Week 1 Discussion 1

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DEFINING HUMAN RESOURCE MANAGEMENT

INTRODUCTION

The specialist occupation of human resource man agement {HRM) has been gradually developing over the last 100 year s, reflecting at each stage of its progress the contemporary fea tures of the era. In this chapter ,ve focus on its historical development to discover what defines HRM as a specialist field of man agement. By looking at hO\v the current models of HR.~,t emerged, ,ve can suggest the fu ture direction of travel of this management specialism.

All managers, whether they ar e specialists, line man agers or with no direct reports, have to be familiar with the skills an d techniques needed to manage people. For those with responsibility for teams of people, this is obvious. HO\vever, even for positions where the manager is responsible for materia l rather than human assets, there will be a requirement to communicate an d to engage with people in the ,vorking environment. i\fost man agers have to motivate an d influence the efforts of people at ,vork, a task whid1 is even more difficult where those concerned ar e not direct reports.

The actions of man agers ar e usually very much concerned with achieving results through other people. Consequently, the interpersonal skills they demonstrate - nota bly their capacity to engage, to communicate, to receive information, to project a vision of the fu ture, the climate of trust they esta blish, the degree of enthusiasm they generate, their sense of fairness an d their own humanity - will be most s ignificant for organ i'zational success.

\Ve can venture a description of what lies at the heart of man agerial ,vork. The essentia l characteristics seem to be that man agers exercise their authority in such a ,vay that it is regar ded as legitimate, they mainta in the adherence of subordinates to the organ i'zation·s goals an d build teams that ar e capable of achieving these goals. Human resource man agement in its specialized sense is concerned to help in the widest possible ,vay with these man ageria l tasks. The human resource fun ction has organ i'zation-wide responsibilities for HR policy, an d should be considered as quite separate from the fun ction whid1 all man agers car ry out when man aging people.

The activities of the specialist occupation, no,v commonly called 'human resource man agement> (HR~:t), ar e concerned with all aspects of the employment relationship - from sta rt to fin ish of the employment life cycle.

These activities ar e listed belO\v, covering all the s tages of employment

STRATEGIC FRAMEWORK

The activities referred to above include the following:

• the creation of HR s trategy to give effect to the business s trategy • designing organ i'zation s tructures, accounta bilities, formal reporting relationships, geographical locations • setting up workforce planning systems, E-HRM platforms • creating policies an d systems, an d rules of ,vork to deliver them • designing the employee offer/ linking employer bran d values to marketing s trategy • re,var d s trategy • employee relations s trategy.

ESTABLISHING THE EMPLOYMENT PRACTICES

• recruitment policies/practices • diversity man agement policies • selection • induction.

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TOTAL REWARD POLICIES

• job evaluation • pay policies • hours of ,vork/contractual arrangements • incentive schemes • pensions and benefits • ,vorking climate • job design • team based re,var ds.

DEVELOPMENT AND TALENT MANAGEMENT

• performance appraisaVidentifkation of potential • training • development • car eer man agement • succession planning • coaching/mentoring.

EMPLOYMENT RELATIONSHIPS

• TU relationships • joint consultation • negotiation procedures • employee participation in decision-making • employee engagement • communication processes • discipline • termination procedures • redundancy policies • health and wellbeing • safety an d risk assessment.

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CHANGE MANAGEMENT

• mergers/ ta keovers/fransfer of Underta kings regulations • due diligence • labour market an alysis • organi'zation development • employee involvement in change.

Under these brood headings there are subsets of activities such as research on competency frame,vorks which ,vould inform all the ,vork where assessment of current or fu ture likely performan ce matters ar e involved. i\fa tters surh as organ i'zation culture an d employee motivation might be exvressly addressed, or be seen as outcomes from policies in areas surh as employee engagement an d development, an d career man agement processes.

It is because abbreviated lists of HR activities tend to miss purposes of the policies and their essentia l meaning that there is no,v a trend tO\var ds grouping policy ar eas un der brood umbrella headings. For example, the term 'ta lent man agement> is used to refer to competitive areas of individual competence that can be developed to become the cornerstones of organ ization capability.

The theoretical basis for HRM is also complex. There are multiple theories an d fields of knowledge upon which practice has built up over man y years, an d in response to diffe rent socie ta l context s. An activity surh as recruitment depends for its evidentia l basis upon the theories of individual diffe rences described in Chapter 1, an d upon an un derstan ding of labour markets, marketing, psyrhometrics, developmenta l psyrbology, as ,vell as ,vhat ,vould be an appropriate 'offer• by the organ ization, an d its culture, an d the nature of the ,vork an d competencies required. Specialist knowledge of typical car eers, qualification s tructures an d what cons titutes high potential for the occupations in the organ ization ,vould also be necessary in most s ituations.

For exverienced practitioners, some of this knowledge may ,vell be so embedded in their consciousness that they cannot ahvays distinguish where the impact of formal training, education an d theore tical knowledge are separate from the traditions an d context ual effects they have exverienced.

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For exverienced practitioners, some of this knowledge may ,veil be so embedded in their consciousness that they cannot ahvays distinguish where the impact of formal training, education and theoretical knowledge ar e separate from the traditions and contex1-ua1 effects they have exverienced.

Storey (1997) sets out a definition of HRM that emphasizes the s trategic role. He sets out a 25 item f hecklist, diffe rentiating what used to be called personnel management and industrial relations from HR~.\. The gist of these diffe rences rests on the more individual contract behveen employer and employee found in HRM, the accent on managing by values and mission and the strong business orienta tion of HRM. Above all, the management of people s trategically is described in terms of human capital, and the optimi'zation of human resources to achieve particular business objectives. \Ve discuss the 'fit> behveen human resource and business strategy in the next chapter.

It is important to be a,vare of the man y diffe rent influences from whi<'h HRM as an occupation has emerged, and the resulting contradictions and interpreta tions that have created a continuing debate about the value of the field and its organ i'zational, socie ta l and economic contribution.

One ,vay to interpret these contrary trends is to appreciate that organ i'zations adopt diffe rent HR.~,t s trategies according to the threats and opportunities they face in their planning environments. There ar e also those who regar d the term 'human resource management> as merely a glossy label, whi<'h attempts to market the same personnel departments as before. \Vhether or not there is no,v a ne,v dominant 'paradigm•, the degree of change and the effects of the early traditions help to exvlain hO\v diffe rent models have emerged. For the sake of consistency, ,ve will use the term 'human resource management>, or 'HR.M·, throughout this tex1.

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THE EARLY HISTORY OP PERSONNEL MANAGEMENT UPTO 1914

The industria l revolution that spread throughout Brita in during the middle of the nineteenth century ,vas brought about by the application of the principle of the division of labour, combined with the harnessing of s team and other pO\ver sources. Concentrations of ,vorking people in factories and the related growth of towns led to the helter-skelter existence that ,ve associate with modem industrial life. The rapid increases in population, ne,v markets, ne,v technology and ex,xmsion by vertical integration ,vere conditions that helped to create the need for a large-scale organi'zation of resources.

During the first half of the nineteenth century, a ground s,vell of criticism appeared against what looked like unchecked greed and exvloita tion of ,vorkers by their fellO\vs. Movements for democracy, agitation for the repeal of anti-trade union legislation an d for some minimal controls on employers foun d their exvression through the Chartists, the Ten-Hour movement and the Anti-Com La,v League and in sporadic riots and petitions. In the ,vorks of Dickens an d the later socia l investigations of Mayhe,v, Booth an d Rowntree, the ,vorst abuses of s,veating (excessive hours), rhild mistreatment and oppression by employers ,vere revealed, and a ,vorking-class counterculture ,vas described.

Even among enlightened liberal opinion, public acknowledgement of the reasons for poverty had usually supported the beliefs underlying the 1834 Poor La,v, rhief amongst whi<'h ,vas the vie,v that paupers ,vere the authors of their own misfortunes. There ,vas no understanding of s tructural unemployment or the effects of a downturn in the trade cycle. The general image of the pauper ,vas of a lazy prof1igate brought down by his or her own failings, nota bly excessive drinking. Surh a vision ,vas congruent with the middle-class ideology of self-help and the ,vork ethic, whid1 ,vas a celebration of capita list economics. Man agement an d the own ers of business were drawn from the upper middle class, where a high value ,vas placed on individualism, competition and the survival of the fittest Artisans, supervisors and shopkeepers ,vould also have subscribed to surh vie,vs. Little had rhanged for ,vorking people in the nineteenth century. Their conditions and life rhan ces had ahvays been poor. As John Clar e, the Northamptonshire poet, wrote: 'the poor man•s lot seems to have been so long remembered as to be entirely forgotten•.

Pressures for reform an d for the protection of ,vorking people came tO\vards the end of the nineteenth century, mostly from trade union leaders and members of the labour movement. The extension of the franrhise added to these pressures in the last quarter of the century. Active campaigning by individuals surh as Rowntree ,vas also effective, and the large Q!taker employers set out to provide an example of hO\v good ,vorking conditions and profita bility could be compatible. \Vhat has been called the movement tO\vards 'industrial betterment> came on the fringes of a wider claim for improvement in living conditions. Out of this movement emerged the earliest attempts at ,velfare policies. One interpreta tion of the industrial betterment movement is that it ,vas a response by employers to the demand for rhange in society.

Early ,velfare ,vorkers belonged to the property-owning classes, and at first ,vere concerned only with ,vomen. The protection of ,vomen ,vas seen as a ,vorthy objective, and even the harshest employer would have foun d it difficult to oppose these aims openly. Extramural ,velfare ,vorkers visited sick employees an d helped to arrange accommodation for ,vomen an d girls, often including the supervision of moral ,velfare as part of their ,vork. \Velfare ,vorkers ,vere usually employed in the ne,ver industries, where ,vomen ,vere engaged on light marhine ,vork, packing, assembly and s imilar routine jobs, an d it ,vas in these factories that full-time ,velfare s taff,vere first in service.

The scope of the ,velfare officer (sometimes called \velfare secretaries') ,vas aUO\ved to grO\v in those companies where she could demonstrate a successful integration of ,velfare an d manageria l objectives, so that she became concerned with the recruitment, training and transfer of hourly paid female factory hands.

Up to 1900 there ,vere s till only a dozen or so full-time ,velfare secretaries, but their number had grown sufficie ntly by 1913 for them to seek a recogni'zable identity by forming the \Velfare \Vorkers• Association, this being the forerunner to the Ins titute of Personnel i\fanagement (no,v the Chartered Ins titute of Personnel and Development). They often foun d that managers and supervisors ,vere suspicious of their ,vork, and they ,vere also attacked by the unions as a management device for controlling employees. The problems of being the 'person in the middle• ,vere not unlike the difficulties faced by first-line supervisors. \Vorkers ,vere not sure whether the aims of ,velfare ,vere altruistic, an d felt that there ,vas an element of hypocrisy in the ,velfare secretaries• actions. Managers sa,v the possibility of another s tan dard besides economic efficie ncy being applied, an d ,vere antagonized by the thought of any restriction on their po,ver.

The reasons for the development of a ,velfare movement can best be seen as a response to the wider trend of greater interest and concern for general living conditions. Although it has been argued that Q!taker employers surh as Cadbury may have been exviating their feelings of guilt by becoming leaders of the ,velfare movement at a time when they had not yet reconciled the profit motive with Christian ethics, it is more accurate to see in their sponsorship of the ,velfare movement a belief in good orga ni'zation, good health, hygie ne an d a brood miss ion of pastoral car e for their ,vorkers. In dividual ,velfare ,vorkers probably had mixed motives, but there is no doubt that most of them ,vanted to help improve conditions for ,vorking people and to provide them with some protection.

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WHAT WAS THE PURPOSE OF WELFARE WORK?

l It ,vas an assertion of a paternalistic relationship bet\veen employers and their ,vorkforce. This outlook ,vas in the spirit of the old guild masters, whi<'h meant that employers might exrpect a reciprocal sense of service from their ,vorkers.

2 To grant some form of moral protection over ,vomen and children, just as the Factory Acts had sought to provide a form of physical protection. 3 To arhieve higher output by control of sickness and absenteeism, and by the early resolution of grievances and problems. 4 To provide sanitary and acceptable ,vorking conditions. Murh of the early ,velfare ,vork ,vas in food factories where cleanliness also benefited

the consumer. 5 To make the organ rl.ation of ,vomen by trade unions unnecessary through removing the employees• grievances.

From these early days some of the conf1ict and confusion about HR activities has persisted. In fact, ,velfare ,vork ,vas ahvays undertaken to meet the interests of management, since ultimately it ,vas a cost met by management To some degree, the areas of ,velfare covered by ,velfare officers, or ,velfare secreta ries, ,vere on behalf of socie ty as a whole, at a time when there ,vas no help from the sta te.

THE FIRST WORLD WAR 1914-1918

The First \Vorld \Var occasioned a 's tep change• in the development of the field. There ,vas a large increase in the number of ,velfare officers (to about 1300), largely in munitions and ,var factories, where men ,vere also recruited to oversee boys• ,velfare. Sta te regulation of employment ,vas instituted through the i\fonitions of \Var Act 1915, whi<'h, together with its amendments, sought to control the supply of labour to ,var factories and made ,velfare services obligatory in these factories.

The extension of controls into such matters as timekeeping, attendan ce and 'diligence• gave the s ta te an unprecedented impact on ,vorking life, although it ,vas not until tO\vards the end of the First \Vorld \Var that the controls became well organ ized and effective. \Velfare ,vork ,vas performed on an impersonal, bureaucratic basis.

The government gave direct encouragement to ,velfare development through the Health of Munitions \Vorkers• Commit tee, which ,vas the precursor to the National Institute of Industria l Psychology, and whi<'h continued the researrh into the psychological problems of ,vorking - boredom, fa tigue, monotony, etc.

\Vomen ,vere recruited in large numbers to HU the s taffing gap caused by the demand for ,var-related man ufacturing and the recruitment of men from industry into the armed services. By 1915, of the men who remained civilians, one man ,vas expected to do the work of t\vo. The employment of ,vomen necessita ted agreement with the trade unions on what ,vas termed 'dilution• - that is, accepting unskilled ,vomen into craftsmen•s ,vork, the abandonment of formal apprenticeship schemes and changed manning levels. Although compulsory arbitration ,vas introduced, there ,vere man y bitter wrangles. Lloyd George, as Minister of Munitions, ,vas obliged to go to the Clydeside shipyards to try to resolve a dispute over 'dilutees• and discharge certificates, for example.

After 1918 various forms of joint consulta tion ,vere proposed. The only enduring form ,vas the \Vhitley Joint Consulta tive Committee in the Civil Service, which is s till in existence. HO\vever, for the first time the sta te had to open up a dia logue with the trade unions, and a recogni'zable policy on industria l relations ,vas evidenced in this period.

GROWTH OF EMPLOYMENT MANAGEMENT IN 1920s AND 1930s

Employment management accented labour control, recruitment and discharge of labour and had separate origins from ,velfare. Labour managers came into being in the engineering industry and in large factories - for example, in process industries - and in some cases developed from more routine jobs such as 'timekeepers• or record-keeping assistants on the ,vorks office manager•s s taff. Often, ,vages clerks sa,v job applicants and came to deal with queries over absences, bonuses, piece rates, etc. The employers• federations had industria l relations responsibilities, and employed officials to help settle disputes. In engineering and shipbuilding there were national negotiations of rates, but districts 'plussed up• on these rates according to tradition and the supply of skilled labour. Records of grievances and disputes ,vere kept by engineering employers because of the need to follo,v procedures within the employers• federation, and therefore specialists in the procedures evolved in some companies.

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EARLY PERSONNEL DEPARTMENTS 1920-1939

In the 1920s and 1930s employment managers with various job titles such as 'Labour Officer•, 'i\•ten•s Employment Officer•, etc., ,vere increasingly common. The number of employers• associations that had traditionally fulfilled the major industrial relations role fe ll from 2403 to 1550 bet\veen 1925 an d 1936. This ,vas partly as a result of employers ,vanting to follo,v an independent tack an d because, with the growth in complexity of their businesses, they created their own personnel departments with industrial relations policies. In the large organ i'zations, such as (Cl, Courtaulds, Pilkingtons, London Transport an d i\farks & Spencer, the first specialist personnel departments ,vere formed behveen the ,var s.

Specialist personnel management in organ i'zations such as these ,vas a response to the problem of control. Complex organization s tructures resulted in diffe ring s tan dards an d divergent policies unless a central controlling influence ,vas exercised. !\forgers, acquisitions an d ex,xmsions led to the esta blishment of personnel departments. These ,vere usually in the ne,ver industries, such as plas tics, chemicals, mass-produced consumer goods an d in multiple reta il, whereas there ,vas no attempt to develop employment man agement as a specia lism in industries such as shipbuilding, textiles or mining, whid1 ,vere hit by the s lump. This was because employment man agement addressed itself to the question of s taffing control in matters including absenteeism and recruitment with the intention of improving output. In the older industries1 the pressing problems ,vere those of s tructural un employment, and no techniques such as retraining adult ,vorkers, redeployment or ,vork-sharing ,vere considered by man agements. The size of the problem (for most of the 1920s an d 1930s there ,vas never less than 10 per cent of the ,vorking population un employed), an d the ,vorldwide recession, made it unlikely that solutions ,vould be sought by the a pplication of ne,v techniques.

As trade began to pick up, an d rearmament began in the late 1930s, the larger companies in the ne,v industries shO\ved an interest in man agement development an d training. Man agement trainees ,vere recruited, who follO\ved a centra l training scheme, an d in this ,vay the latent purpose of spreading a common man ageria l philosophy throughout diverse organ ization s tructures ,vas ensured when the trainees moved behveen divisions. Since the First \Vorld \Var the National Ins titute of In dustria l Psychology had begun to develop selection tests an d to contribute to the solution of training problems.

In the larger modem companies, the ,velfare an d employment man agement sections were merged in the later 1930s. Personnel man agement in all but these fe,v enterprises ,vas a low-level affair until after 1945. The employees covered ,vere usually hourly paid operatives an d junior clerical s taff. In retail distribution, some moves tO\var ds including sales s taff an d buyers took place in the 1930s, an d the Staff Man agement Association ,vas set up in 1934 specifically to cover the difficult personnel problems of man aging s taff scattered in small units. In dustrial relations ,vas not regar ded as the mainstay of personnel ,vork, an d ,vas frequently the main responsibility of senior line man agers.

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THESECONDWORLDWAR 1939-1945

In the Second \Vorld \Var, personnel management ,vas exµm ded in its staffing control aspects to virtually all factories, and the designation of ,velfare and personnel occupations as 'reserved• (that is, those occupying them were exempt from conscription into the forces) shO\vs the importance that ,vas attached to the personnel role. The growth in numbers of personnel officers ,vas again a feature of ,vartime, as had been the case with the First World War, there being around 5700 by 1943.

The three instruments of labour regulation ,vere 'protected establishments· (for those engaged in ,var ,vork), the registration of all employment and ·essential ,vork orders•. These gave an ex,xmded i\,tinistry of Labour and National Service considerable pO\ver to direct labour, to prevent the call-up of those with special skills and to influence conditions of employment.

\Velfare and personnel ,vork ,vere inaugurated on a full-time basis at aU establishments producing ,var materials, and the concept of a total ,var carried with it the belief that no effort should be spared to ensure high productivity. In addition to the administration of the rules, aU aspects of the management of people came under scrutiny, and the government sa,v specialist personnel management as an integral part of the drive for greater efficiency. For example, the Ministry of Aircraft Production stipulated that specialist personnel management ,vas mandatory in aircraft factories.

The evacuation of large numbers of civilians, the ex'tension of shift ,vorking and the problems of training large numbers of ,vomen and young people gave ,velfare and personnel departments the same central place in the organi'zation of production as had emerged during the First \Vorld \Var. \Velfare ,vas again part of the rule-governed environment created for large-scale production.

To arhieve ,vartime production targets, strikes ,vere made illegal and compulsory arbitration was introduced. In 1940, three men ,vere exrpected to cover the ,vork of four, and once again the staffing gap necessitated the employment of ,vomen in unfamiliar jobs, surh as crane drivers, and in ,var factories. Of necessity, restrictive practices had to be suspended by the unions, and the state entered into a dialogue with the unions to try to maintain harmony. The linking of productivity improvements with joint consultation made a lasting impression on management thought, and the principles of joint consultation have come to be regarded as important in the training of personnel managers. After 1945, employers and some governments have found various forms of consultation with trade unions, and the TUC necessary, continuing the tradition.

Three significant tendencies deriving from both ,vorld ,vars can be summarized as follO\vs:

The belief amongst managers, sustained by researrh, that output and employment conditions are related, and the development by personnel managers of specific personnel terhniques.

2 The integration of employment management and ,velfare ,vork into the brood function, under the umbrella of personnel management, and the massive increase in the number of people in the occupation.

3 The ,vars demonstrated that the regulation of employment by the state could produce the desired outcomes in the short term at least, but that this required large-scale controls and could only succeed with the agreement of the ,vorkers, who needed a commitment to victory if they ,vere to be convinced of the necessity to relinquish their freedoms.

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1945-1968, INDUSTRIAL RELATIONS, CONFLICT RATHER THAN CONSENSUS

Post-1945 industria l relations witnessed an enormous growth in the number and po,ver of shop ste,var ds, and the breakdown of national-level bargaining through employers• federations. Local-level ba rgaining gave greater scope for personnel s taff, and the larger companies preferred to develop their own industria l relations policies that ,vere in tune ,vith their investment plans and their overall corporate s trategy. There ,vas a growth in productivity bargaining in the 1960s as employers and unions negotiated about the shares in ,vealth that ,vere to be gained from improvements in technology: for example, agreements such as those made at f.S.SCYs Fawley refinery. The involvement of line managers in productivity bargaining ,vas essentia l, both because of their technical knowledge and because they ,vere the managers who had to make the ba rgain ,vork.

The Donovan Report of 1968 on trade unions and employers ,vas a Royal Commission report that examined British industria l relations in the light of the large number of unofficial s trikes that were taking place. The report ,vas particularly critical of what the Commission•s members sa,v as the failure of personnel managers either to cope ,vith the changes that ,vere taking place, to be skilled in negotiation or to plan industrial relations strategy. The immediate ad hoc responses that ,vere typical of management's reaction to the disagreements, whi<'h so often led to unofficial action, ,vere seen as a failure on management's part to give personnel management a high priority. Donovan failed, hO\vever, to offer a solution or a range of terhniques which ,vould resolve the problems.

All kinds of organ rl.ations (local authorities, hospita ls, service industries, for example, as well as man ufacturing) ,vere s ta rting to employ full- time personnel s taff by the mid-1960s, and the spread of ideas and of specialrl.ation within the field began to establish personnel management as an occupation in its own right The 'consultant problem-solver• role is often the most acceptable one in an organ rl.ation•s authority structure, so there may be greater involvement for line managers in day-to-day negotiation. The research, coordination and back-up activities of personnel officers ,vere often an essentia l part of the management's control and direction of relationships, hO\vever.

The most significant contribution of personnel management to industrial relations ,vas through the creation of conditions under which certa in industrial relations policies came to be accepted. \Vage payment systems, and conditions of service that created diffe rent s ta tus groupings, ,vere examples of hO\v personnel systems came to create relationships.

Union leaders ,vere heard to call for better personnel management since personnel managers brought order and ,vere often able to promote good relationships, for instance, through organ rl.ation development srhemes, whi<'h s ta rted to be prescribed as solutions to difficulties in relationships in the later 1960s. Unions also believed that attention to personnel management might be exrpected to ensure some minimum standards and to curb the rogue employer.

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1968-1979, NATIONAL ECONOMIC POLICY AND GROWTH OP LEGISLATION

In this period there ,vas a boom-slump cycle in Brita in. Both Labour an d Conservative governments tried fiscal an d monetary policies to control the economy. During this time the stability of sterling and the rate of price infla tion dominated economic thinking.

Sta te legislation on prices an d incomes ranged from voluntary regulations by individual employers to s ta tutory controls mainta ined by special commissions and boards. Irrespective of the form used, the regulation of ,vages in accordance with national economic policies entailed the control of ,vage policies by personnel man agers an d other senior s taff on a compan y-wide basis. This encouraged the use of job evaluation schemes an d incrementa l scales. Entry to the European Economic Community (EEC) came at a time when multinational companies ,vere ex,xmding, whi<'h gave some personnel departments an international dimension and added complexity to the activities.

In addition to prices an d incomes policies, the sta te ,vas ex1:remely active in formulating ne,v employment legislation during the early 1960s. The Contracts of Employment Act 1963. the In dustria l Training Act 1964 an d the Redun dan cy Payments Act 1965 ,vere the forerunners of comprehensive legislation on job security, equal opportunity an d the position of trade unions. Various s ta te agencies ,vere also set up during this time to encourage good employment practice. One of the major consequences of all this activity ,vas the enhan cement in formal authority of personnel departments, an d these changes ,vere also a factor in the spread of personnel fun ctions into small organ i'zations.

The burst of legislation coincided with the development of personnel techniques. i\fan agement training courses with both educational an d vocational aspects ex,xmded (for example the introduction from the USA of MBA courses for business graduates) an d theories drawn from the socia l sciences became popular in the late 1960s to exvlain motivation to ,vork an d organ izational behaviour. Communication terhniques such as briefing groups ,vere emphasized an d greater attention ,vas paid to the social and technical environment of ,vork, largely as a result of the influence of the Tavistock Institute an d the ·socioterhnical systems• srhool. The Ins titute of Personnel Man agement (1PM) dre,v heavily on sociology an d psyrhology ,vhen restructuring its examination scheme, an d the 1PM ,vas active in the move to ·professionalize• personnel man agement.

In the 1970s, s taffing planning for larger organ i'zations an d in the public sector became more sophisticated, with an interest in computer models. Similarly, record-keeping for large concerns ,vas aided by microfilm and computer s torage. Selection tests had been available s ince the early 1920s, but they began to be used more frequently, often by specialized agencies.

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1979-1997, THE THATCHER ERA

The election of a Conservative Government in the UK with Mrs Thatche r as prime minister ushered in a ne,v era for people management. The 1980s ,vere char acterized by a political move to the right, ideologically, and the reassertion of man ageria l prerogatives. The Conservative Party ,vas elected with a man date to reduce trade union po,ver, follO\ving the \vinter of discontent> - a series of crippling s trikes in the public sector that reduced services to the public dramatically across the country, an d whi<'h had helped to bring down the previous Labour government. The ne,v government embarked on a comprehensive legislative programme. There ,vere ne,v la,vs that outl;nved sympathetic an d 'political• s trikes, increased the liability of trade unions to legal actions in the courts as a consequence of s trikes or other forms of protest an d la,vs whi<'h increased the pO\ver of individual trade union members an d sought to reduce the influence of trade unions nationally.

Following the recession of the early 1980s, organ i'zations drove through ne,v approaches to quality improvement an d efficiency. Productivity improvements ,vere achieved by ne,v investments an d by introducing more flexible ,vorking practices: flexibility of time, task an d contract. Employers reta ined a shrinking core of full-time permanent employees while ex,xmding in the secondary labour market of part-time, subcontract, temporary, casual an d short-term contract employees. At this time, the use of the term 'human resource management> came to be more common. An import from the USA, the change of title did not immediately come to mean a changed role, but this slowly emerged as a focus on the s trategic role of the specialist in people man agement, concerned to contribute to the business plan an d to deliver the appropriate human resources to the organ i'zation. The notion that the role ,vas about sourcing an d developing human capital ,vas typically introduced at the end of the t\ventie th century.

During the boom period in the mid-1980s, the skills shortage attracted premium rates. There ,vere 'golden hellos• an d signing-on fees for recent graduates. This ,vas a time when deregulation in finan cial services an d the privati'zation of companies such as British Telecom, British Ainvays an d British Gas gave a considerable boost to HR man agement in its resourcing and developmental activities. The man agement of change ,vas seen as the key role, with considerable interest in creating ne,v organ i'zation cultures an d in organ i'zation development techniques, providing a s trategic role for HRM.

At the s ta rt of the 1990s a ne,v, deeper recession ,vas exverienced in the UK Unusually, this affected the south east of Englan d as much as the north, service industries as much as man ufacturing, an d substantial redundan cies occurred. 'Delayering>, restructuring an d outsourcing some of the fun ctions previously conducted within the company ,vere organ i'zation s tructure changes that affected HRM, with outplacement as a solution to help the change. These changes brought about a collapse of the car eer concept an d, even in the public sector, the end to 'jobs for life•. Divisional s tructures an d empo,verment policies moved the day-to-day decision-making a,vay from large corporate headquarters, which could (in theory) concentrate on s trategic issues. i\fan y of the improvements to performan ce, such as total quality man agement (TQi\,t) an d business process redesign (BPR), originated outside the HR fun ction, but nevertheless increased the focus on people man agement issues as a likely source of competitive advantage.

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1997-2008, EXPANDING SERVICES AND EXPANDING DEBT

In 1997 a ne,v Labour government ,vas elected in the UK, whi<'h mainta ined the same brood agenda on industrial relations an d the economy. There ,vas greater s ta bility, with the Bank of England rather than politicians setting the interest rates, and the IO\v rates of unemployment and of inflation meant the UK ,vas able to mainta in a buoyant economy by comparison with its European partners. Growth in the economy ,vas also aided by the globali'zation of business, through the internet, the exrpansion of the E.U to 25 countries and the rapid growth of economies such as China and In dia, where IO\v ,vages an d costs attracted investment, so that UK HR managers foun d themselves frequently with international responsibilities.

Ex,xmsion in the labour force in the UK ,vas only possible by immigration and by ex,xmding the number of ,vomen returners from maternity leave. Flexibility policies and ne,v legislation to make ,vork more family friendly, and imaginative sourcing, including outsourcing, have been required from the HR function. Smarter working through, for example, laptops, mobile phones and email systems made it easier for people to ,vork from home and to ,vork whilst they travel. There ,vas also a requirement for companies to invest more in training and development, and to find and reta in 'ta lented people•. The ex,xmsion, under Labour, of the public sector (especially health an d education) also required a professional HR.i\,t approach with more HR specialists recruited in the public sector.

\Ve have seen from the description in this chapter that ,velfare secretaries ,vere the early pioneers who had to deal with male dominated ,vorkplaces at a time when men occupied virtually all managerial posts. !\,ten entered personnel management in the 1960s and 1970s, when industrial relations came to be more integrated with other aspects of the personnel role. Men ,vere frequently appointed to the more senior roles in spite of the large numbers of female colleagues who ,vorked as personnel officers and personnel assistants. HO\vever, CRANET figures reveal that ,vomen have been reaching higher levels s ince the 1990s.

The demographic rhanges are potentially the most s ignificant influences on HRM. The large reduction in the number of young people coming onto the labour market in \Vestern Europe, and increasing longevity, meant that organi'zations had to revie,v their employment policies to attract a variety of people from any age group. Similarly, Brita in•s multiracial society required HR management techniques that manage diversity. This s timulated interest in equal opportunity policies.

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The events of 9/ 11 in Ne,v York and the 2005 London bombings raised security issues for all organ i'zations. HR managers ,vere involved to ensure that measures ,vere in place to ensure their organ i'zation could continue to operate whatever the potentia l interruptions or threats might be, including both physical risks to people and to cyber crime.

TABLE 5.1 % OP HR MANAGERS AT THE MOST SENIOR LEVEL BY GENDER, UK

Males

Females

% University degree

1995

66

34

60

1999

51 49

60

2003

39

61

69

HR people may, of course, become directly involved owing to their responsibilities for the health, safety and the ,vellbeing of employees. This ,vas exemplified on 9/11 by Alayne Gentul, Senior Vice President for HR of Fiduciary Trust International, who ,vas on the 90th floor of the \Vorld Trade Center South TO\ver, and who gave her life try ing to help employees out, emptying offices, encouraging and comforting when the first plane hit the North TO\ver. She ,vas on the 97th floor when the second plane hit the South TO\ver. She remained 'apparently determined to send everyone down before s ta rting her descent> (Bates 2001 : 32) and died when the South TO\ver fe ll.

Apart from these direct involvements, HR staff also have special responsibilities for recruitment policies, for example security checks and identity checks, references and matters related to the honesty of employees. Heightened interest in security matters is only one of the man y pressures creating a turbulent environment.

The banking crisis of 2008/09 and the following recession ,vas an unexvected shock for man y businesses and individuals across the developed and developing economies. Sta rting as a banking crisis - the direct consequence of excessive debts - and the massive failures in regulations - evident in a situation similar to the 1929 crash - the pervasive nature of the problems underlying the recession affected all sectors of the economy. E.U countries as well as the UK and the USA ,vere all drawn into national financial difficulties, because of public debt The austerity policies that follO\ved in all affected countries had a negative impact on employment.

One of the distinctive fea tures of this recession has been the confluence behveen the economic and the banking crises and other long-term trends, whi<'h signalled a major change in the ,vay people ar e managed at ,vork. The immediate effects of the recession ar e shown belO\v.

Labour market effects of the recession

These vary according to the existing s ta te of labour marke ts in diffe rent countries and sectors. Man y European countries already had substantial unemployment problems amongst young people, including Fran ce and Spain. In the UK, although employment has recovered amongst older people, with a million ne,v jobs created since 2010 (many of them part-time), there ar e ar ound 900,000 under 24-year -olds who ar e unemployed. i\fan y of these will be NE.ETs (not in employment, education or training), reflecting the failures in education and training in the UK, whi<'h is a serious problem for UK productivity. There has also been an increase in the number of people who ar e employed on zero hours contracts, and in various forms of flexible ,vorking, whi<'h has been encouraged by changes in the la,v. Most of the redundancies have occurred in the public sector, and the loss in real income consequently will be spread ar ound the UK In spite of these effects, there ,vas s till a ,var for talent and a shortage of high quality employees with the requisite skills reportedly holding back business performance.

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Standard of living issues Pay freezes imposed for man y year s in the public sector an d IO\v level pay increases in the private sector for man y have coincided with rising prices, affecting not just IO\ver level employees but also those in the 'squeezed middle•.

The concept of the 'living ,vage• as opposed to the minimum ,vage ,vas created by the 'Living \Vage Foun dation• as a voluntary movement for employers who agreed to go beyond the s ta tutory minimum, whi<'h ,vas seen as neither competitive for labour nor fair. The s ta te regulated national minimum ,vage in 2013 for employees over 21 ,vas £6.31 per hour, whereas the 'living ,vage• ,vas £7.65 per hour (the London rate being £8.80 per hour, reflecting the special conditions in the London labour market). According to a KPMG (2013) survey, 5.24 million people were paid less than the 'living ,vage•.

Re,var d policies ,vere also tested by the ongoing controversies of high levels of executive pay. The failures in the banking system ,vere partly blamed on the bonus schemes used in the finan cial services sector where the millions of poun ds paid to executives an d traders ,vere thought to encourage risky deals. The failure by shareholders to control these bonuses an d the 're,vards for failure• issues arising from fa t bonuses being given to senior executives of failing companies, such as those a,var ded to senior executives in the Royal Bank of Scotlan d failure, led to the E.U regulators imposing a cap on bonus payments in finan cial businesses.

The HR consequences ,ve will discuss in more depth in Chapters 6, 17 an d 18, but it is ,vorth commenting here that these trends have encouraged HR specialists to consider questions of perceived fairness, socia l comparison theory an d the corporate socia l responsibility matters involved, along with their usual re,var d policy an d pay technicalities.

Underlying societal issues

The hventy-first century has brought major shifts in demographics, whi<'h are having profound effects on HR policies. In the UK an d in other developed economies, there are falling fertility rates an d increasing life exvectan cy. Age discrimination an d the use of migrant labour are likely imperatives in the long term for HR~.\. Fertility rates in the UK fe ll from 2.4 per cent to 1.8 per cent in 2007. The majority of the populations in developed economies will soon be over 50 year s of age, an d ,vork force participation rates in the employed populations ar e increasing (Buttigieg 2011). One consequence is the likely increase in public exvenditure as a result of rising pension costs, whi<'h s tood at 7 .5 per cent of GDP in the UK, prompting an extension by the government to the normal retirement age to be ar oun d 70 year s of age for those in the UK who are in their early 40s no,v.

For HRM, there ar e important changes to be made to recruitment, re,var d an d pension policies, to car eers, to succession plans, life time learning, an d to ensure there is no age discrimination.

Institutional change and corporate social responsibility

There are a number of trends that relate to a questioning of the role an d calibre of our socia l ins titutions. The recession coincided with a movement tO\var ds ins titutional reform, a time when the public lost confidence in the ,vay society operated. These are foun d in the UK in public disappointment with organ i'zations as diverse and ,videspread as the church (child abuse cases), the press (illegal activities, phone hacking), the BBC (abuse scan dals in respect of some of its presenters an d excessive re,var ds), Parliament (the expenses scan dal), the police (revie,vs of mistakes in some cases and the ·plebgate' affair), local authorities (child protection issues), schools (the quality of teaching) and the NHS (treatment of patients an d of mistakes in car e of the elderly), to name some recent ins tan ces.

In all these cases employees an d their man agers ,vere seen to be failing in some ,vay. Most of these actual abuses or problems first occurred man y year s ago, but the public has only recently discovered them, implying that there ,vere cover-ups in some cases. For HR there is the obvious need to improve recruitment, development an d training, as ,vell as the s ignifican ce of the quality of the oversight by the boar d an d senior man agers. There is also the need to improve whistle-blowing policies.

Further challenges exist for HR to deal with socia l integration an d to socia lize an d induct migrant labour into their ,vork forces.

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Information technology

The march omvar ds of ne,v technology developments ,vas not halted by the recession. In many ,vays, the pressure for improving productivity enhan ced information technology improvements.

Developments such as the 'cloud•, mobile technology an d the rapid advan ces of social media have revolutionized many aspects of ,vork. Three- dimensional printing an d ne,v materials have the potential to revolutionize manufacturing in some industries.

For HRM, the use of eHRM an d of social media in recruitment have been most noticeable. Equally, smart phones an d mobile ,vorking meant employees ,vere no longer tied to their offices or ,vork s ta tions. The possibilities for more Aexible ,vorking meets a growing socia l need for improved child care, care of the elderly an d family friendly HR policies. Improvements surh as Skype encourage communications, video conferencing, ,vebinars an d the use of virtual teams.

To quote Ray Wang, CEO of Constellation Research (2011 , 40),

The 'cloud• gives you any information from HR data to outs ide unstructured information. The mobile platform is the access an d interaction point to the cloud an d the data of rboice. Socia l media will also generate more data, an d this is going to drive ne,v an alytir.s.

CONCLUSIONS

In this rhapter, ,ve have shown hO\v contex't affects the development of HR~.\. As in previous eras, economic trends surh as recession have a major impact on organi'zations, an d hence on HRM. Recessions and recoveries affect HRM through the labour market, the impact on re,var ds an d employee relations. Other major social factors have influenced car eers, recruitment, benefits an d ta lent man agement. Some of the greatest leaps in HRM have come as a consequence of the sta te•s interventions, for example in both ,vorld ,vars, an d through legislation. Ne,v terhnology promises a revolution owing to the opportunities for ne,v ,vays of ,vorking. The coincidence of the diffe rent factors, with some potential problems surh as demographic rhange, may point to where tet'hnology might prove to be an important part of the solution.

The s trategic role of HRM has developed over time: from the early beginnings in the ,velfare roles, through the control systems of employment man agement an d on to the wider systematic use of HR terhniques an d information, in order to impact on businesses s trategically. The nex't rhapter ta kes this further to look at the s trategic role an d hO\v to disrharge it effectively.

QUESTIONS

l \Vhat do ,ve learn about the role of the s ta te in the development of HRM? 2 \Vhi<'h of the main traditions in HR.~,t do you think have influenced the profession the most? 3 \Vhat has the HR profession contributed to the creation of a better life for employees, or for the improved performance of companies? 4 \Vhat do ,ve learn from the impact of the recessions over the years on the man agement of people at ,vork? 5 \Vhat do you see as the 'direction of travel• for the future of the specia list HR function?

For a commentary on these questions, see the companion ,vebsite for this book.

REFERENCES

1331es. S. (2(11)1). 'Abov<" a nd beyond'. HR M(J5 (Jtinl! Cxttmber SHH.Al CRANET Survey (2(11)3). Bxttutiw Ri!porL Huma n Resourtt Researm Centre. Cranfield Univ<"rsily. Sttiool of Manag.<"menL Storey. J. (<'d). (1991). Hum(Jn Rdotircl! M(Jn(J5munt A Critfr(J/ Ta t. London: Routledge. Wang.. R. (2011). Q..ool<'d in 'The grand conv<"rg:COC<''. Roberu. B. Hum(Jr, Rdotircl! M(J5(ltind 9-16 SHRAl