is known for her work on the transfer of
human capital into intellectual capital, thereby linking the intellectual capital, HRM, and
performance debates. Her current research is focused on the links between employee at-
titudes and behaviors, such as knowledge sharing. Swart conducts her research in cross-
boundary contexts wherein multiple stakeholders have an impact on the strategic impact
of HRM practices. Her work has been published widely in the area of HRM, knowledge-
intensive fi rms, and intellectual capital.
NICHOLAS KINNIE conducts research into the links between strategic HRM and business performance within the context of changing organizational structures. He is especially
interested in organizations, such as professional service fi rms, where employees work
across organizational boundaries and interact with a variety of internal and external par-
ties. His most recent research examines the infl uences on employee attitudes and the
consequences of these attitudes for various kinds of behavior and outputs. His research
in these areas has been published, widely drawing on studies of professional service
fi rms and customer contact centers.
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