Exceptional Proff 600

LEARNING OUTCOMES

On completing this chapter you should be able to define these key concepts. You should also understand:

· The framework for delivering HRM

· What the concept of HR architecture means

· What an HR system looks like

· The HR role of line managers

· The role and organization of the HR function

· The nature of an HR delivery model

· The role of HR professionals

The framework for delivering HRM is provided by the HR architecture of an organization, which consists of the HR system, HR practices and the HR delivery model adopted by the HR function. Within that framework the provision of advice and services relating to human resource management is the responsibility of the HR function and the HR professionals who are members of the function. Ultimately, however, the delivery of HRM is up to line managers who put HR policies into practice.

HR techniques such as organization development, selection testing, talent management, performance management and total reward play an important part in the delivery of HRM. But there is the danger that new and seemingly different techniques become ‘flavours of the month’ only to be quickly forgotten when they fail to deliver. Some time ago McLean (1981: 4) observed that:

The history of the management of human resources is littered with examples of widely acclaimed techniques enthusiastically introduced by managers who are keen to find solutions to their ‘people’ problems, only to be discarded and discredited by the same disillusioned and increasingly cynical managers some time later.

Times have not changed. The effective delivery of HRM depends on using techniques which are tried, tested and appropriate, not ones which have been promoted vigorously as ‘best practice’ without supporting evidence.

HR architecture

HR architecture consists of the HR systems, processes and structure, and employee behaviours. It is a comprehensive representation of all that is involved in HRM, not simply the structure of the HR function. As explained by Becker et al (2001: 12): ‘We use the term HR architecture to broadly describe the continuum from the HR professionals within the HR function, to the system of HR related policies and practices, through the competencies, motivation and associated behaviours of the firm’s employees.’ It was noted by Hird et al (2010: 25) that: ‘this architecture is seen as a unique combination of the HR function’s structure and delivery model, the HR practices and system, and the strategic employee behaviours that these create’.

Purcell (1999: 38) suggested that the focus should be on ‘appropriate HR architecture and the processes that contribute to organizational performance’. Becker and Huselid (2006: 899) stated that: ‘It is the fit between the HR architecture and the strategic capabilities and business processes that implement strategy that is the basis of HR’s contribution to competitive advantage.’

The HR system

The HR system contains the interrelated and jointly supportive HR activities and practices which together enable HRM goals to be achieved. Becker and Huselid (1998: 95) observed that: ‘The HRM system is first and foremost a vehicle to implement the firm’s strategy.’ Later (2006) they argued that it is the HR system that is the key HR asset. Boselie et al (2005: 73) pointed out that in its traditional form HRM can be viewed as ‘a collection of multiple discrete practices with no explicit or discernible link between them. The more strategically minded system approach views HRM as an integrated and coherent bundle of mutually reinforcing practices.’

As illustrated in Figure 3.1, an HRM system brings together HR philosophies that describe the overarching values and guiding principles adopted in managing people. Taking account of the internal and external environments in which the organization operates, the system incorporates:

HR activities can be divided into two broad categories: 1) transformational (strategic) activities that are concerned with developing organizational effectiveness and the alignment and implementation of HR and business strategies; 2) transactional activities, which cover the main areas of HR service delivery – resourcing, learning and development, reward and employee relations. A CEO’s view on the HR agenda as quoted by Hesketh and Hird (2010: 105) was that it operates on three levels: ‘There’s the foundation level, which we used to call personnel, it’s just pay and rations, recruitment, all that sort of stuff that makes the world go round, transactional work. Level two to me is tools, it could be engagement, reward, development, those sort of things. Level three is the strategic engagement.’

The ways in which HR operates vary immensely. As Sisson (1990) commented, HR management is not a single homogeneous occupation – it involves a variety of roles and activities that differ from one organization to another and from one level to another in the same organization. Tyson (1987) claimed that the HR function is often ‘balkanized’ – not only is there a variety of roles and activities but these tend to be relatively self-centred, with little passage between them. Hope-Hailey et al (1997: 17) believed that HR could be regarded as a ‘chameleon function’ in the sense that the diversity of practice established by their research suggests that ‘contextual variables dictate different roles for the function and different practices of people management’.

The organization and staffing of the HR function clearly depend on the size of the business, the extent to which operations are decentralized, the type of work carried out, the kind of people employed and the role assigned to the HR function. A survey by Incomes Data Services (IDS, 2010) found that the overall median number of HR staff in the responding organizations was 14: in small and medium-sized companies (with 1–499 staff) the median number was 3.5, and in companies with 500 or more employees it was 20. While, as would be expected, large organizations employed more staff than small and medium-sized enterprises (SMEs), they had on average fewer HR staff per employee. For SMEs the median ratio of employees to HR staff was 62:1; in large employers it was 95:1. The overall ratio was 80:1. The IRS 2012 survey of HR roles and responsibilities found that the median ratio of employees to HR practitioners was 80:1.

A traditional organization might consist of an HR director responsible directly to the chief executive, with functional heads dealing, respectively, with recruitment and employment matters, learning and development, and reward management. Crail (2006: 15) used the responses from 179 organizations to an IRS survey of the HR function to produce a model of an HR department. He suggested that this ‘might consist of a team of 12 people serving a workforce of around 1,200. The team would have a director, three managers, one supervisor, three HR officers and four assistants. It would include a number of professionally qualified practitioners, particularly at senior level’. However, there is no such thing as a typical HR function, although the ‘three-legged stool’ model as described below has attracted a lot of attention.

The notion of delivering HRM through three major areas – centres of expertise, business partners and HR shared service centres – emerged from the HR delivery model produced by Ulrich (1997, 1998), although, as reported by Hird et al (2010: 26): ‘Ulrich himself has gone on record recently to state that the structures being implemented by HR based on his work are not actually his idea at all but an interpretation of his writing.’ They noted that the first reference to the three-legged stool was in an article by Johnson (1999: 44), two years after Ulrich published his delivery model. In this article Johnson quoted David Hilborn, an associate of William Mercer, management consultants, as follows:

The traditional design [of an HR department] typically includes a vice president of HR, then a manager of compensation and benefits, a manager of HRIS and payroll, a manager of employment and so on. However, the emerging model is more like a three-legged stool. One leg of the stool includes an administrative service centre which processes payroll, benefits and the like and focuses on efficiency in transaction functions. The second leg is a centre of excellence (or expertise) in which managers and specialists work. These employees concentrate on design rather than transactions and will have line managers as their customers. HR business partners make up the third leg. They are generalists who usually report to line managers and indirectly to HR. These employees don’t get involved in transactions, but instead act as consultants and planners, linking the business with appropriate HR programmes.

This exposition provided the blueprint for all subsequent versions of the model, which has evolved as follows:

· Centres of expertise – these specialize in the provision of high-level advice and services on key HR activities. The CIPD survey on the changing HR function (CIPD, 2007) found that they existed in 28 per cent of respondents’ organizations. The most common expertise areas were training and development (79 per cent), recruitment (67 per cent), reward (60 per cent) and employee relations (55 per cent).

· Strategic business partners – these work with line managers to help them reach their goals through effective strategy formulation and execution. They are often ‘embedded’ in business units or departments.

· HR shared service centres – these handle all the routine ‘transactional’ services across the business, which include such activities as recruitment, absence monitoring and advice on dealing with employee issues such as discipline and absenteeism.

Although this model has attracted a great deal of attention, the 2007 CIPD survey found that only 18 per cent of respondents had implemented all three ‘legs’, although 47 per cent had implemented one or two elements, with business partners being the most common (29 per cent).

Moreover, there are difficulties with the notion. Gratton (2003: 18) pointed out that: ‘this fragmentation of the HR function is causing all sorts of unintended problems. Senior managers look at the fragments and are not clear how the function as a whole adds value’. And as Reilly (2007) commented, respondents to the CIPD survey mentioned other problems in introducing the new model. These included difficulties in defining roles and accountabilities, especially those of business partners, who risk being ‘hung, drawn and quartered by all sides’, according to one HR director. At the same time, the segmented nature of the structure gives rise to ‘boundary management’ difficulties, for example when it comes to separating out transactional tasks from the work of centres of expertise. The model can also hamper communication between those engaged in different HR activities. Other impediments were technological failure, inadequate resources in HR and skills gaps.

Hird et al (2010: 31) drew attention to the following issues:

· An ‘off the shelf’ introduction of a new HR structure without careful thought as to how the model fits the organization’s requirements.

· A lack of care in dealing with the boundary issues between elements of the HR structure which can easily be fragmented.

· A lack of attention to the new skill sets needed by business partners to ensure they can play at the strategic level.

· A lack of understanding on the part of managers as to the value of a new HR structure.

· A lack of skill on the part of line managers to make the required shift to greater responsibility for people issues implied by the new model.

· What is referred to as the ‘polo’ problem: a lack of provision of the execution of HR services as the business partner shifts to strategic work, and the centre of expertise to an advisory role.

However, some benefits were reported by respondents to the CIPD (2007) survey. Centres of expertise provide higher quality advice. Business partners exercise better business focus, line managers are more engaged, and the profile of HR is raised. Also, the introduction of shared services results in improved customer service and allows other parts of HR to spend more time on value-adding activities. It can also cut costs by reducing the number of HR staff required.

The following approach incorporating recommendations by Holley (2009: 8–9) can be used to deal with HR structuring issues:

· ensure that top management are behind the changes;

· involve line managers and the whole of HR in planning and implementation;

· work out exactly who will do what in each area – HR and the line – avoid overlaps and ambiguities, taking particular care in defining the respective responsibilities of business partners and members of shared services centres and centres of expertise;

· ensure that the right balance is achieved between HR strategic (transformational) activities and HR service delivery (transactional) activities;

· ensure that the right people are in the right roles (don’t simply switch job titles);

· let everyone know about the changes – why they are taking place, how they will work and any differences in responsibilities;

· define the skills required by both HR staff and line managers and help in their development;

· plan the implementation, phasing it as required to avoid any disruption;

· monitor implementation to ensure that it is going according to plan.

 Evaluating the HR function

It is necessary to evaluate the contribution of the HR function to establish how effective it is at both the strategic level and in terms of service delivery and support. The prime criteria for evaluating the work of the function are its ability to operate strategically and its capacity to deliver the levels of services required.

Research conducted by the Institute for Employment Studies (Hirsh, 2008) discovered that the factors that correlated most strongly with line managers’ and employees’ satisfaction with HR were:

· being well supported in times of change;

· HR giving good advice to employees;

· being well supported when dealing with difficult people or situations;

· HR getting the basics right.

But the results showed that HR could do better in each of these areas. The conclusions reached were that HR must find out what its customers need and what their experiences of HR services are. HR has to be responsive – clear about what it is there for and what services it offers, and easy to contact.

The IRS 2012 survey of HR roles and responsibilities established that the main measures used by respondents to assess HR effectiveness were:

· absence management data – 79 per cent;

· staff turnover data – 75 per cent;

· exit interview feedback – 66 per cent;

· discipline and grievance data – 60 per cent;

· results of employee surveys – 60 per cent;

· anecdotal/informal feedback – 59 per cent;

· number of tribunal cases – 50 per cent;

· benchmarking – 47 per cent;

· spending against budget – 46 per cent;

· time-to-fill vacancies data – 34 per cent;

· cost per hire – 30 per cent.

HR organization at the National Australia Bank Group

HR at the National Australia Bank Group has a number of centres of expertise, business partners, solutions consultants, project managers, a shared services centre, and telephone advisory service for employees (the people advisory helpline).

Centres of expertise

Centres of expertise cover areas such as reward, employment policy, talent management, culture management, diversity and performance. The staff in the centres are specialists in their respective fields, while the other parts of HR can be found in the HR service centre, with the exception of recruitment, which is conducted by line managers.

Business partners

Business partners attend business unit leadership team meetings and set the company’s people strategies and deliver the HR requirements emerging from various projects. They tend to work in the areas of talent, performance, leadership, diversity and culture and their job is to facilitate the implementation of corporate people initiatives with the relevant specialist HR partners. Unlike shared services staff, they only get involved in HR’s daily operational matters if projects escalate and extra help is required.

Solutions consultants

Solutions consultants deal with operational queries referred to them from the people advisory helpline – mainly issues of case management and other more complex enquiries. They are a key point of contact for people leaders on matters of policy and procedure, although they do participate in some transaction work as well.

Project staff

Project staff work on projects that emerge from strategic discussions.

The HR shared services model at PricewaterhouseCoopers (PwC)

The HR shared services model at PwC consists of transactional and professional areas. Transactional functions include payroll, benefits administration and the joiners/leavers process department. The transactional functions also provide services for their professional counterparts. In contrast, professional areas organized into centres of expertise include functions such as recruitment, learning and development, reward, diversity, and legal and advisory.

The centres of expertise sit within the central human capital services centre but there are definite lines between them. Every centre of expertise is a cost centre, but for the annual budgeting process all are looked at together as part of the HR shared services function.

The result of introducing the centres of expertise has been that specialist knowledge is now organized into discrete units enabling know-how and experience to be more easily shared. The new structure means there is less duplication and the improved efficiencies allow more time to be dedicated to strategic issues. Additionally, a decrease in costs has been achieved via a combination of reductions in headcount, economies of scale and related efficiencies.

Reorganizing HR in the Greater Manchester Fire Service

Following major changes in operations, it was decided by senior management that the role of the fire service’s HR function was to provide high-level, strategic advice from advisers who could work closely with them, backed up by specialists. In other words, a business partner model. So the brigade began to recruit business partners – placing a special emphasis on those with expertise in employee relations – and specialists to cover areas such as occupational health, equality and diversity, reward, pensions and recruitment. Finding candidates with sufficient gravitas to act as top-level strategic advisers was difficult. There weren’t many true business partners about. A lot of people calling themselves business partners were really HR advisers.

When the team was in place the major developments were:

· to introduce a more transparent promotions process;

· to work on the organizational climate and leadership – a series of away-days for leaders using organizational climate tools such as 360-degree feedback and the Belbin Team Inventory;

· the recruitment process was also modernized by putting together a resourcing team, building a microsite and developing an applicant tracking system;

· to reorganize training;

· a departmental competency framework was put in place to ensure HR staff would be able to move easily within the organization rather than becoming bogged down in specialist areas.

Figure 3.1: The HRM system

The CIPD Profession Map (2013: 9) stated that the HR profession is ‘an applied business discipline with a people and organization specialism’. Research conducted by the CIPD in 2010 emphasized the need for HR professionals to be ‘insight-led’. Sears (2011: 35) reported that the researchers ‘found that demonstrating a sense of purpose that spans the whole pyramid demands a wide-awake HR function, with a deep understanding of business, contextual and organizational factors.

HR professionals can play a proactive role, contributing to the formulation of corporate strategy, developing integrated HR strategies and volunteering guidance on matters related to upholding core values and ethical principles. They help to improve organizational capability – the capacity of the organization to perform effectively and thus reach its goals and work with line managers to deliver performance targets. As described later in this chapter, their role in dealing with people issues can be strategic or innovative and they can act as change agents. They can also be regarded as facilitators; in the words of Tyson and Fell (1986: 65): ‘Their work allows other managerial work to happen.’ But HR professionals are very much concerned with service delivery which, as a basic responsibility of the HR function, is discussed first below.

The service delivery role of HR professionals operates at a transformational level when HR strategies, programmes and policies are devised and implemented which further the achievement of business goals and help to meet the needs of employees. But for many HR people the emphasis is on transactional activities such as recruitment, training, handling day-to-day employment matters and dealing with employment law matters. The latter is one of the most demanding and time-consuming areas in which they give advice and provide services. A 2002 survey by the CIPD found that two thirds of HR specialists were spending in excess of 20 per cent of their time coping with employment law issues, while a quarter reported that over 40 per cent of their working days were being spent in this way.

For many HR practitioners service delivery is what they do. The importance of this aspect of their work should not be underestimated by focusing too much on strategic or business partner roles. Line managers tend to judge HR professionals on the quality and efficiency of the services they provide, such as recruitment, training and solving people problems, rather than on their strategic capabilities.

The roles of HR professionals at a strategic level are:

· To formulate and implement, in conjunction with their management colleagues, forward-looking HR strategies that are based on insights into the needs of the organization, aligned to business objectives and integrated with one another. In doing so they adopt an ‘outside-in’ approach as described by Wright et al (2004) in which the starting point is the business, including the customer, competitor and business issues it faces. The HR strategy then derives directly from these challenges in order to create real solutions and add real value.

· To contribute to the development of business strategies. They do this by advising on how the business can achieve its strategic goals by making the best use of its human resources and by demonstrating the particular contribution that can be made by the talented people it employs.

· To work alongside their line management colleagues and provide on an everyday basis continuous support to the implementation of the business or operational strategy of the organization, function or unit.

The role of HR advisers or assistants is primarily that of delivering effective HR services within their function, or as a member of an HR service centre. While they will not be responsible for the formulation of HR strategies they may contribute to them within their own speciality. They will need to understand the business goals of the departments or managers for whom they provide services in order to ensure that these services support the achievement of those goals.

The notion of HR professionals as business partners has seized the imagination of HR people. In essence, the concept is that, as business partners, HR specialists share responsibility with their line management colleagues for the success of the enterprise and get involved with them in implementing business strategy and running the business.

As business partners, HR practitioners work closely with their line management colleagues. They are aware of business strategies and the opportunities and threats facing the organization. They are capable of analysing organizational strengths and weaknesses and diagnosing the issues facing the enterprise and their human resource implications. They understand the business model and know about the critical success factors that will create competitive advantage. They adopt a ‘value-added’ approach when making a convincing business case for innovations.

The term ‘value added’ looms large in the concept of the HR business partner. In the language of accounting, where the phrase originated, added value is defined as the value added to the cost of raw materials and bought-out parts by the process of production and distribution. In HR speak, a value-added approach means creating value through HR initiatives that make a significant contribution to organizational success. Strictly speaking, added value is measured by the extent to which the value of that contribution exceeds its cost or generates a return on investment. But the term is often used more generally to signify the business-oriented approach that HR professionals are expected to adopt and how it contributes to the creation of value by the firm. Adding value is about improving performance and results – getting more out of an activity than was put into it.

It can be argued that too much has been made of the business partner model. Perhaps it is preferable to emphasize that the role of HR professionals is to be part of the business rather than merely being partners. There is the danger of overemphasizing the seemingly glamorous role of business or strategic partner at the expense of the service delivery aspect of the HR practitioner’s role. Syrett (2006) noted that whatever strategic aspirations senior HR practitioners have, they will amount to nothing if the function they represent cannot deliver the essential transactional services their internal line clients require. As an HR specialist commented to Caldwell (2004): ‘My credibility depends on running an extremely efficient and cost-effective administrative machine… If I don’t get that right, and consistently, then you can forget about any big ideas.’ Another person interviewed during Caldwell’s research referred to personnel people as ‘reactive pragmatists’, a realistic situation in many organizations.

The problem of the overemphasis on the business partner role has been influenced by the erroneous belief that Ulrich was simply focusing on HR executives as business partners. This has had the unfortunate effect of implying that it was their only worthwhile function. But Ulrich cannot be blamed for this. In 1998 he gave equal emphasis to the need for HR people to be administrative experts, employee champions and change agents, and this was confirmed in the revised model (Ulrich and Brockbank, 2005).

The key competencies required by the AA for its business partners are concerned with commercial decision-making, commerciality, influencing people and facilitating change. They have to:

· understand the key factors affecting overall costs and profits;

· understand and interpret financial data;

· understand the connectivity between functional areas of the business;

· understand the impact of actions on cash flow and profitability.

A strategic and therefore proactive approach to HRM will mean that HR specialists will need to innovate – to introduce new processes and procedures they believe will increase organizational effectiveness.

The case for innovation should be established by processes of analysis and diagnosis using an evidence-based management approach to identify the business need and the issues to be addressed. ‘Benchmarking’ can be used to identify ‘best practice’ in other organizations. But ‘best fit’ is more important than ‘best practice’ – in other words, the innovation should meet the particular needs of the business, which are likely to differ from those of other ‘best practice’ organizations. It has to be demonstrable that the innovation is appropriate, beneficial, practical in the circumstances and can be implemented without too much difficulty in the shape of opposition from those affected by it or the unjustifiable use of resources – financial and the time of those involved.

The danger, according to Marchington (1995), is that HR people may go in for ‘impression management’ – aiming to make an impact on senior managers and colleagues through publicizing high-profile innovations. HR specialists who try to draw attention to themselves simply by promoting the latest flavour of the month, irrespective of its relevance or practicality, are falling into the trap that Drucker (1955: 243), anticipating Marchington by 40 years, described as follows: ‘The constant worry of all personnel administrators is their inability to prove that they are making a contribution to the enterprise. Their preoccupation is with the search for a “gimmick” which will impress their management colleagues.’

As Marchington points out, the risk is that people believe ‘all can be improved by a wave of the magic wand and the slaying of a few evil characters along the way’. This facile assumption means that people can too readily devise elegant solutions that do not solve the problem because of the hazards encountered during implementation – for example, the indifference or even open hostility of line managers. These have to be anticipated and catered for.

Guidelines for HR innovations are set out below.

Guidelines for HR innovations

As change agents HR specialists have to be experts in innovation. The following are guidelines on what needs to be done:

· Be clear on what has to be achieved and why.

· Ensure that what you do fits the strategy, culture and circumstances of the organization.

· Don’t follow fashion – do your own thing as long as it is relevant and fits the organization’s needs.

· Keep it simple – overcomplexity is a common reason for failure.

· Don’t rush – it will take longer than you think.

· Don’t try to do too much at once – an incremental approach is generally best.

· Assess resource requirements and costs.

· Pay close attention to project planning and management.

· Remember that the success of the innovation rests as much on the effectiveness of the process of implementation (line manager buy-in and skills are crucial) as it does on the quality of the concept, if not more so.

· Focus on change management approaches – communicate, involve and train.

The implementation of strategy means that HR specialists have to act as change agents, facilitating change by providing advice and support on its introduction and management. Caldwell (2001) categorized HR change agents in four dimensions:

1. Transformational change – a major change that has a dramatic effect on HR policy and practice across the whole organization.

2. Incremental change – gradual adjustments of HR policy and practices which affect single activities or multiple functions.

3. HR vision – a set of values and beliefs that affirm the legitimacy of the HR function as a strategic business partner.

4. HR expertise – the knowledge and skills that define the unique contribution the HR professional can make to effective people management.

Carrying out the role of the HR professional

How HR professionals carry out these roles depends on the context in which they work (the culture of the organization, the types of activities it carries out and the requirements of senior management), their skills and disposition and, importantly, the values they adopt. They will be affected by ambiguity and questions on the status of the profession and what is involved in being a professional. All this demands competency in a number of areas and requirements to adopt certain behaviours.

The most important aspect of values is the ethical stance HR people take in promoting people management policies and practices that are just, fair and take account of the interests of employees as well as those of the business. The pressure on HR practitioners in the private sector is to promote the interests of the business and thus increase shareholder value. In the public sector, the pressure is to promote the aims of the organization. The problem is that, as observed by Parkes and Davis (2013: 2413): ‘HR seems wedded to its allegiance to profitability and distancing itself from any connections with welfare.’ They also note that: ‘The economic drivers for organizations are important but the danger of relying only on the business-case is that ethics and responsibility become optional.’

The activities and roles of HR specialists and the demands made upon them as described above appear to be quite clear cut, but Thurley (1981) pointed out that HR practitioners can be specialists in ambiguity. This continues in the age of Ulrich. As Hope-Hailey et al (2005: 51) commented: ‘Ulrich highlighted that HR professionals must be both strategic and operational, yet the potential role conflict this could engender was not addressed.’ Caldwell (2004: 212) reached the following conclusions on the basis of his research:

There is the issue of ‘powerlessness’ or the marginality of HR practitioners in management decision-making processes, especially at a strategic level. The HR function has an inward-looking tendency to identify professional expertise mainly with administrative concerns over who controls HR activities, rather than questions of HR practices or who has responsibility for implementing HR policy.

The difficulties that HR professionals face in dealing with ambiguity was well described by Guest and King (2004: 421):

Much management activity is typically messy and ambiguous. This appears to apply more strongly to people management than to most other activities. By implication, the challenge lies not in removing or resolving the ambiguities in the role [of HR professionals] but in learning to live with them. To succeed in this requires skills in influencing, negotiating and learning when to compromise. For those with a high tolerance of ambiguity, the role of HR specialist, with its distinctive opportunity to contribute to the management of people in organizations, offers unique challenges; for those only comfortable if they can resolve the ambiguities, the role may become a form of purgatory.

Over the years, the HR profession has suffered from an inferiority complex. This may arise because the role of HR professionals is ill-defined (they are unsure of where they stand), their status is not fully recognized, or top management and line managers have equivocal views about their value to the organization. Tyson and Fell (1986: 68) remarked that ‘the ambiguous character of their work contributes to the problems of convincing others of its value’.

Long ago Drucker (1955: 243) observed that: ‘The constant worry of all personnel administrators is their inability to prove that they are making a contribution to the organization.’ Skinner (1981: 106) in his Harvard Business Review article, ‘Big hat no cattle’, stated that ‘the corporate role of personnel has always been problematic’; and Tyson and Fell (1986: 136) argued that: ‘Classical personnel management has not been granted a position in decision-making circles because it has frequently not earned one. It has not been concerned with the totality of the organization but often with issues which have not only been parochial but esoteric to boot.’

Watson (1996) referred to the perpetual marginality of the HR function and Caldwell (2004: 212) raised the ‘issue of “powerlessness” or the marginality of HR practitioners in management decision-making processes’.

Traditionally, the HR practitioner’s reaction to this problem has been, in the words of Drucker (1955: 243) to ‘search for a “gimmick” that will impress their management colleagues’. This was later called adopting ‘the flavour of the month’. HR professionals have now become more sophisticated. They have enthusiastically supported approaches that appeal to management such as engagement policies and talent management. And in the UK, CIPD spends a lot of time attempting to boost the status of the HR profession by stressing the strategic and business partner role of practitioners.

But research conducted by Guthrie et al (2011: 1681) confirmed that: ‘HR departments are still often viewed, collectively, as a function that is more bureaucratic than strategic.’ They noted previous research, which has shown that ‘it is this role – the strategic role – in which line executives believe that HR is particularly deficient’ (ibid: 1682). The following perceptive comment was made on this trend by Keegan and Francis (2010: 878):

Bearing in mind the history of HR practitioners’ struggles for acceptance as key organizational players it is hardly surprising that a way of discursively modelling the concept of HR as ‘hard’ and relating it to others concepts such as ‘business driven agendas’ and ‘strategic management’, has become so popular. It offers perhaps a way out of the dualism when they seek to claim a share of strategic decision making while at the same time struggling to attend to the employee centred and administrative aspects of the role.

They also commented that: ‘Exhortations for HR practitioners to pursue strategic roles and downplay their historically embedded administrative and employee championing pose a serious threat to the integrity of HR work and claims to professional expertise’ (ibid: 894).

Professionalism in HR as in other fields can be defined generally as the conduct exhibited by people who are providing advice and services that require expertise and that meet defined or generally accepted standards of behaviour. Work done by a professional is usually distinguished by its reference to a framework of fundamental concepts that reflect the skilful application of specialized education, training and experience. It is accompanied by a sense of responsibility and an acceptance of recognized standards. Even more loosely, people can be described as acting ‘professionally’ when they do their work well and act responsibly.

Professionalism in HR means working in accordance with a professional ethos. As suggested by Fletcher (2004) this is characterized by:

· the possession of specialized knowledge and skills;

· power and status based on expertise;

· self-discipline and adherence to some aspirational performance standards;

· the opportunity to display high levels of autonomy;

· the ability to apply some independence of judgement;

· operating, and being guided by, a code of ethics.

HR professionals are required to uphold the standards laid down by their professional body, the CIPD, but they must also adhere to their own ethical values. Additionally, they are bound by organizational codes of conduct expressed formally or accepted and understood as core values (the basic values adopted by an organization that set out what is believed to be important about how people and organizations should behave).

The demands made on HR professionals in terms of skills and expected behaviours are considerable although, nowadays, as Keegan and Francis (2010: 884) commented, ‘Success in HR roles is measured in terms of developing an effective business rather than people skills.’ Brockbank et al(1999) conducted research that led to a definition of the key HR competency ‘domains’ and their components, as set out in Table 3.1.

The CIPD’s HR profession map first issued in June 2009 (CIPD, 2013) listed the following behaviours needed by HR professionals to carry out their activities:

· curious;

· decisive thinker;

· skilled influencer;

· driven to deliver;

· collaborative;

· personally credible;

· courage to challenge;

· role model.

The HR role of line managers

HR can initiate new policies and practices but it is line managers that have the main responsibility for implementing them. In other words, HR proposes but the line disposes. As Guest (1991: 159) observed: ‘HRM is too important to be left to personnel managers.’

If line managers are not inclined favourably towards what HR wants them to do they won’t do it or, if compelled to, they will be half-hearted about it. On the basis of their research, Guest and King (2004: 421) noted that ‘better HR depended not so much on better procedures but better implementation and ownership of implementation by line managers’.

As pointed out by Purcell et al (2003), high levels of organizational performance are not achieved simply by having a range of well-conceived HR policies and practices in place. What makes the difference is how these policies and practices are implemented. That is where the role of line managers in people management is crucial: ‘managers… play a vital role in making involvement happen, in communicating, in being open to allow employee concerns to be raised and discussed, in allowing people space to influence how they do their job, and in coaching, guiding and recognizing performance and providing help for the future’ (ibid: 40). Purcell and his colleagues noted that dealing with people is perhaps the aspect of their work in which line managers can exercise the greatest amount of discretion and they can use that discretion by not putting HR’s ideas into practice. As they observed, it is line managers who bring HR policies to life.

Source review

Improving the quality of line managers as people managers – Hutchinson and Purcell (2003)

· Provide them with time to carry out their people management duties, which are often superseded by other management duties.

· Select them carefully with much more attention being paid to the behavioural competencies required.

· Support them with strong organizational values concerning leadership and people management.

· Encourage the development of a good working relationship with their own managers.

· Ensure they receive sufficient skills training to enable them to perform their people management activities such as performance management.

To which can be added that better implementation and better ownership by line managers of HR practices is more likely to be achieved if: 1) the practice demonstrably benefits them; 2) they are involved in the development and, importantly, the testing of the practices; 3) the practice is not too complicated, bureaucratic or time-consuming; 4) their responsibilities are defined and communicated clearly; and 5) they are provided with the guidance, support and training required to implement the practice.

Key learning points: Delivering HRM – systems and roles

HRM delivery

HRM is delivered through the HR architecture of an organization, which includes the HR system, HR practices and the HR delivery model adopted by the HR function.

All organizations are under an obligation to their stakeholders to perform well. To do this they depend on the quality, dedication, enthusiasm, expertise and skill of the people working in them at every level. The message of the resource-based view is that HRM delivers added value and helps to achieve sustainable competitive advantage through the strategic development of the organization’s rare, hard-to-imitate and hard-to-substitute human resources. As Guest (1997: 269) argued: ‘The distinctive feature of HRM is its assumption that improved performance is achieved through the people in the organization.’ If, therefore, appropriate HR policies and practices are introduced, it can also be assumed that HRM will impact on firm performance.

The chapter begins with a review of the evidence that HRM makes an impact on performance and of the problems met by researchers in establishing what the link is and how it works. It continues with a description of the concept of a high-performance culture and how it can be achieved through a high-performance work system and performance management.

The impact of HR

Much research has been carried out showing that good HRM practice and firm performance are correlated; notable examples in the UK are Guest et al (2000a), Patterson et al (1997), Purcell et al(2003), Thompson (2002) and West et al (2002), summarized in Table 4.1.

How HRM makes an impact

As noted earlier, much research has demonstrated an association between HRM and performance. But Guest et al (2000b) observed that it left uncertainties about cause and effect. Ulrich (1997: 304) pointed out that: ‘HR practices seem to matter; logic says it is so; survey findings confirm it. Direct relationships between performance and attention to HR practices are often fuzzy, however, and vary according to the population sampled and the measures used.’ Guest (2011: 11) summed up his article on HRM and performance with the comment that: ‘After hundreds of research studies we are still in no position to assert with any confidence that good HRM has an impact on organization performance.’

There are two issues that affect the determination of a link between HRM and firm performance: ‘causal ambiguity’ and ‘contingency factors’. These contribute to what is known as the ‘black box’ phenomenon.

The term causal ambiguity refers to the numerous, subtle and often hidden interconnections between the factors influencing cause and effect. Boselie et al (2005: 75) referred to the causal distance between an HRM input and an output such as financial performance: ‘Put simply, so many variables and events, both internal and external, affect organizations that this direct linkage strains credibility.’

A basic reason for ambiguity is multiple causation, which exists when there is more than one possible cause for an effect. HRM may have caused an improvement in performance but there may be many other economic or business factors that did so, and it could be difficult to unravel them. Another factor is the possibility of reversed causality (a situation where A might have caused B but B might well have caused A). As Purcell et al (2003: 2) expressed it: ‘Although it is nice to believe that more HR practices leads to higher economic return, it is just as possible that it is successful firms that can afford more extensive (and expensive) HRM practices.’

Causation will additionally be affected by the organization’s context, ie the internal and external environmental factors that influence what happens within the organization.

Causal ambiguity also stems from the black box phenomenon, as illustrated in Figure 4.1. This is the situation in which, while it may be possible to observe HRM inputs in the form of HR practices and to measure firm performance outputs, it may be difficult to ascertain, through research, what happened in between – what the HRM outcomes were that converted the input of HR practices into firm performance outputs. Alvesson (2009: 56) suggested that: ‘Research does not proceed beyond attempts to find an empirical association between HR practices and organizational performance. The phenomena are in a black box, only input and output are registered and what is happening remains clouded in the dark.’

  Figure 4.1: The black box phenomenon

Guest (1997: 268) stated that: ‘The assumption is that “appropriate” HRM practices tap the motivation and commitment of employees.’ He explained how expectancy theory might help to explain the HR/performance link as follows:

The expectancy theory of motivation provides one possible basis for developing a more coherent rationale about the link between HRM practices and performance. Although expectancy theory is concerned primarily with motivation, it is also a theory about the link between motivation and performance. Specifically, it proposes that high performance, at the individual level, depends on high motivation plus possession of the necessary skills and abilities and an appropriate role and understanding of that role. It is a short step to specify the HRM practices that encourage high skills and abilities, for example careful selection and high investment in training; high motivation, for example employee involvement and possibly performance-related pay; and an appropriate role structure and role perception, for example job design and extensive communication and feedback.

Following this contribution from Guest, any explanation of the impact of HRM on organizational performance is likely to be based on three propositions: 1) that HR practices can make a direct impact on employee characteristics such as engagement, commitment, motivation and skill; 2) if employees have these characteristics it is probable that organizational performance in terms of productivity, quality and the delivery of high levels of customer service will improve; and 3) if such aspects of organizational performance improve, the financial results achieved by the organization will improve. This can be described as the HR value chain.

The propositions highlight the existence of an intermediate factor between HRM and financial performance. This factor consists of the HRM outcomes in the shape of employee characteristics affected by HR practices. Therefore, HRM does not make a direct impact. A model of the impact of HRM taking into account the considerations of reverse causation and contingency effects mentioned earlier is shown in Figure 4.2.

  Figure 4.2: Impact of HRM on organizational performance (based on Paauwe, 2004)

But high performance is not just about HR practices. The case-based research by Purcell et al (2003) showed that the key to activating what they called the ‘people-performance’ link lies not only in well-crafted ‘bundles’ of HR practices, but in their conjunction with a powerful and cohering organizational vision (or ‘big idea’) and corporate leadership, together with front-line leadership’s action and use of its discretionary power.

Developing a high-performance culture

Organizations achieve sustained high performance through the systems of work they adopt, but these systems are managed and operated by people. Ultimately, therefore, high-performance working is about improving performance through people. This can be done through the development and implementation of a high-performance culture involving high-performance work systems in which performance management plays an important part.

High-performance cultures are ones in which the achievement of high levels of performance is a way of life. The characteristics of such cultures are set out below.

Characteristics of a high-performance culture

· Management defines what it requires in the shape of performance improvements, sets goals for success and monitors performance to ensure that the goals are achieved.

· Alternative work practices are adopted such as job redesign, autonomous work teams, improvement groups, team briefing and flexible working.

· People know what is expected of them – they understand their goals and accountabilities.

· People feel that their job is worth doing, and there is a strong fit between the job and their capabilities.

· People are empowered to maximize their contribution.

· There is strong leadership from the top that engenders a shared belief in the importance of continuing improvement.

· There is a focus on promoting positive attitudes that result in an engaged, committed and motivated workforce.

· Performance management processes are aligned to business goals to ensure that people are engaged in achieving agreed objectives and standards.

· Capacities of people are developed through learning at all levels to support performance improvement and they are provided with opportunities to make full use of their skills and abilities.

· A pool of talent ensures a continuous supply of high performers in key roles.

· People are valued and rewarded according to their contribution.

· People are involved in developing high-performance practices.

· There is a climate of trust and teamwork, aimed at delivering a distinctive service to the customer.

· A clear line of sight exists between the strategic aims of the organization and those of its departments and its staff at all levels.

High-performance work systems

High-performance work systems (HPWS) are bundles of HR practices that facilitate employee involvement, skill enhancement and motivation. An HPWS was described by Becker and Huselid (1998: 55) as: ‘An internally consistent and coherent HRM system that is focused on solving operational problems and implementing the firm’s competitive strategy.’ The approach used in an HPWS is sometimes referred to as ‘high-performance working’.

Performance cultures are created by HPWS that embody ways of thinking about performance in organizations and how it can be improved. They are concerned with developing and implementing bundles of complementary practices that, as an integrated whole, will make a much more powerful impact on performance than if they were dealt with as separate entities. Appelbaum et al(2000) stated that HPWS facilitate employee involvement, skill enhancement and motivation.

There is no generally accepted definition of an HPWS and there is no standard list of the features or components of such a system. In spite of this problem of definition, an attempt to describe the basic components of an HPWS was made by Shih et al(2005) as follows:

· Job infrastructure – workplace arrangements that equip workers with the proper abilities to do their jobs, provide them with the means to do their jobs, and give them the motivation to do their jobs. These practices must be combined to produce their proper effects.

· Training programmes to enhance employee skills – investment in increasing employee skills, knowledge and ability.

· Information sharing and worker involvement mechanisms – to understand the available alternatives and make correct decisions.

· Reward and promotion opportunities that provide motivation – to encourage skilled employees to engage in effective discretionary decision-making in a variety of environmental contingencies.

Many descriptions of high-performance systems include lists of desirable features and therefore embody the notion of ‘best practice’. However, Gephart (1995) noted that research has not clearly identified any single set of high-performance practices. Becker et al (1997) pointed out that HPWS were highly idiosyncratic and had to fit the organization’s individual circumstances. The lists that have been compiled vary considerably, as is shown in the selection set out in Table 4.2.

The examples in Table 4.3 of firms that adopt high-performance working policies and practices, assembled by Stevens (2005), illustrate the variety and generalized nature of approaches.

Research conducted by Ramsay et al (2000) aimed to explore linkages from HPWS practices to employee outcomes, and via these to organizational performance. They referred to the existence of the ‘black box’, meaning that while the introduction of an HPWS may be associated with improved performance, no researchers have yet established how this happens. They commented that ‘the widely held view that positive performance outcomes from HPWS flow via positive employee outcomes has been shown to be highly questionable’ (ibid: 521).

Godard (2001) concluded, following his research in Canada, that the actual effects of high-performance work systems can vary considerably and many have a limited lifespan. Following further research, he commented in 2004 that:

The full adoption of this (high performance) paradigm may not yield outcomes that are appreciably more positive than those yielded by practices that have long been associated with good management, including professional personnel practices (eg job ladders, employment security, grievance systems, formal training, above-market pay), group work organization, information sharing and accommodative union relations policies… There may be positive effects in some workplaces. However, these effects may be inherently more limited than assumed and, in a great many workplaces, may not be sufficient to justify full adoption.

But research conducted by Sung and Ashton (2005), Combs et al (2006) and Ericksen (2007) indicated that an HPWS can significantly improve performance. Even so, it is still possible to have reservations about causality and there seems to be no agreement on what constitutes an HPWS except for variable lists of ‘best practices’ – a dubious concept. As Godard (2004) commented, these lists are no more than bundles of long-accepted good personnel practices. Perhaps the virtue of the HPWS model is simply that it makes people think about what can be done to improve performance and how the various approaches can be linked together in a cohesive action programme.

Performance management

Performance management can contribute to the development of a high-performance culture in an organization by delivering the message that high performance is important. The management of organizational performance is the continuing responsibility of top management who, with the help and advice of HR, plan, organize, monitor and control activities and provide leadership to achieve strategic objectives and satisfy the needs and requirements of stakeholders. Individual and team performance management systems play an important part, but they function within the context of what is done to manage organizational performance and to develop effective work systems.

The strategic approach adopted by Johnson & Johnson was described by Wortzel-Hoffman and Boltizar (2007) as follows:

As we embarked on developing an integrated performance and development process into the organization, we knew that driving change and an enhanced process requires a cultural shift within an organization. The best performance management becomes a continuous process and is not a one time event; it takes time and effort and a dedication to developing people. We also knew that from a business standpoint it was critical to build and develop the talent pipeline of the organization to meet the aggressive business goals and dynamically changing marketplace.

Key learning points: HRM and performance

The impact of HRM

Much research has been carried out showing that good HRM practice and firm performance are correlated; notable examples in the UK are Guest et al (2000a), Patterson et al (1997), Purcell et al (2003), Thompson (2002) and West et al (2002).