History of Human Resource ManagementSummary

The SAGE Handbook of Human Resource Management

Human Resources Management: A Historical Perspective

Contributors: Howard Gospel

Edited by: Adrian Wilkinson, Nicolas Bacon, Tom Redman & Scott Snell

Book Title: The SAGE Handbook of Human Resource Management

Chapter Title: "Human Resources Management: A Historical Perspective"

Pub. Date: 2010

Access Date: August 29, 2019

Publishing Company: SAGE Publications Ltd

City: London

Print ISBN: 9781412928298

Online ISBN: 9780857021496

DOI: http://dx.doi.org/10.4135/9780857021496.n2

Print pages: 12-30

© 2010 SAGE Publications Ltd All Rights Reserved.

This PDF has been generated from SAGE Knowledge. Please note that the pagination of the online

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Human Resources Management: A Historical Perspective

Introduction

In this chapter, the management of human resources is broadly defined to cover three broad interconnected areas – work relations, employment relations, and industrial relations. Work relations are taken to cover the way work is organised and the deployment of workers around technologies and production systems. Employ- ment relations deal with the arrangements governing such aspects of employment as recruitment, training, job tenure, and reward systems. Industrial relations are taken to cover the voiced aspirations of workers and institutional arrangements which may arise to address them, such as joint consultation, works councils, trade unions, and collective bargaining. The focus is therefore on human resources management (lower case), which has been an eternal phenomenon in all organisations over time, and not on Human Resources Man- agement (upper case), which is a term which has developed over the last two decades. In addition, in this chapter, the term the management of human resources and the management of labour are used generically and interchangeably.

The focus throughout this chapter is on major patterns in these three areas as they have emerged over time, especially in large private-sector firms, over a long period from the nineteenth century onwards. It draws main- ly on the core economies of the twentieth century, especially the US, the UK, Germany, France, and Japan. The focus is primarily on the management of lower and intermediate classes of labour, which have constituted the majority of employees and which are best covered in the literature.

The next section provides a broad overview of the contexts within which labour has been managed, including market, technological, political, and business contexts. There then follow sections which present broad ‘stages’ in the history of human resource management, taking examples from leading sectors of the economy. However, throughout, the aim is to stress continuities over time between stages, the coexistence of systems, and how older sectors adapt over time. The final section raises some caveats and areas for further research and draws broad conclusions.

The Historical Contexts of Human Resource Management

A number of major contexts are outlined schematically here and used further in each section. These include the changing technological, market, political/legal, social, and business environments. Though these contexts shape the activities of employers, managers, and workers, the chapter also shows how the actors themselves have shaped the situations within which they operate (Dunlop, 1958).

The technological context has historically shaped basic aspects of labour management. Some writers have suggested a broad movement over time from artisan or craft production (with skilled workers having signifi- cant control over work), to mass production (often associated with Ford-type assembly-line systems in indus- tries such as automobiles), and to more flexible production systems (sometimes referred to as post-Fordist) (Tolliday, 1998). In practice, changes have been complex, with overlaps in types of production regimes over time and with older sectors adopting aspects of new arrangements. Thus, skilled, small-batch production was never superseded in many areas often typified as mass production, such as metalworking and light assem- bly industries. Similarly, many aspects of work in modern retail stores, fast-food restaurants, and call centres are very much of a mass-production kind. A constant theme in the history of labour management has been employers’ introduction of new technologies, workers’ counter-attempts to exert some control over these, and managers' further attempts to develop and refine management systems (Nelson, 1975; Hounshell, 1984; Pi- ore and Sabel, 1984; Lazonick, 1990; Tolliday 1998; Scranton, 1997).

The market context comprises labour, product, and financial markets. In the labour market, there are both

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longer- and shorter-term influences. For example, longer-term factors include demographic change, the broad balance of labour supply and demand, and the changing composition of the labour force. Thus, in various peri- ods in different countries, labour shortages have induced firms to substitute capital for labour and to introduce new production systems, as was the case in the United States in the early/mid-nineteenth century (Lewis, 1952; Habbakuk, 1962). Shortages also induced firms to introduce systems to attract and retain labour and these have often become embedded and left continuing inheritances, as for example with skilled labour short- ages in Japan in the early twentieth century (Jacoby, 1979; Gordon, 1985, 1998). Shorter-term labour market influences include the fluctuating level of unemployment which has immediate direct effects on the balance of power between management and labour. In this respect, for example, sharp rises in unemployment in the UK in the early 1920s and early 1980s significantly affected the bargaining power of management and unions, strengthened managerial prerogatives, and led to major changes in labour management and industrial rela- tions (Gospel, 1992).

In the case of product markets, the boundaries of markets and the degree of competition in them have an effect on labour management, both directly and indirectly. For example, Smith (1776), in his celebrated ex- amination of a pin factory, pointed out that the extent of the market shaped the division of labour. Similarly, Commons (1909) used the extension of markets to explain the organisation of production, the emergence of distinct classes of masters and men, and the subsequent growth and organisation of trade unions. In like manner, a large and relatively homogeneous market in the US facilitated mass production in that country com- pared to the smaller and more fragmented markets of Europe (Habbakuk, 1962; Rosenberg, 1969; Hounshell, 1984). The degree of competition within the product market also influences the constraints on management. Thus, over a long period from the interwar years onwards, high levels of product market protection and collu- sive behaviour underpinned the position of trade unions and the development of internal labour market-type arrangements in many countries. Subsequently, the progressive opening-up of markets and the growth of in- ternational competition, especially since the 1970s, have reshaped the international division of labour and the extent to which labour can extract rents from management (Gospel, 2005).

Financial markets, ownership, and corporate governance have also historically shaped human resource sys- tems. Owner-financed and controlled firms historically often had a personal form of paternalism and such firms tended to oppose dealings with trade unions. From the early twentieth century onwards, the growth of equity financing and the separation of ownership and control in countries such as the US and the UK allowed for a more bureaucratic approach to labour and lay behind the development of what some have described as ‘welfare capitalism’, with strong internal labour market-type arrangements (Brandes, 1976; Jacoby, 1985, 1997). In recent years, new financial pressures from institutional owners and private equity capital have put pressures on firms to adjust employment more directly to market forces. By contrast, up until recently, the continuation of private and more concentrated ownership and greater reliance on insider finance has meant that such pressures have been less strong in Germany and Japan (Gospel and Pendleton, 2004).

The history of labour management systems has been profoundly shaped by political and legal contexts. In countries such as the US and the UK, liberal states have overall been less interventionist in labour man- agement than in some other countries, with so-called ‘voluntarism’ being a strong tradition. Even in these countries, however, there have been major exceptions, especially during two world wars, the New Deal in the US, and in the 1980s under the Reagan and Thatcher administrations. By contrast, in more coordinat- ed economies, such as Germany, Japan, and France, there has long been a tradition of state intervention in labour matters (Crouch, 1993; Friedman, 1999; Hall and Soskice, 2001; Yamamura and Streeck, 2003). Nevertheless, it is probably true to say that over time, in most countries, there has been a gradual build-up in intervention in terms of rights off-the-job (state welfare and pension systems), rights on-the-job (workmen's compensation, health and safety, racial and sexual equality legislation), and regulation of collective employ- ment matters (the law on trade unions, collective bargaining, and information and consultation at work). In Europe, the European Union (EU) has in recent decades taken these tendencies further (Supiot, 2001).

The social context is in many ways the most difficult to categorise and summarise. Over the decades, the

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position of children and women at work has changed profoundly, at least in advanced market economies. The starting age of employment has slowly risen, the proportion of women in paid employment has increased, and the numbers of people who can retire from paid employment have risen. Major changes have also come with rising living standards and a greater awareness of social and human rights. Over time, social identities have also changed, with notions of ‘class’ playing a significant part in worker mentalities through much of the twentieth century, but becoming less powerful in more recent decades. Other social identities at work which have long existed, on the basis of gender, race, religion, and immigrant status have been successively reshaped and added to with new identities in terms of age, sexual orientation, and disability (Noiriel, 1989; Magraw, 1992; Piore and Safford, 2005). On the other hand, traditional divides between works and staff or between hourly/weekly and monthly-paid, have slowly eroded. Managements have had to take account of these changing social contexts. The so-called ‘management of diversity’ in the workplace is now stressed in modern management discourse; however, history shows that this has always been a concern of management (Kossek and Lobel, 1996).

A number of final points may be made about the business context of the organisation in historical perspective. First, most firms have been small and medium-sized – though in practice least is known about human re- source management in such firms. Over time, big firms have come to constitute a larger proportion of total output and of total employment, though this is larger in the US and the UK than countries such as Germany, Italy, and Japan, which have more employment in medium-sized firms. Second, there have been major com- positional shifts. Generalising, the typical large employer in the early-to mid-nineteenth century was a textile company; by the mid- to late-nineteenth century, the biggest single group of major firms in most economies were railway companies; by the mid-twentieth century, the main groupings were manufacturers (steel, chem- icals, automobiles, electrical); and by the end of the twentieth century, the biggest single group of large firms was to be found in retailing and financial services (Gospel and Fiedler, 2008). This predominance of certain industries played an important part in laying down patterns of labour management. Third, over time, big firms in particular have developed more sophisticated hierarchies, not least in the labour area, with the growth of ‘welfare’ or ‘labour’ managers, later ‘personnel’ managers, and now ‘human resource’ managers (Niven, 1967; Jacoby, 1985; Morikawa and Kobayashi, 1986; Kocha, 1991; Tsutsui, 1998; Fombonne, 2003). How- ever, it should be remembered that in some countries, especially those of northern continental Europe, firms still rely significantly on outside employers’ organisations and their staff for the management of industrial re- lations. Also, in recent years, there has been some growth in the outsourcing of the human resource func- tion (Gospel and Sako, 2008). Fourth, big firms have also changed in structure from being historically either loosely organised holding companies or centralised, functionally organised firms at the beginning of the twen- tieth century, to being more coordinated multidivisional structures and sometimes decentralised networks of firms by the end of the century (Chandler, 1962, 1977; 1990; Cassis, 1997; Whittington and Mayer, 2000). As will be shown below, this has also had implications for labour management. Finally, as already suggested, ownership and governance has changed, though differentially between countries, with personal and family ownership declining over the course of the twentieth century and outsider ownership increasing in the big firm sector, especially in the US and the UK (Gospel and Pendleton, 2004).

The Emergence of Labour Management in the First Industrial Revolution

Here we provide a perspective on two key industries of the first industrial revolution, viz. over the period of time roughly from the late-eighteenth century to the late-nineteenth century. The two industries are very dif- ferent, textiles and railways, but they provide us with a set of insights into how labour was managed during a key period of economic transformation.

Textile industries have been at the forefront of industrialisation in many countries. Classic problems for em- ployers emerged in these industries – in terms of work relations (how to organise production and the division of labour), employment relations (how to attract, retain, and motivate labour), and industrial relations (how authority was to be maintained and whether or not to concede employees a voice at work).

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In practice, nineteenth century textile and allied industries in Europe and the US always had elements of both older artisan and newer factory production. In artisanal sectors, production was on a small scale, work was often organised on the basis of putting-out to households or small workshops, and family involvement was im- portant. In these circumstances, masters relied on key (usually male) workers to organise their own work and controlled and paid them by piece-work where this was possible. Problems for the masters were uncertainties about the quality of production and the wage-effort relationship (Mendels, 1972; Berg, 1985). As technologies developed and markets expanded, masters increasingly built their own factories and installed machinery. In turn, this meant they had the problem of attracting larger labour forces, especially where factories were locat- ed in less populated areas near water power sources. In cotton spinning, large numbers of women and chil- dren were employed, usually under tight and often coercive systems of direct control and often paid by time. However, even within the new factories, there persisted forms of inside contracting to key workers and the possibility of drawing on pools of specialised craft labour from local industrial districts (Lazonick, 1990; Rose, 2000). The motivation to develop the factory system came from market and technological opportunities, but it also gave employers a means for better control over their labour forces (Marglin, 1974; Landes, 1986).

The emergence of this system in the UK has been classically described by Pollard (1965), who emphasised its heavy reliance on child and female labour, extensive use of piece-work, and devices such as factory hous- ing. At the same time, there was, in most textile districts, a reliance on external economies of scale, for ex- ample in terms of apprentice-type training and piece-work price lists. In the US, the more vertically integrated cotton industry moved more quickly to introduce new technologies, to build larger factories, and to develop a greater internal division of labour within the workplace under management control. Later, in Japan, during industrialisation in the late-nineteenth and early-twentieth centuries, some similar problems for management and some similar responses are discernible. For example, in that country, factory and artisan production also coexisted, though the latter was much smaller; in the large factory sector, employers used predominantly fe- male workforces; they built factory dormitories and provided various forms of paternalistic benefits; and used tight supervision and simple pay and benefit systems to control workers (Nakagawa, 1979; Hunter, 2003). Today, many of these forms of work organisation and employment relations have later appeared and are still to be found in textile industries in India, China, Brazil and other rapidly developing countries today.

Under early forms of labour management, industrial relations systems were diverse. As suggested, the man- agement of labour was often a mixture of both hard, direct control and also of paternalistic oversight of a personal ad hoc kind (Joyce, 1980). Nevertheless, some key male workers could exert control over their work and employers depended on them to organise production. In the UK, by the final half of the twentieth century, unions of male textile workers had grown to become the largest in the country, along with unions for other artisan and craft trades, engineering workers, and coalminers. Those with skills or a strong position in the production process were able to force recognition from employers of their trade societies and to establish re- gional or national collective bargaining where firms joined together in employers’ organisations had to deal with trade unions (Jowitt and McIvor, 1989; McIvor, 1996). In the United States and continental Europe, by the First World War, collective bargaining had also developed in certain craft sectors, such as small metalworking, printing, and footwear, but on the whole it was less extensive than in the UK (Mommsen and Husung, 1985; Montgomery, 1987).

From the mid-nineteenth century onwards, the railways represented a further stage in the growth of the mod- ern business enterprises in most countries (Chandler, 1977, 1990). In terms of labour management, railway companies encountered both a traditional and a new set of problems. Traditional problems were in terms of recruiting, training, and controlling staff, albeit on a much larger scale. New problems included the complexity of scheduling, the safety of goods and passengers, and the geographical dispersion of work. Under manage- ments from various backgrounds (technical, governmental, military, and accounting), the railway companies were the first to put in place some of the first and largest bureaucratic systems of employment. These included more systematic recruitment, the creation of job and promotion hierarchies, and related pay systems based on fixed rates of pay. They also introduced welfare arrangements, of a less personal and more bureaucratic kind, such as housing, basic sick care, and later pension benefits for some workers, usually dependent on

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length of service with the firm.

Talking industrial relations, the large railway companies of the US, UK, and continental Europe were run ac- cording to a ‘unitarist’ rather than a ‘pluralist’ model of management (Fox, 1985). Management was the sole source of authority, issued commands, and expected workers to obey. A plurality of sources of authority, with legitimate worker voice and checks and balances, was not permitted. Discipline was based on the notion of a ‘uniformed’ service. In keeping with this and in contrast with the sectors described above, trade unions were not recognised and collective bargaining was rare, until just before or after the First World War.

This pattern of bureaucratic management later grew in other sectors, such as the gas, electricity, and water utilities (Melling, 1979; Berlanstein, 1991). It also provided something of a model for areas of industry such as steel, chemicals, and, later, oil refining. Developed in the late nineteenth and early twentieth centuries, the model has in many respects persisted up to the present day in both state and private railways and utility sys- tems, albeit since the Second World War, with extensive unionisation and collective bargaining.

This account of bureaucratic employment on the railways prompts three further points. First, the railways were some of the first companies to develop extensive hierarchies of managerial and white-collar staff. These were necessary to organise and coordinate diverse and dispersed operations. Such employees were offered something like ‘careers’ within the company and moved up wage and benefit hierarchies. Though they learnt on-the-job, there were books, magazines, and courses which they could attend. Second, and by contrast, the railways were constructed and to some extent maintained in more traditional ways, by gangs of labourers, who were apart from this bureaucratic system and did not partake of the benefits of others who worked on the railways. Third, the workshops owned by the railway companies, where engines and rolling stock were built and maintained, were also different. Here workers had more control over production, belonged to occu- pational craft communities, were paid wages which related more to those in craft labour markets, and were more likely to belong to trade unions. Within them, craft forms of production and management existed and unions were more likely to be recognised. However, it should also be noted that the railway workshops includ- ed some of the more sophisticated engineering shops of their days, especially in terms of work organisation (Coleman, 1981; Drummond, 1995).

The Development of Personnel Management in the Second Industrial Revolu- tion: The New Heavy Process and Assembly-Line Industries

In the late-nineteenth and early-twentieth centuries, major industries were transformed or created entirely anew with the advent of the new general purpose technology of electricity and with new production processes (steel, chemicals, and later electrical products and automobiles). Employers in these sectors used some old methods and developed other newer forms of what came to be called personnel management.

For example, in steel and chemicals, systems of internal contracting under skilled workers and gang masters continued to exist, at least for a time. Much of the work involved these arrangements and some more skilled and strategically placed workers had considerable control over work organisation. Employment was often short-term and wage and benefit systems simple. Slowly, however, different arrangements developed. Large firms, such as Carnegie and US Steel in the United States, Krupp in Germany, and Schneider in France, substituted their own foremen for internal contractors, began to recruit more systematically, trained workers internally on the job and not usually through apprenticeship systems, and developed employment hierarchies and some of the welfare arrangements described above (notably housing, workmen's compensation, sick pay and pensions) (McCreary, 1968; Stone, 1975; Jacoby, 1985; Fitzgerald, 1988; Vishniac, 1990; Gospel, 1992; Welskopp, 1994).

In these sectors and in large-scale metalworking, there was a desire on the part of employers to gain in- formation on worker effort and to organise work more systematically under managerial control. This devel-

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oped rapidly in the US, where fast-growing and large national markets and a shortage of skilled labour gave managers an incentive to invest in the development of skill-displacing technologies. In metalworking and en- gineering, as early as the mid- to late-nineteenth century, there emerged a distinctive ‘American system of manufactures’, based on standardised and interchangeable parts. This in turn came more and more to use semi-skilled or unskilled workers, who tended high throughput machinery or worked on what came to be as- sembly lines (Rosenberg, 1969; Hounshell, 1984).

By the early twentieth century onwards, in various forms, this led to the development of so-called ‘systematic’ and ‘scientific’ management (Litterer, 1963; Nelson, 1975; Littler, 1982; Merkle, 1980; Fridenson, 1986; Tsut- sui, 1998). The latter is usually associated with Frederick Taylor (Taylor, 1911; Nelson, 1980), but there were other writers and practitioners at the time advocating new systems of labour management. Usually some com- bination of the following were used: a study of the organisation of work by specialist ‘time’ and ‘work’ study experts; the reorganisation of work, often leading to a greater subdivision of jobs; and the fixing of wages by new types of bonus systems related to performance. In practice, such arrangements developed only slowly, but with some acceleration after the First World War, especially in lighter areas of manufacturing (Nelson, 1992). The most significant technological and organisational development was the spread of the assembly line and mass production from the early-twentieth century onwards (Ford, 1926; Fridenson, 1978; Hounshell, 1984; Nelson, 1975; Meyer, 1981; Schatz, 1983; Lewchuk, 1987).

Especially where unions had a presence, these developments often met with worker resistance. In part to counter unions, there was some development of new welfare and personnel policies, though these grew as much in sectors of light industry such as food and light assembly work. There was also some interest in so-called ‘human relations’ techniques as a less collectivist approach to the management of labour (Nelson, 1970; Nelson and Campbell, 1972; Jacoby, 1985; Gillespie, 1991; Gospel, 1992).

The Management of Industrial Relations: The Classic Case of the Automobile Industry

Up to the First World War, in all countries, employer recognition of trade unions and collective bargaining was a minority phenomenon (Bain and Price, 1980). Union membership and recognition by employers was most extensive in the UK, followed by Germany and the US. Membership was much lower in countries such as France, Italy, and Japan, in part reflecting larger agricultural sectors and smaller scale industry in those coun- tries. Even where unions were recognised in the UK in craft industries such as metalworking and printing, in parts of cotton spinning, and in coalmining, collective bargaining was underdeveloped and often informal, spasmodic, and subject to recurrent employer counteroffensives.

The position of trade unions was significantly strengthened during the First World War: labour markets were tight, product market competition was curtailed, and both employers and the state were dependent on workers to achieve production. In these circumstances, employers were constrained to recognise unions, not least at government prompting, and collective bargaining developed, in many cases on a multi-employer basis, cov- ering a whole industry either regionally or nationally. After the war and especially where there was economic depression in the 1920s, employers launched counter-offensives and curtailed the scope of, or withdrew en- tirely from, collective bargaining. The depression which affected all countries from 1929 onwards further re- duced union presence and collective bargaining declined in coverage and content (Brody, 1980; Clegg, 1985; Schneider, 1991).

From the mid-1930s onwards, however, this situation changed, especially in the automobile, electrical, and other growing industries. In the UK, unions slowly increased their membership and managements had in- creasingly to deal with them (Tolliday and Zeitlin, 1986; Lewchuk, 1987). For the most part they chose to do this on a multi-employer basis. In France, in the late 1930s, a combination of economic and political fac- tors led French employers to enter into new dealings with unions, albeit temporarily (Vinen, 1991; Chapman,

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1991). Employer opposition was particularly strong in the United States. But, even there, the large automobile firms recognised unions, in significant part in the context of a change in the stance of government and legal requirements introduced in the New Deal from the mid- 1930s onwards and during the Second World War and its aftermath (Dubofsky, 1994). Thus, General Motors recognised the United Auto Workers in 1937 and Ford followed suit in 1941. In the United States, in contrast to Britain, employers chose to deal with unions more at a company level and negotiated formal legally binding contracts which regulated wide aspects of wages, employment, and work organisation. There were elements of pattern-setting and following within industries, but, for the most part, dealings were at the level of the firm (Slichter et al., 1960; Brody, 1980; Harris, 1985; Jefferys, 1986; Tolliday and Zeitlin, 1986). By contrast, in the UK, bargaining was often at multiple levels, in- cluding informal bargaining with shop stewards at the workplace (Edwards and Terry, 1988).

In Germany, France, Italy, and Japan, the settlement with organised labour came after the war. Under Fascist and military regimes and foreign occupation, independent unions were outlawed, state- and employer-domi- nated labour bodies were imposed, and most aspects of work and employment were unilaterally determined by management or government. After the war, in Germany, in a situation of turmoil, unions were recognised by employers and a system of regional and industry-wide collective bargaining emerged which has largely persisted up to the present day. Reverting to an earlier German tradition, with origins in the nineteenth centu- ry mining industry and in legislation after the First World War, there was also established by law a system of works councils at company and workplace level and worker representation on the boards of German compa- nies. In part this was at the prompting of the British occupation authorities and met with some resistance from German business. However, over time, German employers came to accept these arrangements and accom- modated them into their systems of labour management (Teuteberg, 1961; Streeck, 1992; Dartmann, 1996). It should be noted that works councils and board-level representation are to be found in other continental Eu- ropean countries, but not usually on the scale or with the powers of those in Germany (Rogers and Streeck, 1995).

Also after the war, Japanese employers came to terms with unions, though along different lines. At first, they confronted demands from militant general and industrial unions. With support from the American occupa- tion authorities and the Japanese government, in the late 1940s and early 1950s, employers confronted and defeated these unions in major lockouts and strikes and replaced them with a system of enterprise-based unions. Collective bargaining was subsequently conducted mainly at enterprise level, with some industry co- ordination by employers’ organisations and federations of unions. This settlement with enterprise unions in- teracted with traditional and emerging Japanese management practices and led, during the subsequent years of economic growth in the 1950s and 1960s, to key aspects of the Japanese employment system: the provi- sion of job security for core male workers, the use of complex wage and benefit hierarchies often related to seniority, systems of management-led consultation within the firm, and a strong ideological encouragement of the notion of the company as a community. By the mid- to late- 1950s, such a system was in place in firms such as Toyota, Nissan, Toshiba, Hitachi, and other large manufacturing companies. In the 1970s, this came to be recognised as the ‘Japanese system of management’ and attracted considerable foreign atten- tion (Dore, 1973; Taira, 1970; Gordon, 1985; 1998; Koike, 1988; Cusomano, 1985; Shiomi and Wada, 1995; Hazama, 1997; Inagami and Whittaker, 2005). However, as will be seen below, in the slowdown in the 1990s, the system has come under growing pressure, with some reduction of ‘lifetime employment’, an increase in pay based more on merit and performance, and less of a role for enterprise unions, especially in bargaining about work organisation and wage levels.

The post-war industrial relations settlements in France and Italy were rather less clear and in some ways more akin to the British situation. After the war, employers increasingly had to recognise unions and enter into collective bargaining. However, they were less able to contain a system of multi-unionism (including in these two continental countries Communist-dominated unionism) and multi-level collective bargaining. Large firms such as Renault, Citroen, Peugeot, and Fiat made varying compromises, depending on the economic and political contexts at particular times (Fridenson, 1986; Durand and Hatzfeld, 2003; Musso, 2008). In some respects, it was only in the 1980s and 1990s, when union power was on the wane, that French and Italian

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companies reached a settlement of their industrial relations more acceptable to management.

In big firms in most of these countries, over the first three decades after the war, with full employment and union bargaining, there developed systems of relative job security, possibilities for internal promotion to high- er paying jobs, and wages based on seniority and hierarchical grading systems. However, there were differ- ences between countries. In Japan, the US, and Germany, management maintained more control over the production system than, say, in the UK or Italy. In Germany and Japan, workers received more training than in most of the other countries and were more involved in improvements in processes and products. This was to lead to what in Germany has been called the ‘diversified quality production’ system and in Japan to what came to be called the Toyota or ‘lean production’ system, with more consultation and discretion given to bet- ter trained workers (Ohno, 1982; Dohse et al., 1985: Streeck, 1992; Shimokawa, 1993; Wada, 1995; Tolliday, 1998).

The union-based system of personnel and industrial relations management has declined differentially across these countries. In the US, union membership fell from the mid- 1960s onwards, and the coverage of collec- tive bargaining contracted (Kochan et al., 1986; Jacoby, 1997). It is now restricted to a few areas of the private sector, such as parts of the steel, automobile, engineering, and transportation industries. In France, union membership never attained very high levels; it has fallen since the 1970s, and collective bargaining is much constrained (Howell, 1992). In the UK, a change in the economic and political climate in the 1980s led to a hollowing out of the collective bargaining-based system of labour management and the development of new forms of human resource management such as will be discussed below. Along with this, union membership has fallen (Millward et al., 2000; Gospel, 2005). In Germany and Japan, changes have been slower, but in recent years employers have come to have less recourse to collective bargaining with trade unions and more to consultation with their workers, either via work councils in Germany or more informal joint committees in Japan (Thelen, 2001; Inagami and Whittaker, 2005).

The Development of Human Resource Management: Challenges of Diversity and Flexibility in the ‘Third’ Industrial Revolution

Alongside the developments described above, other trends may be distinguished from the 1970s onwards. In the post-war years, sectors which grew rapidly included electrical goods, food and drink, and household and personal consumer products. In the US and the UK, large firms, which had often grown by merger and acquisition and which had increasingly diversified into new lines of business, developed multidivisional forms of organisation to manage their diverse activities (Chandler, 1962, 1977, 1990; Whittington and Mayer, 2000). Increasingly, such firms faced ‘new’ labour forces, enjoying higher standards of living, with less commitment to trade unions, and more heterogeneous in terms of interests.

Increasingly firms had to develop new policies to deal with growing product market competition and changes in labour market composition. Here we give the example of the fast-moving consumer goods sector where firms came to adapt and transform a set of centralised and often paternalistic policies which they had first developed in the late-nineteenth and early-twentieth centuries. Some of these approaches have since come to be collectively described as Human Resource Management (Foulkes, 1980; Jacoby, 1997; Gospel, 1992).

In the US, for example, Procter & Gamble (P&G) had organised its labour management centrally, though with some plants unionised and others remaining non-unionised. Employment systems were rather bureaucratic; use was made of scientific management, and dealings with the labour force had elements of paternalism. As the company grew, in part organically and in part through merger and acquisition and diversified into new areas such as food and drink, paper goods, and personal care products, so it faced new problems and chal- lenges. These it came to manage with central direction in some key areas (the development of manageri- al staff and the non-recognition of unions in new plants). Through the 1970s, in most other areas, human resource management was increasingly left to the level of the constituent divisions or companies, where a

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degree of differentiation and controlled experimentation was allowed. On the basis of this, the company in- troduced new forms of job flexibility, management-directed team working, and pay for skills and performance, wherever possible maintaining a non-union environment and often with the use of contingent labour.

A similar flexible and decentralised trajectory can also be seen in Unilever in the UK, though with a time lag of a decade or more. Unilever had had a tradition of rather centralised, somewhat paternalistic employment practices which it had developed in the interwar years. In the UK context, it was less able or inclined to es- cape from a collective bargaining based system than P&G. Nevertheless, through the 1970s and 1980s, it transformed its practices into a more differentiated and flexible set of arrangements, based on its divisions and subsidiaries (Jones, 2005a). In France, a comparable example is Danone, that country's largest food company. Over the 1970s, BSND an one moved from being a glass producer to a glass bottle, drinks, and diversified food producer and then later restructured around a range of food products. It developed a rhetoric and practice of human resources and social partnership with its employees, including unions, but essentially ran its various parts in a decentralised, flexible manner. This enabled experimentation and facilitated the ac- quisition and disposal of companies. In many instances, these and similar firms increased their flexibility by employing a core labour force, supplemented by part-time and temporary workers (Dyer et al., 2004).

Some contrast may be drawn with the German and Japanese equivalents of these companies. Henkel and Kao both had a rather centralised and paternalistic system of labour management through to the 1970s. More slowly than their counterparts referred to above, they nevertheless introduced different arrangements – less reliance on union bargaining, more reliance on joint consultation and direct employee involvement, greater use of flexible pay and conditions, and more resort to contingent employment for different parts of their com- panies (Feldenkirchen and Hilger, 2001; Gospel, 1992). However, to date, they have not proceeded as far as their US, UK, and French counterparts in terms of developing variegated and flexible human resource sys- tems. In part this reflects the fact that they have grown organically and are less diversified and divisionalised companies – a broader characteristic of both countries. In part, it also reflects the fact that they have been subject to rather more legal and union constraints (in Germany) and ideological and customary constraints (in Japan).

Up to this point we have described the development of decentralised and flexible systems of human resources management which have spread across the large firm sector. However, we also stress continuities and diver- sities. We have already noted national differences. In addition, some firms still remain relatively centralised (automobiles) and bureaucratic (utilities). Also, in the medium and small firm sectors, firms have not had to confront the issues of diversity of operations in the same way. Here human resource management is usual- ly less purposely decentralized and less professionalised. In some localities, medium and small firms have also maintained external economies of scale in terms of skills training and innovative working in industrial districts such as have been identified, especially in Germany and Italy (Crouch et al., 2001). There is also a considerable spread, with some firms pursuing ‘high road’ practices of good pay and conditions, high training, and employee involvement, while others pursue ‘low road’ practices of minimal benefits and cost minimisation (Foulkes, 1980; Guest and Hoque, 1996; Osterman, 1999).

The most marked change in employment composition in the final quarter of the twentieth century has been the decline of manufacturing and blue collar jobs and the rise of services and white collar jobs. Service compa- nies and service work cover a wide spread. They cover the financial sector, information and communications services, hotels and catering, health and personal care, and retailing. They also cover a spread in terms of company size, from small start-up firms to some of the largest companies in the world. They also cover a wide spread of occupational levels from graduate managerial, technical, and professional employees to low-level mundane work in call centres, fast food restaurants, and retail stores. Recent changes in this sector have been very much driven by the application of new technologies of information and communications.

In financial services, there are some patterns which have long existed, as in banks and insurance companies – relative job security, gendered and educationally segmented hierarchies, and salaries and benefits which

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rise with age. In recent years, some of these have been subject to change, especially the notion of lifetime careers and incremental salary scales. There are also new aspects, within both old and new firms in these sectors – the reliance on self-investment in training and development, greater mobility and more flexible ca- reers, more project working, and, especially for higher-level employees, the spread of share- and stock-based pay. However, in many telephone call centres, connected with the new service economy, work is organised along different lines – with elements of mass production, tight computer monitoring, and limited pay and bene- fit systems. In recent years, in these areas, there has been a growth in so-called ‘outsourcing’ and ‘off shoring’ of jobs (Marchington et al., 2005). By the end of the twentieth century the biggest single grouping of large em- ployers were retailers such as Wal-Mart, Target, and Home Depot in the United States, Carrefour and Auchan in France, Tesco and Kingfisher in the UK, and Metro and Karstadt in Germany. Such firms have developed further some aspects of systematic and scientific management. They make extensive use of information and communication technology to match the flow of goods, customer demand, and the deployment of labour. In turn, extensive use is made of part-time employment, often young, female, and immigrant workers, to facilitate flexible scheduling. Jobs are narrowly defined, with little scope for training and development, but employees may be expected to work flexibly across jobs, such as unloading, stacking, and checkout. Wage hierarchies are short and non-wage benefits limited. In the United States, Wal-Mart and other large retailers make efforts to promote individual identification with the company and are strongly anti-union (Lichtenstein, 2006). In Eu- rope, unions have a limited presence and play little part in management calculations.

Human resource management systems such as operate in call centres and supermarkets, have elements of mass production such as have existed from the early twentieth century onwards. However, there are a num- ber of important differences with earlier systems. First, computer control facilitates a more exact synchroni- sation of production and work. Second, there would seem to be more mixed identities on the part of workers and less solidarity and opposition to management. Third, union membership shows little sign of developing as it once did in earlier mass-production systems and more sophisticated managements seem more likely to prevent its growth.

Some commentators have recently referred to a growing diversity within national systems; this may in turn maintain diversities between national systems (Katz and Darbishire, 2000). A historical perspective suggests there has always been diversity. Certainly many arrangements described above are to be found side by side within national systems, such as the provision of discretion for more skilled and higher-level employees versus mass-production-type systems for many workers as well as elements of bureaucratic forms of management versus more differentiated and flexible systems. This same diversity may increasingly be found in manufac- turing where, among other factors, unions are less able to impose uniformity. Hence, in manufacturing, some firms are pursuing so-called ‘high-performance’ and ‘high-involvement’ policies while many others have not developed sophisticated human resource strategies and provide little employee voice (Foulkes, 1980; Guest and Hoque, 1996; Osterman, 1999).

Conclusions

This chapter has concentrated on major stages in the development of human resources management in ad- vanced capitalist economies, while stressing continuities and diversities across stages. However, we register a number of gaps. The chapter has concentrated on the history of labour management in the United States, Western Europe, and Japan. It has left out other countries: smaller countries of the developed world; Rus- sia and the Soviet Union, China, and other former Communist states; and labour management in developing countries. In addition, the chapter has focused mainly on large firms at particular stages of history. There has been some coverage of smaller firms, especially with reference to textiles at the beginning of the period and startup high-tech companies at the end. On the whole, however, less is known about labour management in the medium and small firm sector.

The chapter has largely left out the public sector, in central and local government and in organisations such

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as national post offices, utility companies, and public health service organisations. Such public sector organ- isations are important, not only because of their size, but also because they were often considered to be ‘good’ employers and historically at times acted as trend-setters for the private sector. Studies of such firms show the extensive use of bureaucratic management methods, the presence of a certain paternalism, and the strength of trade unions and collective relations with the labour force, especially through the post-Sec- ond World War period (Frost, 1983; Hannah, 1979; 1982; Berlanstein, 1991). More recently, in these sectors there are new political and market pressures which are leading to management practices emphasising more flexibility and decentralisation of operations, not least as parts of the public sector have been privatised and opened to more outside market competition.

A further caveat might be that the chapter has tended to treat labour as a rather homogeneous entity. For example, little has been said specifically about the management of female labour. However, there are some excellent historical studies of women's employment, in both manufacturing and service industries which might be used to look at the management of female labour (Glucksmann, 1990; Fourcaut, 1982; Hunter, 2003; Milk- man, 1987; Cobble, 1991; Omnes, 1997; Wightman, 1999). These pose questions as to whether historically the management of female labour has been largely the same as that of men or to what extent there are dif- ferent patterns of gender segregation. The chapter has concentrated mainly on lower- and middle-level, es- pecially blue-collar-type, workers, on the basis that these have been the main group of employees over most of the time period under consideration. However, in most national economies, these are now a declining part of employment. We have touched on white-collar and managerial labour forces in several of the industry sec- tors, for example in discussing railways in the nineteenth century and financial services in the late twentieth century. A wide literature exists on white-collar, professional, technical, supervisory, and managerial workers which might be used for studies of white collar labour management (Lockwood, 1958; Kocha, 1977; 1991; Melling, 1980; Hyman and Price, 1983; Morikawa and Kobayashi, 1986; Morikawa, 1991; Prendergast, 1999).

The chapter has also dealt with employment within the firm largely within one country, namely the country of origin. Since the early twentieth century, a growing number of large firms have had multinational activities and this has accelerated in the post-Second World War period. Further work needs to be done on the historical development of human resource management in such multinationals, where some of the essential decisions concern whether firms take practices from their home country, adopt those of the host country, or develop distinct global patterns of labour management (Perlmutter, 1969; Enderwick, 1985; Knox and McKinlay, 1999, 2002; Ferner and Varul, 2000; Rosenweig and Nohria, 1994: Kristensen and Zeitlin, 2005; Jones 2005b).

Bearing in mind the caveats referred to above and the emphasis throughout on both change and continuities, a number of conclusions may be drawn from the above survey.

First, broad stages in the development of labour management can be discerned. Thus, from the early nine- teenth century, there coexisted artisanal and factory models in sectors such as textiles. The railways, heavy industry, and assembly-type industries brought the development of newer more bureaucratic systems of per- sonnel management, especially from the late nineteenth century onwards. Subsequently, in the mid-twentieth century, in the golden age of manufacturing, union-based systems of industrial relations management were strong, especially in the big firm sector. More recently there has been a growth of more differentiated and flex- ible systems of human resource management within firms, in both manufacturing and services. However, it was also stressed that much work in the modern service sector and in retailing still has elements of mass-pro- duction-type systems. Thus, different stages have coexisted side-by-side and older industries have adapted to new developments. Overall, the tendency may be towards growing diversity within firms and within coun- tries.

Second, some movement may be discerned over time from direct systems of management (based on person- al supervision, simple piecework systems, and traditional paternalism), to technical or mechanical systems of management (based on scientific management principles with an attempt to build control into production processes), to bureaucratic forms of working and employment, with internal labour markets and complicated

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administrative hierarchies (Edwards, 1979). However, in recent years, there has been some reconfiguration of bureaucratic employment systems and of internal labour markets and there have been complex backward and forward movements between direct control and more autonomy and responsibility on the job. The ex- amples of modern retailing and work in call centres show how direct systems of supervision and computer control continue. Thus, motivation and control based on mixes of coercive, remunerative, and normative poli- cies have always existed. There is no linear movement in the management of human resources.

Third, in terms of industrial relations, there have been significant shifts over time. In the nineteenth and early- twentieth centuries, most employers were what might be termed ‘unitarist’ and believed that they had a right unilaterally to dictate aspects of work and employment. The period after the Second World War saw a shift in a more ‘pluralist’ direction and a greater preparedness to admit employee representation in the form of trade unions and collective bargaining. Such systems grew and even predominated through the early post-Second World War years in many industries, especially in manufacturing. However, beginning in the 1970s, there has been a shift away from such managerial ideologies and their replacement by new forms of joint consulta- tion, direct voice, and employee involvement of various kinds, such as participation in small groups and team working. To date, these shifts have been greater in countries such as the United States, France, and the UK, where union membership in the private sector is weakest, and least in countries such as Germany and the Scandinavian countries, where union membership remains stronger.

Finally, some of the changes analysed above can be captured by the notion of externalising and internalising decisions (Coase, 1937). Firms can externalise decisions in the following ways: they can make use of external subcontracting forms of production; recruit as much as possible from the external labour market and lay off workers into the market; fix wages and benefits according to market signals; and, where they have to recog- nise trade unions, deal with them through outside employers’ organisations. By contrast, firms can internalise decisions in various ways: they can bring production in-house and develop more elaborate internal divisions of labour; rely less on the external labour market and institute stronger internal labour markets, with more in-house training and greater job security; fix wages and benefits by internal administrative rules such as seniority or job rank; and provide employee voice via company-based consultation and bargaining (Gospel, 1992). In practice, different firms in different countries have pursued mixed strategies. However, in a long-term perspective, the following might be argued. In the nineteenth century much use was made of externalising strategies, subject to paternal-istic constraints and with exceptions such as the railways where companies internalised. Over the course of the twentieth century, there was some tendency towards greater internali- sation of work and employment relations, with Fordist mass production and internal labour markets, but not necessarily internalisation of industrial relations, since in Europe considerable reliance was placed on out- side employers’ organisations. The tendency to internalise employment relations was particularly strong in continental European countries and in Japan. Over the last quarter century, there may be some movement towards an externalization of work and employment relations, but with a greater internalisation of industrial relations within the firm. However, strategies depend not only on their relative cost, but also on the capacity of the firm to pursue them and the micro- and macro-political context within which they are implemented.

HowardGospel

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• collective bargaining • employment relations • human resource management • bargaining • resource management • unions • railroads

http://dx.doi.org/10.4135/9780857021496.n2

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