Category: Human Resource Management

The last three chapters focused on the processes used to mobilise a workforce: activities which are often expensive and time consuming. It is estimated that the costs associated with recruiting and training a new employee average between half and one and a half times the annual salary for the post in question, depending on the approaches used (Branham 2005, p. 3). In this chapter we consider the most important way in which human resource managers seek to reduce the time and money spent on these activities, namely by trying to ensure that people choose not to leave an organisation voluntarily in the first place.

The extent of interest in employee retention issues varies over time as labour markets become successively tighter and looser depending on economic conditions. In recent years, as unemployment has fallen, making it harder to recruit staff with the necessary skills and attitudes, the subject has again moved up the HRM agenda. This has led to the publication of several new books and articles exploring how organisations can ensure that they have the best chance of retaining the people they employ. The authors tend to take one of two distinct perspectives on the subject. The first focuses on the organisation as a whole, tracking staff turnover rates over time, benchmarking the figures against industry or regional averages and developing organisational policy aimed at improving retention generally. The second, illustrated in work by Hiltrop (1999), Woodruffe (1999), Williams (2000), Cappelli (2000), Larkan (2006) and Clayton (2006), concentrates primarily on retaining high-performing key players. Each of these authors uses the expression ‘the war for talent’ to illustrate the significance and difficulty faced by those competing for the services of individuals who have the capacity to make a real difference to an organisation’s competitive position. While the methods put forward to reduce turnover are similar in each case, the second group advocate more sophisticated retention practices aimed specifically at those whose talents are the most scarce.

1. TURNOVER RATES AND TRENDS

In recent years there has been a mismatch between the rhetoric about job tenure and the reality. Much mileage continues to be made by some consultants, academics and man­agement gurus out of the claim that ‘there are no longer any jobs for life’, suggesting that the length of time we spend working for organisations has fallen substantially in recent years. In fact this is a misleading claim. All the available evidence strongly suggests that job tenure has been broadly stable for several decades. The most comprehensive study to be published in recent years was carried out by Gregg and Wadsworth (1999). Their detailed analyses of data from the New Earnings Survey, the General Household Survey and the British Labour Force Survey showed that relatively little actually changed in terms of worker retention during the latter part of the twentieth century. This is illus­trated in Table 9.1 which shows how average job tenure rates fluctuated for men and women between 1975 and 1998 while the overall tenure rate for the UK as a whole remained stable. What happened over this period is that male tenure rates fell as men in their fifties and early sixties took early retirement or accepted redundancy packages, while job tenure among women rose. Gregg and Wadsworth’s study showed that the biggest increase has been among women with children. In 1975, on average, they remained in a job for 20 months; the figure in 1998 was 46 months. This reflects the greater propensity of women during this period to return to work following maternity leave and the improved career opportunities available to them. Other fluctuations are readily explained by economic conditions.

Staff turnover always rises when the economy is strong and jobs are plentiful because there are more opportunities available for people to change employers. Conversely, dur­ing recessions staff turnover falls because relatively few attractive permanent positions are advertised.

These trends appear to have continued in the first decade of the twenty-first century. While there has been no comprehensive study carried out more recently along the lines of Gregg and Wadsworth’s work, the statistics that have been published point to con­tinuity rather than to either reduced or increased job tenure. OECD statistics show that average job tenure among permanent employees in the UK remained steady at or around eight years from 1992 until 2002 (Auer et al. 2004, p. 3), Labour Force Survey data confirming that long periods of job tenure remain the norm for a substantial portion of the working population (see Table 9.2). People tend to move from employer to employer early on in their careers, often staying in one employment for just a few months. But once they find a job (or an employer) that they like, the tendency is to remain for several years. ‘Jobs for life’ have, in truth, always been a relative rarity, but the evidence suggests that they remain a reality for many employees, despite the predictions of the management gurus. Over a third of employees have already been in their current jobs for over eight years.

The overall figures mask substantial differences between tenure and turnover rates in different industries. Studies undertaken annually by the Chartered Institute of Personnel and Development persistently show retailing and catering to be the sectors with the highest turnover levels, with rates averaging over 40 per cent in recent years. By contrast the most stable workforces are to be found in the public services, where reported annual turnover rates are only 10 or 11 per cent (CIPD 2006, p. 26). Rates also vary from region to region and over time, being highest when and where average pay levels are highest and unemployment is low, and between different professions. As a rule, the more highly paid a person is, the less likely they are to switch jobs, but there remain some highly paid professions such as sales where turnover is always high. It is also interesting to observe how much more inclined younger workers are to switch jobs than their older colleagues. Macaulay (2003) calculated what proportion of employees had completed more than a year’s service with their employer. For the over-fifties the figure was 86 per cent, for the 18-24 age group it was only 51 per cent.

2. THE IMPACT OF STAFF TURNOVER

There is some debate about the level which staff turnover rates have to reach in order to inflict measurable damage on an employer. The answer varies from organisation to organisation. In some industries it is possible to sustain highly successful businesses with turnover rates that would make it impossible to function in other sectors. Some chains of fast food restaurants, for example, are widely reported as managing with turnover rates in excess of 300 per cent. This means that the average tenure for each employee is only four months (Ritzer 1996, p. 130; Cappelli 2000, p. 106), yet the companies concerned are some of the most successful in the world. By contrast, in a professional services organisation, where the personal relationships established between employees and clients are central to ongoing success, a turnover rate in excess of 10 per cent is likely to cause damage to the business.

There are sound arguments that can be made in favour of a certain amount of staff turnover. First, it is fair to say that organisations need to be rejuvenated with ‘fresh blood’ from time to time if they are to avoid becoming stale and stunted. This is particularly true at senior levels, where new leadership is often required periodically to drive change forward. More generally, however, new faces bring new ideas and experiences which help make organisations more dynamic. Second, it is possible to argue that a degree of turn­over helps managers to keep firmer control over labour costs than would otherwise be the case. This is particularly true of organisations which are subject to regular and unpredict­able changes in business levels. When income falls it is possible to hold back from replacing leavers until such time as it begins to pick up again. In this way organisations are able to minimise staffing budgets while maintaining profit levels during leaner periods. Redundancy bills are also lower in organisations with relatively high staff turnover because they are able to use natural wastage as the main means of reducing their work­force before compulsory lay-offs are needed. Third, it can be plausibly argued that some employee turnover is ‘functional’ rather than ‘dysfunctional’ because it results in the loss of poor performers and their replacement with more effective employees.

The arguments against staff turnover are equally persuasive. First are the sheer costs associated with replacing people who have left, ranging from the cost of placing a recruitment advertisement, through the time spent administering and conducting the selection process, to expenses required in inducting and training new employees. On top of these there are less easily measurable losses sustained as a result of poorer perform­ance on the part of less experienced employees. For larger organisations employing specialist recruiters these costs can add up to millions of pounds a year, with substantial dividends to be claimed from a reduction in staff turnover levels by a few percentage points. The second major argument in favour of improving staff retention results from a straightforward recognition that people who leave represent a lost resource in whom the organisation has invested time and money. The damage is all the greater when good people, trained and developed at the organisation’s expense, subsequently choose to work for competitors. Finally, it is argued that high turnover rates are symptomatic of a poorly managed organisation. They suggest that people are dissatisfied with their jobs or with their employer and would prefer to work elsewhere. It thus sends a negative message to customers and helps create a poor image in the labour market, making it progressively harder to recruit good performers in the future.

We may thus conclude that the case for seeking to reduce staff turnover varies from organisation to organisation. Where replacement employees are in plentiful supply, where new starters can be trained quickly and where business levels are subject to regu­lar fluctuation it is possible to manage effectively with a relatively high level of turnover. Indeed, it may make good business sense to do so if the expenditure required to increase employee retention is greater than the savings that would be gained as a result. In other situations the case for taking action on turnover rates is persuasive, particularly where substantial investment in training is required before new starters are able to operate at maximum effectiveness. Companies which achieve turnover rates below their industry average are thus likely to enjoy greater competitive advantage than those whose rates are relatively high.

Source: Torrington Derek, Hall Laura, Taylor Stephen (2008), Human Resource Management, Ft Pr; 7th edition.

1. TURNOVER ANALYSIS AND COSTING

There is little that an organisation can do to manage turnover unless there is an under­standing of the reasons for it. Information about these reasons is notoriously difficult to collect. Most commentators recommend exit interviews (that is, interviews with leavers about their reasons for resigning), but the problem here is whether the individual will feel able to tell the truth, and this will depend on the culture of the organisation, the specific reasons for leaving and support that the individual will need from the organisa­tion in the future in the form of references. Despite their disadvantages, exit interviews may be helpful if handled sensitively and confidentially – perhaps by the HR department rather than the line manager. You will find further information and discussion exercises about them on our companion website www.pearsoned.co.uk/torrington. In addition, analyses of turnover rates between different departments and different job groups may well shed some light on causes of turnover. Attitude surveys can also provide relevant information.

People leave jobs for a variety of different reasons, many of which are wholly outside the power of the organisation to influence. One very common reason for leaving, for example, is retirement. It can be brought forward or pushed back for a few years, but ultimately it affects everyone. In many cases people leave for a mixture of reasons, certain factors weighing more highly in their minds than others. The following is one approach to categorising the main reasons people have for voluntarily leaving a job, each requiring a different kind of response from the organisation.

1.1. Outside factors

Outside factors relate to situations in which someone leaves for reasons that are largely unrelated to their work. The most common instances involve people moving away when a spouse or partner is relocated. Others include the wish to fulfil a long-term ambition to travel, pressures associated with juggling the needs of work and family and illness. To an extent such turnover is unavoidable, although it is possible to reduce it somewhat through the provision of career breaks, forms of flexible working and/or childcare facilities.

1.2. Functional turnover

The functional turnover category includes all resignations which are welcomed by both employer and employee alike. The major examples are those which stem from an indi­vidual’s poor work performance or failure to fit in comfortably with an organisational or departmental culture. While such resignations are less damaging than others from an organisation’s point of view they should still be regarded as lost opportunities and as an unnecessary cost. The main solution to the reduction of functional turnover lies in improving recruitment and selection procedures so that fewer people in the category are appointed in the first place. However, some poorly engineered change management schemes are also sometimes to blame, especially where they result in new work pressures or workplace ethics.

1.3. Push factors

With push factors the problem is dissatisfaction with work or the organisation, leading to unwanted turnover. A wide range of issues can be cited to explain such resignations. Insufficient development opportunities, boredom, ineffective supervision, poor levels of employee involvement and straightforward personality clashes are the most common precipitating factors. Organisations can readily address all of these issues. The main reason that so many fail to do so is the absence of mechanisms for picking up signs of dissatisfaction. If there is no opportunity to voice concerns, employees who are unhappy will inevitably start looking elsewhere.

1.4. Pull factors

The opposite side of the coin is the attraction of rival employers. Salary levels are often a factor here, employees leaving in order to improve their living standards. In addition there are broader notions of career development, the wish to move into new areas of work for which there are better opportunities elsewhere, the chance to work with par­ticular people, and more practical questions such as commuting time. For the employer losing people as a result of such factors there are two main lines of attack. First, there is a need to be aware of what other employers are offering and to ensure that as far as

possible this is matched – or at least that a broadly comparable package of pay and opportunities is offered. The second requirement involves trying to ensure that employees appreciate what they are currently being given. The emphasis here is on effective communication of any ‘unique selling points’ and of the extent to which opportunities comparable to those offered elsewhere are given.

1.5. What are the most common reasons?

Taylor and his colleagues (2002) interviewed 200 people who had recently changed employers about why they left their last jobs. They found a mix of factors at work in most cases but concluded that push factors were a great deal more prevalent than pull factors as causes of voluntary resignations. Very few people appear to leave jobs in which they are broadly happy in search of something even better. Instead the picture is overwhelmingly one in which dissatisfied employees seek alternatives because they no longer enjoy working for their current employer.

Interestingly this study found relatively few examples of people leaving for financial reasons. Indeed more of the interviewees took pay cuts in order to move from one job to another than said that a pay rise was their principal reason for switching employers. Other factors played a much bigger role:

• dissatisfaction with the conditions of work, especially hours;
• a perception that they were not being given sufficient career development opportunities;
• a bad relationship with their immediate supervisor.

This third factor was by far the most commonly mentioned in the interviews, lending sup­port to the often stated point that people leave their managers and not their organisations.

Branham (2005), drawing on research undertaken by the Saratoga Institute, reached similar conclusions. His seven ‘hidden reasons employees leave’ are as follows:

• the job or workplace not living up to expectations;
• a mismatch between the person and the job;
• too little coaching and feedback;
• too few growth and advancement opportunities;
• feeling devalued and unrecognised;
• stress from overwork and work-life imbalance;
• loss of trust and confidence in senior leaders.

You will find further information and discussion exercises about the issue of trust and its link to employee retention on our companion website www.pearsoned.co.uk/torrington.

1.6. Costing

When deciding what kind of measures to put in place in order to improve staff retention generally or the retention of particular individuals, organisations need to balance the costs involved against those that are incurred as a direct result of voluntary resignations. Although it is difficult to cost turnover accurately, it is possible to reach a fair estimate by taking into account the range of expenses involved in replacing one individual with another. Once a figure has been calculated for a job, it is relatively straightforward to com­pute the savings to be gained from a given percentage reduction in annual turnover rates. Figure 9.1 shows the approach to turnover costing recommended by Hugo Fair (1992).

Costing turnover each year permits organisations to state with some confidence how much money is being saved as a result of ongoing staff turnover reduction programmes. It can also be used as a means of persuading finance directors of the case for investing money in initiatives which can be shown to improve retention. An example of an organ­isation which has done this is Positive Steps Oldham, a not-for-profit company set up when two local careers service organisations merged (see IDS 2005). The new organisa­tion employs 205 people and at the time it was formed had an overall staff turnover rate of 38 per cent. Over a three-year period, as a result of various targeted initiatives, turnover fell to a much more healthy 14 per cent. Not only did this make the organisa­tion much more effective, it also substantially reduced overheads. The company model for calculating turnover costs includes direct and indirect costs along the lines put forward by Fair in Figure 9.1. At Positive Steps Oldham it was estimated that around £20,000 a year was saved by more than halving turnover.

2. STAFF RETENTION STRATEGIES

The straightforward answer to the question of how best to retain staff is to provide them with a better deal, in the broadest sense, than they perceive they could get by working for alternative employers. Terms and conditions play a significant role, but other factors are often more important. For example, there is a need to provide jobs which are satis­fying, along with career development opportunities, as much autonomy as is practicable and, above all, competent line management. Indeed, at one level, most of the practices of effective human resource management described in this book can play a part in reducing turnover. Organisations which make use of them will enjoy lower rates than competitors who do not. Below we look at six measures that have been shown to have a positive effect on employee retention, focusing particularly on those practices which are not covered in any great depth elsewhere in the book.

2.1. Pay

There is some debate in the retention literature about the extent to which raising pay levels reduces staff turnover. On the one hand there is evidence to show that, on aver­age, employers who offer the most attractive reward packages have lower attrition rates than those who pay poorly (Gomez-Mejia and Balkin 1992, pp. 292-4), an assumption which leads many organisations to use pay rates as their prime weapon in retaining staff (Cappelli 2000, pp. 105-6; IRS 2000a, p. 10; IRS 2000b, p. 9). On the other, there is questionnaire-based evidence which suggests that pay is a good deal less important than other factors in a decision to quit one’s job (Bevan et al. 1997, p. 25; Hiltrop 1999, p. 424). The consensus among researchers specialising in retention issues is that pay has a role to play as a satisfier, but that it will not usually have an effect when other factors are pushing an individual towards quitting. Raising pay levels may thus result in greater job satisfaction where people are already happy with their work, but it will not deter unhappy employees from leaving. Sturges and Guest (1999), in their study of leaving decisions in the field of graduate employment, summed up their findings as follows:

As far as they are concerned, while challenging work will compensate for pay, pay will never compensate for having to do boring, unstimulating work. (Sturges and Guest 1999, p. 19)

Recent research findings thus appear to confirm the views expressed by Herzberg (1966) that pay is a ‘hygiene factor’ rather than a motivator. This means that it can be a cause of dissatisfaction at work, but not of positive job satisfaction. People may be motivated to leave an employer who is perceived as paying badly, but once they are satisfied with their pay additional increases have little effect.

The other problem with the use of pay increases to retain staff is that it is an approach that is very easily matched by competitors. This is particularly true of ‘golden handcuff’ arrangements which seek to tie senior staff to an organisation for a number of years by paying substantial bonuses at a defined future date. As Cappelli (2000, p. 106) argues, in a buoyant job market, recruiters simply ‘unlock the handcuffs’ by offering equivalent signing-on bonuses to people they wish to employ.

It is important that employees do not perceive their employers to be treating them inequitably. Provided pay levels are not considerably lower than those paid by an organisation’s labour market competitors, other factors will usually be more important contributors towards high turnover levels. Where the salaries that are paid are already broadly competitive, little purpose is served by increasing them further. The organisa­tion may well make itself more attractive in recruitment terms, but the effect on staff retention will be limited. Moreover, of course, wage costs will increase.

There is potentially more to be gained from enhancing benefits packages, because these are less easily imitated or matched by competitors. Where particular benefits, such as staff discounts, holiday entitlements or private healthcare schemes, are appreciated by staff, they are more likely to have a positive effect on staff turnover than simply paying higher base wages. Potentially the same is true of pension schemes, which are associated with relat­ively high levels of staff retention. However, the research evidence suggests that except for older employees who have completed many years of service, most pension schemes are not sufficiently valued by staff to cause them to stay in a job with which they are dissatisfied (Taylor 2000). Arguably, the best way of using benefits to keep a lid on staff turnover is to move towards flexible schemes such as those discussed in Chapter 29. An employer who allows individual employees to choose how they make up their own remuneration package will generally be more attractive than one who only offers a ‘one size fits all’ set of benefits.

While pay rates and benefit packages may play a relatively marginal role in the retention of good people, reward in the broader sense plays a more significant role. If employees do not find their work to be ‘rewarding’ in the broadest sense of the word, they will be much more likely to start looking for alternative jobs. Making work rewarding is a good deal harder for managers to achieve because different people find different aspects of their work to be rewarding. There is thus a need to understand what makes people tick and to manage them as individuals accordingly. Getting this right is difficult, but achieving it is worthwhile from the point of view of retaining people. It is far harder for would-be competitors to imitate the effective motivation of an individual than it is for them to increase the salary that a person is paid.

2.2. Managing expectations

For some years research evidence has strongly suggested that employers benefit from ensuring that potential employees gain a ‘realistic job preview’ before they take up a job offer. The purpose is to make sure that new staff enter an organisation with their eyes wide open and do not find that the job fails to meet their expectations. A major cause of job dissatisfaction, and hence of high staff turnover, is the experience of having one’s high hopes of new employment dashed by the realisation that it is not going to be as enjoyable or stimulating as anticipated.

Several researchers have drawn attention to the importance of these processes in reducing high turnover during the early months of employment (e.g. Wanous 1992, pp. 53-87; Hom and Griffeth 1995, pp. 193-203). The need is to strike a balance at the recruitment stage between sending out messages which are entirely positive and sending out those which are realistic. In other words, it is important not to mislead candidates about the nature of the work that they will be doing.

Realistic job previews are most important when candidates, for whatever reason, cannot know a great deal about the job for which they are applying. This may be because of limited past experience or it may because the job is relatively unusual and not based in a type of workplace with which job applicants are familiar. An example quoted by Carroll et al. (1999, p. 246) concerns work in nursing homes, which seems to attract people looking to undertake a caring role but who are unfamiliar with the less attractive hours, working conditions and job duties associated with the care assistant’s role. The realistic job preview is highly appropriate in such a situation as a means of avoiding recruiting people who subsequently leave within a few weeks.

The importance of unmet expectations as an explanation for staff turnover is also stressed by Sturges and Guest (1999, pp. 16 and 31) in their work on the retention of newly recruited graduates. Here the problem is one of employers overselling graduate careers when competing with others to secure the services of the brightest young people:

False impressions are given and a positive spin put on answers to questions so as to deter able applicants from taking up alternative offers. As a result, graduates start work confident in the belief that their days will be filled with interesting work, that they will be treated fairly and objectively in terms of performance assessment, that their career development will be fostered judiciously, and that their working lives will in some way be ‘fun’ and ‘exciting’. That is fine if it really can be guaranteed. Unfortunately such is often not the case, and unsurprisingly it leads to early dissatisfaction and higher turnover rates than are desirable. (Jenner and Taylor 2000, p. 155)

A solution, aside from the introduction of more honest recruitment literature, is to pro­vide periods of work experience for students before they graduate. A summer spent working somewhere is the best possible way of finding out exactly what a particular job or workplace is really like. The same argument can be deployed in support of work experience for young people who are about to leave school in order to enter the job market.

2.3. Induction

Another process often credited with the reduction of turnover early in the employment relationship is the presence of effective and timely induction. It is very easy to overlook in the rush to get people into key posts quickly and it is often carried out badly, but it is essential if avoidable early turnover is to be kept to a minimum. Gregg and Wadsworth (1999, p. Ill) show in their analysis of 870,000 workers starting new jobs in 1992 that as many as 17 per cent had left within three months and 42 per cent within 12 months. No doubt a good number of these departures were due either to poorly managed expecta­tions or to ineffective inductions.

Induction has a number of distinct purposes, all of which are concerned with prepar­ing new employees to work as effectively as possible and as soon as is possible in their new jobs. First, it plays an important part in helping new starters to adjust emotionally to the new workplace. It gives an opportunity to ensure that they understand where things are, who to ask when unsure about what to do and how their role fits into the organisation generally. Second, induction provides a forum in which basic information about the organisation can be transmitted. This may include material about the organ­isation’s purpose, its mission statement and the key issues it faces. More generally a corporate induction provides a suitable occasion to talk about health and safety regula­tions, fire evacuation procedures and organisational policies concerning matters like the use of telephones for private purposes. Third, induction processes can be used to convey to new starters important cultural messages about what the organisation expects and what employees can expect in return. It thus potentially forms an important stage in the establishment of the psychological contract, leaving new employees clear about what they need to do to advance their own prospects in the organisation. All these matters will be picked up by new starters anyway in their first months of employment, but incor­porating them into a formal induction programme ensures that they are brought up to speed a good deal more quickly, and that they are less likely to leave at an early date.

There is no ‘right’ length for an induction programme. In some jobs it can be accom­plished effectively in a few days, for others there is a need for some form of input over a number of weeks. What is important is that individuals are properly introduced both to the organisation and to their particular role within it. These introductons are usually best handled by different people. Organisational induction, because it is given to all new starters, is normally handled centrally by the HR department and takes place in a single place over one or two days. Job-based induction takes longer, will be overseen by the individual’s own line manager and will usually involve shadowing colleagues. The former largely takes the form of a presentation, while the latter involves the use of a wider variety of training methods. IRS (2000c, pp. 10-12) draws attention to the recent development of web-based training packages which allow new employees to learn about their organisations and their jobs at their own pace, when they get the opportunity.

2.4. Family-friendly HR practices

Labour Force Survey statistics show that between 5 per cent and 10 per cent of employees leave their jobs for ‘family or personal reasons’ (IRS 1999, p. 6), while Hom and Griffeth (1995, p. 252) quote American research indicating that 33 per cent of women quit jobs to devote more time to their families – a response given by only one per cent of men. To these figures can be added those quoted by Gregg and Wadsworth (1999, 116) which show average job tenure among women with children in the UK to be over a year shorter than that of women without children and almost two years shorter than that of men. These statistics suggest that one of the more significant reasons for voluntary resignations from jobs is the inability to juggle the demands of a job with those of the family. They indicate that there is a good business case, particularly where staff retention is high on the agenda, for considering ways in which employment can be made more family friendly.

As a result of legislation under the Working Time Regulations 1998, the Employment Relations Act 1999, the Employment Act 2002 and the Work and Families Act 2006, UK employers are now obliged by law to provide the following as a minimum floor of rights:

• nine months’ leave for all employees paid according to a formula set out in the regulations;
• an additional three months’ unpaid maternity leave for employees;
• reasonable paid time off for pregnant employees to attend ante-natal clinics;
• specific health and safety measures for workers who are pregnant or have recently given birth;
• four weeks’ paid holiday each year in addition to eight bank holidays;
• a total of three months’ unpaid parental leave for mothers and fathers on the birth or adoption of a child;
• reasonable unpaid time off for employees to deal with family emergencies such as the sickness of a child or dependent relative;
• consideration of reasonable requests by parents of young children and with caring responsibilities for adults to work flexibly;
• two weeks’ paid paternity leave for new fathers.

Many employers, however, have decided to go a good deal further down this road than is required by law. The most common example is the provision of more paid matern­ity leave and the right, where possible, for mothers to return to work on a part-time or job-share basis if they so wish. Creche provision is common in larger workplaces, while others offer childcare vouchers instead. Career breaks are offered by many public sector employers, allowing people to take a few months off without pay and subsequently to return to a similar job with the same organisation. Flexitime systems such as those described in Chapter 6 are also useful to people with families and may thus serve as a retention tool in some cases. In the USA the literature indicates growing interest in ‘elder care’ arrangements (Lambert 2000) aimed specifically at providing assistance to those seeking to combine work with responsibility for the care of elderly relatives. An example in the UK is the ‘granny creche’ established by Peugeot for employees at its plant in Coventry. You can read much more about these and other work-life-balance initiatives in Chapter 31.

2.5. Training and development

There are two widely expressed, but wholly opposed, perspectives on the link between training interventions and employee turnover. On the one hand is the argument that training opportunities enhance commitment to an employer on the part of individual employees, making them less likely to leave voluntarily than they would if no training were offered. The alternative view holds that training makes people more employable and hence more likely to leave in order to develop their careers elsewhere. The view is thus put that money spent on training is money wasted because it ultimately benefits other employers.

Green et al. (2000, pp. 267-72) report research on perceptions of 1,539 employees on different kinds of training. They found that the overall effect is neutral, 19 per cent of employees saying that training was ‘more likely to make them actively look for another job’ and 18 per cent saying it was less likely to do so. However, they also found the type of training and the source of sponsorship to be a significant variable. Training which is paid for by the employer is a good deal less likely to raise job mobility than that paid for by the employee or the government. Firm-specific training is also shown in the study to be associated with lower turnover than training which leads to the acquisition of transferable skills. The point is made, however, that whatever the form of training, an employer can develop a workforce which is both ‘capable and committed’ by com­bining training interventions with other forms of retention initiative.

The most expensive types of training intervention involve long-term courses of study such as an MBA, CIPD or accountancy qualification. In financing such courses, employers are sending a very clear signal to the employees concerned that their contribution is valued and that they can look forward to substantial career advancement if they opt to stay. The fact that leaving will also mean an end to the funding for the course provides a more direct incentive to remain with the sponsoring employer.

2.6. Improving the quality of line management

If it is the case that many, if not most, voluntary resignations are explained by dissatis­faction on the part of employees with their supervisors, it follows that the most effective means of reducing staff turnover in organisations is to improve the performance of line managers. Too often, it appears, people are promoted into supervisory positions with­out adequate experience or training. Organisations seem to assume that their managers are capable supervisors, without recognising that the role is difficult and does not usu­ally come naturally to people. Hence it is common to find managers who are ‘quick to critise but slow to praise’, who are too tied up in their own work to show an interest in their subordinates and who prefer to impose their own solutions without first taking account of their staff’s views. The solution is to take action on various fronts to improve the effectiveness of supervisors:

• select people for line management roles following an assessment of their supervisory capabilities;
• ensure that all newly appointed line managers are trained in the art of effective supervision;
• regularly appraise line managers on their supervisory skills.

This really amounts to little more than common sense, but such approaches are the exception to the rule in most UK organisations.

Source: Torrington Derek, Hall Laura, Taylor Stephen (2008), Human Resource Management, Ft Pr; 7th edition.

In the last chapter we looked at situations in which employees decide to end their con­tracts of employment by giving their employers notice. Here we focus on circumstances when the contract is brought to an end by the employer through a dismissal of one kind or another, something that over a million employees experience in the UK each year (Knight and Latreille 2000). In some cases employees are happy to leave (or at least not unhappy) such as when they are retiring or when they are due to receive a large redund­ancy payment. More common, however, are situations where the person dismissed is distinctly unhappy about the contract being brought to an end. When someone perceives that they have been treated unfairly in terms of the reason for, or the manner of, their dismissal they can take their case to an employment tribunal. In practice, between five per cent and ten per cent of all dismissed workers who qualify do bring such claims, leaving the Employment Tribunal Service to deal with 30,000-40,000 cases each year (see ETS 2006). If someone wins their case they may ask to be reinstated, but will usu­ally settle for a compensation payment. The size of such awards is not generally sub­stantial (around £8,500 on average), but occasionally people are awarded larger sums. Whatever the final outcome there are often additional legal costs for the employer to bear, not to mention the loss of a great deal of management time. An organisation’s reputation as a good employer can also be damaged by adverse publicity arising from such cases. Employers generally take careful account of the requirements of the law when dismissing employees. The alternative is to run the risk of being summoned to an employment tribunal and possibly losing the case. To a great extent the law therefore effectively determines practice in the field of dismissal.

In the UK there are three forms of dismissal claim that can be brought to a tribunal. Rights associated with the law of wrongful dismissal are the longest established. A person who claims wrongful dismissal complains that the way that they were dismissed breached the terms of their contract of employment. Constructive dismissal occurs when someone feels forced to resign as a direct result of their employer’s actions. In this area the law aims to deter employers from seeking to avoid dismissing people by pushing them into resignation. The third category, unfair dismissal, is by far the most common. It is best defined as a dismissal which falls short of the expectations of the law as laid down in the Employment Rights Act 1996. You will find some practical case study exercises relating to unfair dismissal law on our companion website www.pearsoned.co.uk/torrington.

1. UNFAIR DISMISSAL

The law of unfair dismissal dates from 1971, since when it has been amended a number of times. Although amendments and the outcomes of leading cases have made it more complex than it was originally, the basic principles have stood the test of time and remain in place. The latest major changes were contained in the Statutory Dispute Resolution Regulations which came into effect in 2004 (DTI 2003). Their aim was to reduce the number of claims being brought before employment tribunals by providing strong incentives for employers and employees to make use of internal disciplinary and grievance procedures first. These regulations also adjusted the position of the law in respect of dismissals that are for justified reasons but which are carried out using an incomplete or deficient procedure. At the time of writing (March 2007) the future of the 2004 regulations is in some doubt and it is likely that significant further reform may soon be introduced (see the Window on Practice box).

In most circumstances the right to bring a claim of unfair dismissal applies to employees who have completed a year’s continuous service with their employer on the date their contract was terminated. This allows the employer a period of 12 months to assess whether or not an individual employee is suitable before the freedom to dismiss is restricted. For a number of years until 1999 the time limit was two years. In reducing the period, the government brought an additional 2.8 million people within the scope of unfair dismissal law (DTI 1999). Until recently people who were over the age of 65 or ‘the normal retiring age’ in a particular employment had no right to bring an unfair dismissal case to an employment tribunal. This restriction was removed as part of the introduction of age discrimination law in October 2006. At the time of writing, however (March 2007), it remains lawful for an employer to retire people mandatorily at the age of 65 provided a prescribed procedure is followed.

The one-year restriction on qualification applies except where the reason for the dismissal is one of those listed below which are classed as ‘automatically unfair’ or ‘inadmissible’. A further requirement is that the claim form is lodged at the tribunal office before three months have elapsed from the date of dismissal. Unless there are cir­cumstances justifying the failure to submit a claim before the deadline, claims received after three months are ruled out of time.

Before a case comes to tribunal, officers of the Advisory, Conciliation and Arbitration Service (ACAS) will often try to help the parties reach a settlement. The papers of all cases lodged with the employment tribunals’ offices are sent to ACAS with a view to con­ciliation taking place ahead of a tribunal hearing. As a result the majority of cases either get settled or are withdrawn without the need for the parties to attend a full hearing.

When faced with a claim of unfair dismissal, and where it is not disputed that a dismissal took place, an employment tribunal asks two separate questions:

• Was the reason for the dismissal one which is classed by the law as legitimate?
• Did the employer act reasonably in carrying out the dismissal?

Where the answer to the first question is ‘no’, there is no need to ask the second because the dismissed employee will already have won his or her case. Interestingly the burden of proof shifts as the tribunal moves from considering the first to the second question. It is for the employer to satisfy the tribunal that it dismissed the employee for a legitimate reason. The burden of proof then becomes neutral when the question of reasonableness is addressed.

1.1. Automatically unfair reasons

Certain reasons for dismissal are declared in law to be inadmissible or automatically unfair. Where the tribunal finds that one of these was the principal reason for the dis­missal, they find in favour of the claimant (i.e. the ex-employee) whatever the circum­stances of the case. In practice, therefore, there is no defence that an employer can make to explain its actions that will be acceptable to the tribunal. Some of these relate to other areas of employment law such as non-discrimination, working time and the minimum wage, which are discussed in more detail elsewhere in this book. The list of automatic­ally unfair reasons for dismissal has grown steadily in recent years as new employment rights have come on to the statute book; in 2007 it was as follows:

• dismissal for a reason relating to pregnancy or maternity;
• dismissal for a health and safety reason (e.g. refusing to work in unsafe conditions);
• dismissal because of a spent conviction;
• dismissal for refusing to work on a Sunday (retail and betting workers only);
• dismissal for a trade union reason;
• dismissal for taking official industrial action (during the first 12 weeks of the action);
• dismissal in contravention of the part-time workers or fixed-term employees’ regulations;
• dismissal for undertaking duties as an occupational pension fund trustee, employee representative, member of a European Works Council or in connection with jury service;
• dismissal for asserting a statutory right (including rights exercised under the Employ­ment Rights Act, as well as those connected with the Working Time Regulations, the National Minimum Wage Regulations, the Public Interest Disclosure Act and the Information and Consultation of Employees Regulations; the right to request flexible working, the right to time off for dependents, the right to adoptive, parental or paternity leave, the right to be accompanied at disciplinary and grievance hearings and the claiming of working tax credits);
• dismissal for a reason connected with the transfer of an undertaking (i.e. when a business or part of a business changes hands or merges with another organisation) in the absence of a valid economic, technical or organisational reason;
• dismissals that take place before the completion of the disciplinary and dismissal procedures (DDPs) required by the Dispute Resolution Regulations 2004.

The requirement to have completed a year’s continuous service only applies in the case of the last two dismissal scenarios on this list. Under the Dispute Resolution Regulations 2004 a dismissal must be found unfair, irrespective of the circumstances, whenever an employer dismisses an employee with over a year’s service without first having initiated the following basic three-step procedure:

• Step 1: The employer sends the employee a letter setting out the nature of the circumstances that may lead to the employee’s dismissal.
• Step 2: The employer invites the employee to a meeting to discuss the issue at which both parties put their views across. After the meeting the employer informs the employee about the outcome. If it is to dismiss, then the right of appeal is confirmed.
• Step 3: The employee exercises their right to appeal and a further meeting is held for this purpose.

In exceptional cases of gross misconduct employers are permitted to omit stage 2 of this procedure. This does not, however, make the dismissal fair, it just means that it is not automatically unfair. A failure to investigate properly or hold a hearing would mean that such a dismissal would usually be found to have been carried out unreasonably.

1.2. Potentially fair reasons

From an employer’s perspective it is important to be able to satisfy the tribunal that the true reason for the dismissal was one of those reasons classed as potentially fair in unfair dismissal law. Only once this has been achieved can the second question (the issue of reasonableness) be addressed. The potentially fair grounds for dismissal are as follows:

• Lack of capability or qualifications: if an employee lacks the skill, aptitude or physical health to carry out the job, then there is a potentially fair ground for dismissal.
• Misconduct: this category covers the range of behaviours that we examine in consider­ing the grievance and discipline processes: disobedience, absence, insubordination and criminal acts. It can also include taking industrial action.
• Redundancy: where an employee’s job ceases to exist, it is potentially fair to dismiss the employee for redundancy.
• Statutory bar: when employees cannot continue to discharge their duties without breaking the law, they can be fairly dismissed. Most cases of this kind follow dis­qualification of drivers following convictions for speeding, or for drunk or dangerous driving. Other common cases involve foreign nationals whose work permits have been terminated.
• Some other substantial reason: this most intangible category is introduced in order to cater for genuinely fair dismissals for reasons so diverse that they could not real­istically be listed. Examples have been security of commercial information (where an employee’s husband set up a rival company) or employee refusal to accept altered working conditions.
• Dismissals arising from official industrial action after 12 weeks have passed.
• Dismissals that occur on the transfer of an undertaking where a valid ETO (eco­nomic, technological or organisational) reason applies.
• Mandatory retirements which follow the completion of the procedures set out in the Employment Equality (Age) Regulations 2006 (see Chapter 23).

1.3. Determining reasonableness

Having decided that potentially fair grounds for the dismissal exist, the tribunal then proceeds to consider whether the dismissal is fair in the circumstances. The test used by the tribunal in reaching decisions about the fairness of a dismissal is that of the
reasonable employer. Tribunal members are not required to judge cases on the basis of what they would have done in the circumstances or what the best employers would have done. Instead they have to ask themselves whether what the employer did in the cir­cumstances of the time fell within a possible band of reasonable responses. In practice this means that the employer wins the case if it can show that the decision to dismiss was one that a reasonable employer might conceivably have taken.

In assessing reasonableness tribunals always take a particular interest in the pro­cedure that was used. They are also keen to satisfy themselves that the employer has acted broadly consistently in its treatment of different employees and that it has taken into account any mitigating circumstances that might have explained a deterioration in an employee’s conduct or performance. In addition, they are required to have regard to the size and resources of the employer concerned. Higher standards are thus expected of a large PLC with a well-staffed HR department than of a small owner-managed business employing a handful of people. The former, for example, might be expected to give two or three warnings and additional training before dismissing someone on grounds of incapability. One simple warning might suffice in a small business which relied heavily on an acceptable level of performance from the individual concerned.

The significance attached to procedure has varied over the years. Until 1987 employers were able to argue successfully that although the procedure used was deficient in some respects, the outcome was not affected. This changed following the judgment of the House of Lords in the case of Polkey v. AE Dayton Services (1987). Henceforth, tribunals were obliged to find dismissals unfair where the employer had not completed a proper procedure before making the final decision to dismiss. In 2004 the law changed again, but the extent to which this has occurred has only become clear more recently as a result of evolving case law. The current position is that the employer must only dis­miss once the basic two or three-step procedure set out in the 2004 Dispute Resolution Regulations has been completed. A failure to do so renders the dismissal automatically unfair. However, beyond that, procedural deficiencies can be defended on the grounds that they made no difference to the outcome. In other words, a dismissal would have occurred whether or not the employers’ own established procedures were or were not carried through to the letter.

In this book we have separated the consideration of discipline from the consideration of dismissal in order to concentrate on the practical aspects of discipline (putting things right) rather than the negative aspects (getting rid of the problem). The two cannot, however, be separated in practice and the question of dismissal needs to be reviewed in the light of the material in Chapter 25.

1.4. Lack of capability or qualifications

A common reason for dismissal is poor performance on the part of an employee. The law permits dismissals for this reason. It also allows employers to determine for them­selves what constitutes an acceptable level of performance in a job, provided of course that a consistent approach is followed between different employees. However, such dismissals are only considered to be reasonable (and hence fair in law) if the employee concerned has both been formally warned about their poor performance at least once and given a reasonable opportunity to improve. Formality in this context means that a formal hearing has been held at which the employee has been entitled to be represented and after which there has been a right of appeal to a more senior manager.

The employer will always need to demonstrate the employee’s unsuitability to the satisfaction of the tribunal by producing evidence of that unsuitability. This evidence must not be undermined by, for instance, giving the employee a glowing testimonial at the time of dismissal or by the presence of positive appraisal reports on the individual’s personal file. Lack of skill or aptitude is a fair ground when the lack can be demon­strated and where the employer has not contributed to it by, for instance, ignoring it for a long period. Redeployment to a more suitable job is also an option employers are expected to consider before taking the decision to dismiss.

The requirement on employers to warn an employee formally that their performance is unsatisfactory at a meeting at which they have the opportunity to answer back, and the subsequent requirement to give the employee concerned support during a reasonable period in which they have an opportunity to improve, means that dismissals on grounds of poor performance can take several weeks or months to carry through. Moreover, during this time relationships can become very strained because formal action has been taken and a formal warning given. For these reasons managers often seek to avoid dismissing in line with the expectations of the law, instead seeking to dress up poor performance dismissals as redundancies or cases of gross misconduct. However, employment tribunals are very aware of this tendency and always find dismissals that occur in such circumstances to be unfair.

Another aspect of employee capability is health. It is potentially fair to dismiss some­one on the grounds of ill health which renders the employee incapable of discharging the contract of employment. Even the most distressing dismissal can be legally admissible, provided that it is not too hasty and that there is consideration of alternative employ­ment. Employers are expected, however, to take account of any medical advice available to them before dismissing someone on the grounds of ill health. Companies with occupa­tional health services are well placed to obtain detailed medical reports to help in such judgements but the decision to terminate someone’s employment is ultimately for the manager to take and, if necessary, to justify at a tribunal. Medical evidence will be sought and has to be carefully considered but dismissal remains an employer’s decision, not a medical decision.

Normally, absences through sickness have to be frequent or prolonged in order for dismissal on the grounds of such absence to be judged fair, although absence which seriously interferes with the running of a business may be judged fair even if it is neither frequent nor prolonged. In all cases the employee must be consulted and effectively warned before being dismissed.

In the leading case of Egg Stores v. Leibovici (1977) the EAT set out nine questions that have to be asked to determine the potential fairness of dismissing someone after long-term sickness:

how long has the employment lasted; (b) how long had it been expected the employment would continue; (c) what is the nature of the job; (d) what was the nature, effect and length of the illness; (e) what is the need of the employer for the work to be done, and to engage a replacement to do it; (f) if the employer takes no action, will he incur obligations in respect of redundancy payments or compensation for unfair dismissal; (g) are wages continuing to be paid; (h) why has the employer dismissed (or failed to do so); and (i) in all the circumstances, could a reasonable employer have been expected to wait any longer?

A different situation is where an employee is frequently absent for short spells. Here too it is potentially reasonable to dismiss, but only after proper consideration of the illnesses and after warning the employee of the consequences if their attendance record does not improve. Each case has to be decided on its own merits. Medical evidence must be sought and a judgement reached about how likely it is that high levels of absence will continue in the future. The fact that an employee is wholly fit at the time of his or her dismissal does not mean that it is necessarily unfair. What matters is the over­all attendance record and its impact on the organisation.

In another leading case, that of International Sports Ltd v. Thomson (1980), the employer dismissed an employee who had been frequently absent with a series of minor ailments ranging from althrugia of one knee, anxiety and nerves to bronchitis, cystitis, dizzy spells, dyspepsia and flatulence. All of these were covered by medical notes. (While pondering the medical note for flatulence, you will be interested to know that althrugia is water on the knee.) The employer issued a series of warnings and the company dis­missed the employee after consulting its medical adviser, who saw no reason to examine the employee as the illnesses had no connecting medical theme and were not chronic. The Employment Appeals Tribunal held that this dismissal was fair because proper warning had been given and because the attendance record was deemed so poor as not to be acceptable to a reasonable employer. This position was confirmed by the Court of Appeal in Wilson v. The Post Office (2000) where it was held to be quite acceptable, in principle, for an employer to dismiss someone simply because of a poor absence record.

The law on ill-health dismissals was affected in important ways by the passing of the Disability Discrimination Act 1995. In Chapter 23 we look at this important piece of legislation in detail. Here it is simply necessary to state that dismissing someone who is disabled according to the definition given in the Act, without first considering whether adjustments to working practices or the working environment would allow them to con­tinue working, is unlawful. Reasonable adjustments might well include tolerance of a relatively high level of absence, especially where the employer is large enough to be able to cope perfectly well in the circumstances. Employers are well advised to pay particu­lar attention to disability discrimination issues when dismissing people on the grounds of ill health because the level of compensation that can be awarded by tribunals in such cases is considerably higher than it is for unfair dismissal.

1.5. Misconduct

The law expects employers to make a distinction between two classes of misconduct when dismissing employees or considering doing so.

• Gross misconduct. This occurs when an employee commits an offence which is sufficiently serious to justify summary dismissal. To qualify, the employee must have acted in such a way as to have breached either an express term of their contract or one of the common law duties owed by an employee to an employer (see Chapter 6). In practice this means that their actions must be ‘intolerable’ for any reasonable employer.
• Ordinary misconduct. This involves lesser transgressions, such as minor breaches of rules and relatively insignificant acts of disobedience, insubordination, lateness, forgetfulness or rudeness. In such cases the employer is deemed by the courts to be acting unreasonably if it dismisses as a result of a first offence. The dismissal would only be fair if, having been formally warned at least once, the employee failed to improve his/her conduct.

Employers have a wide degree of discretion when it comes to deciding what exactly does and does not constitute gross misconduct, and this will vary from workplace to workplace. For example, a distinction can be made between uttering an obscene swear word in front of colleagues (ordinary misconduct) and swearing obscenely to a customer (gross misconduct). While much depends on the circumstances, the tribunals also look carefully at an employer’s established policies on matters of conduct:

Where the disciplinary rules spell out clearly the type of conduct that will warrant dismissal then a dismissal for this reason may be fair. Conversely, if the rules are silent or ambiguous as to whether particular conduct warrants dismissal, a dismissal for a first offence may be unfair. It is important, therefore, for employers to set out in writing what standards of conduct they expect, to make clear what will be regarded as ‘sackable misconduct’, and to ensure that everyone is aware of these rules. (Duggan 1999, p. 178)

The second key principle in misconduct cases concerns procedure. Whether the indi­vidual is dismissed summarily for gross misconduct or after a number of warnings for ordinary misconduct, the tribunals look to see if a reasonable procedure has been used. This basic requirement is unaffected by the Dispute Resolution Regulations (2004) which clearly state that employers are required to adhere to basic procedures. However, these regulations do permit employers to dispense with the need for a disciplinary hearing in ‘extreme’ cases of gross misconduct. We look in more detail at disciplinary procedures in Chapter 25. Here it is necessary to note the main questions that an employment tribunal asks when faced with such cases:

• Was the accusation thoroughly, promptly and properly investigated by managers before the decision was made to dismiss or issue a formal warning?
• Was a formal hearing held at which the accused employee was given the opportunity to state their case and challenge evidence brought forward by managers?
• Was the employee concerned permitted to be represented at the hearing by a colleague or trade union representative?
• Was the employee treated consistently when compared with other employees who had committed similar acts of misconduct in the past?

Only if the answers to all these questions is ‘yes’ will a tribunal find a dismissal fair. They do not, however, expect employers to adhere to very high standards of evidence gathering such as those employed by the police in criminal investigations. Here, as throughout employment law, the requirement is for the employer to act reasonably in all the circumstances, conforming to the principles of natural justice and doing what it thought to be right at the time, given the available facts.

Conversely, if an employee is found guilty by court proceedings, this does not automatically justify fair dismissal; it must still be procedurally fair and reasonable. A theft committed off duty and away from the workforce is not necessarily grounds for dismissal; it all depends on the nature of the work carried out by the employee concerned. For example, it might well be reasonable to dismiss members of staff with responsibility for cash if they commit an offence of dishonesty while off duty.

On the other hand, evidence that would not be sufficient to bring a prosecution may be sufficient to sustain a fair dismissal. Clocking-in offences will normally merit dis­missal. Convictions for other offences like drug handling or indecency will only justify dismissal if the nature of the offence will have some bearing on the work done by the employee. For someone like an instructor of apprentices it might justify summary dis­missal, but in other types of employment it would be unfair, just as it would be unfair to dismiss an employee for a driving offence when there was no need for driving in the course of normal duties and there were other means of transport for getting to work.

1.6. Redundancy

Dismissal for redundancy is protected by compensation for unfair redundancy, com­pensation for genuine redundancy and the right to consultation before the redundancy takes place:

An employee who is dismissed shall be taken to be dismissed by reason of redundancy

Apart from certain specialised groups of employees, anyone who has been continu­ously employed for two years or more is guaranteed a compensation payment from an employer, if dismissed for redundancy. The compensation is assessed on a sliding scale relating to length of service, age and rate of pay per week. If the employer wishes
to escape the obligation to compensate, then it is necessary to show that the reason for dismissal was something other than redundancy. The inclusion of age in the criteria for calculating redundancy payments remained, despite the introduction of age discrimination law in 2006.

Although the legal rights relating to redundancy have not altered for 35 years, there have been persistent problems of interpretation, different courts reaching different deci­sions when faced with similar sets of circumstances (see IRS 2000b). In 1999 the House of Lords provided some long-needed clarification of key issues in the cases of Murray et al. v. Foyle Meats Ltd, where it was decided that tribunals should look at the actual facts of someone’s working situation rather than at their written contractual terms when deciding whether or not their jobs were redundant. In so doing it confirmed that the practice of ‘bumping’, where the employer dismisses a person whose job is remaining to retain the services of another employee whose job is disappearing, is acceptable under the statutory definition. The questions laid out by the Employment Appeals Tribunal (EAT) in Safeway v. Burrell (1997) are thus now confirmed as those that tribunals should ask when considering these cases:

1. Has the employee been dismissed?
2. Has there been an actual or prospective cessation or diminution in the requirements for employees to carry out work of a particular kind?
3. Is the dismissal wholly or mainly attributable to the state of affairs?

The employer has to consult with the individual employee before dismissal takes place, but there is also a separate legal obligation to consult with recognised trade unions or some other body of employee representatives where no union is recognised. If 20 or more employees are to be made redundant, then the employer must give written notice of intention to any recognised unions concerned and the Department for Business, Enterprise and Regulatory Reform (DBERR) at least 30 days before the first dismissal. If it is proposed to make more than 100 employees redundant within a three-month period, then 90 days’ advance notice must be given. Having done this, the employer has a legal duty to consult on the redundancies. There is no obligation to negotiate with employees, merely to explain, listen to comments and reply with reasons. Employees also have the right to reasonable time off with pay during their redundancy notice so that they can seek other work.

One of the most difficult aspects of redundancy for the employer is the selection of who should go. The traditional approach provides that people should leave on a last-in­first-out basis, or LIFO, as this provides a rough-and-ready justice with which it is difficult to argue. In recent years, however, an increasing number of employers are using a mix of other criteria, including skill, competence and attendance record. A third approach involves drawing up a new post-redundancy organisation structure and invit­ing everyone to apply for the jobs that will remain. All three approaches are widely used and have been considered acceptable as far as the law is concerned provided they are carried out objectively and consistently. However, some commentators question whether or not LIFO is compatible with age discrimination law on the grounds that it inevitably involves favouring older employees over younger colleagues and is not always objectively justifiable.

Increasingly, employers are trying to avoid enforced redundancy by a range of strategies, such as not replacing people who leave, early retirement and voluntary redundancy. They also increasingly seek to make the management of redundancy more palatable by appointing redundancy counselling or outplacement services. Sometimes this is administered by the HR department, but many organisations use external ser­vices. Contrary to some popular perception there is no legal requirement to offer such services or to ask for volunteers before carrying through a programme of compulsory redundancies.

1.7. Some other substantial reason

As the law of unfair dismissal has evolved since 1971 the most controversial area has been the category of potentially fair dismissals known as ‘some other substantial reason’. Many commentators see this as a catch-all or dustbin category which enables employers to dismiss virtually anyone provided a satisfactory business case can be made. All manner of cases have been successfully defended under this heading including the following: dismissals resulting from personality clashes, pressure to dismiss from sub­ordinates or customers, disclosure of damaging information, the dismissal of a man whose wife worked for a rival firm, and the dismissal of a landlord’s wife following her husband’s dismissal on grounds of capability.

The majority of cases brought under this heading, however, result from business reorganisations where there is no redundancy. These often occur when the employer seeks to alter terms and conditions of employment and cannot secure the employee’s agreement. Such circumstances can result in the dismissal of the employee together with an offer of re-employment on new contractual terms. Such dismissals are judged fair provided a sound business reason exists to justify the changes envisaged. It will usually be necessary to consult prior to the reorganisation but the tribunal will not base its judg­ment on whether the employee acted reasonably in refusing new terms and conditions. The test laid down in Hollister v. The National Farmers’ Union (1979) by the Court of Appeal merely requires the employer to demonstrate that the change would bring clear organisational advantage.

1.8. Written statement of reasons

The Employment Rights Act 1996 (s. 92) gives employees the right to obtain from their employer a written statement of the reasons for their dismissal if they are dismissed after completing a year’s continuous service. If asked, the employer must provide the state­ment within 14 days. If it is not provided, the employee can complain to an employment tribunal that the statement has been refused and the tribunal will award the employee two weeks’ pay if they find the complaint justified. The same right applies where a fixed- term contract is not renewed after having expired. The employee can also complain, and receive the same award, if the employer’s reasons are untrue or inadequate, provided that the tribunal agrees.

Such an award is in addition to anything the tribunal may decide about the unfairness of the dismissal, if the employee complains about that. The main purpose of this provi­sion is to enable the employee to test whether there is a reasonable case for an unfair dis­missal complaint or not. Although the statement is admissible as evidence in tribunal proceedings, the tribunal will not necessarily be bound by what the statement contains. If the tribunal members were to decide that the reasons for dismissal were other than stated, then the management case would be jeopardised.

2. CONSTRUCTIVE DISMISSAL

When the conduct of the employer causes an employee to resign, the ex-employee may still be able to claim dismissal on the grounds that the behaviour of the employer con­stituted a repudiation of the contract, leaving the employee with no alternative but to resign. The employee may then be able to claim that the dismissal was unfair. It is not sufficient for the employer simply to be awkward or whimsical; the employer’s conduct must amount to a significant breach, going to the root of the contract, such as physical assault, demotion, reduction in pay, change in location of work or significant change in duties. The breach must, however, be significant, so that a slight lateness in paying wages would not involve a breach, neither would a temporary change in place of work.

Some of the more interesting constructive dismissal cases concern claims that implied terms of contract have been breached, such as the employer’s duty to maintain safe systems of working or mutual trust and confidence.

Constructive dismissal, like unfair dismissal, dates from 1971. It too only applies to employees who have completed a year’s continuous service. The cases are harder for employees to win and easier for employers to defend because of the need to establish that a dismissal has taken place, before issues of reasonableness in the circumstances are addressed. The burden of proof is on the employee to show that they were forced into resigning as a result of a repudiatory breach on the part of the employer.

3. COMPENSATION FOR DISMISSAL

Having found in favour of the applicant in cases of unfair or constructive dismissal, the tribunal can make two types of decision: either they can order that the ex-employee be re­employed or they can award some financial compensation from the ex-employer for the loss that the employee has suffered. Originally it was intended that re-employment should be the main remedy, although this was not previously available under earlier legislation. In practice, however, the vast majority of ex-employees (over 98 per cent) want compensation.

Tribunals will not order re-employment unless the dismissed employee wants it, and tribunals can choose between reinstatement or re-engagement. In reinstatement the old job is given back to the employee under the same terms and conditions, plus any incre­ments, etc., to which the individual would have become entitled had the dismissal not occurred, plus any arrears of payment that would have been received. The situation is just as it would have been, including all rights deriving from length of service, if the dis­missal had not taken place. The alternative of re-engagement will be that the employee is employed afresh in a job comparable to the last one (usually in a different depart­ment), but without continuity of employment. The decision as to which of the two to order will depend on assessment of the practicability of the alternatives, the wishes of the unfairly dismissed employee and the natural justice of the award taking account of the ex-employee’s behaviour.

Tribunals currently calculate the level of compensation under a series of headings. First is the basic award which is based on the employee’s age and length of service. It is calculated in the same way as statutory redundancy payments, and like them has not been changed following the introduction of age discrimination law:

• half a week’s pay for every year of service below the age of 22;
• one week’s pay for every year of service between the ages of 22 and 41;
• one and a half weeks’ pay for every year of service over the age of 41.

The basic award is limited, however, because tribunals can only take into account a maximum of 20 years’ service when calculating the figure to be awarded. A maximum weekly salary figure is also imposed by the Treasury. This was £310 in 2007. The max­imum basic award that can be ordered is therefore £9,300. In many cases, of course, where the employee has only a few years’ service the figure will be far lower. In addition a tribunal can also order compensation under the following headings:

• Compensatory awards take account of loss of earnings, pension rights, future earn­ings loss, etc. The maximum level in 2007 was £60,600.
• Additional awards are used in cases of sex and race discrimination and also when an employer fails to comply with an order of reinstatement or re-engagement. In the former case the maximum award is 52 weeks’ pay, in the latter 26 weeks’ pay.
• Special awards are made when unfair dismissal relates to trade union activity or member­ship. They can also be used when the dismissal was for health and safety reasons.

A tribunal can reduce the total level of compensation if it judges the individual concerned to have contributed to his or her own dismissal. For example, a dismissal on grounds of poor work performance may be found unfair because no procedure was followed and consequently no warnings given. This does not automatically entitle the ex-employee concerned to compensation based on the above formulae. If the tribunal judges the ex-employee to have been 60 per cent responsible for his or her own dismissal the compensation will be reduced by 60 per cent. Reductions are also made if an ex-employee is judged not to have taken reasonable steps to mitigate his or her loss.

4. WRONGFUL DISMISSAL

In addition to the body of legislation defining unfair and constructive dismissal there is a long-standing common law right to damages for an employee who has been dismissed wrongfully.

Cases of wrongful dismissal are taken to employment tribunals where the claim is for less than £25,000; otherwise they are taken to the county court. These cases are con­cerned solely with alleged breaches of contract. Employees can thus only bring cases of wrongful dismissal against their employers when they believe their dismissal to have been unlawful according to the terms of their contract of employment. Wrongful dis­missal can, therefore, be used when the employer has not given proper notice or if the dismissal is in breach of any clause or agreement incorporated into the contract. This remains a form of remedy that very few people use, but it could be useful to employees who do not have sufficient length of service to claim unfair dismissal and whose contracts include the right to a full disciplinary procedure. There may also be cases where a very highly paid employee might get higher damages in an ordinary court than the maximum that the tribunal can award.

5. NOTICE

An employee qualifies for notice of dismissal on completion of four weeks of employ­ment with an employer. At that time the employee is entitled to receive one week’s notice. This remains constant until the employee has completed two years’ service, after which it increases to two weeks’ notice, thereafter increasing on the basis of one week’s notice per additional year of service up to a maximum of 12 weeks for 12 years’ unbroken service with that employer. These are minimum statutory periods. If the employer includes longer periods of notice in the contract, which is quite common with senior employees, then they are bound by the longer period.

The employee is required to give one week’s notice after completing four weeks’ service and this period does not increase as a statutory obligation. If an employee accepts a contract in which the period of notice to be given is longer, then that is bind­ing, but the employer may have problems of enforcement if an employee is not willing to continue in employment for the longer period.

Neither party can withdraw notice unilaterally. The withdrawal will be effective only if the other party agrees. Therefore, if an employer gives notice to an employee and wishes later to withdraw it, this can be done only if the employee agrees to the contract of employment remaining in existence. Equally, employees cannot change their minds about resigning unless the employer agrees.

Notice exists when a date has been specified. The statement ‘We’re going to wind up the business, so you will have to find another job’ is not notice: it is a warning of intention.

Source: Torrington Derek, Hall Laura, Taylor Stephen (2008), Human Resource Management, Ft Pr; 7th edition.

In our opening chapters we described the shift in emphasis away from the contract of employment towards the contract for performance. Even before the development of Taylor’s scientific management methods a century ago, getting the most out of the workforce has always been a predominant management preoccupation, and the manage­ment literature is full of studies on the topic. Psychologists have studied motivation and leadership, ergonomists have dismantled and reconstructed every aspect of the physical environment in which people work, industrial relations specialists have pondered power relationships and reward, while sociologists discussed the design of organisations and their social structure, and operations experts have looked for ways to engineer process improvements. In 2001, Caulkin asserts:

more than 30 studies in the US and UK leave no room for doubt; how organizations manage and develop people has a powerful – perhaps the most powerful – effect on overall performance, including the bottom line. (Caulkin 2001, p. 32)

1. A CHANGE IN PERSPECTIVE: FROM EMPLOYMENT TO PERFORMANCE

The traditional HRM approach to enhancing individual performance has centred on the assessment of past performance and the allocation of reward – rewards were provided in exchange for performance. This has been powerfully influenced by the industrial rela­tions history, as trade unions have developed the process of collective bargaining and negotiation.

The prime purpose of trade unions has always been to improve the terms and working conditions of their members; the union has only one thing to offer in exchange for improvements in terms and conditions, that is, some opportunity for improvement in productivity or performance. With the steadily increasing influence of unions in most industrial countries through most of the twentieth century, it was inevitable that performance improvement was something of direct interest only to management. Performance therefore became stereotyped as something of no intrinsic interest to the person doing the work.

The influence of trade unions has altered and collective bargaining does not dominate the management agenda as much as it used to. This is the most significant feature in the general change in attitudes about what we go to work for. Managements have been gradually waking up to this fact and realising the scope for integration in a way that was previously unrealistic. Not only is it possible to say, ‘Performance is rewarded’, one can now begin to say, ‘Performance is a reward’. The long-standing motivational ideas of job enlargement, job enrichment, and so forth, become more cogent when those at work are able to look for the satisfaction of their needs not only in the job, but also in their performance at the job.

Although it may seem like playing with words, this subtle shift of emphasis is funda­mental to understanding the strategic approach to performance.

2. INFLUENCES ON OUR UNDERSTANDING OF PERFORMANCE

2.1. The Japanese influence

In the 1980s the success of Japanese companies and the decline of western organisations encouraged an exploration and adoption of Japanese management ideas and practices in order to improve performance. Thurley (1982) described the objectives of personnel policies in Japan as performance, motivation, flexibility and mobility. Delbridge and Turnbull (1992) described type ‘J’ organisations (based on Japanese thinking) as charac­terised by commitment, effort and company loyalty. A key theme in Japanese thinking appears to be people development and continuous improvement, or ‘kaizen’.

Much of this thinking and the specific management techniques used in Japan, such as JIT (just in time), have been adopted into UK organisations, often in an uncritical way and without due regard for the cultural differences between the two nations. It is only where the initiatives are developed and modified for their location that they appear to succeed.

2.2. The American literature

Key writers from the American ‘excellence’ school, Peters and Waterman (1982), identified eight characteristics that they found to be associated with excellent companies – all American. These companies were chosen as excellent on the basis of their innova­tiveness and on a set of financial indicators, compared on an industry-wide basis. The characteristics they identified included such factors as a bias for action (rather than an emphasis on bureaucracy or analysis) and using a simple form with lean staff (meaning a simple organisation structure and small HQ staffing).

Peters and Waterman identified a shift from the importance of strategy and structural factors to style, systems, staff and skills (from the hard ‘s’s to the soft ‘s’s). In a follow- on book Peters and Austin (1985) identify four key factors related to excellence as concern for customers, innovation, attention to people and leadership.

However, there are problems with the research methodology used; for example, no comparison was made with companies not considered to be excellent. We do not, therefore, know whether these principles were applied to a greater extent in excellent organisations. In addition, a number of the companies quoted have experienced severe problems since the research was carried out, and there remains the problem of the extent to which we can apply the results to UK organisations.

Whatever the reservations, the influence of this work on strategic thinking about performance remains profound. Even the use of the term ‘excellence’ means that there is a change of emphasis away from deadpan, objective terms such as profitability, effective­ness, value added and competitive advantage towards an idea that may trigger a feeling of enthusiasm and achievement. ‘Try your best’ becomes ‘Go for it’.

More recently there has been considerable quantitative research in the USA that aims to identify HR practices which lead to high organisational performance, for example Huselid (1995) and Pfeffer (1998). The HR practices identified are termed ‘high perform­ance work practices’ and have encouraged similar investigations in the UK to determine ‘high commitment work practices’.

2.3. HRM and the strategy literature

The HRM strategy literature provides different ways to understand the contribution of HR policies and practices to organisational performance. We noted in Chapter 2 that three distinct approaches to HR strategy can be identified. The universalist or best practice approach presupposes that certain HR policies and practices will always result in high performance, and the question is to identify exactly what these are. The contingency or fit approach suggests that different HR policies and practices will be needed to produce high performance in different firms depending on their business strategy and environment. Finally the resource-based view of the firm suggests that neither of these approaches is sufficient, but that every organisation and its employees should be considered as unique and that the set of HR policies and practices that will result in high performance will also be unique to that firm. From this perspective no formula can be applied, and the way that people processes contribute to organisational performance can only be under­stood within the context of the particular firm. These three perspectives have resulted in different investigational approaches to understanding the impact of people management on organisational performance, as will become clear in the following section.

2. DO PEOPLE-MANAGEMENT PROCESSES CONTRIBUTE TO HIGH PERFORMANCE?

The investigations to date have had a dual purpose, the first being to seek to establish a link between people-management practices and organisational performance. In other words, does the way that people are managed affect the bottom line? The second one follows logically from this, and is: If the answer to the first question is yes, then which particular policies and practices result in high performance? Both these questions are usually invest­igated in parallel. A variety of different definitions of performance have been used in these studies. These range from bottom line financial performance (profitability), through productivity measures, to measurement of outcomes such as wastage, quality and labour turnover (which are sometimes referred to as internal performance outcomes). Some­times the respondent’s perception of performance is used, on the basis that bottom line figures can be influenced by management accounting procedures. The studies have gen­erally used large datasets and complex statistical analysis to determine relationships.

Some researchers argue that the performance effects of HR policies and practices are multiplicative rather than additive, and this is often termed the ‘bundles’ approach (see, for example, MacDuffie 1995), and this highlights an emphasis on internal rather than external fit. In other words, a particular set of mutually reinforcing practices is likely to have more impact on performance than applying one or just some of these in isolation. This is sometimes referred to as complementarity. Pfeffer (1998), for example, identifies seven critical people-management policies: emphasising employment security; recruiting the ‘right’ people; extensive use of self-managed teams and decentralisation; high wages solidly linked to organisational performance; high spending on training; reducing status differentials; and sharing information; and he suggests that these policies will benefit every organisation. In the UK the Sheffield Enterprise Programme (Patterson et al. 1997) has studied 100 manufacturing organisations over 10 years (1991-2001) and used statis­tical techniques to identify which factors affect profitability and productivity. It has been reported that aspects of culture, supervisory support, concern for employee welfare, employee responsibility, and training were all important variables in relation to organ­isational performance. Also in the UK, Wood and de Menezes (1998) identify a bundle of HR practices which they term high-commitment management, and these comprise recruitment and selection processes geared to selecting flexible and highly committed individuals; processes which reward commitment and training by promotion and job security; and the use of direct communication and teamwork.

This avenue of work has a very optimistic flavour, suggesting not only that people- management practices are related to high organisational performance, but that we can identify the innovative and sophisticated practices that will work best in combination. On a practical level there are problems because different researchers identify different practices or ‘bundles’ associated with high performance (see, for example, Becker and Gerhard 1996), and the results overall have been patchy and inconclusive. Guest et al. (2003) address these issues by suggesting that it is the internal fit of practices that is important, rather than the exact practices that are in the bundle.

There have been many criticisms of this approach, partly based on the methods used – which involve, for example, the view of a single respondent as to which practices are in place, with no account taken of how the practices are implemented. A further confusion is that some studies are at establishment level, some at corporate level, some are sector based and some are cross-sector. Each of these approaches has inbuilt problems and creates extreme difficulties for any meta-analysis of the studies so far. A further problem is causality. It could be that profitable firms use best practice people-management methods, because they can afford to do so since they are profitable, rather than that such methods lead to profitability. A further issue concerns the conflict between different aspects of the bundle. Such contradictions are, for example, between individualism and teamwork and between a strong culture and adaptability. Lastly, this approach ignores the business strategy of the organisation.

The work we have described so far comes from a universalist/best practice perspective; an alternative way forward is to use the contingency or fit point of view (see, for example, the work of Wright and Snell 1998), asking the question, ‘Which people-management policies create high performance in which different organisational circumstances?’ This approach does bring the integration with business strategy to the fore, and draws attention to sectoral differences; for example Guest (2001) has suggested that ‘high performance work practices’ may be effective in producing high performance in manu­facturing rather than services. However, it fails to provide a more useful way forward.

Attempting to model all the different factors that influence the appropriate set of HR policies and practices that lead to high performance is an extremely complex, if not impossible, task. In addition to this Purcell et al. (2000) argue that the speed of change poses a real problem for the fit approach.

In summary, the extent to which all the statistical work that has been done proves the relationship between people-management practices and organisational performance continues to be hotly contested. Reviewing the academic literature Richardson and Thompson (1999) come to the conclusion that the evidence indicates a positive rela­tionship between innovative and sophisticated people-management practices and better business performance. Guest et al. (2003), however, recognise that although the statistical work so far provides some associations between people management and organisational performance there is a lack of convincing evidence. Guest (2000), Hall (2002) and par­ticularly Purcell (1999) all provide detailed expositions of the problems with the above approaches. The situation is further confused by the fact that organisations often apply differing HR practices to different groups of employees. For example Melian-Gonzalez and Veranco-Tacoronte (2006) found that the value and the uniqueness of jobs were two factors that influenced the application of differing practices.

Purcell (1999) suggests that a more useful approach is to focus on the resource-based view of the firm, which is the third perspective on HR strategy that we considered in Chapter 2. From this perspective each organisation is a unique and complex whole, so we need to look beyond lists of HR policies and practices to explain organisational performance. We also need to consider long-term performance capability and not just short-term performance improvements. From this perspective Paauwe and Richardson (2001) argue that the move to longitudinal studies and case study work is useful, and suggest that organisational context and institutional arrangements need greater atten­tion; Becker and Gerhard (1996) suggest that it is more likely to be the architecture of the system, not just a group of HR practices, that results in high performance, and Purcell suggests that it is how practices are implemented and change is managed that makes the difference. Hutchinson et al. (2000) term this ‘idiosyncratic fit’. The work of Purcell and his colleagues from Bath University, which forms part of the CIPD’s research in this area, attempts to address some of the deficits in large-sample statistical work. They have investigated 12 case study organisations on a longitudinal basis, collecting the employees’ view and concentrating on the line manager’s role in implementation.

They collected data on 11 HR policy/practice areas identified from previous research as being linked to high organisational performance. In testing the link between people manage­ment and performance this study differs from others in that the measures taken were ones that were the most meaningful to each organisation. (The issue of performance measurement and its varying nature is addressed in Case 11.1 on the companion website, www. pearsoned.co.uk/torrington). Also each of the organisations was visited twice over a two- and-a-half-year period so comparisons could be made over time. Their results are not clear- cut, but a major conclusion is that it is the way policies are implemented and the role of line managers which are critical. They also acknowledge that it is difficult to disentangle the performance impact of HR policies from the performance impact of changing environ­mental circumstances and other changes such as technology. They do argue, however, that those organisations with a ‘big idea’, which expresses what the organisation stands for and what it is trying to achieve, were more able to sustain their performance over the longer term. For example the big idea in Jaguar is quality and in Nationwide it is mutuality. They also found that such big ideas have five characteristics in high-performing organisations:

• Embedded – in policies and practices
• Connected – connects relationships with customers, values, culture and the way people are managed
• Enduring – stable, long-lasting values which survive even in difficult times
• Collective – acts as corporate glue
• Measured and managed – often through the use of balanced scorecard type approaches

For further information on the balanced scorecard see Chapter 33.

Source: Torrington Derek, Hall Laura, Taylor Stephen (2008), Human Resource Management, Ft Pr; 7th edition.

1. HOW DO HR POLICIES AND PRACTICES AFFECT PERFORMANCE?

If we accept that there is sufficient evidence to claim that HR policies and practices do affect company performance (although some studies, for example Lahteenmaki and Storey 1998 do not support this) then we need to understand better the processes which link these HR practices to business performance. As Purcell et al. (2000) point out, ‘what remains unclear is what is actually happening in successful organisations to make this connection’ (p. 30). Job satisfaction was for a long time seen as key and some evidence was produced to support this (see, for example, Patterson et al. 1997). However, more generally, connec­tions between this and organisational performance did not prove fruitful and the focus moved to commitment (Guest 2002) in mediating the impact of HR policies and practices on business performance. In addition to commitment researchers have also identified motivation as the mediating mechanism and some identify trust and morale. Purcell and his colleagues (2003) give equal prominence to job satisfaction and motivation and commit­ment. In their model HR policies and practices are seen to impact on employee ability/ skills, motivation and incentive (in that people can be motivated to use their ability pro­ductively via intrinsic and extrinsic rewards) and opportunity. In turn these three factors have an impact on commitment, individual motivation and job satisfaction, all of which have an impact on employee discretionary behaviour which in turn impacts on per­formance. Their ‘People and Performance’ model is displayed in Figure 11.1.

The search continues to explain better the mediating variables which encourage employees to perform at a high level, but as you will see from this chapter there is much overlap between the key mediating variables proposed to date and the idea that there is an ‘answer’ to be found may well be an illusion.

The Window on practice below gives an example of satisfaction being used as an explana­tory variable, and given the prominence of commitment and motivation we will consider these in more detail next. We conclude this section with some key themes of current enquiry in explaining how HR policies and practice impact on employee performance.

1.1. Commitment

Commitment has been described as:

• Attitudinal commitment – that is, loyalty and support for the organisation, strength of identification with the organisation (Porter 1985), a belief in its values and goals and a readiness to put in effort for the organisation.
• Behavioural commitment – actually remaining with the company and continuing to pursue its objectives.

Walton (1985) notes that commitment is thought to result in better quality, lower turnover, a greater capacity for innovation and more flexible employees. In turn these are seen to enhance the ability of the organisation to achieve competitive advantage. Iles, Mabey and Robertson (1990) add that some of the outcomes of commitment have been identified as the industrial relations climate, absence levels, turnover levels and individual performance. Pfeffer (1998) and Wood and Albanese (1995) argue that commitment is a core variable, and Guest (1998, p. 42) suggests that:

The concept of organizational commitment lies at the heart of any analysis of HRM. Indeed the whole rationale for introducing HRM policies is to increase levels of commitment so that other positive outcomes can ensue.

Marchington and Zagelmeyer (2005) suggest that most studies explaining an HRM- performance link use some variant of the high commitment model. Hence we see the adoption of the terms ‘high commitment work practices’ and ‘high commitment man­agement’ and their linkage with high performance. Meyer and Allen (1997) argue that there is not a great deal of evidence to link high commitment and high levels of organ­isational performance.

Some authors, however, have argued that high commitment could indeed reduce organisational performance. Cooper and Hartley (1991) suggest that commitment might decrease flexibility and inhibit creative problem solving. If commitment reduces staff turn­over, this may result in fewer new ideas coming into the organisation. Staff who would like to leave the organisation but who are committed to it in other ways, for example through high pay and benefits, may stay, but may not produce high levels of performance.

As well as the debate on the value of commitment to organisational performance, there is also the debate on the extent to which commitment can be managed, and how it can be managed. Guest (1992) suggests that commitment is affected by: personal characteristics; experiences in job role; work experiences; structural factors; and personnel policies. This suggests there is a limit to the extent to which commitment can be manipulated.

More recently the emphasis on commitment is being downplayed as new areas of understanding are opening up, and old ones are being revisited.

1.2. Motivation

Until the 1980s performance was usually construed as the output of a combination of ability and motivation, given appropriate resources, and hence motivating others became a key part of most management skills training. The word motivation is gener­ally used to reflect the effort or drive that an individual puts into an activity. In spite of more recent attention to commitment, motivation is still considered to be an important influence on performance. It is not our purpose here to recount any motivation theories in detail (for this see texts such as Huczynski and Buchanan 2007; Mullins, 2006; Fulop and Linstead 1999; or Hollyforde and Whiddett 2002), but below we identify some of the key concepts addressed in motivation theories and suggest how HR policies and practice can influence motivation and potentially performance. Some theories of motivation emphasise the needs that individuals are motivated to fulfil (such as an adequate standard of living, recognition for good work, social activity and so on) and these are referred to as content theories of motivation. If work is constructed as an opportunity for these needs to be fulfilled then greater effort at work is predicted. Other theories explore the process of motivation. We draw on both types of theories here.

• Importance of the work itself. Maslow (1943), Herzberg (1968) and Hackman and Oldham (1976), for example, all underline the way in which individuals are motiv­ated to seek and may achieve satisfaction through their jobs. Herzberg, for example, identifies how opportunities for achievement, recognition, responsibility, autonomy, challenging tasks and opportunities for development may all be motivational. There are clear possibilities for HR policies and practice in this area. For example this would include policies on job design, empowerment, training and development and career development.
• Social needs are important. Maslow (1943), Mayo (1953) and McClelland (1971), among others, highlight the need for affiliation as a motivational factor. These needs are likely to be met by policies to incorporate teamwork and involvement generally.
• Reward cannot be ignored. For most employees pay is important, if not a sufficient motivator. Maslow (1943) recognizes the need to have sufficient money for basic needs, and Herzberg (1968) suggests that whilst pay may not motivate per se it does have the ability to demotivate if not sufficient. So policies which ensure that pay and benefits are comparable with, or greater than, competitors are likely to have some motivational value.
• Expectancy has an impact on motivation. Vroom’s (1964) expectancy theory of motivation recognises that in the process of motivation the extent to which the indi­vidual feels he or she can realistically achieve the target will have an influence on whether he or she is motivated even to try, so policies which enable individuals to agree targets would be appropriate. Communication, empowerment and involve­ment policies would have some impact here.
• Different people are motivated by different things. Expectancy theory, previously mentioned, also identifies that different individuals value different things and hence have different motivational needs. In the process of motivation, only those things that the individual values will spur them to act. So, for example, policies on work-life balance and time flexibility will be motivational for some people, whilst for others promotion policies may have more impact. Policies which enable managers to really get to know those who work for them would be appropriate here as well.
• Social context influences motivation. Recent work in the area of motivation suggests that motivations are socially or culturally determined, and this reinforces the issues identified in the point above.
• The influence of the line manager is key. McGregor (1960) argued that workers were basically motivated to be responsible and perform well. He suggested that if you treat people as responsible and self-motivated then they will act in a responsible and motivated manner. On the other hand if managers treat employees as if they are irresponsible and are basically work shy then they will act as such. The role of the line managers is increasingly seen as key and we discuss this in more detail below.

We have indicated how HR policies and practice can tap into employees’ motivation, but, just as with commitment, there is a limit to which individual motivation can be manipulated. For example, some people have less internal energy and drive than others and less need for growth. Also, individuals with high levels of energy and drive may satisfy these outside the work environment. While we may try to motivate people externally the greatest power for motivation comes from within and is therefore under the control of the individual rather than another. The best we can say is that managers can enhance employees’ motivation by the way they treat them, and at worst managers may neu­tralise the motivational energy in their followers. There will always be some factors on which managers and organisations have no impact whatsoever.

2. CURRENT DIRECTIONS IN HRM-PERFORMANCE THINKING

We have identified a number of problematic aspects of the research to date in under­standing the HRM-performance link. These have led to some slight changes in direction in order to develop our understanding of the issues. Key themes of interest are focused on exploring the discrepancy between intended and implemented HRM practices and the key role of the line manager; investigating the sustainability of high-performance work practices, and exploring alternative mediating variables. Underpinning each of these is a focus on understanding employee perceptions in relation to HRM, an area which has until recently been widely neglected (see, for example, Boselie et al. 2005). Hope Hailey et al. (2005) suggest that their research demonstrates the need to incor­porate the employee voice into conceptual models of the HRM-performance link, and Kinnie et al. (2005) propose that ‘the fulcrum of the HRM-performance causal chain is the employees’ reactions to HR practices as experienced by them’ and they go on to say that this is what drives discretionary behaviour.

In considering the employee view we are cognisant of the impact that line managers have on this, particularly in view of the continuing trend to devolve HR activities to the line, which we discuss in more detail in Chapter 32. Employees are influenced not so much by the way policies are intended to operate but by the way they are actually implemented (Kinnie et al. 2005) as this affects the meaning and sense that employees make of these policies and will affect their behaviour and performance (Hutchinson and Purcell 2003). It is therefore critical that line managers buy into and understand HR policies and implement them appropriately and fairly. As Richardson and Thompson (1999) suggest, there is a need to know if the HR practices ‘are . . . pursued by managers with equity, vigour and belief’.

Research however suggests that line managers often have differing interpretations of HR policies as they are often not precisely defined, and that the managers themselves are not adequately prepared for implementation (see, for example, Renwick 2003). Lack of consistency and perceived access to, and fairness of, policies as implemented by line managers are likely to damage employee attitudes, behaviours and performance, and employee dissatisfaction with policies has been shown to have a greater impact, in terms of lowering commitment, than the absence of policies (Purcell et al. 2003). Purcell and his colleagues provide an example of two Tesco stores each operating the same Tesco HRM policies but with very different performance levels. In this particular case the line manager’s role was identified as key in the way the policies were delivered and the con­sequent impact on employees and their performance.

The employee view is highly relevant not only in understanding how implementation of HR policies may vary from intention and the line manager’s role in this, but also in understanding the response to policies that are implemented as intended. Increasing attention is being given to the sustainability of high-performance work practices. High-performance work practices vary in their nature, and some approaches have been criticised as a form of work intensification, and whilst these practices may provide short­
term gains they do not provide a sustainable approach to increasing performance. In parallel with this there is a growing body of knowledge which until recently has not been reflected in the HRM-performance research, and this focuses on happiness and well­being. Such concepts are attracting considerable general attention of late. Guest (2002) argues that such concepts need to be built into the HRM-performance relationship and there is some evidence of their integration (see, for example, Peccei 2004). For example there is currently greater interest in practices such as work-life balance and support for physical and mental well-being, the argument being that such practices improve performance. Case study 11.2, ‘BT launches UK’s biggest mental health drive’, on the com­panion website, www.pearsoned.co.uk/torrington focuses on well-being and aspects of performance. However an alternative school of thought suggests that the combination of work-life balance practices and high-performance practices is contradictory. The combination of these practices therefore remains a challenge.

3. MAJOR PERFORMANCE INITIATIVES

We have previously considered some HR policies and practices that have been identified as related to high performance, and have noted the idea of using practices in bundles. Many of the popular performance initiatives that companies have adopted represent similar (but not the same) bundles of HR policies and practices, and we now turn to these. There are many small initiatives every day that help to improve performance, but we are concentrating here on major strategic initiatives although the labels may, of course, mean different things in practice in different organisations. Interestingly, Guest and King (2001) found that many senior managers were not aware of the research on performance, and it is therefore unclear what is informing senior managers’ choice of performance initiatives.

This brings us to the concern that too many initiatives in the same organisation will give conflicting messages to employees, particularly when they are introduced by different parts of the business. There may, for example, be contradictions between the messages of total quality management (‘right first time’) and those of the learning organisation type of approach (‘it’s OK to make mistakes as long as you learn from them’).

The performance research to date focuses very much on the individual, but we agree with Caulkin (2001) who suggests that organisations also need to develop the capability of the organisation as a whole, and to this end we include in Table 11.1 three levels of initiative depending on the primary focus: organisational, team or individual. Some of them cover some of the same ground, and it would be surprising to find them in the same business at the same time. In Chapter 14 on Leadership and change we discuss the intro­duction of practices such as these into the organisation.

Source: Torrington Derek, Hall Laura, Taylor Stephen (2008), Human Resource Management, Ft Pr; 7th edition.

There was a time when performance was seen primarily in terms of individual motiva­tion and performance. The focus has now shifted to emphasise performance of the organisation as a whole. While some performance variations are the result of individual differences, ultimate organisational performance can also be significantly affected by systems, processes, structures and culture. These are outside the control of the indi­vidual employee, but can be implemented and controlled to some extent by managers. The focus of this chapter is on the whole organisation and its performance, although it is inevitable that within this individual performance and team performance issues will play a part.

1. ORGANISATIONAL PERFORMANCE ‘INITIATIVES’

The word ‘initiative’ may appear inappropriate, as approaches to improving organisa­tional performance may be seen as long-term and permanent changes in the philosophy of the organisation and the way that it is managed. We use the word ‘initiative’ as this is usually the term used for packaging such ideas and presenting them to managers. These ‘initiatives’ generally involve a variety of organisational change measures, which may be structural, processual and/or cultural. Culture, in particular, has a high profile. How many times have you heard that organisations are attempting to develop a ‘quality culture’, a ‘learning culture’ or a ‘knowledge-centric culture’?

Many of these initiatives overlap; for example, similarities between business process re-engineering (BPR) and total quality management (TQM), and between TQM and learning organisations have been pointed out, although there are contradictions here too. Much current research and literature demonstrates the similarity between learning organisations and knowledge management. Similar concepts are used, such as ‘com­munities of practice’ (see, for example, Ortenblad 2001); and similar dilemmas are addressed, such as how to embed individual knowledge and learning into organisational systems and processes. Some of the same researchers investigate both areas, others link the two areas explicitly together (see, for example, Wang and Ahmed 2003; Easterby- Smith and Lyles 2005), conferences span both areas, for example the 2001 event in a series of conferences on organisational learning was entitled ‘Organizational Learning and Knowledge Management: New Directions’ (Vince et al. 2002), and in 2006 a special issue of the journal The Learning Organization focused on ‘Facilitating Organizational Learning and Knowledge Management’.

The term ‘initiative’ may also be misleading in that some organisations may display characteristics of these organisational performance strategies without ever consciously trying to implement such a strategy. A good example of this is provided by Jones (2001) who, in research on organisational twinning, claims that he might have ‘discovered’ a learning organisation. He suggests that members of the organisation may not have heard the term ‘learning organisation’, but the way that the organisation was led and managed provided the suitable conditions for a learning organisation to happen naturally. This is an interesting contrast to organisations which employ the rhetoric of a learning organ­isation but which in practice are quite different. In all of these performance initiatives, it is unfortunate that the way they have been applied does not always live up to the ideals that are promulgated.

2. LEARNING ORGANISATIONS

The interest in learning organisations has been stimulated by the need to be competitive, as learning is considered to be the only way of obtaining and keeping a competitive edge. Edmonson and Moingeon (1998, p. 9) put it very well when they say:

To remain viable in an environment characterized by uncertainty and change, organizations and individuals alike depend upon an ability to learn.

While the concept of organisational learning has been explored for some time, the concept of the learning organisation is a comparatively recent notion reflected in the literature since the late 1980s. Pedler et al. (1989) suggested that the concept of the learning organisation was a response to poor organisational performance. In other words they saw it as a way of overcoming

sluggishness, an excess of bureaucracy and over-control, of organisations as straitjackets frustrating the self-development efforts of individual members and failing to capitalise upon their potential.

In 1987 Pedler, Boydell and Burgoyne carried out a project entitled ‘Developing the Learn­ing Company’ and interviewed staff in organisations which were pursuing learning com­pany strategies. They asked why these strategies had been adopted, and found such reasons as the need to improve quality; the wish to become more people oriented in relation to both staff and customers; the need to encourage ‘active experimentation’ and generally to cope with competitive pressures in order to survive. They defined the learning organ­isation, which they identify as a ‘dream’ rather than a description of current practice, as:

an organisation which facilitates the learning of all its members and continually transforms itself.

There continues to be little empirical evidence of organisations that have transformed themselves like this, and in 1999 Sloman suggested that the concept of the learning organisation was in terminal decline. Part of the problem, he argues, is that there is such confusion over the concept and, as Stewart (2001) notes, a lack of tangible practices to implement. While Burgoyne (1999) and many others, such as Popper and Lipshitz (2000), concur with the extent of confusion, Burgoyne claims that there is still consider­able interest in the idea from both organisations and academics, and that our under­standing of the concept needs to be developed. He recognises that much of the early thinking about the learning organisation was naive, and suggests that, as the concept is developed, organisations will have more success with it. In particular, he describes the idea of becoming a learning organisation as one grand project, as ‘utopian and unrealistic’, and he recognises the value of a more incremental approach.

Easterby-Smith and Araujo (1999) note that a number of different disciplines have made a contribution to the debate on organisational learning and learning organisations, producing a plurality of perspectives. Part of the confusion, though, lies in the practices adopted by organisations under the banner of a learning organisation, rather than in the fundamental ideas. For example Yeo (2005) refers to nine different theoretical positions on the learning organisation. Academics and theorists may place different emphases on different aspects, but these are mutually supportive rather than conflicting. There is a common thread of a holistic approach and that organisational learning is greater than the sum of individual learning in the organisation. Different organisations appear to have been inspired by some aspects of this approach and, having adopted these, they see themselves as learning organisations. In essence they have taken some steps towards their goal, and have certainly improved the level of learning going on in the organisa­tion, but have taken a partial rather than a holistic approach. A further confusion lies in the difference between the nature of organisational learning and the learning organisa­tion, which we consider in the following section.

2.1. Organisational Learning and the Learning Organisation

The study of organisational learning is based on the detached observation of indi­vidual and collective learning processes in the organisation. The approach is critical and academic, and the focus is the nature and processes of learning, whereas Easterby- Smith and Araujo (1999) suggest that the study of learning organisations is focused on ‘normative models for creating change in the direction of improved learning processes’. Much of the research on learning organisations has been produced by consultants and organisations that are involved in the process. In other words the data come from an action learning perspective and are produced by interested parties, giving, inevitably, a positive spin to what is produced. This is not to say that the learning organisation perspective is devoid of theory. The study of learning organisations often focuses on organisational learning mechanisms, and these can be seen as a way of making the concept of organisational learning more concrete, and thus linking the two perspectives. Popper and Lipshitz (1998) describe organisational learning mechanisms as the structural and procedural arrangements that allow organisations to learn, in other words:

that is to collect, analyse, store, disseminate and use systematically information that is relevant to their and their members’ performance.

These issues are well reflected in Pedler et al.’s (1991) model of the learning organ­isation, which we will describe shortly. Easterby-Smith and Araujo (1999) argue that the literature on the learning organisation draws heavily on the concepts of organisational learning, from a utilitarian perspective, and there is some commonality in the literature, as Argyris and Schon (1996) suggest. It is generally agreed that there is a lack of critical research from both perspectives.

2.2. Organisational and individual learning

Although some pragmatic definitions of learning organisations centre on more and more individual learning, learning support and self-development, organisational learning is

more than just the sum of individual learning in the organisation. It is only when an individual’s learning has an impact on and interrelates with others that organisation members learn together and gradually begin to change the way things are done.

In this way mutual behaviour change is achieved which increases the collective com­petence, rather than just individual competence. Argyris and Schon (1978) see such learning as a change in the ‘theory in use’ (that is, the understanding, whether conscious or unconscious, that determines what we actually do) rather than merely a change in the ‘espoused’ theory (what we say we do). In other words the often unspoken rules of the organisation have changed. The question of how individual learning feeds into organ­isational learning and transformation, and how this is greater than the sum of individual learning, is only beginning to be addressed. Viewing the organisation as a process rather than an entity may offer some help here. Another perspective is that of viewing the organisation as a living organism. Pedler et al. (1991) make a useful start with their com­pany energy flow model, shown in Figure 12.1.

Argyris and Schon (1978) describe different levels, or loops, of organisational learn­ing, which others have developed. These levels are:

• Level 1: Single loop learning. Learning about how we can do better, thus improving what we are currently doing. This is seen as learning at the operational level, or at the level of rules.

• Level 2: Double loop learning. A more fundamental level, which is concerned with ‘why’ questions in relation to what we are doing rather than with doing the same things better, that is, questioning whether we should be doing different things. This level is described as developing knowledge and understanding due to insights, and can result in strategic changes and renewal.
• Level 3: Triple loop learning. This level of learning is the hardest of all to achieve as it is focused on the purpose or principles of the organisation, challenging whether these are appropriate, and is sometimes described as learning at the level of will or being.

All these levels of organisational learning are connected, as shown in Figure 12.2.

2.3. What are the characteristics of learning organisations?

There are many different approaches to describing the characteristics of a learning organisation, and we shall briefly consider three of these. First, we look at the approach of Pedler et al. (1991), who identify 11 characteristics of a learning organisation, grouped into five general themes.

Strategy

Two characteristics within this theme are suggested, first that a learning approach to strategy should be taken. Strategy formation, implementation, evaluation and improve­ment are deliberately structured as learning experiences by using feedback loops. Second, participative policy making infers that this is shared with all in the organisation, and even further, that suppliers, customers and the total community have some involve­ment. The aim of the policy is to ‘delight customers’, and the differences of opinion and values that are revealed in the participative process are seen as productive tensions.

Looking in

Four characteristics are suggested within this theme – the first being informating which involves using technology to empower and inform employees, and to ensure information is made widely available. They note that such information should be used to provide understanding about what is going on in the company, and so stimulate learning, rather than being used to reward, punish or control. Second, there is formative accounting and control which involves designing accounting, budgeting and reporting systems to assist learning. Third, there is internal exchange which involves all internal units seeing them­selves as customers and suppliers of each other. Fourth, they identify reward flexibility, which implies that the question of why some receive more money than others is a debate to be brought out into the open. They recommend that alternatives are discussed and tried out, but recognise that this is the most difficult of the 11 characteristics to put into practice.

Structures

Enabling structures suggest that roles are loosely structured in line with the needs of internal customers and suppliers, and in a way that allows for personal growth and experimentation. Internal boundaries can be flexible. For example, project groups and transient structures help to break down barriers between units, provide mechanisms for spreading new ideas and encourage the idea of change.

Looking out

Boundary workers as environmental scanners implies that part of the role of all workers in contact with suppliers, customers and neighbours of the organisation should be to participate in data collection. A second feature in this theme is inter-company learning, which entails joining with customers, suppliers and possibly competitors in training experiences, research and development and job exchanges. They also suggest that benchmarking can be used to learn from other companies.

Learning opportunities

First, a learning climate is important, that is, one that encourages experimentation and learning from experience, questioning current ideas, attitudes and actions and trying out new ideas. Mistakes are allowed because not all new ideas will work. There is a focus on continuous improvement, and the involvement of customers, suppliers and neighbours in experimentation is suggested. A learning climate suggests that feedback from others is continually requested, is made available and is acted upon. Second, self-development opportunities for all requires resources and facilities for self-development for employees at all levels in the organisation, and coaching, mentoring, peer support, counselling, feedback and so on must be available to support individuals in their learning.

Peter Senge (1990) takes a slightly different perspective. In his book about the art and practice of a learning organisation he identified five vital dimensions in building organisations which can learn, which he refers to as disciplines:

1. Systems thinking. This is an understanding of the interrelatedness between things, seeing the whole rather than just a part and concentrating on processes. In terms of organisational actions it suggests that connections need to be constantly made and that there must be consideration of the implications that every action has elsewhere in the organisation.
2. Personal mastery. This underlines the need for continuous development and indi­vidual self-development.
3. Mental models. This is about the need to expose the ‘theories in use’ in the organ­isation. These can block change and the adoption of new ideas, and can only be confronted, challenged and changed if they are brought to the surface rather than remaining unconscious.
4. Shared visions. This is expressing the need for a common purpose or vision which can inspire members of the organisation and break down barriers and mistrust. Senge argues that such a vision plus an accurate view of the present state results in a creative tension which is helpful for learning and change.
5. Team learning. Teams are seen as important in that they are microcosms of the organisation, and the place where different views and perspectives come together, which Senge sees as a productive process.

Senge acknowledges that he presents a very positive vision of what organisations can do, and recognises that without the appropriate leadership this will not happen. He goes on to identify three critical leadership roles: designer, teacher and steward. As designer the leader needs to engage employees at all levels in designing the vision, core purpose and values of the organisation: design processes for strategic thinking and effective learning processes. As teacher the leader needs to help all organisation members gain more insight into the organisational reality, to coach, guide and facilitate, and help others bring their theories into use. As steward the leader needs to demonstrate a sense of personal commitment to the organisation’s mission and take responsibility for the impact of leadership on others.

Bob Garratt (1990) concentrates on the role that the directors of an organisation have in encouraging a learning organisation and in overcoming learning blocks. He suggests:

• the top team concentrate on strategy and policy and hold back from day-to-day operational issues;
• thinking time is needed for the top team to relate changes in the external environment to the internal working of the organisation;
• the creation of a top team, involving the development and deployment of the strengths of each member;
• the delegation of problem solving to staff close to the operation;
• acceptance that learning occurs at all levels of the organisation, and that directors need to create a climate where this learning flows freely.

Clearly, a learning organisation is not something that can be developed overnight and has to be viewed as a long-term strategy.

Easterby-Smith (1990) makes some key points about encouraging experimentation in organisations in relation to flexible structures, information, people and reward. We have discussed flexibility and information in some detail. In respect of people he argues that organisations will seek to select those who are similar to current organisation members. The problem here is that such a strategy, in reinforcing homogeneity and redu­cing diversity, restrains the production of innovative and creative ideas. He sees diversity as a positive stimulant and concludes that organisations should therefore select some employees who would not normally fit their criteria, and especially those who would be likely to experiment and be able to tolerate ambiguity. In relation to the reward system he notes the need to reinforce rather than punish risk taking and innovation.

Critique

The initial idealism of the learning organisation concept has been tempered by experi­ences, and more pragmatic material is gradually being developed. Popper and Lipshitz (2000) have identified four conditions under which organisational learning is likely to be productive. These are in situations where there is:

1. Valid information – that is, complete, undistorted and verifiable information.
2. Transparency – where individuals are prepared to hold themselves open to inspection in order to receive valid feedback. This reduces self-deception, and helps to resist pressures to distort information.
3. Issues orientation rather than a personal orientation – that is, where information is judged on its merits and relevance to the issue at hand, rather than on the status or attributes of the individual who provides the information.
4. Accountability – that is, ‘holding oneself responsible for one’s own actions and their consequences and for learning from these consequences’.

In a different approach Burgoyne (1999) provides a list of nine things that need to happen for continuous learning to become a reality.

There remains a wide range of concerns regarding the concept of the learning organ­isation. Hawkins (1994) notes the evangelistic fervour with which learning organisations and total quality management (TQM) are recommended to the uninitiated and fears that the commercialisation of these ideas means that they become superficial. He argues that an assumption may be made that all learning is good whatever is being learned, whereas the value of learning lies in where it is taking us and, as Stewart (2001) points out, learning is neither objective nor neutral. Learning should be seen as the means rather than the end in itself. Learning to be more efficient at what is being done does not necessarily make one more effective; it depends on the appropriateness of the activity itself. It is not surprising therefore that there is a lack of evidence linking learning organ­isation strategies with financial performance (see, for example, Sonsino 2002).

Nor does the literature cover adequately the barriers to becoming a learning organisation – for example, the role of politics within the organisation. If learning requires sharing of information, and information is power, then how can individuals be encouraged to let go of the power they have? There has also been a lack of attention to emotion, ethics and human irrationality. Harris (2002), for example, demonstrates how the potential for learning in her retail bank case studies was constrained by the
overwhelming desire to maintain continuity in the organisation. Other qualitative work concentrating on employee perceptions has found that some employees exclude themselves from being part of a learning organisation, apparently feeling no need to develop further (Dymock and McCarthy 2006).

In particular, both Senge (1990) and Garratt (1990) have high expectations of the leaders of organisations. To what extent are these expectations realistic, and how might they be achieved? The literature of learning organisations has a clear unitarist perspective – the question of whether employees desire to be involved in or united by a vision of the organisation needs to be addressed. The question of willing participation was also raised by Harris when she found that contractors were unwilling to share their learning when leaving the organisation, even though this expectation was built into their contracts. For a useful critique of the assumptions behind learning organisations, see Coopey (1995). In addition, the full complexity of the ideas implicit in the words ‘learning organisation’ requires more explanation.

The problems in implementing learning organisation prescriptions has led Sun and Scott (2003) to suggest that attention needs to refocus on organisational learning in order really to understand how individual learning can be transformed into collective learning, and they suggest some useful ways forward. An alternative development is that of the ‘living company’ which extends the learning organisation concept, and this is the subject of Case 12.1 on this book’s companion website, www.pearsoned.co.uk/torrington. Another focus has been the more recent attention to knowledge management which is generally presented in a more practical/applicable manner, and yet as we have previ­ously suggested has some similar foundations to the learning organisation.

Source: Torrington Derek, Hall Laura, Taylor Stephen (2008), Human Resource Management, Ft Pr; 7th edition.

1. KNOWLEDGE MANAGEMENT

Knowledge and its perceived value

Knowledge is increasingly viewed as a critical organisational resource which provides competitive advantage, and as Gourlay (2006) demonstrates, it has a particular import­ance for multinational companies (MNCs). As the speed of change gets faster organisa­tions increasingly need innovations, new ideas and new ways of doing things to keep ahead of the competition, and they constantly need to know what their competitors and customers are doing. Increasing organisational knowledge is seen to underpin this. In addition knowledge-based organisations, such as consultancies and finance companies, are growing. The growth of knowledge work and the increasing number of knowledge workers has been well reported. Examples of knowledge workers are research and development staff, legal, IT, accounting and other professionals. But, although the prevalence of knowledge work still accounts for only a minority of workers in the UK (Nolan 2001), it would be a mistake to see knowledge as relevant just to such a narrow range of staff (see, for example, Evans 2003). We take the view in this chapter that knowledge is important for everyone in the organisation.

There are many different perspectives in the literature on what constitutes know­ledge, and for an academic debate about the nature of knowledge see Tsoukas and Vladimirou (2001). At a simple level we can say that data are raw facts, that analysis and contextualisation of raw data so that they become something meaningful produce informa­tion, and that knowledge is more than information in that it has been reflected on and processed to the extent that it can be applied and is with the person who needs to apply it. Explicit knowledge, sometimes referred to as operational knowledge, or the ‘know what’ type of knowledge, can be codified and stored for others to access. Examples here might be competitors’ price changes, new competitor products, customer buying patterns and changes in employment legislation.

However, most knowledge is more complex than this, it is something which resides in a person’s head and we are often unaware of what we know until we come to use it. This is usually referred to as tacit knowledge, or the ‘know how’ type of knowledge. This is made up of our accumulated experiences about how things are done, how prob­lems can be solved, what works, what doesn’t and in what contexts and under what con­ditions. An example of this might be a fireman who during a fire would be able to work out when a backdraught would be likely to occur and could then make sure the imme­diate area is clear of people. Working this out involves a series of decision processes about the current conditions of the fire and comparing this with previous experiences when backdraughts have occurred. This is usually done intuitively. For anyone else to use this knowledge it needs to be made explicit, which is recognised by many as difficult, and by some as unachievable. Knowledge management initiatives may cover either or both types of knowledge.

Knowledge in itself is not enough as it has to be accessed, applied appropriately and used to enhance the organisation’s ability to achieve its objectives. Thus for knowledge to be of value it needs to be turned into action. Given this, it is not surprising that atten­tion has been focused on how to generate knowledge, how to share knowledge and how to reuse it – in other words knowledge management.

2. MANAGING KNOWLEDGE

Knowledge management has been variously defined and the term is ambiguous. In this chapter we will use a definition suggested by Scarbrough and Swan (2001):

defined broadly and inclusively to cover a loosely connected set of ideas, tools and practices centring on the communication and exploitation of knowledge in organisations. (p. 3)

Our understanding of what knowledge is will have implications for the way we try to manage it. Early approaches to knowledge management focused on IT systems as a means of codifying an individual’s knowledge, storing it and making it available to others in the organisation. This somewhat simplistic approach was based on the concept that knowledge is an abstract objective truth which can be easily recorded and manipu­lated, separately from the person who created the knowledge. The resultant activity led to a proliferation of organisational databases, search programmes, yellow pages type directories, intranets and extranets. An example of an extranet is provided by Hunter et al. (2002) in the context of a legal firm which offered professional knowledge in this format to valued clients as part of the service that they paid for. While this may be use­ful for the explicit knowledge referred to above, and is the focus of much research work in the area, it has very limited value.

The alternative perspective is that knowledge is personal and socially constructed. In other words, knowledge is an ongoing interpretation of the external world, as suggested by Blackler (2000):

knowledge to be . . . pragmatic, partial, tentative and always open to revision – it is no more, and no less, than a collective interpretation. (p. 61)

This perspective suggests that codifying knowledge and using IT systems to store and share it is inadequate. Instead attention needs to be focused on ‘communities of interest’ – in other words the way in which individuals with a common interest network to share knowledge and spark off new ideas. A second focus is on the way that knowledge becomes embedded into systems, processes and culture within the organisation. This perspective requires that individuals need to be willing to share their knowledge, and since knowledge is power, there can be no assumptions that individuals will comply. To this end encouraging and perhaps facilitating various types of networking would be more appropriate. Trust in the organisation is critical here as sharing knowledge may involve admitting to failures and what has been learned from them and giving bad news. Project write-ups and reports may also be used in trying to make tacit knowledge explicit, especially when individuals holding the knowledge may leave the organisation. An example of this is a Department Head in a university who was aware that a valued member of staff teaching a very specialist area was about to retire and instigated a pro­ject to document their teaching content and methods so that their particular knowledge would not be lost to the university.

Kermally identifies a range of knowledge management initiatives, based on Nonaka and Takeuchi’s (1995) model of how organisational knowledge can be created. Kermally suggests that to develop knowledge through socialisation activities such as brainstorm­ing, informal meetings, conversations, coaching, mentoring, interacting with customers,
on-the-job training and observation may be helpful; to develop knowledge through externalisation, databases, exchange of best practices, building models, after-action reviews and master classes would also be helpful; for a combined approach, confer­ences, publications and electronic libraries are suggested; and for knowledge internalisa­tion, feedback from customers, facilitation skills and development counselling would be helpful.

The barriers to knowledge management have been variously identified as the culture of the organisation, the risk of admitting to failure, lack of incentive to change, resist­ance to ideas and learning from other contexts, internal competition and individual reward practices. Factors identified as encouraging knowledge management are an organisation which engenders trust and openness, a knowledge-centric culture, defined roles and responsibilities in knowledge management, support through the performance management system (such as targets about sharing knowledge and team/organisational rewards), building on informal practices which already exist.

It has been suggested that organisations need to make all their knowledge manage­ment activities explicit in order to justify the investment made and demonstrate the organisation’s commitment to knowledge. Strategies for making knowledge manage­ment explicit are the subject of Case 12.2 at www.pearsoned.co.uk/torrington.

2.1. Roles in knowledge management

Evans (2003) notes that there is still much confusion about the responsibility for and accountabilities in knowledge management, and Lank (2002) suggests three new organ­isational roles intended to promote knowledge management:

• The knowledge architects. Lank suggests that these are senior, strategic roles such as Chief Knowledge Officer and involve, among other things, working out which knowledge is critical and how it will be shared, how technology could be used, how people will be trained, how they will be rewarded for collaborative working.
• The knowledge facilitators. These are the people who run processes to help know­ledge flow, for example company journalists who write up customer case studies and project reviews; librarians who develop indexes for storage and retrieval of informa­tion; information service providers who provide an internal consultancy service to find and deliver information to staff – including external and internal information; webmasters who develop the company intranet; and learning facilitators who can facilitate post-event reviews to elicit lessons learned.
• The knowledge aware. These include all employees, who have a responsibility to share their own expertise and knowledge, who will participate in post-event reviews, and who act to reinforce the value of collaboration.

There are two critical roles missing here – the line manager and the HR specialist. MacNeil (2003) makes a convincing case for the importance of the line manager in knowledge management which she suggests has been overlooked to date. She identifies the line manager’s contribution as creating a positive learning climate, encouraging open exchange, reinforcing that making mistakes is acceptable and that it is helpful to share errors. She does, however, note that there are questions about the extent to which line managers have the skills to facilitate knowledge management.

Given a broader understanding of knowledge as outlined above, then knowledge management is inevitably bound up with human resource management in overcoming barriers and in proactively supporting knowledge management. HR professionals may, for example, utilise facilitation skills in supporting knowledge management, or they align human resource activities with knowledge management needs.

2.2. Knowledge management and human resource management

MacNeil (2003) goes on to suggest that there has been a lack of research on the links between HRM and knowledge management, yet Lengnick-Hall and Lengnick-Hall (2003) suggest that knowledge facilitator is a key HR role. They suggest that HR has a key role in:

developing the motivation, competencies, value orientation, and knowledge of the firm’s strategic intent to use knowledge to enhance organisational capabilities. (p. 90)

In more detail they recommend that HR managers need to design organisational structures and processes that promote knowledge diffusion, contribute to designing user-friendly systems for accessing knowledge and training people in their use, develop a knowledge-centric culture, provide mechanisms for people to share knowledge – for example allowing teams to work together long enough to develop knowledge together and then move people around the organisation to cross-fertilise.

Scarbrough and Carter (2000) asked their sample of researchers in the knowledge management area what implications their work had for HRM, and found that:

• 27 per cent claimed there were implications for recruitment and selection policy;
• 63 per cent claimed there were implications for training and development in the workplace;
• 27 per cent claimed there were implications for rewards and appraisal;
• 77 per cent claimed there were implications for organisational and cultural change policy and practice.

At a strategic level Scarbrough and Carter identify five different perspectives in the work on knowledge management and draw out the implications that each has for HRM:

• Best practice perspective. Encouraging employees to share knowledge and cooperate with knowledge management initiatives. If commitment is required in order that indi­viduals are prepared to share their knowledge and remain with the organisation then ‘best practice’ HRM will be important to generate that commitment. (See Chapter 2 for a reminder of this approach.)
• Knowledge work perspective. Managing knowledge work and knowledge workers. Such workers may have distinctive needs in terms of motivation, job challenge, autonomy, careers and so on. These will need to be addressed by HR policies. For further depth on this issue see Beaumont and Hunter (2002).
• Congruence perspective. Increasing performance by aligning HRM and knowledge management practices. For a reminder of this see the fit model of HR strategy in Chapter 2.
• Human and social capital perspective. This involves the development of human and social resources in the organsisation. This both underpins the success of knowledge management initiatives and mobilises longer-term capabilities. This perspective is based on the resource-based view of the firm that we explored in Chapter 2.
• Learning perspective. This perspective incorporates two different approaches. First is the notion of communities of learning, discussed above, which draws attention to the way tacit knowledge is developed and shared in practitioner groups. Second, there is organisational learning which focuses on how learning can be embedded in organisa­tional routines and processes to improve organisational performance.

Source: Torrington Derek, Hall Laura, Taylor Stephen (2008), Human Resource Management, Ft Pr; 7th edition.

Managing individual performance in organisations has traditionally centred on assess­ing performance and allocating reward, with effective performance seen as the result of the interaction between individual ability and motivation.

Increasingly, it is recognised that planning and enabling performance have a critical effect on individual performance, with performance goals and standards, appropriate resources, guidance and support from the individual’s manager all being central.

The words ‘performance management’ are sometimes used to imply organisational targets, frameworks like the balanced scorecard, measurements and metrics, with indi­vidual measures derived from these. This meaning of performance management has been described by Houldsworth (2004) as a harder ‘performance improvement’ approach compared with the softer developmental and motivational approaches to aligning the individual and the organisation, which she suggests equates to good management prac­tice. We adopt this as a very helpful distinction and in this chapter focus on the softer approach to employees and teams, covering aspects of the organisational measurement approach in Chapter 33 on Information technology and human capital measurement.

1. PERFORMANCE MANAGEMENT AND PERFORMANCE APPRAISAL

1.1. Appraisal systems

Traditionally performance appraisal systems have provided a formalised process to review employee performance. They are centrally designed, usually by the HR function, requiring each line manager to appraise the performance of their staff, usually each year. This normally requires the manager and employee to take part in a performance review meeting. Elaborate forms are often completed as a record of the process, but these are not living documents, they are generally stored in the archives of the HR department, and the issue of performance is often neglected until the next round of performance review meetings.

What is being appraised varies and might cover personality, behaviour or job perform­ance, with measures being either quantitive or qualitative. Qualitative appraisal is often an unstructured narrative on the general performance of the appraisee, although some guidance might be given as to the areas on which the appraiser should comment. The problem with qualitative appraisals is that they may leave important areas unappraised, and that they are not suitable for comparison purposes.

Coates (1994) argues that what is actually measured in performance appraisal is the extent to which the individual conforms to the organisation. Some traditional appraisal was based on measures of personality traits that were felt to be important to the job. These included traits such as resourcefulness, enthusiasm, drive, application and other traits such as intelligence. One difficulty with these is that everyone defines them differ­ently. Raters, therefore, are often unsure of what they are rating, leaving more scope for bias and prejudice. Another problem is that since the same scales are often used for many different jobs, traits that are irrelevant to an appraisee’s job may still be measured.

Other approaches link ratings to behaviour and performance on the job. So perform­ance may be reviewed against key aspects of the job or major headings on the job description. Behaviourally anchored rating scales (BARS) and behavioural observation scales (BOS) are specific methods of linking ratings with behaviour at work, although evidence suggests that these are not widely used (Williams 2002).

Another method of making appraisal more objective is to use the process to set job objectives over the coming year and, a year later, to measure the extent to which these objectives have been met. The extent to which the appraisee is involved in setting these objectives varies considerably. When a competency profile has been identified for a particular job, it is then possible to use this in the appraisal of performance. Many appraisal systems combine competency assessment with assessment against objectives or job accountabilities. IRS (2005b) report that 89 per cent of their respondents that used appraisals measured employees against objectives or goals, with 56 per cent measuring against competencies and 53 per cent measuring against pre-set performance standards, as might be used in a harder approach to performance improvement.

Lastly, performance may be appraised by collecting primary data via various forms of electronic surveillance system. There are increasing examples of how activity rates of computer operators can be recorded and analysed, and how the calls made by telephone sales staff can be overheard and analysed. Sewell and Wilkinson (1992) describe a Japanese electronics plant where the final electronic test on a piece of equipment can indicate not only faults but the individual operator responsible for them. On another level some companies test the performance of their sales staff by sending in assessors act­ing in the role of customer (Newton and Findlay 1996), often termed ‘mystery shoppers’.

In a recent survey (IRS 2005a) 146 of the 154 respondents used appraisal, and of the 146 mixed size, but mainly large companies, 91 per cent appraised all employees. But while performance appraisal has gradually been applied to wider groups of employees, beyond managers and professionals, there are also concerns that appraisal systems are treated as an administrative exercise, are ineffective, and do little to improve perform­ance of employees in the future.

A further problem with such systems is the lack of clarity of purpose. The Employment Studies Institute (IRS 2001) suggests that appraisal is a victim of its own expectations, in that it is expected to deliver in too many areas. Systems may focus on development, identifying future potential, reward, identifying poor performers, or motivation. In systems where appraisal results were linked to reward the manager was placed in the position of an assessor or judge. Alternatively some systems focused on support or development, particularly in the public sector. These provided a better opportunity for managers to give constructive feedback, for employees to be open about difficulties, and for planning to improve future performance. Many systems try to encompass both approaches; for example in the IRS survey (IRS 2005b) 92 per cent of companies used appraisal to determine training and development needs (mainly form­ally), and 65 per cent used the system either formally or informally to determine pay, with 43 per cent using it formally or informally to determine bonuses. However, as these approaches conflict, the results are typically unsatisfactory.

Another example is an event experienced by one of the present authors when running a course on Performance Appraisal in the Czech Republic some time after the Velvet Revolution. Managers on the course said that the use of performance appraisal would be entirely unacceptable at that time as workers would associate it with what had gone before under the communist regime. Apparently every year a list of workers was published in order of the highest to the lowest performer. Whilst this list was claimed to represent work performance the managers said that in reality it represented degrees of allegiance to the communist party and was nothing to do with work performance.

The effectiveness of appraisal systems hinges on a range of different factors. Research by Longenecker (1997) in the USA sheds some light on this. In a large-scale survey and focus groups he found that the three most common reasons for failure of an appraisal system were: unclear performance criteria or an ineffective rating instrument (83 per cent); poor working relationships with the boss (79 per cent); and that the appraiser lacked information on the manager’s actual performance (75 per cent). Other problems were a lack of ongoing performance feedback (67 per cent) and a lack of focus on man­agement development/improvement (50 per cent). Smaller numbers identified problems with the process, such as lack of appraisal skills (33 per cent) and the review process lacking structure or substance (29 per cent).

Ownership of the system is also important. If it is designed and imposed by the HR function there may be little ownership of the system by line managers. Similarly, if paperwork has to be returned to the HR function it may well be seen as a form-filling exercise for someone else’s benefit and with no practical value to performance within the job. There is an increasing literature indicating that appraisal can have serious negative consequences for the employee and IRS (2005b) found that whilst 40 per cent of respond­ents in their survey reported no negative consequences, 30 per cent had negative impacts for the organisation, the individual or a relationship, and were able to explain specific incidents where this had happened. Political manipulation of the appraisal process is increasingly being recognised as problematic.

More fundamentally Egan (1995) argues that the problem with appraisal not only relates to poor design or implementation, but is rooted deeply in the basic reaction of organisational members to such a concept. There is an increasing body of critical literature addressing the role and theory of appraisal. These debates centre on the under­lying reasons for appraisal (see, for example, Barlow 1989; Townley 1989, 1993; Newton and Findlay 1996) and the social construction of appraisal (see, for example, Grint 1993). This literature throws some light on the use and effectiveness of performance appraisal in organisations.

1.2. Performance management systems

While many appraisal systems are still in existence and continue to be updated, per­formance management systems are increasingly seen as the way to manage employee performance, and have incorporated the appraisal/review process into this. In the Focus on skills at the end of Part 3 we consider the performance appraisal interview in the context of either an appraisal or a performance management system. Clark (2005) pro­vides a useful definition of performance management, stating that the essence of it is:

Establishing a framework in which performance by human resources can be directed, monitored, motivated and refined, and that the links in the cycle can be audited. (p. 318)

Bevan and Thompson (1992) found that 20 per cent of the organisations they surveyed had introduced a performance management system. Armstrong and Baron (1998a) report that 69 per cent of the organisations they surveyed in 1997 operated a formal pro­cess to measure manager performance. Such systems are closely tied into the objectives of the organisation, so that the resulting performance is more likely to meet organisa­tional needs. The systems also represent a more holistic view of performance. Perform­ance appraisal or review is almost always a key part of the system, but is integrated with performance planning, which links an individual’s objectives to business objectives to

ensure that employee effort is directed towards organisational priorities: support for performance delivery (via development plans, coaching and ongoing review) to enable employee effort to be successful, and that performance is assessed and successful per­formance rewarded and reinforced.

The conceptual foundation of performance management relies on a view that per­formance is more than ability and motivation. It is argued that clarity of goals is key in enabling the employee to understand what is expected and the order of priorities. In addition goals themselves are seen to provide motivation, and this is based on goal­setting theory originally developed by Locke in 1968 and further developed with practical applicability (Locke and Latham 1990). Research to date suggests that for goals to be motivating they must be sufficiently specific, challenging but not impossible and set participatively. Also the person appraised needs feedback on future progress.

The other theoretical base of performance management is expectancy theory, which states that individuals will be motivated to act provided they expect to be able to achieve the goals set, believe that achieving the goals will lead to other rewards and believe that the rewards on offer are valued (Vroom 1964). Given such an emphasis on a link into the organisation’s objectives it is somewhat disappointing that Bevan and Thompson found no correlation between the existence of a performance management system and organisational performance in the private sector. Similarly, Armstrong and Baron (1998a) report from their survey that no such correlation was found. They do report, however, that 77 per cent of organisations surveyed regarded their systems as effective to some degree and Houldsworth (2003), using the Henley and Hay Group survey of top FTSE companies and public sector respondents, reports that 68 per cent of organisations rated their performance management effectiveness as excellent. While Houldsworth et al. (2005) propose that performance management practice is now more sophisticated and better received by employees, we suggest that it still remains an act of faith.

Some performance management systems are development driven and some are reward driven. Whereas in the 1992 IPD survey 85 per cent of organisations claimed to link performance management to pay (Bevan and Thompson 1992), Armstrong and Baron (1998a) found that only 43 per cent of survey respondents reported such a link. How­ever, 82 per cent of the organisations visited had some form of performance-related pay (PRP) or competency-based pay, so the picture is a little confusing. They suggest that a view is emerging of performance management which centres on ‘dialogue’, ‘shared understanding’, ‘agreement’ and ‘mutual commitment’, rather than rating for pay pur­poses. To this end organisations are increasingly suggesting that employees take more ownership of performance management (see Scott 2006 for a good example) and become involved in collecting self-assessment evidence throughout the year (IDS 2005). While these characteristics may feature in more sophisticated systems, Houldsworth (2003) reports that 77 per cent of organisations link performance assessments with pay, and it appears that many organisations are trying to achieve both development and reward outcomes. She also contrasts systems driven by either performance development or per­formance measurement, finding that the real experience of developmental performance management is that it is motivational, encourages time spent with the line manager, encourages two-way communication and is an opportunity to align roles and training with business needs. Alternatively, where there is a measurement focus, performance management is seen as judgemental, a chance to assess and get rid of employees, emphasises control and getting more out of staff, raises false expectations and is a way to manage the salaries bill. (See Table 13.1.)

2. STAGES IN A PERFORMANCE MANAGEMENT SYSTEM

Figure 13.1 shows a typical performance management system, including both develop­ment and reward aspects, the main stages of which are discussed below.

2.1. Business mission, values, objectives and competencies

There is an assumption that before it is able to plan and manage individual performance the organisation will have made significant steps in identifying the performance required of the organisation as a whole. In most cases this will involve a mission statement so that performance is seen within the context of an overriding theme. In addition many organ­isations will identify the strategic business objectives that are required within the current business context to be competitive and that align with the organisation’s mission statement.

Many organisations will also identify core values of the business and the key compe­tencies required. Each of these has a potential role in managing individual performance.

Organisational objectives are particularly important, as it is common for such objectives to be cascaded down the organisation in order to ensure that individual objectives contribute to their achievement (for an example of an objective-setting cascade, see Figure 13.2).

2.2. Planning performance: a shared view of expected performance

Individual objectives derived from team objectives and an agreed job description can be jointly devised by manager and employee. These objectives are outcome/results oriented rather than task oriented, are tightly defined and include measures to be assessed. The objectives are designed to stretch the individual, and offer potential development as well as meeting business needs. It is helpful to both the organisation and the individual if objectives are prioritised. Many organisations use the ‘SMART’ acronym for describing individual objectives or targets:

• Specific
• Measurable
• Appropriate
• Relevant
• Timed

It is clearly easier for some parts of the organisation than others to set targets. There is often a tendency for those in technical jobs, such as computer systems development, to identify purely technical targets, reflecting the heavy task emphasis they see in their jobs. Moving staff to a different view of how their personal objectives contribute to team and organisational objectives is an important part of the performance management process. An objective for a team leader in systems development could be:

To complete development interviews with all team members by end July 2007 (written March 2007).

Clearly, the timescale for each objective will need to reflect the content of the objective and not timescales set into the performance management system. As objectives are met, managers and their staff need to have a brief review meeting to look at progress in all objectives and decide what other objectives should be added, changed or deleted. Five or six ongoing objectives are generally sufficient for one individual to work on at any time. A mix of objectives about new developments and changes as well as routine aspects of the job is generally considered to be appropriate.

The critical point about a shared view of performance suggests that handing out a job description or list of objectives to the employee is not adequate. Performance expecta­tions need to be understood and, where possible, to involve a contribution from the employee. For example, although key accountabilities may be fixed by the manager, they will need to be discussed. Specific objectives allow for and benefit from a greater degree of employee input as employees will have a valid view of barriers to overcome, the effort involved and feasibility. Expressing objectives as a ‘what’ statement rather than a ‘how’ statement gives employees the power to decide the appropriate approach once they begin to work on the issue. Incorporating employee input and using ‘what’ statements are likely to generate a higher degree of employee ownership and com­mitment. However, difficulties have been experienced with purely ‘what’ objectives as there may be appropriate and inappropriate ways of achieving an objective. For example, a manager with an objective to ensure that another department agrees to a plan of action could achieve this in different ways. The manager may pressure susceptible members of the other department and force agreement through without listening to the other depart­ment’s perspective. This may alienate the other department and damage future good relations. Alternatively the manager could adopt a collaborative approach so that the needs of both departments are met, providing a sound basis for future cooperation between the departments. More sophisticated systems now incorporate the ‘how’ as well (see IDS 2003).

Planning the support, development and resources necessary for employees to achieve their objectives is imperative. Without this support it is unlikely that even the most determined employees will achieve the performance required.

Concerns have been expressed over restricting the objectives to those which specify output targets, and there is now evidence of increasing use of input targets, such as developing a critical competency which is valued by the organisation and relevant to the achievement of objectives. Williams (2002) argues that as individuals cannot always control their results it is important to have behavioural targets as well as output targets. It is also recommended that there is a personal development plan which would again underpin the achievement of objectives.

2.3. Delivering and monitoring performance

While the employee is working to achieve the performance agreed, the manager retains a key enabling role. Organising the resources and off-job training is clearly essential. So too is being accessible. There may well be unforeseen barriers to the agreed performance which the manager needs to deal with, and sometimes the situation will demand that the expected performance needs to be revised. The employee may want to sound out possible courses of action with the manager before proceeding, or may require further information. Sharing ‘inside’ information that will affect the employee’s performance is often a key need, although it is also something that managers find difficult, especially
with sensitive information. Managers can identify information sources and other people who may be helpful.

Ongoing coaching during the task is especially important as managers guide employees through discussion and by constructive feedback. They can refer to practical job experiences to develop the critical skills and competencies that the employee needs, and can provide job-related opportunities for practice. Managers can identify potential role models to employees, help to explain how high achievers perform so well, and oil the organisational wheels.

Employees carry out ongoing reviews to plan their work and priorities and also to advise the manager well in advance if the agreed performance will not be delivered by the agreed dates. Joint employee/manager review ensures that information is shared. For example, a manager needs to be kept up to date on employee progress, while the employee needs to be kept up to date on organisational changes that have an impact on the agreed objectives. Both need to share perceptions of how the other is doing in their role, and what they could do that would be more helpful.

These reviews are normally informal, although a few notes may be taken of progress made and actions agreed. They need not be part of any formal system and therefore can take place when the job or the individuals involved demand, and not according to a pre-set schedule. The review is to facilitate future employee performance, providing an opportunity for the manager to confirm that the employee is ‘on the right track’, redir­ecting him or her if necessary. They thus provide a forum for employee reward in terms of recognition of progress. A ‘well done’ or an objective signed off as completed can enhance the motivation to perform well in the future. During this period evidence collec­tion is also important. In the Scottish Prison Service (IDS 2003) line managers maintain a performance monitoring log of their team members’ positive and negative behaviours in order to provide regular feedback and to embed the practice of ongoing assessment. Employees are expected to build up a portfolio of evidence of their performance over the period to increase the objectivity of reviews and to provide an audit trail to back up any assessment ratings. It is also during this part of the cycle that employees in many organ­isations can collect 360-degree feedback to be used developmentally and as part of an evidence base.

2.4. Formal performance review/assessment

Regular formal reviews are needed to concentrate on developmental issues and to motivate the employee. Also, an annual review and assessment is needed, of the extent to which objectives have been met – and this may well affect pay received. In many organ­isations, for example Microsoft and AstraZeneca, employees are now invited to prepare an initial draft of achievement against objectives (IDS 2003). Some organisations con­tinue to have overall assessment ratings which have to conform to a forced distribution, requiring each team/department to have, say, 10 per cent of employees on the top point, 20 per cent on the next point, and so on, so that each individual is assessed relative to others rather than being given an absolute rating. These systems are not popular and Roberts (2004) reports how staff walked out in a part of the Civil Service over relative assessment; AstraZeneca does not encourage its managers to give an overall rating to staff at all as its research suggested that this was demotivating (IDS 2003). Research by the Institute for Employment Studies (IRS 2001) found that review was only seen as fair if the targets set were seen as reasonable, managers were seen to be objective and judgements were consistent across the organisation.

Some organisations encourage employees to give upward feedback to their managers at this point in the cycle. For further details of this stage in the process see the Focus on skills at the end of Part 3.

2.5. Reward

Many systems still include a link with pay, but Fletcher and Williams (1992) point to some difficulties experienced. Some public and private organisations found that the merit element of pay was too small to motivate staff, and sometimes seen as insulting. Although performance management organisations were more likely than others to have merit or performance-related pay (Bevan and Thompson 1992), some organisations have regretted its inclusion. Armstrong and Baron (1998a) report that staff almost universally disliked the link with pay, and a manager in one of their case study com­panies reported that ‘the whole process is an absolute nightmare’ (p. 172). Clark (2005) provides a good discussion of the problems with the pay link and we include a detailed discussion of performance related pay in Chapter 28.

There are other forms of reward than monetary and the Institute for Employment Studies (IRS 2001) found that there was more satisfaction with the system where promo­tion and development, rather than money, were used as rewards for good performance.

3. INDIVIDUAL VERSUS TEAM PERFORMANCE MANAGEMENT

There is one key aspect of employee performance management which we have yet to touch upon and that is how organisations can use performance management to support team performance as well as individual performance. This is a critical balancing act in most cases as, if managers and employees are not mindful in their objective setting, development, review and reward process, there can be conflicts built into performance management activity causing employees’ pursuit of individual objectives to damage the performance of the team they are in and vice versa. The complications that can arise and the way they are best dealt with will depend very much on the type of team(s) to which the employee belongs and the individual circumstances. Below we consider different types of team situations and the challenges these bring for performance management, and how both individual performance and team performance can best be enhanced at the same time.

It is generally agreed that team working has increased but this may take many forms. First, let us look at the situation where an employee has a base role in a departmental team, such as the ‘training team’, ‘contracts team’, ‘schools marketing team’ for example, reflecting where that person is placed in the organisation and who their line manager is. If this is the only team to which the employee belongs then it is highly likely that he or she will agree individual performance management objectives with the team leader which relate to the employee’s role in the achievement of the team’s objectives. One of those individual objectives may of course focus on collegiality or support to other members of the functional team.

However many employees will at the same time be members of other teams, perhaps ongoing cross-functional teams or time-limited cross-functional problem-solving teams. The objectives for this cross-functional team may be owned elsewhere in the organisa­tion. One danger in such a situation is that if the employee does not have at least one objective relating to his or her role in this second team then this aspect of his or her job may suffer as effort is prioritised on areas that purely relate to his or her home team. This will be especially so if any kind of reward is attached to achievement of objectives. So neglect of a part of the employee’s job relating to the second team is the first potential problem. The remedy to this is fairly straightforward, but easily overlooked. An objec­tive relating to the contribution the employee makes to the second team needs to be included (an input objective), or alternatively an objective relating to the achievement of one or more objectives of the second team (an output objective). An example of the first may concern the team role the employee is required to play in that second team, perhaps focusing on strengthening it, if it is not well developed, or concern the skills that are needed in that team given its stage of development, or concern the extent to which the employee is collaborative in his or her work with the team. An example of the second may concern, say, the team delivering on a target date, to the standard agreed, or other output targets it has agreed.

The second potential problem is that the employee’s individual objectives may actu­ally conflict with the objectives of the second team of which he or she is a part. This conflict may be political in nature, where the home team leader agrees an objective with an individual that he or she should influence the second team to, for example, plan in a certain amount of training, before the roll-out of a new IT system. However if roll-out is to commence on the target date agreed by the second team, fitting in this training may be extremely difficult, if not impossible. The employee in this situation may not be able to win, either he or she fails to achieve his or her individual objective or the second team of which he or she is a part fails to achieve one of its objectives.

Van Vijfeijken et al. (2006) provide another example of potential conflict in relation to the operation of management teams, where the employee (this time a departmental head) has individual objectives relating to the achievement of the department’s objec­tives, but is also part of the organisation’s management team which has its own set of objectives. The researchers identified potential conflicts between the individual objectives of different department heads in the management team, and also between any individual head’s goals and the team goals. An example here might be that a department head of marketing has an objective relating to cost reductions in their department, whereas a management team goal may concern an extensive marketing campaign to launch a new product. There is a great deal written about how such management teams need to distance themselves from their department (see, for example, Garratt 1990) and operate in the interests of the organisation as a whole. This is clearly difficult if the department head has individual objectives relating to the department, which will drive monetary or other rewards. Such contradictions need to be openly aired at an early stage, but this is often not the case, due to lack of awareness, inertia or politicking.

We turn now to consider permanent self-managed teams or the like. Often in such teams all performance management objectives are team based, with the whole team needing to pull together to achieve these objectives effectively. In such teams there may in addition be individual input objectives such as skills development. These teams are more likely to fit the classical definition of a team. Moxon (1993) defines a team as having a common purpose; agreed norms and values which regulate behaviour; mem­bers with interdependent functions; and a recognition of team identity. Katzenbach and Smith (1993) and Katzenbach (1997) have also described the differences that they see between teams and work groups, and identify teams as comprising individuals with complementary skills, shared leadership roles, mutual accountability and a specific team purpose, amongst other attributes. In organisations this dedication only happens when individuals are fully committed to the team’s goals. This commitment derives from an involvement in defining how the goals will be met and having the power to make decisions within teams rather than being dependent on the agreement of external management. These are particularly characteristics of self-managing teams.

The problems most likely to occur with team objectives in this setting are peer pres­sure and social loafing (see, for example, Clark 2005). Peer pressure can be experienced by an individual, such as for example, the pressure not to take time off work when feel­ing ill, as this may damage achievement of objectives; or pressure to work faster, make fewer mistakes and so on. This pressure is likely to be much greater when rewards are attached to the achievement of team objectives. Individuals will vary in the competitive­ness and in the value they place on monetary rewards and this may cause a pressure for all. Social loafing occurs in a situation where one or more team members rely on the others to put in extra effort to achieve objectives, to cover for their own lack of effort. It works when some members are known to be conscientious or competitive or to care deeply about the rewards available, and there are others who are likely to be less con­cerned and who know the conscientious team members will make sure by their own efforts that the objectives are achieved.

4. IMPLEMENTATION AND CRITIQUE OF PERFORMANCE MANAGEMENT

Performance management needs to be line driven rather than HR driven, and therefore mechanisms need to be found to make this happen. The incorporation of line managers alongside HR managers in a working party to develop the system is clearly important as it not only takes account of the needs of the line in the system design, but also demonstrates that the system is line led. Training in the introduction and use of the system is also ideally line led, and Fletcher and Williams (1992) give us an excellent example of an organisation where line managers were trained as ‘performance manage­ment coaches’ who were involved in departmental training and support for the new system. However, some researchers have found that line managers are the weak link in the system (see, for example, Hendry et al. 1997). The Department of Trade and Industry (DTI) (see IRS 2001) notes that any system is only as good as the people who operationalise it. See Case 13.1 at www.pearsoned.co.uk/torrington which deals with the introduction of a performance management system.

Bevan and Thompson (1992) found incomplete take-up of performance management, with some aspects being adopted and not others. They noted that there was a general lack of integration of activities. This is rather unfortunate as one of the key advantages of performance management is the capacity for integration of activities concerned with the management of individual performance. This problem is still apparent. Hendry et al. (1997) reported the comments of Phil Wills from GrandMet, that there is still little understanding of what an integrated approach to performance management means. While alignment is critical, some organisations do not understand whether their HR processes are aligned or pulling in different directions. Williams (2002) suggests that there is still confusion over the nature of performance management.

Performance management seems to suffer from the same problems as traditional appraisal systems. Armstrong and Baron (1998a) report, for example, that over half the respondents to their survey feel that managers give their best ratings to people that they like (p. 202), and over half the managers surveyed felt that they had not received sufficient training in performance management processes (p. 203). They also report (1998b) that the use of ratings was consistently derided by staff and seen as subjective and inconsistent. Performance ratings can be seen as demotivating, and forced distributions are felt to be particularly unfair. Yet Houldsworth (2003) found 44 per cent of the Henley and Hay Group survey sample did this.

In terms of individual objective setting linked to organisational performance objec­tives, there are problems when strategy is unclear and when it evolves. Rose (2000) also reports a range of problems, particularly the fact that SMART targets can be problem­atic if they are not constantly reviewed and updated, although this is a time-consuming process. Pre-set objectives can be a constraining factor in such a rapidly changing busi­ness context, and they remind us of the trap of setting measurable targets, precisely because they are measurable and satisfy the system, rather than because they are most important to the organisation. He argues that a broader approach which assesses the employee’s accomplishments as a whole and the contribution to the organisation is more helpful than concentrating on pre-set objectives. Williams (2002) also notes that there is more to performance than task performance, such as volunteering and helping others. He refers to this as contextual performance; it is sometimes referred to as collegiate behaviour.

A further concern with SMART targets is that they inevitably have a short-term focus, yet what is most important to the organisation is developments which are com­plex and longer term, which are very difficult to pin down to short-term targets (see, for example, Hendry et al. 1997). In this context systems which also focus on the develop­ment of competencies will add greater value in the longer term. Armstrong and Baron (1998b) do note that a more rounded view of performance is gradually being adopted, which involves the ‘how’ as well as the ‘what’, and inputs such as the development of competencies. There is, however, a long way to go adequately to describe performance and define what is really required for organisational success.

For an in-depth example of performance management in the Scottish Prison Service see Case 13.2 at www.pearsoned.co.uk/torrington.

5. 360-DEGREE FEEDBACK

The term 360-degree feedback, a very specific term used to refer to multi-rater feedback, is increasingly being used within performance management systems and as a separate development activity.

5.1. The nature of 360-degree feedback

This approach to feedback refers to the use of the whole range of sources from which feedback can be collected about any individual. Thus feedback is collected from every angle on the way that the individual carries out his or her job: from immediate line manager; peers; subordinates; more senior managers; internal customers; external customers; and from individuals themselves. It is argued that this breadth provides better feedback than relying on the line manager only, who will only be able to observe the individual in a limited range of situations, and Atwater and his colleagues (2002) suggest that 360-degree feedback provides a better way to capture the complexities of performance. Hogetts et al. (1999) report that more than 70 per cent of United Parcels Service employees found that feedback from multiple sources was more useful in devel­oping self-insight than feedback from a single source. Individuals, it is argued, will find feedback from peers and subordinates compelling and more valid (see, for example, Borman 1997 and Atwater et al. 2001), and Edwards and Ewen (1996, p. 4) maintain that:

No organizational action has more power for motivating employee behaviour change than feedback from credible work associates.

Such all-round feedback enables the individual to understand how he or she may be seen differently (or similarly) by different organisational groups, and how this may contrast with the individuals own views of his or her strengths and weaknesses. This provides powerful information for the development of self-awareness. While 360-degree feedback may be collected using informal methods, as shown in the Window on prac­tice box on Humberside Tec, the term itself is a registered trade mark, and refers to a very specific method of feedback collection and analysis which was devised in the United States (see Edwards and Ewen 1996, p. 19), and they suggest that ‘simplistic, informal approaches to multi-source assessment are likely to multiply rather than reduce error’. However, informal approaches to 360-degree feedback are sometimes used quite success­fully as an alternative to a survey questionnaire and statistical analysis.

The formal process is a survey approach which involves the use of a carefully constructed questionnaire that is used with all the contributors of feedback. This questionnaire may be bought off the peg, providing a well-tested tool, or may be developed internally, providing a tool which is more precisely matched to the needs of the organisation. Whichever form is used, the essence is that it is based on behavioural competencies (for a more detailed explanation of these see Chapter 17), and their associated behaviours. Contributors will be asked to score, on a given scale, the extent to which the individual displays these behaviours. Using a well-designed questionnaire, distributed to a sufficient number of contributors and employing appropriate sophistic­ated analysis, for example specifically designed computer packages which are set up to detect and moderate collusion and bias on behalf of the contributors, should provide reliable and valid data for the individual. The feedback is usually presented to the indi­vidual in the form of graphs or bar charts showing comparative scores from different feedback groups, such as peers, subordinates, customers, where the average will be provided for each group, and single scores from line manager and self. In most cases the individual will have been able to choose the composition of the contributors in each group, for example which seven subordinates, out of a team of 10, will be asked to complete the feedback questionnaire. But beyond this the feedback will be anonymous as only averages for each group of contributors will be reported back, except for the line manager’s score. The feedback will need to be interpreted by an internal or external facilitator, and done via a face-to-face meeting. It is generally recommended that the individual will need some training in the nature of the system and how to receive feedback, and the contributors will need some training on how to provide feedback. The principle behind the idea of feedback is that individuals can then use this informa­tion to change their behaviours and to improve performance, by setting and meeting development goals and an action plan.

Reported benefits include a stronger ownership of development goals, a climate of constructive feedback, improved communication over time and an organisation which is more capable of change as continuous feedback and improvement have become part of the way people work (Cook and Macauley 1997). Useful texts on designing and implementing a system include Edwards and Ewen (1996) from the US perspective
and Ward (1995) from the UK perspective. A brief ‘how to do it guide’ is Goodge and Watts (2000).

5.2. Difficulties and dilemmas

As with all processes and systems there needs to be clarity about the purpose. Most authors distinguish between developmental uses, which they identify as fairly safe and a good way of introducing such a system, and other uses, such as to determine pay awards. There seems to be an almost universal view that using these data for pay purposes is not advisable, and in the literature from the United States there is clearly a concern about the legal ramifications of doing this. Ward (1998) provides a useful framework for considering the different applications of this type of feedback, and reviews in some detail other applications such as using 360-degree feedback as part of a training course to focus attention for each individual on what he or she needs to get out of the course. Other applications he suggests include using 360-degree feedback as an approach to team building, as a method of performance appraisal/management, for organisation development purposes and to evaluate training and development. Edwards and Ewen (1996) suggest that it can be used for nearly all HR systems, using selec­tion, training and development, recognition and the allocation of job assignments as examples.

Most approaches to 360-degree feedback require rater confidentiality as well as clarity of purpose, and this can be difficult to maintain with a small team, so raters may feel uncomfortable about being open and honest. In their research Pillutla and Ronson (2006) demonstrate how peer evaluations may be biased and warn against recruitment, reward and promotion decisions being made on this basis. The dangers of collusion and bias need to be eliminated, and it is suggested that the appropriate software systems can achieve this, but they are of course expensive, as are well-validated off-the-peg systems.

Follow-up is critical and if the experience of 360-degree feedback is not built on via the construction of development goals and the support and resources to fulfil these, the process may be viewed negatively and may be demotivating. There is an assumption that the provision of such feedback will motivate the individuals receiving it to develop and improve their performance, but Morgan and Cannan (2005) found very mixed results in their Civil Service research. One-third of their respondents were not motivated to act on the feedback and in this case felt that the 360-degree process was an isolated act with lack of follow-up, depending heavily on the proactivity of the individuals involved, with little support.

London et al. (1997) report concerns about the way systems are implemented, and that nearly one-third of respondents they surveyed experienced negative effects. Atwater and his colleagues (2002) found some negative reactions such as reduced effort, dissatis­faction with peers who provided the feedback and a lower commitment to colleagues. Fletcher and Baldry (2001) note that there are contradictions in the results from 360- degree feedback so far, and they suggest that further research is needed on how feedback affects self-esteem, motivation, satisfaction and commitment. The DTI (2001) suggested that sufficient resources need to be devoted to planning a system and that it should be piloted before general use. Clearly, 360-degree feedback needs to be handled carefully and sensitively and in the context of an appropriate organisational climate so that it is not experienced as a threat. The DTI (2001) suggested that there needs to be a climate of openness and trust for 360-degree feedback to work. Atwater et al. (2002) suggest that to counteract any negative effects it is important to prepare people for making their own ratings and on how they can provide honest and constructive feedback to others, ensure confidentiality and anonymity of raters, make sure the feedback is used developmentally and owned by the person being rated (for example that person may be the only one to receive the report), provide post-feedback coaching and encouragement and encourage people to follow up the feedback they have received.

Source: Torrington Derek, Hall Laura, Taylor Stephen (2008), Human Resource Management, Ft Pr; 7th edition.

1. LEADERSHIP AND MANAGEMENT

Northouse (2006) suggests that there are four components that characterise leadership: that leadership is a process; it involves influence; it occurs within a group context; and it involves goal attainment. This corresponds with Shackleton’s (1995) definition, which we shall use as a working definition for the remainder of the chapter:

Leadership is the process in which an individual influences other group members towards the attainment of group or organizational goals. (Shackleton 1995, p. 2)

This definition is useful as it leaves open the question of whether leadership is exer­cised in a commanding or a facilitative manner. It does suggest, however, that the leader in some way motivates others to act in such a way as to achieve group goals.

The definition also makes no assumptions about who the leader is; it may or may not be the nominal head of the group. Managers, therefore, may or may not be leaders, and leaders may or may not be managers. Some authors distinguish very clearly between the nature of management and the nature of leadership but this draws on a particular per­spective, that of the transformational leader, and we will consider this in the section on whether the organisation needs heroes. This is a school of thought that concentrates on the one leader at the top of the organisation, which is very different from organisations and individuals who use the terms manager and leader interchangeably with nothing more than a vague notion that managers should be leaders. Indeed, any individual may act as a manager one day and a leader the next, depending on the situation. In addition we should not assume that leadership is always a downwards process, as sometimes employees and managers lead upwards (Hollington 2006).

The flow of articles on leadership continues unabated, but it would be a mistake to think that there is an ultimate truth to be discovered; rather, there is a range of perspec­tives from which we can try to make sense of leadership and motivation. Grint (1997) puts it well when he comments that

What counts as leadership appears to change quite radically across time and space. (p. 3)

In the following three sections we will look at three questions which underlie virtu­ally all the work on leadership. First, what are the traits of a leader, or an effective leader? Second, what is the ‘best’ leadership style or behaviour? Third, if different styles are appropriate at different times, what factors influence the desired style?

2. WHAT ARE THE TRAITS OF LEADERS AND EFFECTIVE LEADERS?

Trait approaches, which were the earliest to be employed, seek to identify the traits of leaders – in other words what characterises leaders as opposed to those who are not leaders. These approaches rest on the assumption that some people were born to lead due to their personal qualities, while others are not. It suggests that leadership is only available to the chosen few and not accessible to all. These approaches have been discredited for this very reason and because there has been little consistency in the lists of traits that research has uncovered. However, this perspective is frequently resurrected.

Kilpatrick and Locke (1991), in a meta-analysis, did seem to find some consistency around the following traits: drive to achieve; the motivation to lead; honesty and integrity; self-confidence, including the ability to withstand setbacks, standing firm and being emotionally resilient; cognitive ability; and knowledge of the business. They also note the importance of managing the perceptions of others in relation to these characteristics. Northouse (2006) provides a useful historical comparison of the lists of traits uncovered in other studies. Perhaps the most well-known expression of the trait approach is the work relating to charismatic leadership. House (1976), for example, describes charismatic leaders as being dominant, having a strong desire to influence, being self-confident and having a strong sense of their own moral values. We will pick up on this concept of leadership in the later section on heroes.

In a slightly different vein Goleman (1998) carried out a meta-analysis of leadership competency frameworks in 188 different companies. These frameworks represented the competencies related to outstanding leadership performance. Goleman analysed the competencies into three groups: technical, cognitive and emotional, and found that, in terms of the ratios between the groups, emotional competencies ‘proved to be twice as important as the others’. Goleman goes on to describe five components of emotional intelligence:

• Self-awareness: this he defines as a deep understanding of one’s strengths, weaknesses, needs, values and goals. Self-aware managers are aware of their own limitations.
• Self-regulation: the control of feelings, the ability to channel them in constructive ways. The ability to feel comfortable with ambiguity and not panic.
• Motivation: the desire to achieve beyond expectations, being driven by internal rather than external factors, and to be involved in a continuous striving for improvement.
• Empathy: considering employees’ feelings alongside other factors when decision making.
• Social skill: friendliness with a purpose, being good at finding common ground and building rapport. Individuals with this competency are good persuaders, collabor­ative managers and natural networkers.

Goleman’s research is slightly different from previous work on the trait approach, as here we are considering what makes an effective leader rather than what makes a leader (irrespective of whether they are effective or not). It is also different in that Goleman refers to competencies rather than traits. There is a thorough discussion of competencies in Chapter 17; it is sufficient for now to say that competencies include a combination of traits and abilities, among other things. There is some debate over whether competencies can be developed in people. The general feeling is that some can and some cannot. Goleman maintains that the five aspects of emotional intelligence can be learned and provides an example in his article of one such individual. In spite of his argument we feel that it is still a matter for debate, and as many of the terms used by Goleman are similar to those of the previous trait models of leadership, we have categorised his model as an extension of the trait perspective. To some extent his work sits between the trait approach and the style approach which follows. It is interesting that a number of researchers and writers are recognising that there is some value in considering a mix of personality characteristics and behaviours, and in particular Higgs (2003) links this approach to emotional intelligence.

Rajan and van Eupen (1997) also consider that leaders are strong on emotional intelligence, and that this involves the traits of self-awareness, zeal, resilience and the ability to read emotions in others. They argue that these traits are particularly import­ant in the development and deployment of people skills. Heifetz and Laurie (1997) similarly identify that in order for leaders to regulate emotional distress in the organisa­tion, which is inevitable in change situations, the leader has to have ‘the emotional capacity to tolerate uncertainty, frustration and pain’ (p. 128). Along the same lines Goffee (2002) identifies that inspirational leaders need to understand and admit their own weaknesses (within reason); sense the needs of situations; have empathy and self-awareness.

3. WHAT IS THE ‘BEST WAY TO LEAD’? LEADERSHIP STYLES AND BEHAVIOURS

Dissatisfaction with research on leadership that saw leadership as a set of permanent personal characteristics that describe the leader led to further studies that emphasised the nature of the leadership process – the interaction between leader and follower – aiming to understand how the leaders behave rather than what they are. The first such studies sought to find the ‘best’ leadership style; from this perspective leadership comprises an ideal set of behaviours that can be learned. Fulop et al. (1999) suggest that Douglas McGregor’s (1960) work, The Human Side of Enterprise, can be understood from this perspective. McGregor argued that American corporations managed their employees as if they were work-shy, and needed constant direction, monitoring and control (theory ‘x’), rather than as if they were responsible individuals who were willing and able to take on responsibility and organise their own work (theory ‘y’). McGregor argued that the underlying assumptions of the manager determined the way he or she managed the employees and this in turn determined how the employees would react. Thus if employees were managed as if they operated on theory ‘x’ then they would act in a theory ‘x’ manner; conversely if employees were managed as if they operated on theory ‘y’ then they would respond as theory ‘y’ employees would respond. The message was that management style should reinforce theory ‘y’ and thus employees would take on responsibility, be motivated by what they were doing and work hard. Although the original book was written over forty years ago, this approach is being revisited (see, for example, Heil et al. 2000) and it fits well with the empowering or post-heroic approach to leadership that we discuss later in the chapter. Another piece of research from the style approach is that by Blake and Mouton (1964), who developed the famous ‘Managerial Grid’. The grid is based on two aspects of leadership behaviour. One is concern for production, that is, task-oriented behaviours such as clarifying roles, scheduling work, measuring outputs; the second is concern for people, that is, people-centred behaviour such as building trust, camaraderie, a friendly atmosphere. These two dimensions are at the heart of many models of leadership. Blake and Mouton proposed that individual leaders could be measured on a nine-point scale in each of these two aspects, and by combining them in grid form they identified the four leadership styles presented in Table 14.1.

Such studies, which are well substantiated by evidence, suggest that leadership is accessible for all people and that it is more a matter of learning leadership behaviour than of personality characteristics. Many leadership development courses have therefore been based around this model. However, as Northouse (2006) argues, there is an assumption in the model that the team management style (high concern for people and high concern for production; sometimes termed 9,9 management) is the ideal style; and yet this claim is not substantiated by the research. This approach also fails to take account of the characteristics of the situation and the nature of the followers.

Much of the recent work on the notion of transformational/heroic leadership, and empowering/post-heroic leadership, similarly assumes that what is being dis­cussed is the one best way for a leader to lead, and we return to this leadership debate later on.

4. DO LEADERS NEED DIFFERENT STYLES FOR DIFFERENT SITUATIONS?

A variety of models, sometimes termed contingency models, have been developed to address the importance of context in terms of the leadership process, and as a con­sequence these models become more complex. Many, however, retain the concepts of production-centred and people-centred behaviour as ways of describing leadership behaviour, but use them in a different way. Hersey and Blanchard (1988) developed a model which identified that the appropriate leadership style in a situation should be dependent on their diagnosis of the ‘readiness’, that is, developmental level or maturity, of their followers. The model is sometimes referred to as ‘situational leadership’, and works on the premise that leaders can ‘adapt their leadership style to meet the demands of their environment’ (Hersey and Blanchard 1988, p. 169). Readiness of followers is defined in terms of ability and willingness. Level of ability includes the experience, knowledge and skills that an individual possesses in relation to the particular task at hand; and level of willingness encompasses the extent to which the individual has the motivation and commitment, or the self-confidence, to carry out the task. Having diagnosed the developmental level of the followers, Hersey and Blanchard suggest, the leader then adapts his or her behaviour to fit. They identify two dimensions of leader behaviour: task behaviour, which is sometimes termed ‘directive’; and relationship behaviour, which is sometimes termed ‘supportive’. Task behaviour refers to the extent to which leaders spell out what has to be done. This includes ‘telling people what to do, how to do it, when to do it, where to do it, and who is to do it’ (Hersey 1985, p. 19). On the other hand, relationship behaviour is defined as ‘the extent to which the leader engages in two-way or multi-way communication. The behaviours include listening, facilitating and supporting behaviours’ (ibid.). The extent to which the leader empha­sises each of these two types of behaviour results in the usual two-by-two matrix. The four resulting styles are identified, as shown in Table 14.2.

There is an assumption that the development path for any individual and required behaviour for the leader is to work through boxes 1, 2, 3 and then 4 in the matrix.

Hersey and Blanchard produced questionnaires to help managers diagnose the readiness of their followers.

Other well-known contingency models include Fielder’s (1967) contingency model where leadership behaviour is matched to three factors in the situation: the nature of the relationship between the leader and members, the extent to which tasks are highly struc­tured and the position power of the leader. The appropriate leader behaviour (that is, whether it should be task oriented or relationship oriented) depends on the combination of these three aspects in any situation. Fielder’s model is considered to be well supported by the evidence. The research was based on the relationship between style and per­formance in existing organisations in different contexts. For a very useful comparison of contingency models see Fulop et al. (1999).

Goleman (2000) reports the results of some research carried out by Hay/McBer who sampled almost 20 per cent of a database of 20,000 executives. The results were analysed to identify six different leadership styles, which are shown in Table 14.3, but most importantly Goleman reports that ‘leaders with the best results do not rely on only one leadership style’ (p. 78).

Goleman goes on to consider the appropriate context and impact of each style, and argues that the more styles the leader uses the better. We have already reported Goleman’s work on emotional intelligence, and he links this with the six styles by suggesting that leaders need to understand how the styles relate back to the different competencies of emotional intelligence so that they can identify where they need to focus their leadership development.

Source: Torrington Derek, Hall Laura, Taylor Stephen (2008), Human Resource Management, Ft Pr; 7th edition.

1. DO WE REALLY NEED HEROES?

A different approach to understanding leadership is transformational leadership, which focuses on the leader’s role at a strategic level, so there is a concentration on the one leader at the top of the organisaton. There is a wide range of literature in this vein, most of it written in the 1980s. Since that time the academic literature may have moved on but the image of the transformational leader still remains widely attractive. While this is a different approach it links back to our original three questions about leadership. Transformational leadership shows elements of the trait approach, as leaders are seen to ‘have’ charisma, which sets them apart as extraordinary and exceptional, and they are also seen to use a set of ‘ideal’ behaviours, with the assumption in many writings that this is the ‘best’ approach.

The leader is usually characterised as a hero, although Steyrer (1998) proposes that there are other charismatic types such as the father figure, the saviour and the king. Such leaders appear to know exactly what they are doing and how to ‘save’ the organisation from its present predicament (and consequently such leadership is found more often when organisations are in trouble). Leaders involve followers by generating a high level of commitment, partly due to such leaders focusing on the needs of followers and expressing their vision in such a way that it satisfies these needs. They communicate high expectations to followers and also the firm belief that followers will be able to achieve these goals. In this way the leader promotes self-confidence in the followers and they are motivated to achieve more than they ordinarily expect to achieve. In terms of behaviours, perhaps the most important is the vision of the future that the leader offers and that he or she communicates this and dramatises this to the followers. Such leaders are able to help the followers make sense of what is going on and why as well as what needs to be done in the future. It is from this perspective that the distinction between management and leadership is often made. Bennis and Nanus (1985), for example, sug­gest leadership is path finding while management is path following; and that leadership is about doing the right thing whereas management is about doing things right. Kotter (1990) identified leaders as establishing a direction (whereas managers plan and budget); leaders align people with the vision (whereas managers organise things); leaders moti­vate and inspire (whereas managers control and solve problems); and leaders encourage change (whereas managers encourage order and predictability). Other writers analysing leadership from this perspective include Tichy and Devanna (1986) and Bass (1985), and there is a wide research base to support the findings. The approach does have a great strength in taking followers’ needs into account and seeking to promote their self­confidence and potential, and the idea of the knight in shining armour is very attractive and potentially exciting – Tichy and Devanna, for example, present the process of such leadership as a three-act drama. However, in spite of the emphasis on process there is also an emphasis on leadership characteristics which harks back to the trait approach to leadership, which has been characterised as elitist. There is also the ethical concern of one person wielding such power over others.

Maybe we should ask whether organisations really require such leaders. A very dif­ferent conception of leadership is now offered as an alternative, partly a reaction to the previous approach, and partly a response to a changing environment. This is termed empowering or post-heroic leadership, and could be described as the currently favoured ideal way to lead.

Fulop et al. (1999) identify factors in a rapidly changing turbulent environment which by the 1990s dilute the appropriateness of concentrating on the one leader at the top of the organisation. These factors include: globalisation making centralisation more difficult; technology enabling better sharing of information; and change being seen as a responsibility of all levels of the organisation – not just the top. They also note a dis­satisfaction with corporate failures, identify few transformational leaders as positive role models, suggest that such a model of male authoritarian leadership is less relevant, and in particular that the macho leader with all the answers does not necessarily fit well with the encouragement of creativity and innovation. In addition they suggest that increasing teamwork and an increasing emphasis on knowledge workers mean that employees will be less responsive now to a transformational leader. The emphasis has therefore moved away from understanding the traits and style of the one leader at the top of the organisation who knows how to solve all the organisation’s problems, to how empowering or post-heroic leaders can facilitate many members of the organisation in taking on leadership roles. In this context Applebaum et al. (2003) comment that female leadership styles are more effective in today’s team-based consensually driven organisa­tions. Many commentators speak of leaders with integrity and humility, the ability to select good people and to remove barriers so they can fulfil their potential and perform (see, for example, Collins 2003; Alimo-Metcalfe and Alban-Metcalfe 2002).

The leader becomes a developer who can help others identify problems as opportun­ities for learning, and who can harness the collective intelligence of the organisation, and Fulop et al. (1999) note that this means in practice that they encourage the develop­ment of a learning organisation. Senge (1990), who is a protagonist of the learning organisation (see Chapter 12 for further details), sees the leader’s new roles in encour­aging a learning organisation as designer, teacher and steward, rather than a traditional charismatic decision maker. He suggests that leaders should design the organisation in terms of vision, purpose, core values and the structures by which these ideas can be translated into business decisions. However, he also suggests that the leader should involve people at all levels in this design task. It is the role of the leader not to identify the right strategy, but to encourage strategic thinking in the organisation, and to design effective learning processes to make this happen. The leader’s role as a teacher is not to teach people the correct view of reality, but to help employees gain more insight into the current reality. The leader therefore coaches, guides and facilitates. As a steward the leader acts as a servant in taking responsibility for the impact of his or her leadership on others, and in the sense that he or she overrides his or her own self-interest by personal commitment to the organisation’s larger mission. To play this role effectively, Senge suggests, the leader will need many new skills, in particular vision-making skills – a never-ending sharing of ideas and asking for feedback. Skills that will encourage employees to express and test their views of the world are also key. These involve actively seeking others’ views, experimenting, encouraging enquiry and distinguishing ‘the way things are done’ from ‘the way we think things are done’.

This changing perspective on leadership is well demonstrated by a survey on leader­ship skills reported by Rajan and van Eupen (1997). The research is based on interviews with 49 top business leaders, 50 HR directors and a postal questionnaire of 375 com­panies in the service sector. They asked what were the most important leadership skills during the period 1995-7 and compared the results with those of a similar survey con­ducted in the late 1980s. They found that the key skill was seen to be inspiring trust and motivation followed by visioning skills and ability, willingness and self-discipline to listen in 1995-7 compared with strategic thinking followed by entrepreneurial skills and originality in the late 1980s. The change in skills base reflects very well the change in the idealised leadership role and the increasing importance of facilitative people-related skills. They also note the prediction that the future will require an equal balance of tradi­tionally masculine and feminine personality traits.

Higgs (2003) argues that leaders need a combination of skills and personality: envisioning, engaging, enabling, enquiring and developing skills are needed, together with authenticity, integrity, will, self-belief and self-awareness.

From a slightly different perspective Heifetz and Laurie (1997) propose six guiding principles of post-heroic leadership, and they conclude that leadership is about learning and that the idea of having a vision and aligning people to this is bankrupt. The idea of one leader at the top creating major changes in order to solve a one-off challenge is no longer appropriate, as organisations now face a constant stream of adaptive challenges, and leadership is required of many in the organisation, not just one person at the top. They argue that employees should be allowed to identify and solve problems themselves and learn to take responsibility. The role of the leader is to develop collective self­confidence. As Grint (1997) puts it, ‘the apparent devolvement (or desertion – depending on your perspective) of responsibility has become the new standard in contemporary models of leadership’ (p. 13). For further discussion on the devolution of responsibility see Case 14.1 on this book’s companion website www.pearsoned.co.uk/torrington.

These visions of leadership are very attractive but they do require a dramatic change in thinking for both leaders and followers. For leaders there is the risk of giving away power, learning to trust employees, developing new skills, developing a different per­spective of their role and overriding self-interest. For followers there is the challenge of taking responsibility – which some may welcome, but others shun. Yet, if sustained competitive advantage is based on human capital and collective intelligence, it is difficult to relegate this perspective to ‘just an ideal’.

While empowering leaders have been shown to fit with the current climate we may sometimes need heroic leaders. Kets de Vries (2003) makes the point that heroic leader­ship will never die as change makes people anxious and we need heroic leaders to calm them down, but since no one can live up to the expectations of heroic leaders, they will eventually become a disappointment. We conclude with the thought that there is no one best way – different leaders and different leader behaviours are needed at different times. For an example of a mixed approach to leadership see Case 14.2 on the companion website, www.pearsoned.co.uk/torrington, about Tim Smit of the Eden Project.

2. LEADERSHIP AND CHANGE

We are all now familiar with the mantra that change is a constant in our world and that its pace is increasing. Inevitably therefore leaders will find themselves leading, promoting, encouraging and stimulating change as a key part of their role. In this last part of the chapter we will briefly review the nature of organisational change, explain a traditional perspective on managing and leading change and contrast this with a learn­ing perspective suggested by Binney and Williams (2005). We will then link these two perspectives back to perspectives on the nature of leadership.

There is a good deal of literature identifying the drivers for change (see, for example, Greenhalgh 2001), such as competitor behaviour, customer expectations, or a change of technology, with distinctions being made as to whether the drivers are external or internal. Other distinctions are made as to whether the change is proactive or reactive. A distinction is also made between change that is revolutionary and that which is evolutionary or incremental. It is sometimes suggested that transformational change is equivalent to revolutionary change, but we suggest that evolutionary change can equally be transformational. However, underlying all of this is the fundamental reason for change, which is organisational survival and competitiveness in the complex and global world which we have created.

The nature of change has also been hotly debated and the emphasis has increasingly been on transformational change. Change may involve movements in organisational shape, size, structure, rewards, values, beliefs, systems, procedures, roles, responsibilit­ies, culture, tasks and behaviour. Whilst transformational change may involve all of these it is generally agreed that transformational change is more than this and involves fundamentally new ways of understanding what the organisation is for and is doing. Beckhard (1992), for example, suggested that transformational change may involve the organisation’s shape, structure or nature, but more than this requires a re-examination of the organisation’s mission and a vision of a different future state of the organisation. As Binney and Williams (2005) suggest transformational change is about the change in mental models of what the organisation is about, sometimes referred to as change in the organisational paradigm.

All change, no matter how small, presents a challenge to leaders and followers alike. For leaders there is the challenge of making the required changes happen in reality, and for followers there is the challenge of coping with changes over which they often have no control and for which they have potentially no desire. Such changes invariably involve them in engaging in new activities, behaviours and thinking, and the even more difficult task of letting go and unlearning old activities, behaviours and thinking. In trying to understand how employees cope with change, in an effort to then manipulate this, managers have used models from other parts of the social sciences. An example is the Kubler-Ross change curve (1997) which tracks the stages an individual generally experi­ences when coping with loss, a model that was developed in the context of bereavement.

In addition to this there has been a long-running school of thought which proposes that leaders can plan and manage change given the right processes and tools to use. There is a variety of models in the literature but most focus on such stages as:

• identify the need for change
• define our current state
• vision the future desired state
• identify the gap
• diagnose capacity for change including barriers and how they can be overcome
• plan actions and behaviours needed to close the gap
• implement required actions
• manage the transition
• constantly reinforce changes, sustain momentum and measure progress

More details on such processes are readily available in the literature; see, for example, Hayes (2007) and Walton (1999).

However this approach to change relies on a rational view of the organisation, and as Binney and Williams (2005) suggest a model of the organisation as a machine. They outline the limitations of such an approach, including: unintended consequences of change, its messiness, the gap in perceptions between leaders and followers, the fact that visions often do not inspire. They also point out the assumption that change is some­thing which is done to organisations, rather like the assumption that leadership is done to followers rather than with them (Goffee and Jones 2006). Eriksson (2004) highlights the legitimate role of emotion in the implementation of change and draws our attention to the work of Kanter (1983) who identifies change as exhilarating when done by us and disturbing when done to us. There is an assumption that employee resistance to change is a characteristic of the individual psyche that, ultimately, has to be overcome, rather than that resistance stems from legitimate reasons and is partly a result of the way that change is conceived and led in the organisation.

Research by Les Worrall and Cary Cooper (2006) provides us with a managerial/ employee perspective on change, rather than that of the leader(s) at the top of the organ­isation. They suggest that change is reaching epidemic proportions. In their survey they found that 90 per cent of managers were affected by change (97 per cent in the public sector), compared with 83 per cent five years earlier. In addition over half the managers were affected by three or more forms of change (increased from 45 per cent). Managers felt that changes were a result of cost reductions and created work intensification and increased pressure to perform. This had negatively affected their morale (61 per cent), sense of job security (56 per cent) motivation (51 per cent), sense of employee well­being (48 per cent) and loyalty (47 per cent). Managers felt they were subject to greater top-down control, and greater scrutiny, and felt overloaded with insufficient time and resources to do their job at the standard they felt appropriate. Absence levels were significantly higher in those organisations with cost-cutting programmes, and larger proportions of managers reported insomnia, persistent headaches, appetite problems, muscular tension, constant tiredness and other symptoms, and the researchers suggest that such levels of change are literally making managers ill. Such problems interestingly did not apply to the same extent to directors, and in addition they felt much more positively about the changes taking place, reporting lower levels of stressors.

In a different study, Eriksson (2004) found that change programmes resulted in employees exhibiting signs of depression and experiencing feelings of failure.

The above create real concerns about the leadership of change, and Binney and Williams (2005) propose a way to reconceptualise change, based on the metaphor of the organ­isation as a living system rather than a machine. They suggest that this perspective helps us see organisations as adaptive (as behaviour and thinking shift of their own accord in response to the pressure of events); as self-organising (to achieve an equilibrium); as interdependent with their environment (interacting in complex ways); and as dynamic.

They propose that this perspective suggests change is natural, if painful, and that the challenge is to release the potential for change rather than drive it. In addition they identify the need for some stability as well as change. They suggest that this perspective encourages the view that managers cannot control change, and that the problem with a vision for the future is that it denigrates the present and the past of the organisation. A good example of this is the town of Crewe. Much effort and money is being put in to regenerate and develop the town, but whilst there are newcomers who feel this is an excellent change programme, there are many people who have been brought up in the town who feel that the changes are unnecessary and are spoiling things. The living organ­ism approach also suggests that trying to copy excellence elsewhere is a fruitless task, as is a change consultant or chief executive telling people to change; changes, they suggest, emerge and the key is seeing the new pattern, drawing attention to it and reinforcing it. The acceptance that the future is unknowable and unpredictable is important, as is the need for leaders to recognise that they are also part of the problem, and acknowledge that people are not rational and that feelings and emotion are legitimate. They character­ise this approach to change as a learning approach rather than a leading approach, but recognise that both perspectives add value in a change situation; in order to reflect this they propose the concept of ‘leaning into the future’. Figure 14.1 summarises their thinking.

If you look back to the characteristics of empowering leadership you will be able to see the commonality between this and the learning approach to change suggested by Binney and Williams (2005).

Source: Torrington Derek, Hall Laura, Taylor Stephen (2008), Human Resource Management, Ft Pr; 7th edition.

1. THE NATIONAL CONTEXT

The CIPD (2006) found a level of 3.5 per cent sickness absence (defined as the percent­age of working time missed, and often referred to as the headline rate) from a survey they carried out in early 2006 with responses from 1,083 public sector and private sector organisations. This represents eight days’ absence per employee per year. CIPD com­mented that this is a reduction on the figure of 3.7 per cent reported by a similar survey in the previous year. Other surveys produce fairly similar figures; for example the CBI survey (CBI/AXA 2006) reports a rate of 3.1 per cent (equating to 6.6 days lost per person per year). Whilst this is the lowest figure found since the CIPD absence surveys began in 2000, it is, for two reasons, difficult to argue yet that there is a clear downward trend in absence rates. First, the rate in the CIPD surveys has fluctuated up and down, as in the CBI survey. Second, while the methodology of the CIPD survey remains con­stant the actual organisations responding each year are not necessarily the same, within either the CIPD or CBI surveys. In addition, the Engineering Employers Federation (EEF) (2005) report that absence has become a bigger problem since their survey in 2003, with the rate increasing from 2 per cent to 3.6 per cent, yet it reduced again the following year (EEF 2006). Bevan of the Work Foundation (Silcox 2006) concludes that absence has remained broadly at the same level for the past 30 years with small fluctuations due to unemployment and the wider economic cycle.

In terms of the patterns of absence most surveys report that absence is higher in larger than in smaller organisations, which is likely to be why the CBI figures are generally lower than the ones from the CIPD, as the CBI sample includes a higher proportion of smaller organisations. Public sector absence is usually found to be higher than that in the private sector: for example in 2006 the CIPD found the public sector absence rate to be 4.3 per cent. Reviewing the Labour Force Survey, the General Household Survey and employer surveys, Barham and Leonard (2002) found that absence does tend to be con­centrated in some groups of people rather than others: in addition to higher rates in the public sector they found higher rates for women, full-time workers and those aged under 30. They also found differences by occupational group, with managers, professionals and administrative professionals having lower levels than other groups. The CBI found that sickness absence was higher among manual workers, and this to some extent must reflect the nature of job demands. The CIPD (2006) found that absence levels were high­est in the food, drink and tobacco sector, local and central government and the health sectors; and lowest in media and publishing, the voluntary sector, and the hotel, restaur­ant and leisure sector. These sectors do change to some extent each year.

The CBI reports that absence costs the UK economy around £13 billion per year and it constantly asserts that around 13 per cent of all absence is not genuine, whilst unions point to the efforts that workers often make to attend work even when ill (see, for example, TUC 2005). Big sporting events, such as the World Cup, often attract atten­tion in terms of their impact on absence levels, but organisations can use these events to their advantage given some thought. Smethurst (2006) reports on how Prudential and Egg responded to the World Cup by offering more flexible working over the period, with incentive schemes and themed competitions to incorporate interest in the event.

At a national level the government has an interest in reducing absence and loss of employment due to sickness. Roberts (2003) reports that while there are 1.46 million people claiming unemployment pay, there are 2.7 million people out of work claiming long-term sickness and disability benefits. Roberts goes on to explain how this situation has stimulated a focus on how society manages long-term sickness and rehabilitation. The government has an interest in reducing NHS costs and Invalidity Benefit costs, and the Department for Work and Pensions has arranged a two-year series of job rehab­ilitation pilot studies. The pilots will test three different approaches, healthcare inter­ventions, workplace interventions and combined interventions, and the aim is to learn which approaches are most successful. The Welfare Reform Bill proposes a variety of measures designed to encourage and enable welfare claimants back to work (for brief details see, for example, Brockett 2006; Griffiths 2006).

2. THE ORGANISATIONAL CONTEXT

Barham and Leonard (2002) question the accuracy of data in absence surveys. They argue that given the low response rates to such surveys, there is no evidence to suggest that the survey findings are representative of the whole population. In addition the CIPD found that much management absence is not recorded. It is likely that respondents are those with better absence information. On this basis they argue that absence costs to the organisation are underestimated.

The CIPD found that over 90 per cent of organisations in their survey considered absence to be a significant cost to the organisation, but less that half monitored this cost. The average cost was reported to be £598 per year per employee. Barham and Leonard (2002) suggest that estimating the costs of absence is complicated, and that the estimate needs to include not only the direct costs (i.e., paying salary and benefits for a worker who is not there), but also indirect costs such as organising replacement staff, overall reductions in productivity and administrative costs. Bevan (2002), reporting research from the Employment Studies Institute, suggests that there are virtually no robust data on direct and indirect costs of absence and that most employers under­estimate the true costs of sickness absence, particularly in respect of long-term sickness. Costing currently does not distinguish between short-term and long-term sickness. Using case study research Bevan reports that long-term sickness costs account for between 30 per cent and 70 per cent of absence costs. He goes on to argue, on the basis of this research, that even the most sophisticated companies are not well equipped to calculate such costs.

Statutory Sick Pay (SSP) changes in 1994 have given absence costs a higher profile as the burden has been passed to the employer, although there were compensatory mech­anisms in place and direct costs to the employer are increased and are more prominent.

Traditionally employers have concentrated on short-term absence, and while long­term absence accounts for only around 20 per cent of absence incidents it can represent more than 40 per cent of total working time lost, according to the CBI, although figures do vary. CIPD (2006) found that long-term absence was most significant in the public sector where it accounts for 25 per cent of absence, compared with 17 per cent in manu­facturing, 16 per cent in not-for-profit organisations and 12 per cent in private services. Reducing such absence is increasingly seen as having the potential to create significant costs savings. Cost is not the only factor in influencing organisations to attend to long-term absence, and we have already mentioned government interest in this. In addi­tion, the Disability Discrimination Act 1995 requires employers to provide reasonable adjustments to enable disabled workers to continue in employment, and the term ‘disabled’ extends to those suffering from long-term ill health. It has been argued that employers have a more explicit duty of care to their employees due to UK and EU legisla­tion, and there is a growing concern for the well-being of employees, partly due to fear of litigation.

In summary the evidence suggests that absence levels in the UK are decreasing to a small extent, but that there is insufficient evidence as yet to conclude how our absence rates compare with the rest of Europe. Long-term sickness generates proportionately greater costs and problems than short-term sickness and it is appropriate that the focus on this has increased significantly in recent years.

3. PROCESS AND CAUSES OF ABSENCE

The CIPD found the most frequently stated causes of absence are minor illness for short­term absence and back pain and minor illness (for manual workers) and stress and minor illness (for non-manual workers). For long-term illness the most frequent causes for manual workers are back pain and musculo-skeletal injuries; and for non-manual workers stress remains the greatest, and an increasing cause. The increase in stress as a cause may well be partly due to the fact that this is now a more legitimate reason for non-attendance than previously. Case 15.1 on this book’s companion website at www.pearsoned.co.uk/torrington focuses on stress as a reason for absence. It is import­ant to bear in mind that recorded causes of absence in organisations will be those causes which employees perceive the organisation to view as legitimate.

The causes of absence are complex and interrelated and a process approach is gener­ally agreed to be the most useful way of understanding absence behaviour, although there are criticisms that such models are not supported by the evidence. One of the most widely quoted models is from Rhodes and Steers (1990) and in our view this is the most useful of the process models. For an alternative model see Nicholson (1977).

The Rhodes and Steers model (see Figure 15.1) not only includes content information on the causes of absence but also incorporates a range of interdependent processes. In essence the model focuses on attendance motivation and the ability to attend in terms of resulting attendance behaviour.

Rhodes and Steers suggest that attendance motivation is directly affected by two factors: satisfaction with the job and pressure to attend. Pressure to attend may result from such factors as market conditions. Examples include the likelihood that there will be redundancies at their workplace and how easy it would be to get another job; incentives to attend, such as attendance bonuses; work-group norms on what is acceptable in the work group and the effects of absence on other group members; personal work ethic producing internal pressure to attend based on beliefs about what is right; and com­mitment to the organisation through an identification with the beliefs and values of the organisation and an intention to remain with the organisation. On this basis threat of redundancies, attendance bonuses, team structures where team members have to cover the workload of an absent member, a personal ethic about the need to attend work wherever possible, and feelings of loyalty to the organisation should all promote the motivation to attend.

Rhodes and Steers suggest that satisfaction with the job is determined by the job situation and moderated by employee values and job expectations. Factors in the job situation are identified as job scope and level of responsibility and decision making; role stress such as work overload, underload, difficult working conditions or hours; work-group size; leadership style of their immediate manager, particularly the openness of the relationship and how easy it is to discuss and solve problems jointly; strength of relationships with co-workers; and the opportunity for promotion. On this basis higher levels of responsibility and the opportunity to make decisions in relation to job demands, balanced workload and good working conditions, small work group size, an open relationship with immediate manager, good relationships with colleagues and the opportunity for promotion should all improve attendance motivation.

However job satisfaction is moderated by the values and expectations of the employee. Such values and expectations are shaped by both personality and personal characteristics and life experiences, but can also change during the course of one’s life. The extent to which the job matches up with expectations and values will have a bearing on job satisfaction; a close match is more likely to lead to satisfaction than a mismatch.

Personality and personal characteristics influence expectations and values and job satisfaction. We have previously referred to the influence of age and sex on absence rates. Length of service has also been identified as having an influence. However, none of these relationships is clear-cut, and different pieces of research often produce differ­ent findings. There is most evidence for suggesting that younger workers and female workers have the highest rates of absence, and it is argued that younger workers value free time to a greater extent than older workers.

This brings us to the last influence on attendance, which is the ability to attend. This influence is interposed between attendance motivation and actual attendance. For example an employee could be highly motivated to attend, but may have insurmount­able transportation difficulties, family or domestic responsibilities, or may be genuinely ill. In these cases motivation to attend does not result in attendance.

Source: Torrington Derek, Hall Laura, Taylor Stephen (2008), Human Resource Management, Ft Pr; 7th edition.

The complex interrelationship of the causes of absence needs to be taken into account in its management. Many organisations have introduced policies for managing absence that focus on minimising short-term rather than long-term absence. The role of sickness in long-term absence has been given little priority in the past, as has the issue that short­term absence, if badly handled, can lead to long-term absence. Typically long-term absence and short-term absence require different approaches. Attendance management policies need to take into account causes of absence, which may be identified by patterns of absence and by enabling individuals to be open about why they are not at work. Measures range from proactive methods intended to reduce the risk of ill health; measures intended to reduce spells of absence and those intended to reduce the length of absence. Typically there is a mix of processes both to discourage absence and positively to encourage attendance, but these work differently with those on long- and short-term sickness absence.

Whatever approach is chosen, there is a great need for consistency in the construction and implementation of absence management policies and procedures, not only in terms of ensuring fairness and as a support for any disciplinary action taken, but also in terms of providing employees with clear expectations about how absence will be tackled, and promoting an attendance culture. While different approaches work in different sectors and with different types of staff, there is a strong argument that the policies themselves need to be consistent in any organisation, to encourage employee accept­ance and line manager support. For example Dunn and Wilkinson (2002) report the difficulties that a line manager in a production company experienced due to the fact that manufacturing staff were subject to more stringent absence procedures than other staff in the company.

Lack of consistency in implementation also weakens any policy and procedures. The role of the line manager is key and there is much emphasis on giving the line manager ownership of absence and attendance issues, with support from HR. Whatever policies and procedures are set up it is critical that the line manager feels ownership of these and applies them in practice. James and his colleagues (2002) found that two-thirds of their interviewees in a long-term absence management study noted that there were problems
in the way that line managers carried out their responsibilities. Managers frequently did not follow the guidelines in matters such as ongoing contact with absent employees, and consequently HR did not know what was going on and often had to step in and manage cases. James and his colleagues found that managers’ behaviour resulted from time pres­sures, lack of awareness of what the procedure was and lack of training.

It has been found that some measures to manage absence actually increase absence, so monitoring any new policies and procedures is critical. In terms of implementing a new absence strategy, the advice given by Huczynski and Fitzpatrick (1989) still holds good. The ALIEDIM process they suggest comprises the following stages:

• Assess the absence problem
• Locate the absence problem
• Identify and prioritise absence causes
• Evaluate the current absence control methods
• Design the absence control programme
• Implement the absence control programme
• Monitor the effectiveness of the absence control programme

The mix of policies and methods chosen will be specific to the needs of the individual organisation, and Case 15.2 on the book’s companion website, www.pearsoned.co.uk/ torrington explains the mix chosen by Newry and Mourne Police Unit in Ireland. Below are some of the most frequently used approaches to managing absence. Some are most appropriate for short-term absence, and some better suited to long-term absence, others meet the needs of both.

1. Accurate records

Managing absence is almost impossible without an accurate picture of current absence levels and patterns, which requires identification of areas of high absence and the most common reasons for absence in the organisation. The CIPD (2006) found that 60 per cent of those organisations reporting a reduction in absence said that this was due to improved monitoring. However, such data collection is more often reported in the public sector and manufacturing industry than in the rest of the private sector. The HSE (Silcox 2005a) in a bid to aid employers has produced a new computerised absence recording and management tool, SART, which it hopes will also encourage employers to record such data in a more consistent manner. Prior to its review of absence Carlsberg-Tetley (IDS 2001) did not have an accurate picture of sickness absence. Although some records were kept, absence was inconsistently measured and recorded, so there was no reliable information about level of absence and patterns. This was their first task in tackling absence. They decided to adopt the ‘Bradford factor’ method for scoring absence where both frequency of absence spells and absence duration are used but with the weight being given to the former. The Bradford factor formula, devised by Bradford University, is shown in Figure 15.2. For further information on statistics see IDS (2005).

Absence reports are frequently produced by HR and sent to line managers – and such reports will often include details of employees where trigger points have been hit and where intervention is required by the line manager. However, Dunn and Wilkinson (2002) found that the attention line managers gave to these reports varied, and some managers never even looked at the reports, because they did not agree that this was the best way to manage staff. As one manager commented, ‘I know my staff well enough not to need these reports … at the end of the day it all comes down to good management and knowing your staff’. Some managers argued that the reports were of little use because the employees they managed often worked long hours (beyond contract) and came in at weekends. It was felt that to punish such employees, who were clearly committed to the company, because they had reached certain absence levels was unreasonable, and would be counter-productive.

2. Absence review and trigger points

In order to focus attention on those with less satisfactory absence records many organ­isations identify trigger points in terms of absence spells or length, or Bradford factor scores which indicate that action is needed when an individual’s absence record hits the trigger. Such policies for reviewing absence appear to be critical in absence reduction, and the CIPD (2006) reports that 67 per cent of organisations reporting a decrease in absence levels put this down to tightened policies for reviewing absence. The HBOS Window on practice above describes the trigger points that they use. However, such trigger points may be well known to employees, and Connex (IDS 2001) found that some
employees were able to manipulate the system and regularly have absence levels just below the trigger point. To overcome this some organisations have a rolling year, rather than, say, a calendar year or a financial year, against which absence levels are assessed – on the grounds that it will be much more difficult for employees to keep track of their absence levels and manipulate the system. In fact Dunn and Wilkinson (2002) found organisations where the trigger system was avoided because it was felt that it would encourage employees to take off time until they were just under the trigger limit.

Some organisations have absence review groups, such as the absence champion network at HBOS, and the safety, health and absence unit at HM Customs and Excise (IDS 2001). While the role of these groups varies, they are frequently used to review all absences and identify those who have hit trigger points which will then require intervention, such as an absence review meeting with the employee.

3. Absence targets and benchmarking

Many organisations have absence targets phrased in terms of a reduction on current absence levels or a lower absence level to attain. However, the CIPD (2006) found that although 80 per cent of the organisations it surveyed believed that absence levels could be reduced, less than half of these had set targets for this, and only around 37 per cent benchmarked their absence levels against other organisations. An alternative approach, used by some organisations, is to give managers absence targets for their group, and tie this into their performance review and performance payments. This is the approach used in Connex (IDS 2001). Such overall and local targets need to be carefully used, however, so as not to give the impression to employees that absence is not allowed.

4. Training and support for line managers

Most organisations recognise that line managers play a key role in making absence pro­cedures work and in reducing absence levels, and training is usually available when a new absence system is introduced. Connex (IDS 2001) has introduced a creative form of training. The company takes managers to an employment tribunal to view an absence- related case so that managers will understand the consequences of not dealing fairly and consistently with employees when they have to deal with similar situations at work. HM Customs and Excise (IDS 2001) uses training videos showing role plays of return to work interviews (see below). These demonstrate that such a meeting is not about accusation or recrimination. The idea is that managers watch the video with their team of supervisory staff and then discuss the issues that arise.

However, there is evidence that further training is needed. Both James et al. (2002) and Dunn and Wilkinson (2002) found managers who could not understand how ‘sick­ness’ could be managed, were scared of dealing with the situation and were embarrassed about asking personal questions about an employee’s state of health.

5. Absence notification procedures

Many organisations specify that when employees phone in as absent they must phone themselves, rather than asking another person to phone on their behalf. Many also specify that the employee must speak to their direct line manager or nominated repres­entative. This means that such a telephone conversation can be the first stage of the absence management process. The conversation is welfare based and the intention is that the manager is able to ask about the nature of the problem and the anticipated date of return to work. Brakes (IDS 2005), interestingly, outsources potential absence reporting calls to a nurse helpline. The nurse gives confidential advice on how to manage symptoms but makes no recommendation about whether the individual should attend work or not. The nurse does, however, make a record of the call and notifies the appropriate line manager and also informs the line manager when the individual is ready to return to work. Apparently managers appreciate this burden being removed and concentrate their attention on those employees whose absence level has reached a trigger point.

Some organisations, such as First Direct (IDS 2001), make every effort to offer altern­ative work. For example, a telephone operator who cannot do telephone work with a sore throat may be able to do other work, and managers are asked to bear this in mind when employees phone in sick and to try to encourage the employees to come in, where appropriate, to carry out other tasks. This telephone conversation is also seen as an important tool in reducing the length of the absence.

6. Better understanding of the causes of absence

Analysis of absence data can show the primary causes of absence in any particular organisation and this may help employers develop absence management methods relev­ant to the most frequent causes. However, as we have said, the reasons employees give for absence will be those that the organisation considers legitimate, and further investigation may be necessary.

Organisations can encourage individuals to be open about the real cause for their absence, for example a minor illness may be used as an excuse to cover for caring responsibilities, a stressful working environment or alcohol or drug problems. However, this is easier said than done. The London Borough of Brent (IRS 2002b) has decided that the next stage in its efforts to tackle long-term absence is to try to unpick the causes of such absence. The employer has a feeling that the explanation may be partly related to issues of stress and the nature and organisation of the work. Helping employees to feel they can trust the employer sufficiently to admit the real cause of absence means that absence can then effectively be tackled by providing the appropriate form of support. Another key tool is risk assessment, so, for example, some organisations will assess the risk of back pain or stress and then training can be provided to meet identified needs.

The CIPD (2006) found that organisations used risk assessments, training, staff surveys, policy development, flexible working, employee assistance programmes, focus groups and changes in work organisation as methods to identify and reduce stress. The HSE encourage the use of focus groups for stress identification and management and more details and examples can be found in Silcox (2005b).

7. Ongoing contact during absence

Maintaining contact during absence is considered by many organisations as a method of reducing length of absence, demonstrating to the employee that the organisation is interested in them, and maintaining employee motivation. In some organisations it is the line manager who will keep in touch, and in others, such as Walter Holland and Son (IDS 2001), there are liaison officers who fulfil this role. Contact may be by telephone, and with longer periods of absence may involve home visits. For a useful summary of a wide range of methods of keeping in touch with employees who are off sick see Silcox (2005c). The Employers Organisation for Local Government (EO) (HSE 2002a) suggests that more effort should be made to keep in touch with employees after operations, partly to keep them up to date, but also to see if it is possible for them to come back to work on light duties or on a part-time basis. In working out its policy of visits, Bracknell Forest Council (IRS 2002a) pays due attention to the requirements of the Human Rights Act 1998. The council recommends one visit per month in working hours and considers this is reasonable in terms of the need to demonstrate ‘respect for private and family life’, and the wish to avoid putting pressure on employees to return to work too early.

8. Return to work interviews and formal absence reviews

Return to work interviews are increasingly used as a key part of attendance procedures, and CIPD (2006) reports that these were used by 81 per cent of organisations in 2006 compared with 57 per cent in 2000. CIPD also reports that these interviews are regarded as the most effective way of managing short-term absence. For some organisations these interviews are mandatory, even following a single day’s absence, but there is frequently some flexibility about the nature of the interview depending on the circum­stances. In general the purposes of such interviews are identified as to: welcome the employee back and update them on recent events; check that the employee is well enough to resume normal duties and whether any further organisational support is needed; reinforce the fact that the employee has been missed and that attendance is a high priority in the organisation; and review the employee’s absence record. Dunn and Wilkinson (2002) found managers in their research who said that there was not time to concentrate on return to work interviews, as the practicalities of getting the job done were more critical. They also found a view among line managers that they were just so glad to get the employee back that they did not want to ‘rock the boat’. Where formal absence reviews are held these need to be handled with sensitivity and tact, and care needs to be taken so that the interview does not become recriminatory or accusatory.

9. Use of disciplinary procedures

If someone is genuinely ill and unable to work as a result, disciplinary action whether threatened or real is unlikely to bring about a return to work. It would not be desirable from the point of view of the employee or the employing organisation were this to be the case. There are, however, situations in which people who are too ill to work have to be dismissed. This is never a pleasant task, but it often falls to the HR manager to carry it out. The key is to make sure that the dismissal is carried out in a legally sound manner. This issue is covered in greater detail in Chapters 10 and 25, so it is only necessary here to summarise the main points:

1. Dismissing someone who is unable to work because of ill health is potentially fair under unfair dismissal law.
2. It is necessary to warn the individual concerned that he or she may be dismissed if he or she does not return to work and to consult with the individual ahead of time to establish whether a return in the foreseeable future is feasible.
3. It is necessary to act on whatever medical advice is available.
4. In larger organisations, except where a person’s job is very specialised or senior, it is normally considered reasonable to refrain from dismissing a sick employee for at least six months.
5. In any case no dismissal should occur if the employee falls under the definition of ‘disabled’ as set out in the Disability Discrimination Act 1995. In these cases an employee should only be dismissed once the employer is wholly satisfied that no reasonable adjustments could be made to accommodate the needs of the sick employee so as to allow them to return to work.

Where someone is persistently absent for short periods of time, the course of action taken will depend on whether or not there is a genuine underlying medical condition which explains most of the absences. If so, the matter should be handled in the same way as cases of long-term absence due to ill health outlined above. If not, then it is feasible for the employer to take a tougher line and to threaten disciplinary action at an earlier stage. It is quite acceptable in law to dismiss someone whose absence record is unacceptably high, provided the individual has been warned ahead of time and given a fair opportunity to improve his or her attendance. It is also necessary to treat different employees in a consistent fashion. Taking disciplinary action in the form of issuing a formal warning is therefore credible and likely to be successful.

10. Absence levels and performance assessments

Some organisations have communicated to employees the message that attendance levels are a measure of their performance so they are included in annual assessments. Dunn and Wilkinson (2002) found that in the three retail companies in their case sample, employees were assessed via a separate rating category on their absence levels. In addition employees with unacceptable absence levels would not be put forward for transfers or promotion. At HBOS (IDS 2005) line managers have a key performance objective relating to employee absence, reflecting their enhanced roles in managing absence.

11. Attendance bonus and rewards

Some organisations pay bonuses direct to employees on the basis of their attendance records. For example Richmondshire District Council (Silcox 2005d) have adopted a scheme where staff receive an additional day’s leave for 100 per cent attendance in the previous year. The council found that, coupled with other absence management measures, absence was reduced from 10 days to 8 days in the first year. The council argue not only that this is a cost saving, but that an anticipated day’s holiday is much easier to manage than an unanticipated day’s sickness absence. Connex (IDS 2001) will pay a quarterly attendance bonus of £155 at the end of each 13-week period for full attendance and an additional lump sum of £515 if an employee has had no sickness absence during a full calendar year. In addition Connex sends out letters commending employees for improving their absence record. The company considers that its absence scheme is a success as 80 per cent of eligible employees now qualify for payments. However, some managers do not support attendance bonuses as they feel that employees are already paid to turn up, and they are effectively being paid twice. Connex also found managers who felt that attendance bonuses were a signal to employees that managers cannot control the work environment themselves and that they have relinquished all responsibility for managing absence. On the other hand, Dunn and Wilkinson (2002) found that managers felt attendance bonuses were unfair as they penalised those employees who were genuinely ill. A further problem is that such rewards may encourage employees to come into work when they are genuinely ill which is not good for either the individual or the organisation. Such rewards therefore remain controversial.

12. Occupational health support, health promotion and well-being

A number of organisations carry out pre-employment screening to identify any poten­tial health problems at this stage. Others screen employees for general fitness and for potential job hazards, such as working with radiation, or VDUs. General screening may involve heart checks, blood tests, eye tests, well-woman/man clinics, ergonomics and physiotherapy, and discussions about weight and lifestyle, such as smoking, drinking and fitness levels. The value of such screening is that problems can be identified at an early stage so that the impact on sickness absence will be minimised. In some organisa­tions positive encouragement will be given to employees to follow healthy lifestyles, such as healthy eating, giving up smoking, taking up exercise routines. Increasing numbers of employers offer exercise classes and or an on-site gym, or alternatively pay for gym membership. Healthier canteen menus are appearing, and healthier snacks in some vending machines. However the CIPD (2006) found that barriers to such well­being initiatives were lack of resources, lack of senior management buy-in, and lack of employee buy-in, especially in manufacturing and production. The government has provided some funding (together with other organisations) for nine health promotion projects in England, and a good example of one of these is the ‘Be Active 4 life’ Programme at Exeter City Council which will be evaluated soon after the time of writing by a team from Loughborough University. Details of this project and the eight others are provided by Silcox (2005e).

For long-term absence the CIPD (2006) reported that the involvement of occupational health professionals was seen to be the most effective management tool, although HSE (2002c) shows that only one in seven workers has the benefit of comprehensive occupa­tional health support. However, such support does not have to be in-house and can be purchased: this is the course followed by the London Borough of Brent (IRS 2002b).

Physiotherapists, counsellors and psychologists are often employed, and the occupa­tional health role may include remedial fitness training and exercise therapy for those recovering from an illness. Stress counselling is increasingly being provided and if this is offered as part of an employee assistance programme can reduce the liability in stress- related personal injury cases. Also training in stress management may be offered.

James and his colleagues (2002) found that the role of occupational health workers was ambiguous and problematic. Their respondents suggested that while occupational health professionals worked on behalf of the employer, they tended to see themselves as representing employee interests. They also found that employees were very sceptical about visiting occupational health workers as they saw it as the first step in the termina­tion of their employment.

13. Changes to work and work organisation

Many employers appear to offer flexible working hours, part-time work and working from home. Employers also sometimes consider offering light duties or redeployment. However, James and his colleagues (2002) found that operational factors often limited what was possible. In the three manufacturing organisations they visited it was not always feasible to offer light duties or make adjustments to the workplace. They also found that other departments were reluctant to accept someone who was being rede­ployed after sickness, partly because they felt the employee might have lost the work habit, and also because there might be problems with pay if the levels of the old and new job differed. They also noted that there might be no budget to pay for adaptations to equipment or to purchase further equipment.

14. Practical support

There are many ways in which the employer can provide practical support to minimise sickness absence. Many organisations have experienced frustrations while employees are on waiting lists for diagnostic procedures and operations. In order to speed up medical treatment that employees need some organisations are prepared to pay the medical costs for employees where there is a financial case to do this, for example the Corporation of London (Silcox 2005f). Training in areas such as stress management and
time management may help employees minimise feelings of stress, childcare support may simplify childcare arrangements, and phased return to work after a long-term absence is also a useful strategy. For more details on phased return to work and some examples see Silcox (2005g).

Source: Torrington Derek, Hall Laura, Taylor Stephen (2008), Human Resource Management, Ft Pr; 7th edition.

There seems to be general agreement that training and development is a good thing, and that it increases productivity, but the question is ‘how much?’ It is even difficult to show a causal link between HR development and organisational performance, partly because such terms are difficult to define precisely, and partly because the payoff from development may not be seen in the short term. It is also difficult to tie down perform­ance improvements to the development itself and to understand the nature of the link. For example, is performance better because of increased or different HR development, because the reward package has improved or because we have a clearer set of organ­isational and individual objectives? If there is a link with HR development initiatives, is it that employees have better skills, or that they are better motivated, or that they have been selected from a more able group of candidates attracted to the organisation as it offers a high level of development?

In spite of these difficulties it is important to identify the contribution of HR develop­ment to business success, and wider measures for assessing business success, beyond the standard financial indicators, make this more feasible, as, for example, suggested by Kaplan and Norton (1992) and discussed in Chapter 33. While the search for ‘evidence’ goes on, the current climate encourages high levels of attention to HR development, which is increasingly seen not only as a route to achieving business strategy, but also as a means of building core competence over the longer term to promote organisational growth and sustained competitive advantage. Global competition and a fast pace of change have emphasised the importance of the human capital in the organisation, and the speed and ways in which they learn. A Green Paper produced by the Department for Education and Employment (1998) stated that ‘investment in human capital will be the foundation of success in the 21st century’. Nationally the emphasis on qualifications is increasing and Case 16.1 on this book’s companion website, www.pearsoned.co.uk/ torrington, focuses on the development of directors from this perspective.

In addition, levels and sophistication of training and development have received con­siderable attention in the context of the ‘new psychological contract’ and the need to promote employability, which we discuss in more detail in Chapter 19. There is some evidence that employee demand for training and development is increasing and that unions are beginning to engage in bargaining for development. Opportunities for training and development may be a vital tool in recruitment and retention, and considered to be a reward when promotion or monetary rewards are less available. However, Stewart and Tansley (2002) found significant structural and cultural barriers to formal and informal learning in organisations; in particular lack of time was identified as an issue.

1. THE NATIONAL PICTURE AND STRATEGY

Employee development has traditionally been seen as a cost rather than an investment in the UK, although this is certainly changing in some organisations. It has been argued that UK organisations give little support to training and development compared with our European partners (see, for example, Handy 1988; Constable and McCormick 1987 for keystone reports). This lack of investment in training and development has been identified as a major factor in Britain’s economic performance, and it has been argued that without such investment we will be trapped in a low-wage, low-skills economy (Rainbird 1994; Keep and Mayhew 1999), with the emphasis on competing on price rather than quality. In recent years in the UK there has been a governmental focus on

measures to increase our skills levels and reduce skills gaps, which we review in more detail in the following chapter. Despite these efforts, and some evidence from the Workplace Employment Relations Survey (WERS) that training for core employees has increased between 1998 and 2004 (Kersley et al. 2006), evidence of skills gaps remains (see, for example, Phillips 2006). Our national training framework is voluntarist, with the government’s role limited to encouraging training rather than intervening, as in many other countries. High levels of skills are seen as critical in promoting high per­formance and wealth as a country.

Alternatively it has been argued that it is not a lack of investment in training that is the problem but the way such investment is distributed, that is, who it is spent on and the content of the training. It is generally agreed that training spend is unevenly distributed. For example Stevens (2001) argues that it is the people at the lower end of the hierarchy that miss out on training, and Westwood (2001) reports that:

Access to workforce development is unequal with managers and professionals or those with a degree up to five times more likely to receive work based training than people with no qualification and/or unskilled jobs. (p. 19)

Thomson (2001) explains that broader development is concentrated on those at the beginning of their careers and those in more senior and specialist posts, rather than part- timers and those with fewer qualifications to begin with. The WERS survey found that professionals, associated professionals, managers and those with most qualifications receive most training rather than low-skilled workers (Kersley et al. 2006). In the aerospace and pharmaceuticals businesses, defined as high-skills sectors, Lloyd (2002) found a conflict of interests between employees’ desire for training and development and managerial short-term aims, lack of accreditation of skills, structured development focused on key employees, access to training being dependent on individual initiative, senior managers viewing training as a minor issue to be dealt with by lower-level man­agers and insufficient resources. She suggests that there was under-investment and lack of support for flexibility and employability. Westwood (2001) concludes that while we do not do as much training as in Europe, we do spend a lot of money on training that doesn’t last very long and on the people who may not need it. In terms of training con­tent there is evidence to suggest that much training is related to induction and particu­larly health and safety, as demonstrated in the WERS survey, and it has been argued that this does nothing to drive the development of a knowledge-based economy (see, for example, Westwood 2001). In addition there is considerable ongoing evidence that employees in small organisations are at a disadvantage in terms of access to training. In the construction industry overall low levels of apprenticeships and a heavy reliance on contingent (temporary) workers were found, particularly in smaller organisations (Forde and MacKenzie 2004), and evidence from the WERS survey suggests that the highest levels of training are in the public sector and larger organisations, particularly those employing high levels of professional employees.

Some view the solution to this problem as increasing state intervention, as many view voluntarism as having a limited effect (see, for example, Sloman 2001). It is argued that potential intervention would not mean a return to the levy system, where employers were forced to make an annual payment relative to profits which they could recoup by providing evidence that the equivalent money had been spent of training. But, for example, statutory rights for paid study leave and employer tax credits, and funding mechanisms to create a demand-led system, could be introduced.

A demand-led approach is currently receiving much attention, but there are subtle differences in how this is interpreted. The Leitch Review (Leitch 2006) provides a useful starting point in differentiating between a supply-led and a demand-led training system. He characterises the supply-driven approach as being based on ineffectively articulated collective employer views of training needed and a central system of provision planned by the government to meet these needs, and predict future needs. He suggests that employers and individuals find it difficult to articulate their needs partly due to the pro­fusion of bodies to which they are asked to input, that this approach results in too little investment by employers, too little responsibility being taken by individuals for their own training and a qualifications system divorced from the needs of the workplace. In contrast he suggests a demand-led system is about directly responding to demand rather than planning supply. To achieve this suppliers (such as colleges of further education) only receive funding as they attract customers (rather than being given block funding in advance, based on estimated demand), driving them to respond flexibly and immediately to employer demand. He suggests this approach, as used in Employer Training Pilots (which we discuss in the following chapter), leads to training provision which is more relevant, reflects the needs of customer, and is likely to produce higher completion rates and better value for money.

Keep (2006) identifies current problems for demand-led and employer-led training in terms of the mismatch between employer needs and training provision. For example he suggests that colleges offer longer-term accredited courses as these attach Learning and Skills Council funding in response to government targets, whilst employers may be seek­ing short uncertificated courses. Such a mismatch is addressed in the recommendations of the Leitch Review, and we highlight the principles and mechanisms proposed to achieve Leitch’s 2020 vision for the UK being a world leader in skills in the following chapter. If these mechanisms are effective, training supply should be much more reactive to the real needs of employers; however the limitations of this approach are that such a reactive approach focuses on current and short-term needs at the expense of anticipating and preparing for future needs, and does not address the structure of jobs in this country.

There is, however, a subtly different school of thought in relation to the supply/ demand debate which suggests the problem lies with the demand side of the equation rather than the supply side. In other words the problem is not with government initiatives and measures to encourage training, development and learning but with the way that skills are used and jobs are constructed, and hence the employer demand for training, development and learning. In speaking of the Learning and Skills Councils (LSCs), Stevens (2002) says that he is less concerned with what the LSCs can do to encourage learning than with ‘whether the UK can generate enough jobs for people who have learnt and can learn’ (p. 44). Lloyd (2002) suggests that the country cannot solve its problems just by developing skills, as it is critical to change the structure of jobs:

All this suggests that we still have a situation in which the majority of organizations are using a reactive strategy: training only in response to the immediate short-term demands of the business, rather than being considered a strategic issue. (Ashton 2003, p. 23)

This implies that training and development needs to be considered at a strategic level in the business, but also, and perhaps more challenging, that employers need to change their business strategies to focus on quality rather than cost. Lloyd (2005), however, in the context of research in the fitness industry suggests that even this may not be enough to shift the low-skills equilibrium, and that amongst other things, customer expectations in this country need to be higher.

2. ORGANISATIONAL STRATEGY AND HR DEVELOPMENT STRATEGY

For training and development to be effective in terms of business success there is a well- rehearsed argument that it should be linked upfront with business strategy, and the WERS survey (Kersley et al. 2006) did find evidence that there was more training in organisations with a strategic plan that covered employee development. McClelland’s research (1994) is one of many studies showing that organisations generally do not consider development issues to be part of their competitive strategy formulation, but those that do so identified it to be of value in gaining as well as maintaining competitive advantage. Miller (1991), writing specifically of management development, points to a lack of fit between business strategy and development activity. Miller makes the point that although at the organisational level it is difficult to identify quantitatively the direct impact of strategic investment in development, this impact is well supported by anecdotal evidence and easily demonstrated at the macro-level.

Those organisations that do consider HR development at a strategic level usually see it as a key to implementing business strategy in a reactive way. Luoma (2000) categorises this approach as a ‘needs-driven’ approach, where the purpose of the HR development strategy is to identify and remedy skill deficiencies in relation to the organisational strategy. Luoma suggests that in many articles this is ‘implicitly referred to as the only way of managing strategic HRD’. Miller, for example, has demonstrated how management development can be aligned with the strategic positioning of the firm, and this can be seen as coming within the broad remit of such approaches as a needs-driven approach. He has produced a matrix demonstrating how development content and processes can reflect stable growth, unstable growth, unstable decline and competitive positions, as shown in Table 16.1. He offers the model as suggestive, only, of the ‘possibilities in designing strategically-oriented management development programmes’.

Luoma (2000), however, identifies a second approach to HR development strategy which is an ‘opportunistic approach’, where the impetus is external rather than internal. This would include applying leading ideas on development to the organisation in a more general way, rather than specifically in relation to meeting the current business objectives. Such ideas may be developed from benchmarking, case studies, networking and the academic and practitioner press. Such ideas could include content and method, for example the development of a corporate university, and the concept of developing non­employees who perhaps work for suppliers or who are contracted to the organisation. The abilities thus developed may indeed be relevant in achieving business objectives, but they may also be relevant in developing abilities and behaviours which may be the source of future competitiveness. Thus they may also be a means of achieving culture change and/or facilitating the strategy process itself by constructing it as a learning process. In this approach the learning potential of all employees will be emphasised, and the HR development strategy may meet reactive needs in the implementation of business strategy, but may also be proactive in influencing the formation of future business strategy.

The third approach to the strategy link suggested by Luoma is based on the concept, which we discussed in Chapter 2, of organisational capability as the key to sustained competitive advantage, the resource-based view of the firm. This approach is proactive in that it focuses on the desired state of the organisation as defined in its future vision. Within this would come the interest in anticipatory learning, which has been attracting some interest, where future needs are predicated and development takes place in advance.

Of paramount importance, therefore, is the ability to learn. Watkins (1987) suggests that development for strategic capability, rather than just targeting development on achieving business objectives, needs to reinforce an entrepreneurial and innovative cul­ture in which learning is part of everyday work. He identifies the importance of acting successfully in novel and unpredictable circumstances and that employees acquire a ‘habit of learning, the skills and learning and the desire to learn’. Within this same perspective Mayo (2000) suggests that the intangible assets of the organisation are increasing in proportion to the value of tangible assets. He recognises that developing intellectual capital may be an ‘act of faith’, or one of budgetary allocation, and suggests that the most useful measures to track such investments are individual capability, indi­vidual motivation, the organisational climate and work-group effectiveness. While he recognises the value of competency frameworks in respect of individual development he does point out that these neglect such features as experience and the networks and range of personal contacts, both of which are key to the development of core organisational competencies which are in turn key to developing uniqueness.

In a slightly different but compatible approach McCracken and Wallace (2000) develop a redefinition of strategic HR development, based on an initial conception by Garavan (1991). They suggest nine characteristics of a strategic approach to HR development, which are that:

• HR development shapes the organisation’s mission and goals, as well as having a role in strategy implementation.
• Top management are leaders rather than just supporters of HR development.
• Senior management, and not just HR development professionals, are involved in environmental scanning in relation to HR development.
• HR development strategies, policies and plans are developed, which relate to both the present and future direction of the organisation, and the top management team are involved in this.
• Line managers are not only committed and involved in HR development, but involved as strategic partners.
• There is strategic integration with other aspects of HRM.
• Trainers not only have an expanded role, including facilitation and acting as organ­isational change consultants, but also lead as well as facilitate change.
• HRD professionals have a role in influencing the organisational culture.
• There is an emphasis on future-oriented cost effectiveness and results, in terms of evaluation of HR development activity.

They suggest that each of these aspects needs to be interrelated in an open system. In the following sections we will address some of these characteristics in more detail; however it is worth bearing in mind that changing learning patterns and HR develop­ment roles both place challenges on the alignment of learning and development with business needs (for more details see Hirsh and Tamkin 2005).

3. THE EXTERNAL LABOUR MARKET AND HR STRATEGIC INTEGRATION

The external availability of individuals with the skills and competencies required by the organisation will also have an impact on employee development strategy. If skilled individuals are plentiful, management has the choice of whether, and to what extent, it wishes to develop staff internally. If skilled individuals are in short supply, internal devel­opment invariably becomes a priority. Predicting demographic and social changes is critical in identifying the extent of internal development required and also who will be available to be developed. In-depth analysis may challenge traditionally held assumptions about who will be developed, how and to what extent. For example, the predicted short­age of younger age groups in the labour market, coupled with a shortage of specific skills, may result in a strategy to develop older rather than younger recruits. This poses potential problems about the need to develop older workers some of whom may learn more slowly. What is the best form of development programme for employees with a very varied base of skills and experiences? Another critical issue is that of redeployment of potentially redundant staff and their development to provide skills that are in short supply.

Prediction of skills availability is critical, as for some jobs the training required will take years rather than months. Realising in January that the skills required in August will not be available in the labour market is too late if the development needed takes three years!

The external labour market clearly has a big impact on employee development strategy, so it is important that there is effective integration between HR development strategy, other aspects of human resource strategy and overall organisational strategy. Currently many skills gaps are being covered by the recruitment of immigrant workers with valued skills and who employers often consider to work very willingly and very hard. However Philpott and Davies (2006) warn that if employers see the immigrant labour force as a quick fix for skills shortages this may undermine employers’ efforts to develop the existing workforce.

Where there is a choice between recruiting required skills or developing them inter­nally, given a strategic approach, the decision will reflect on the positioning of the organisation and its strategy. In Chapter 5 we looked at this balance in some depth and you may find it helpful to re-read this. A further issue is that of ensuring a consistency between the skills criteria used for recruitment and development.

From a slightly different perspective, the impact of the organisation’s development strategy on recruitment and retention, either explicit or implicit, is often underestimated. There is increasing evidence to show that employees and potential employees are more interested in development opportunities, especially structured ones, than in improvements in financial rewards. Development activity can drive motivation and commitment, and can be used in a strategic way to contribute towards these. For these ends, publishing and marketing the strategy is key, as well as ensuring that the rhetoric is backed up by action. There is also the tricky question of access to and eligibility for development. If it is offered only very selectively, it can have the reverse of the intended impact.

However, not all employees see the need for, nor the value of, development and this means that reward systems need to support the development strategy, a topic to which we return in Chapter 26. If we want employees to learn new skills and become multi­skilled, it is skills development we need to reward rather than the job that is currently done. If we wish employees to gain vocational qualifications, we need to reflect this in our recruitment criteria and reward systems. Harrison (1993) notes that these links are not very strong in most organisations.

Other forms of reward, such as promotions and career moves, also need to reflect the development strategy; for example, in providing appropriate, matrix, career pathways if the strategy is to encourage a multifunctional, creative perspective in the development of future general management. Not only do the pathways have to be available, they also have to be used, and this means encouraging current managers to use them for their staff. In Chapter 19 we explore such career issues more fully.

Finally, an organisation needs to reinforce the skills and competencies it wishes to develop by appraising those skills and competencies rather than something else. Develop­mentally based appraisal systems can clearly be of particular value here. Mabey and Iles (1993) note that a strategic approach to development differs from a tactical one in that a consistent approach to assessment and development is identified with a common skills language and skills criteria attached to overall business objectives. They also note the importance of a decreasing emphasis on subjective assessment. To this end many organisations have introduced a series of development centres, similar to the assessment centres discussed in Chapter 8, but with a clear outcome of individual development plans for each participant related to their current levels of competence and potential career moves, and key competencies required by the business.

4. TRAINING AND DEVELOPMENT ROLES

Salaman and Mabey (1995) identify a range of stakeholders in strategic training and development, each of which will have different interests in, influence over and owner­ship of training and development activities and outcomes. They identify senior managers as the sponsors of training and development, who will be influenced by professional, personal and political agendas; and business planners as the clients who are concerned about customers, competitors and shareholders. Third, they identify line managers who are responsible for performance, coaching and resources; and fourth, participants who are influenced by their career aspirations and other non-work parts of their lives. HRM staff are identified as facilitators who are concerned with best practice, budget credibil­ity and other HR strategy. Lastly, training specialists are identified as providers, who are influenced by external networks, professional expertise and educational perspectives. The agendas of each of these groups will overlap on some issues and conflict on others. We have already noted how McCracken and Wallace (2000) have redefined the roles of top managers, line managers and HR professionals so that they are all more proactively involved in HRD strategy. Sloman (2006) defines the role of trainer in a service-led, knowledge-driven economy as ‘that of a people developer, and [it] is about supporting, accelerating and directing learning that meets the organisation’s needs and that are appropriate to the learner and the context’ (p. 35).

Most organisational examples suggest that the formation of training and develop­ment strategy is not something that should be ‘owned’ by the HR/HRD function. The strategy needs to be owned and worked on by the whole organisation, with the HR/ HRD function acting in the roles of specialist/expert and coordinator. The function may also play a key role in translating that strategy into action steps. The actions themselves may be carried out by line management, the HR/HRD function or outside consultants. Stewart and Tansley (2002) suggest that the immediate and medium-term contribution of HRD professionals should focus on developing the competence and motivation of managers to manage learning and development. They confirm that such professionals need to act as facilitators and not instructors, and have a focus on the process and design of development rather than its content. There is a debate about where the training and development function should be located in order best to fulfil its role; and the balance between central specialists concentrating on strategic activities and local specialists integrated into departments needs to be appropriate to the organisational context. Hirsh and Tamkin (2005) provide an informed discussion of the central/local tension.

Involvement of line management in the delivery of the training and development strategy can have a range of advantages. Top management have a key role in introducing and promoting strategic developments to staff, for example creating an organisation­wide competency identification programme; setting up a system of development centres or introducing a development-based organisational performance management system. Only if management carry out this role can employees see and believe that there is a commitment from the top. At other levels line managers can be trained as trainers, assessors and advisers in delivering the strategy. This is a mechanism not only for getting them involved, but also for tailoring the strategy to meet the real and different needs of different functions and departments.

External consultants may be used at any stage. They may add to the strategy develop­ment process, but there is always the worry that their contribution comes down to an offering of their ready-packaged solution, with a bit of tailoring here and there, rather than something which really meets the needs of the organisation. It is useful to have an outside perspective, but there is an art in defining the role of that outside contribution.

In delivery, external consultants may make a valuable contribution where a large number of courses have to be run over a short period. The disadvantages are that they can never really understand all the organisational issues, and that they may be seen as someone from outside imposing a new process on the organisation.

Source: Torrington Derek, Hall Laura, Taylor Stephen (2008), Human Resource Management, Ft Pr; 7th edition.

There has been a considerable shift in the way that individual development is under­stood and characterised. We have moved from identifying training needs to identifying learning needs, the implication being that development is owned by the learner with the need rather than by the trainer seeking to satisfy that need. This also has implications for who identifies the needs and the way that those needs are met. Current thinking suggests that needs are best developed by a partnership between the individual and the organisation, and that the methods of meeting these needs are not limited only to formal courses, but to a wide range of on-the-job development methods and distance/ e-learning approaches. Whilst a partnership approach is considered ideal the phrase ‘self-development’ is an important one in our development lexicon, indicating the grow­ing emphasis on the individual having ownership of and taking responsibility for their own development. There has also been a shift in the type of skills that are the focus of development activity. Hallier and Butts (1999) for example identify a change from an interest in technical skills to the development of personal skills, self-management and attitudes. Lastly, while the focus on development for the current job remains high, there is greater pressure for development which is also future oriented. These shifts reflect the changes that we have already discussed in terms of global competition, fast and continuous change and the need for individuals to develop their employability in an increasingly uncertain world.

1. THE NATURE OF LEARNING

For the purpose of this text we consider the result of learning to be changed or new behaviour resulting from new or reinterpreted knowledge that has been derived from an external or internal experience. There are broadly four theoretical approaches or perspectives to understanding the nature of learning, and the training and development that organisations carry out reflect the explicit or implicit acceptance of one or more perspectives. We will look at each perspective, in the evolutionary order in which they became important. There is no right or wrong theory – each has strengths and weaknesses.

The behaviourist perspective is the earliest which, reflecting the label, concentrates on changes in observable behaviour. Experiments with animals formed the foundation of this theory, for example the work of Skinner, Watson and Pavlov. Researchers sought to associate rewards with certain behaviours in order to increase the display of that behaviour. The relevance of this for organisations today may be seen for example in telesales training where employees are taught to follow a script and calls are listened to, to ensure that the script is followed. Reward or punishment follows depending on behaviour. Trainers are not interested in what is going on in the heads of employees, they merely want them to follow the routine to be learned. This approach has also been used for a range of interpersonal skills training. One American company, for example plays video sequences to trainees portraying the ‘correct’ way to carry out, say, a return to work interview. Trainees then practise copying what they have seen and are given cue cards to use when carrying out that particular interpersonal event. The problems with the perspective are that it is overtly manipulative, simplistic and limited. It may produce only temporary changes in behaviour and increase cynicism.

Cognitive approaches are based on an information-processing perspective and are more concerned with what goes on in the learner’s head. This is a more technical perspective and maps out the stages of learning such as: expectancy to learn (motivation); attention and perception required; experience is coded (meaning is derived); meaning is stored in long-term memory; meaning is retrieved when needed; learning is applied; feed­back is received (which may supply reinforcement). The strengths of this perspective are that it stresses the importance of learner motivation and individual needs, it recognises that the individual has some control over what is learned and it identifies feedback as an important aspect of learning. The weaknesses are that it assumes learning is neutral and unproblematic and it is a purely rational approach that ignores emotion. From this perspective useful development activities would be seen as formal courses offering models and ideas with lots of back-up paperwork. Activities to improve learning motivation are also important, for example helping employees to recognise their own development needs and providing rewards for skills development. Mechanisms for providing feedback to employees are also key.

The third perspective is based on social learning theory, in other words learning is a social activity and this is based on our needs as humans to fit in with others. In organisa­tions this happens to some extent naturally as we learn to fit in with things such as dress codes, behaviour in meetings and so on. Fitting in means that we can be accepted as successful in the organisation, but it is not necessary that we internalise and believe in these codes. Organisations often use role models, mentors and peer support, and ‘buddies’, to intensify our natural will to fit in. The disadvantages of this perspective are that it ignores the role of choice for the individual and it is based, to some extent, on a masquerade.

The constructivist perspective is a development of the information-processing per­spective, but does not regard learning as a neutral process: it is our perception of our experiences that count; there is no ‘objective’ view. This perspective accepts that in our dealings with the world we create ‘meaning structures’ in our heads and these are based on our past experiences and personality. New information and potential learning need to fit with these meaning structures in some way, which means that a similar new expe­rience will be understood differently by different people. We tend to pay attention to things which fit with our meaning structures and ignore or avoid things that don’t fit. As humans we are also capable of constructing and reconstructing our meaning structures without any new experiences. These meaning structures are mainly unconscious and therefore we are not aware of the structures which constrain our learning. We are gen­erally unaware of how valid our meanings sets are, and they are deeply held and difficult to change. Making these structures explicit enables us to challenge them and to start to change them. This perspective recognises that learning is a very personal and potentially threatening process. We develop mechanisms to protect ourselves from this threat, and thus protect ourselves from learning. The implication of this is that learning support needs to encourage introspection and reflection, and providing the perspectives of others (for example as in 360-degree feedback, outdoor courses or relocations) may assist in this process.

2. PRACTICAL CHARACTERISTICS OF LEARNING AND DEVELOPMENT

2.1. Learning from experience

A significant amount of work has been done which helps us understand how managers, and others, learn from their experiences. Kolb et al. (1984) argue that it is useful to combine the characteristics of learning, which is usually regarded as passive, with those of problem solving, which is usually regarded as active. From this combination Kolb et al. developed a four-stage learning cycle, which was further developed by Honey and Mumford (1989).

The four stages, based on the work of both groups of researchers, are shown in Figure 18.1.

Each of these four stages of the learning cycle is critical to effective learning, but few people are strong at each stage and it is helpful to understand where our strengths and weaknesses lie. Honey and Mumford designed a questionnaire to achieve this which identified individuals’ learning styles as ‘activist’, ‘reflector’, ‘theorist’ and ‘pragmatist’, and explain that:

• Activists learn best from ‘having a go’, and trying something out without necessarily preparing. They would be enthusiastic about role-play exercises and keen to take risks in the real environment.
• Reflectors are much better at listening and observing. They are effective at reflect­ing on their own and others’ experiences and good at analysing what happened and why.
• Theorists’ strengths are in building a concept or a theory on the basis of their ana­lysis. They are good at integrating different pieces of information, and building models of the way things operate. They may choose to start their learning by reading around a topic.
• Pragmatists are keen to use whatever they learn and will always work out how they can apply it in a real situation. They will plan how to put it into practice. They will value information/ideas they are given only if they can see how to relate them to practical tasks they need to do.

Understanding how individuals learn from experience underpins all learning, but is particularly relevant in encouraging self-development activities. Understanding our strengths and weaknesses enables us to choose learning activities which suit our style, and gives us the opportunity to decide to strengthen a particularly weak learning stage of our learning cycle. While Honey and Mumford adopt this dual approach, Kolb firmly maintains that learners must become deeply competent at all stages of the cycle. There has been considerable attention to the issue of matching and mismatching styles with development activities: see, for example, Hayes and Allinson (1996), who also consider the matching and mismatching of trainer learning style with learner learning style.

2.2. Planned and emergent learning

From a different, but compatible, perspective, David Megginson characterises learners by the extent to which they plan the direction of their learning and implement this (planned learning), and the extent to which they are able to learn from opportunistic learning experiences (emergent learning). Megginson (1994) suggests that strengths and weak­nesses in these two areas will influence the way individuals react to self-development. These two characteristics are not mutually exclusive, and Megginson combines them to identify four learning types, as shown in Table 18.1.

Warriors are those who are strong at planning what they want to learn and how, but are less strong at learning from experiences they had not ancticipated. They have a clear focus on what they want to learn and pursue this persistently. On the other hand Adventurers respond to and learn from opportunities that come along unexpectedly, they are curious and flexible. However, they tend not to plan and create opportunities for themselves. Sages are strong on both characteristics, and Sleepers display little of either characteristic at present. To be most effective in self-development activities learners need to make maximum use of both planned and emergent learning. For a further explanation of this model also see Megginson and Whitaker (1996).

2.3. Learning curves

The idea of the learning curve has been promulgated for some time, and was developed in relation to technical skills development. The general idea was that we tend to learn a new task more rapidly at first, so that the learning curve is steep, and then gradually plateau after we have had significant experience. A slightly different shape of learning is more relevant to personal skills development: the curve is less likely to be smooth, or it may not even be curved. Ideally our learning would be incremental, improving bit by bit all the time; in reality, however, learning is usually characterised by a mix of improve­ments and setbacks. Although, with persistence, our skills gradually increase, in the short term we may experience dips. These dips are demotivating but they are a neces­sary part of learning. Developing personal skills usually requires us to try out a new way of doing things. This is risky because, although the skills we are developing may be quite personal to us, we usually have to experiment with new ways of doing things in public. Understanding that sometimes things get worse before they get better helps to carry us through the dips. Figure 18.2 shows the reality of learning progress.

2.4. Identifying learning and training needs

The ‘systematic training cycle’ was developed to help organisations move away from ad hoc non-evaluated training, and replace it with an orderly sequence of training activit­ies, but this approach has been less prominent of late. Harrison (2005) contests that such a cycle is not necessarily the most appropriate to use as it falls far short of the messy world of practice, and does not focus adequately on learning. Sloman (2001) argues that it may have fitted the 1960s mood for rationality and efficiency, but it is somewhat mechanical and fits less well with our faster pace of continuous change. In spite of this the cycle does retain some value, and we describe an adaptation of such a model to make it more applicable to today’s environment. The model is set within an external environ­ment and within an organisation strategy and an HR development strategy. Even if some of these elements are not made explicit, they will exist implicitly. Note that the boundary lines are dotted, not continuous. This indicates that the boundaries are per­meable and overlapping. The internal part of the model reflects a systematic approach to learning and to training. Learning needs may be identified by the individual, by the organisation or in partnership, and this applies to each of the following steps in the circle. This dual involvement is probably the biggest change from traditional models where the steps were owned by the organisation, usually the trainers, and the individual was con­sidered to be the subject of the exercise rather than a participant in it, or the owner of it. The model that we offer does not exclude this approach where appropriate, but is intended to be viewed in a more flexible way. The model is shown in Figure 18.3.

There are various approaches to analysing needs, the two most traditional being a problem-centred approach and matching the individual’s competency profile with that for the job that person is filling. The problem-centred approach focuses on any perform­ance problems or difficulties, and explores whether these are due to a lack of skills and, if so, which. The profile comparison approach takes a much broader view and is perhaps most useful when an individual, or group of individuals, are new to a job. This latter approach is also useful because strategic priorities change and new skills are required of employees, as the nature of their job changes, even though they are still officially in the same role with the same job title. When a gap has been identified, by whatever method, the development required needs to be phrased in terms of a learning objective, before the next stage of the cycle, planning and designing the development, can be undertaken. For example, when a gap or need has been identified around team leadership, appropriate learning objectives may be that learners, by the end of the development, will be able ‘to ask appropriate questions at the outset of a team activity to ascertain relevant skills and experience, and to check understanding of the task’ or ‘to review a team activity by involving all members in that review’.

The planning and design of learning will be influenced by the learning objectives and also by the HR development strategy, which for example may contain a vision of who should be involved in training and development activities, and the emphasis on approaches such as self-development and e-learning. Once planning and design have been specified the course, or coaching or e-learning activity, can commence, and should be subject to ongoing monitoring and evaluated at an appropriate time in the future to assess how behaviour and performance have changed.

Source: Torrington Derek, Hall Laura, Taylor Stephen (2008), Human Resource Management, Ft Pr; 7th edition.

1. METHODS OF LEARNING AND DEVELOPMENT

1.1. Off-job methods: education and training courses

Educational courses undertaken during a career are frequently done on a part-time basis leading to a diploma or master’s degree with a management or business label, and/or qualification for a professional body. It is considered that such courses provide value for both the employer and the participant – and MBA study is a popular route. For advant­ages of such a course for the employee see, for example, Baruch and Leeming (2001). An alternative approach to qualification is the NVQ route which we discussed in the pre­vious chapter, which is more closely tied to on-job experiences and not concerned with ‘education’.

In addition there are consultancy courses. Varying from a half-day to several weeks in length, they are run by consultants or professional bodies for all comers. They have the advantage that they bring together people from varying occupational backgrounds and are not, therefore, as introspective as in-house courses and are popular for topical issues. They are, however, often relatively expensive and superficial, despite their value as sources of industrial folklore, by which we mean the swapping of experiences among course members.

The most valuable courses of this type are those that concentrate on specific skills or knowledge, such as developing time management, interviewing or disciplinary skills, or being introduced to a new national initiative. This short-course approach is probably the only way for individuals to come to terms with some new development, such as a change in legislation, because they need not only to find an interpretation of the devel­opment, but also to share views and reactions with fellow employees to ensure that their own feelings are not idiosyncratic or perverse.

In-house courses are often similar in nature to the consultancy courses, and are some­times run with the benefit of some external expertise. In-house courses can be particu­larly useful if the training needs to relate to specific organisational procedures and structures, or if it is geared to encouraging employees to work more effectively together in the organisational environment. The drawbacks of in-house courses are that they suffer from a lack of breadth of content, and there is no possibility of learning from people in other organisations.

Alternatively, there are outdoor-type courses (sometimes known as Outward Bound, after the organisation that pioneered them). Outdoor courses attempt to develop skills involved in working with and through others, and aim to increase self-awareness and self-confidence through a variety of experiences, including outdoor physical challenges. Courses like these continue to be increasingly used, and their differential value is assumed to hinge on their separation from the political, organisational environment. A natural, challenging and different environment is assumed to encourage individuals to forsake political strategising, act as their raw selves and be more open to new ideas. Burleston and Grint (1996), based on ethnographic research into outdoor programmes, found that while most participants did gain from the experience, the idea of providing a de-politicised environment is a naive hope rather than a reality. Ibbetson and Newell (1999) did find, however, that non-competitive outdoor programmes were more effec­tive in meeting teambuilding objectives than competitive programmes. More recently learning experiences based on drama have increasingly been used; in these particip­ants are engaged in improvisation through role play and exercises. For a fascinating insight into the variety of forms this may take see Monks et al. (2001). There are other forms of simulation in addition to role play, such as games and computer simulations; for a good discussion of definitions and outcomes of such approaches see Feinstein et al. (2002).

One of the major concerns with these different types of off-job courses and activities is the difficulty of ensuring transfer of learning back to the workplace. As part of their research on the contribution of off-job courses to managers Longenecker and Ariss (2002) asked managers what helped them retain what they had learned and transfer it to the workplace. Developing goals/plans for implementing new skills was most frequently identified. In addition managers said that it helped to review materials immediately after the programme; be actively involved in the learning itself; make a report to peers/ superiors on what they had learned; review material and development plans with their mentor/manager; and include development goals in performance reviews. It is generally agreed that a supportive climate helps transfer (for example line manager interest and involvement, and development having a high priority in the organisation). Santos and Stewart (2003), for example, found that transfer was more likely if reward such as promotion or pay was attached to developmental behaviour change, and also where there was a helpful management climate in terms of pre- and post-course briefings and activities. Currently there are number of more creative approaches where experiential job-related activities are included on courses, as shown in the Window on practice.

In relation to MBAs Martin and Pate (2001) found, surprisingly, that a poor transfer climate did not affect transfer, but willingness to apply what was learned was related to the individual’s positive feelings about the company and his or her intended continuance there.

While courses are no longer viewed as the key means of developing staff, they still have an important role to play, and in Interactive skill 4, in the Focus on skills at the end of Part 4, we therefore explore presentation as well as coaching skills.

1.2. Learning on the job

Manager coaching and other internal and external coaching

The line manager’s role in learning and development has increased with the devolution of HR tasks. Coaching is an informal approach to individual development based on a close relationship between the individual and one other person either internal or external to the organisation. The coach is often the immediate manager, who is experienced in the task, but there is increasing use of external coaches, especially for more senior managers, or specially trained internal coaches, and ‘coaching’ has become very much a professional occupation with its own code of ethical practice. We will look at this in more detail, but first we explore the coaching role of the line manager.

The manager as coach helps trainees to develop by giving them the opportunity to perform an increasing range of tasks, and by helping them to learn from their exp­eriences. Managers work to improve the trainee’s performance by asking searching questions, actively listening, discussion, exhortation, encouragement, understanding, counselling and providing information and honest feedback. The manager coach is usually in a position to create development opportunities for the trainee when this is appropriate. For example, a line manager can delegate attendance at a meeting, or allow a trainee to deputise, where this is appropriate to the individual’s development needs. Alternatively a line manager can create the opportunity for a trainee to join a working party or can arrange a brief secondment to another department. Coaches can share ‘inside’ information with the individual they are coaching to help them understand the political context in which they are working. For example, they are able to explain who will have most influence on a decision that will be made, or future plans for restructuring within a department.

Skilled coaches can adapt their style to suit the individual they are coaching, from highly directive at one end of the scale to non-directive at the other. The needed style may change over time, as the trainee gains more confidence and experience. A useful text on the practical skills of coaching is Pemberton (2006). In an exploratory study Carroll and Gillen (2001) found a variety of barriers to line manager acceptance of a teaching/ coaching role, in particular lack of interpersonal competence, lack of time, performance pressures, and a feeling that the teaching role was not valued and was the role of the HR department. This same article also provides some excellent material on what makes an effective coach. The CIPD (2006) found that competing business pressures and lack of internal skills and experience were the greatest barriers to coaching, and IDS (2006a) suggests that in view of the emphasis in coaching on honest self-reflection, there will be barriers in organisations where the culture is not one of openness and honesty. They also point out that coaching has been seen as a remedial tool but that it prob­ably has more to offer as a development opportunity for turning good performers into excellent ones.

There has been an increasing trend to broaden the concept of coaching in terms of both content and who carries out the coaching. Many organisations are now providing or arranging intensive training for designated internal coaches who operate broadly in the organisation, just in a coaching role. This is quite different from the basic training line managers are likely to receive. External executive coaching is often provided by consultancies and specialist coaching organisations. IDS (2006a) provides an excellent range of case studies demonstrating the different ways in which organisations are using coaching. Various forms of coaching may include career coaching, performance coaching, skills coaching, business coaching and life coaching. Given the increasing professional- isation of coaching it is not surprising that the quality of the coaching experience is receiving attention. Supervision of practice is increasingly being used in a way that is similar to supervision for counsellors, which involves regular meetings with a more experienced practitioner to explore their client relationships and reflect on practice. A CIPD study carried out by the Bath Consultancy Group (Arney 2006) found that nearly half the coaches received regular supervision, and that it was a fast growing practice.

Such individual supervision is carried out with a mind to client confidentiality; however there is also a growing trend for group supervision of coaches and also for organisations wanting to collect common themes discussed in coaching sessions as these can be used to inform organisational thinking (Arney 2006). Both these approaches put client confidentiality at greater risk.

The emphasis on coaching is underlined by the recently released CIPD journal, Coaching at Work, and the development of the institute’s coaching standards. The number of organisations aiming to develop a coaching culture reached 80 per cent in the 2006 CIPD survey, with 79 per cent already using some coaching activities, and Lehane (2005) provides some guidance on getting started on this. Useful ideas for developing a coaching culture include making coaching part of conversations, day to day; shifting the power to the learner; integrating external and internal coaching resources; the focus on continuous improvement in coaching activities making this a valued and natural part of a manager’s job; and shifting the emphasis from individual coaching to team coaching (Clutterbuck and Megginson 2005). Concerns for quality are being addressed, for example by a kitemarking scheme for coaching and mentoring qualifications, launched by the European Coaching and Mentoring Council (see www. emccouncil.org), and the British Psychological Society now has a specialist interest group focused on coaching.

Mentoring

Mentoring offers a wide range of advantages for the development of the mentee or pro­tege, coaching as described above being just one of the possible benefits of the relation­ship. The mentor may occasionally be the individual’s immediate manager, but usually it is a more senior manager in the same or a different function. Kram (1983) identifies two broad functions of mentoring, the first of which is the career function, including those aspects of the relationship that primarily enhance career advancement, such as exposure and visibility and sponsorship. The second is the psychosocial function, which includes those aspects of the relationship that primarily enhance a sense of competence, clarity of identity and effectiveness in the managerial role. More recently Fowler and O’Gorman (2005) on the basis of research with both mentors and mentees, describe eight individual mentoring functions which are: personal and emotional guidance; coaching; advocacy; career development facilitation; role modelling; strategies and systems advice; learning facilitation; and friendship, whilst Arnold (1997) found that the most common advantages of mentoring were perceived as role modelling and coun­selling. There is evidence that mentoring does benefit both parties (see, for example, Johnson et al. 1999), and Broadbridge (1999) suggests that mentors can gain through recognition from peers, increased job satisfaction, rejuvenation, admiration and self­satisfaction. The drawbacks to mentoring that were revealed in Broadbridge’s research include the risk of over-reliance, the danger of picking up bad habits, the fact that the protege may be alienated from other sources of expertise and the sense of loss experi­enced when a mentor leaves. In addition, the difficulty of dealing with conflicting views in such an unequal relationship was identified. Perceived benefits, however, considerably outweighed any drawbacks. Megginson (2000) identifies the issue of dysfunctional mentoring, and the danger of assuming that mentoring is unquestionably good.

Managers are also seen as responsible for developing talent, and while a mentor/ protege relationship might not naturally occur, mentorship may be encouraged or formalised. For example, there are systems where all new graduates are attached to a mentor as soon as they join the organisation. The difficulties of establishing a formal programme include the potential mismatch of individuals, unreal expectations on both sides and the time and effort involved.

Peer relationships

Although mentor-protege relationships have been shown to be related to high levels of career success, not all developing individuals have access to such a relationship, and even formal schemes are often reserved for specific groups such as new graduate entrants. Supportive peer relationships at work are potentially more widely available to the individual and offer a number of benefits for the development of both parties. The benefits that are available depend on the nature of the peer relationship, and Kram and Isabella (1985) have identified three groups of peer relationships, which are differenti­ated by their primary development functions. These can be expressed on a continuum from ‘information peer’, based primarily on information sharing, through ‘collegial peer’, based on career strategising, giving job-related feedback and friendship, to ‘special peer’, based on emotional support, personal feedback, friendship and confirmation. Most of us benefit from one or a number of peer relationships at work but often we do not readily appreciate their contribution towards our development. Peer relationships most often develop on an informal basis and provide mutual support. Some organisa­tions, however, formally appoint an existing employee to provide such support to a new member of staff through their first 12-18 months in the organisation. These relation­ships may, of course, continue beyond the initial period. The name for the appointed employee will vary from organisation to organisation, and sometimes the word ‘buddy’, ‘coach’ or ‘mentor’ is used – which can be confusing! Cromer (1989) discusses the advant­ages of peer relationships organised on a formal basis and the skills and qualities sought in peer providers, which include accessibility, empathy, organisational experience and proven task skills.

Self-development

Natural learning is learning that takes place on the job and results from an individual’s everyday experience of the tasks to be undertaken. Natural learning is even more difficult to investigate than coaching, mentoring or peer relationships, and yet the way in which we learn from everyday experiences, and our level of awareness of this, is very important for our development. To some extent self-development may be seen as a conscious effort to gain the most from natural learning in a job, and to use the learning cycle as a framework. Self-development can be focused in specific skills development, but often extends to attitude development and personal growth.

The emphasis in self-development is that each individual is responsible for, and can plan, his or her own development, although he or she may need to seek help when work­ing on some issues. Self-development involves individuals in analysing their strengths, weaknesses and the way in which they learn, primarily by means of questionnaires and feedback from others. This analysis may initially begin on a self-development course, or with the help of a facilitator, but would then be continued by the individual back on the job. From this analysis individuals, perhaps with some help at first, plan their devel­opment goals and the way in which they will achieve them, primarily through development opportunities within the job. When individuals consciously work on self-development they use the learning cycle in a more explicit way than in natural learning. They are also in a better position to seek appropriate opportunities and help, in their learning, from their manager.

Many of the activities included in self-development are based on observation, collecting further feedback about the way they operate, experimenting with different approaches and in particular reviewing what has happened, why and what they have learned. Self-development, however, is not a quick fix as it requires a long-term approach and careful planning and, as Stansfield (1996) suggests, attention needs to be paid to the ‘scaffolding’ which supports the self-development process. To this end she suggests that extensive briefing and explanation of the theoretical underpinning of the self-development are both important. In addition she suggests direct skill development concerning the role, importance and nature of peer feedback, and further support in tracking personal learning needs to ensure a more rigorous learning journey. Woodall (2000) also notes difficulties around the support structure for self-development, and identifies confusion in terminology as unhelpful. Confusion in terminology is also raised by Antonacopoulou (2000), who highlights a much neglected influence on self-development – that the individuals themselves have to be capable of taking on this responsibility.

Self-development groups

Typically, in self-development groups a group of individuals is involved in a series of meetings where they jointly discuss their personal development, organisational issues and/or individual work problems. Groups may begin operating with a leader who is a process expert, not a content expert, and who therefore acts as a facilitator rather than, but not to the complete exclusion of, a source of information. The group itself is the primary source of information and may operate without outside help as its members’ process skills develop. The content and timings of the meetings can be very flexible, although meetings will require a significant level of energy and commitment if they are to operate well.

Self-development groups can be devised in a variety of contexts. They can be part of a formal educational course, for example a Diploma in Management Studies, where a group of managers from different organisations come together to support their development; they may constitute the whole of a self-development ‘course’; or they can be an informal support group within an organisation. However the group originates, it is important that the members understand what every member hopes to get out of the group, the role of the facilitator (if there is one), the processes and rules that the group will operate by and how they agree to interact.

Learning logs

Learning logs are a mechanism for learning retrospectively as they encourage a discip­lined approach to learning from opportunistic events. The log may be focused around one particular activity and is usually designed to encourage the writer to explain what happened, how he or she has reflected on this, what conclusions he or she has made and what future learning actions he or she wishes to make. Alternatively logs can be used in the form of a daily or weekly diary.

Learning contracts

There is increasing use of learning contracts, sometimes used within more formalised self-development groups; on other management courses; as part of a mentoring or coaching relationship; or in working towards a competency-based qualification. These contracts are a formal commitment by the learner to work towards a specified learning goal, with an identification of how the goal might be achieved. They thus promote a proactive approach to learning. Boak (1991) has produced a very helpful guide to the use of such contracts and suggests that they should include:

• an overall development goal;
• specific objectives in terms of skills and knowledge;
• activities to be undertaken;
• resources required;
• a method of assessment of learning.

The value that individuals gain from learning contracts is dependent on their choos­ing to participate, their identification of the relevant goal and the importance and value they ascribe to achieving it. Only with commitment will a learning contract be effective, because ultimately it is down to the individual learner manager to make it happen.

1.3. e-learning and blended learning

As technology enables interesting and interactive presentation of distance learning mater­ials, there is evidence of considerable enthusiasm on the part of organisations to pursue this approach to development, and take advantage of the opportunities it presents. CIPD (2003) reports that one of the most significant changes in training over the last five years is the increased use of e-learning, although it is still most heavily used by IT staff. However, by 2006 only a quarter of respondents to the Learning and Development CIPD survey said that it had significantly altered learning and training offerings. E-learning can be defined as ‘learning that is delivered, enabled or mediated by electronic technology’ (Sloman and Rolph 2003, p. 1). While e-learning has been characterised as requiring high investment in terms of hardware, software and design time, it has also been characterised as cost effective in the long run, with the ability to provide speedy and flexible training. IDS (2006b) identifies the main advantages of e-learning as flexible access across time and place; flexible use of content; consistent delivery; sustainable and easy to update; value for money and of the moment, being particularly useful for the launch of new products. Hammond (2001), for example, describes the case of Cisio which is constantly launching new IT-based products. The company has moved from 90 per cent classroom-based training for its sales representatives to 80 per cent online training so that the large numbers of representatives can experience training immedi­ately the product is launched. Channel Four (Cooper 2001) has a strategy to replace much of its classroom teaching activity with interactive learning, and the London Emergency Services are using virtual reality training to prepare employees for emergency events. Prickett (1997) reports how Hendon Police Training College uses virtual reality to prepare officers to deal with siege and hostage situations. Sloman and Rolph (2003) found that e-learning has been implemented in a variety of ways, from being introduced as a sweeping ambitious change to small incremental changes to the organisation’s approach to training, and from a mandatory change to an offer to volunteers. They also report that key barriers are the computer literacy of employees and access to the appropriate equipment.

However enthusiasm from the organisation is not sufficient, and there has been much evidence of employees being unwilling to use e-learning. There was much initial euphoria about what e-learning could contribute, but increasingly it has been recognised that motivating learners is critical and most organisations now have much more realistic expectations of what e-learning can achieve, and often have to improve and re-launch e-learning solutions before they bed in, as for example in Hilton Hotels (Smethurst 2006). The support provided may well be critical, as may the way that such methods are introduced and used.

E-learning covers a wide variety of approaches from using CD-roms to the company intranet and the Internet. More sophisticated approaches do not confine e-learning to interactive learning at a distance. Increasingly, synchronous learning is used where all participants log on at the same time, with a tutor or facilitator being available. Indi­viduals can progress through material alone or network with others to complete a task and use chat rooms and have a dialogue with the tutor. Videoconferencing can also be used to bring participants together at the same time. For example, some MBAs have been delivered via videoconferencing rather than classroom-based teaching, and further details of this are provided in Cases 18.1 and 18.2 on this book’s companion website at www.pearsoned.co.uk/torrington. The concept of blended learning also has had much appeal recently, but this term can be interpreted in different ways. Some use it to indi­cate the blending of e-learning with face-to-face learning experiences, while others use it more broadly to indicate ‘a range of ways that e-learning can be delivered when com­bined with multiple additional routes that support and facilitate learning’ (Sloman and Rolph 2003, p. 6).

Blended learning is increasingly used to indicate a blend of any approaches to learn­ing, and there is evidence that learning and training now involve a much wider range of activities (CIPD 2006), while Pickard (2006) reports on the blended learning approach at the Department for Work and Pensions which integrates self-managed learning, coaching and e-learning.

2. EVALUATION OF TRAINING AND DEVELOPMENT

One of the most nebulous and unsatisfactory aspects of the training job is evaluating its effectiveness, yet it is becoming more necessary to demonstrate value for money. Whilst Campbell (2006) estimates that employer, public and individual spend on workforce train­ing and development in the UK nears £30 billion each year, Phelps (2002) suggests there is no satisfactory return on investment calculation to prove its value, and that we remain unsure whether training breeds success or success breeds training. Evaluation is straight­forward when the output of the training is clear to see, such as reducing the number of dispatch errors in a warehouse or increasing someone’s typing speed. It is more difficult to evaluate the success of a management training course or a programme of social skills development, but the fact that it is difficult is not enough to prevent it being done.

A familiar method of evaluation is the post-course questionnaire, which course members complete on the final day by answering vague questions that require them to assess aspects of the course using only such general terms as ‘good’, ‘very good’ or ‘outstanding’. The drawbacks with such questionnaires are, first, that there is a powerful halo effect, as the course will have been, at the very least, a welcome break from routine and there will probably have been some attractive fringe benefits such as staying in a comfortable hotel and enjoying rich food. Second, the questionnaire tends to evaluate the course and not the learning, so that the person attending the course is assessing the quality of the tutors and the visual aids, instead of being directed to examine what has been learned.

Hamblin (1974), in a much-quoted work, identified five levels of evaluation: (1) evaluat­ing the training, as in the post-course questionnaire above; (2) evaluating the learning, in terms of how the trainee now behaves; (3) evaluating changes in job performance; (4) evalu­ating changes in organisation performance; and (5) evaluating changes in the wider con­tribution that the organisation now makes. Perhaps the most well-referenced approach to evaluation is Kilpatrick (1959) who suggested four levels of evaluation, somewhat similar to Hamblin: (1) reaction level; (2) learning level (have the learning objectives been met?); (3) behaviour (how has the individual’s behaviour changed back in the job?); and (4) results and impact on the bottom line (what is the impact of training on performance?).

Bramley (1996) suggests that performance effectiveness can be measured at indi­vidual, team and organisational levels, and that changes in behaviour, knowledge, skills and attitudes need to be considered. He makes the worthwhile point – as do others – that the criteria for evaluation need to be built into development activities from the very beginning, and not tagged on at the end. Lingham and his co-researchers (2006) provide a good example of how this can be done in practice. They describe an action research project where evaluation was built in from the outset and involved collabora­tion between organisational leaders, trainers, participants and evaluators. A four-phase approach was used:

• Phase 1: Design of training programme (organisational leaders, trainers and evalu­ators agree design and methods to obtain feedback from participants after the initial runs of the training programme).
• Phase 2: Launch and evaluation of initial programme (training conducted and agreed methods used to collect participants’ views).
• Phase 3: Feedback and design of evaluation instrument (organisational leaders, trainers and evaluators meet to review feedback and field notes and adapt the training programme where necessary. A survey instrument designed for evaluation of future iterations of the programme).
• Phase 4: Ongoing training and evaluation (training programme conducted with new design/content, evaluation survey used and results fed back into Phase 3. (adapted from Lingham et al. 2006)

Problems with evaluation persist and in the 2006 CIPD survey 80 per cent of respond­ents reported that their training activities are delivering greater value to the business than they are able to demonstrate. There is always a need, however, to assess value for money, and this is generally worked out on a payback basis, which focuses attention on the short term. Lee (1996) suggests a ‘pay-forward’ approach to assessing value for money and this concept appears to be more consistent with the nature of training and development strategy and interventions than a payback approach, as the outcome may only be observed in the long term.

While organisations may desire a measure of the impact of training on the organisa­tion, in practice this appears to be rarely achieved. Sadler-Smith et al., for example, found in their study (1999) that the reasons for evaluating training were more often operational than strategic, and they state that evaluation information was used ‘mostly for feedback to individuals, and to inform the training process, and less for return on investment decisions’ (p. 369).

Source: Torrington Derek, Hall Laura, Taylor Stephen (2008), Human Resource Management, Ft Pr; 7th edition.

1. HOW AND WHY ARE CAREERS CHANGING?

Many writers over the past decade have provided a picture of dramatic change in the nature of careers that are possible in today’s society. The traditional career within a single organisation, characterised by hierarchical progression, managed on a planned basis by the organisation, is gone, it is argued (see, for example, Arthur and Rousseau 1996a; Adamson et al. 1998). Organisations now have flatter structures and need to be flexible, fluid and cost effective in the face of an uncertain and unpredictable future. Thus they can no longer offer long-term career progression in return for loyalty, commitment and adequate performance, which was an unwritten deal and part of the traditional psycho­logical contract.

Kanter (1989), for example, suggests that managers can no longer rely on the organisation for their career future and must learn to manage themselves and their work independently, as many professionals do. In particular, they must build portfolios of their achievements and skills, develop networks, make a ‘name’ for themselves and market themselves within the relevant industry sector rather than just within their current organisation. In a different sense Handy (1994) uses the words ‘portfolio career’ to mean ‘exchanging full time employment for independence’, which is expressed in the collection of different pieces of work done for different clients. Individuals starting off a portfolio career often continue to do some work for their previous organisation (on a fee-paying basis) and add to this a network of other clients. Arthur et al. (2005) describe the ‘boundaryless career’ as one which includes moves between organisations, non­hierarchical moves within organisations where there are no norms of progress or success, and moves into different careers as well as employment outside the organisation. Post­organisational careers (sometimes called post-corporate) were defined in the Window on Practice at the opening of this chapter; and protean careers, involving reinvention of the self and discovery, have probably best been described by Hall (2004) who identifies such as career as bound up with the development of the self, driven by the individual’s values and self-fulfilment.

There is some debate, however, about whether portfolio and associated careers are liberating or exploitative (see, for example, Smeaton 2003), and the extent to which individuals have sought such careers or found them to be the only alternative may have some influence on their perceptions of this. Interestingly Fenwick (2006) in a study of nurses and adult educators who had become portfolio workers, found that such careers were simultaneously liberating and exploitative, partly due to individual desires for both contingency and stability.

The evidence to support the reality that careers have fundamentally changed is ‘shaky at best’ (Mallon 1998) and Guest and McKenzie-Davey (1996), for example, found the traditional organisation and the traditional career ‘alive and well’ (pp. 22-3), with the hierarchy still used for motivation and progression. However, there is increasing evid­ence over the past five or so years that professionals, in particular, are moving into self­employment or agency work (see, for example, Purcell et al. 2005). As yet there remains insufficient research into the extent to which new career patterns are developing, for whom, and the mechanisms by which individuals are pulled or pushed into them.

Some argue that the contradictions between the above views are a result of people being in transition (see, for example, Burke 1998a), whereas King (2003) suggests that the ‘new career’ may be reflected in people’s expectations rather than their labour market experiences. Another explanation may be that temporary work and contract work are spread more evenly across different sectors (see, for example, Burke 1998b), and have therefore become more visible. Let us not forget that the traditional psycho­logical contract was never available to everyone. Smithson and Lewis (2000) argue that public perceptions of increasing insecurity may have more to do with the characteristics of those whom the insecurity now affects, such as graduates and professional staff, than with an increase in the phenomenon. Similarly, different groups have different sets of expectations and subjective feelings of job insecurity. Younger workers accept insecur­ity, almost as the norm (see, for example, Smithson and Lewis 2000), but older workers feel the psychological contract has been violated. Older workers may have the same expectations as before but realise that the employer is no longer going to fulfil their part of the bargain (see, for example, Herriot et al. 1997; Thomas and Dunkerley 1999).

A different explanation for these contradictory findings is that organisations pro­ject the image of a stable and predictable internal career structure, because it is in their interests to do so, whatever the reality. Adamson et al. (1998) suggest that it is in the organisation’s interests to maintain the illusion of such career structures so as to retain high-performance employees. It could also be argued that such structures are useful in recruiting highly skilled employees, for whom career structures are likely to continue. Purcell et al. (2003) also showed that positive perceptions of career advancement oppor­tunities are one of the most powerful determinants of employee commitment. However, if this is an illusion such a strategy may well backfire.

If the psychological contract between employer and employee now needs to be renegotiated, this does not mean abandoning the concept of career, rather, the idea of a new psychological contract is developing. Many articles identify a ‘new psychological contract’ in which the deal between employer and staff is different but still mutually beneficial. Employees offer high productivity and total commitment while with their employer, and the employer offers enhanced employability rather than long-term employment. The offer of employability centres on enabling employees to develop skills that are in demand, and allows them opportunities to practise these and keep up to date. This equips the employee with the skills and experiences needed to obtain another appropriate job when he or she is no longer needed by their present employer (see, for example, Waterman et al. 1994). The differences between the old psychological contract and the new, as they relate to careers, are shown in Tables 19.1 and 19.2. King (2003) found that graduates rated the offer of employability as of most importance in career terms, and they still expected the organisation to provide a career for them; she argues that the picture presented is one of lip service and a less than whole-hearted commitment to the concept of the ‘new career’.

However, a further contradiction is apparent in the literature: the assumption that the ‘new psychological contract’ supplants the old when the original contract is violated, but the degree to which this happens is debatable (see, for example, Doherty et al. 1997). Herriot (1998) argues that the new psychological contract is just more rhetoric, and that in real­ity there are many different new deals, and Sparrow (1996) suggests that the solution to the fragmentation of the old psychological contract is a series of layered individualised career contracts. King also suggests that the organisation should not adopt an either/or career approach, but aim to offer both internal careers and employability support.

2. DEFINITIONS AND IMPORTANCE OF CAREER DEVELOPMENT

A career can be defined as the pattern or sequence of work roles of an individual. Traditionally, the word applied only to those occupying managerial and professional roles, but increasingly it is seen as appropriate for everyone in relation to their work roles. Also, the word career has been used to imply upward movement and advancement in work roles. As we have noted, many organisations no longer offer a traditional career, or only offer it to a selected few. Enforced redundancies, flatter structures, short­term contracts, availability of part-time rather than full-time work, all break the ideal­ised image of career. We now recognise other moves as legitimate expressions of career development, including development and extension within the job itself, lateral moves and the development of portfolio work. Career can also be conceptualised more broadly in terms of ‘the individual’s development in learning and work throughout life’ (Collin and Watts 1996), and thus includes voluntary work and other life experiences. Indeed Adamson et al. (1998) go so far as to say that a good curriculum vitae may no longer be one with an impressive list of job titles of increasing seniority, but rather a rich cv (e.g. one which includes a variety of work and non-work activities). (p. 256)

Male careers are becoming increasingly similar to the traditional fragmented pattern of women’s careers (Goffee and Nicholson 1994), and many men are generally keener to develop careers which take account of personal and family needs, including children’s education, partner’s career and quality of life. Career development is no longer a stand­alone issue and needs to be viewed in the context of the life and development of the whole person and not just the person as employee.

We view career development as something experienced by the individual (some­times referred to as the internal career), and therefore not necessarily bounded by one organisation. This also means that the responsibility for managing a career is with the individual, although the organisation may play a key facilitating and supporting role.

The primary purpose of career development is to meet the current and future needs of the organisation and the individual at work, and this increasingly means develop­ing employability. On this basis Walton (1999) argues that it is increasingly difficult to disentangle career development from general training and development. We could make a strong case for the value of self-development here. Career success is seen through the eyes of the individual, and can be defined as individual satisfaction with career through meeting personal career goals, while making a contribution to the organisation. Although in this chapter we prioritise the needs of the individual, in Chapter 3 we prioritise the needs of the organisation when we review replacement and succession planning.

We have given priority to the individual in career development, but it is worth noting the general benefits career development provides for the organisation:

• It makes the organisation attractive to potential recruits.
• It enhances the image of the organisation, by demonstrating a recognition of employee needs.
• It is likely to encourage employee commitment and to reduce staff turnover.
• It is likely to encourage motivation and job performance as employees can see some possible movement and progress in their work.
• Perhaps most importantly it exploits the full potential of the workforce.

Before looking at how individuals can manage their career development with organ­isational support, we need to review some of the concepts underlying the notion of career.

3. UNDERSTANDING CAREERS

3.1. Career development stages

Many authors have attempted to map out the ideal stages of a successful career and in this section we loosely use the five stages outlined by Greenhaus and Callanan (1994). Few careers follow such an idealised pattern, and even historically such a pattern did not apply for all employees. However, the stage approach offers a useful framework for understanding career experiences, if we use it flexibly as a tool for understanding careers rather than as a normative model.

Stage 1: occupational choice: preparation for work

This first stage involves developing an occupational self-image and will of course reappear for those who wish to change career later in life The key theme is a matching process between the strengths/weaknesses, values and desired lifestyle of the individual and the requirements and benefits of a range of occupations. One of the difficulties that can arise at this stage is a lack of individual self-awareness. There are countless tests avail­able to help identify individual interests, but these can only complete part of the picture, and need to be complemented by structured exercises, which help people look at them­selves from a range of perspectives. Other problems involve individuals limiting their choice due to social, cultural, gender or racial characteristics. Although we use role models to identify potential occupations, and these extend the range of options we con­sider, this process may also close them down. Another difficulty at this stage is gaining authentic information about careers which are different from the ones pursued by family and friends.

Stage 2: organisational entry

This stage involves the individual in both finding a job which corresponds with his or her occupational self-image, and starting to do that job. Problems here centre on the accuracy of information that the organisation provides, so that when the individual begins work expectations and reality may be very different. Recruiters understandably ‘sell’ their organisations and the job to potential recruits, emphasising the best parts and neglecting the downside. Applicants often fail to test their assumptions by asking for the specific information they really need. In addition, schools, colleges and universities have, until recently, only prepared students for the technical demands of work, ignoring other skills that they will need, such as communication skills, influencing skills and dealing with organisational politics. To aid organisational entry, Wanous (1992) has suggested the idea of realistic recruitment with the emphasis on providing accurate information, to which we refer in Chapter 8. Pazy and his colleagues (2006) also demonstrate how information-free interventions can be beneficial in this respect. They provided a decision­making tool to a random selection of candidates eight months prior to their joining the Technical School of the Israeli air force so that they could use this for occupational choice decisions. The candidates who had been introduced to the tool had significantly lower turnover during the programme and a lower turnover six months after the programme. The authors suggest that the tool enabled the trainees to make better career choices and also made trainees aware of self-determination in their career.

Stage 3: early career – establishment and achievement

The establishment stage involves fitting into the organisation and understanding ‘how things are done around here’. Thorough induction programmes are important, but more especially it is important to provide the new recruit with a ‘real’ job and early challenges rather than a roving commission from department to department with no real purpose, as is often found on trainee schemes. Feedback and support from the immediate man­ager are also key. This has implications, for example for the design of graduate training programmes.

The achievement part of this stage is demonstrating competence and gaining greater responsibility and authority. It is at this stage that access to opportunities for career development becomes key. Development within the job and opportunities for promo­tion and broadening moves are all aided if the organisation has a structured approach to career development, involving career ladders, pathways or matrices, but not neces­sarily hierarchical progression. Feedback remains important, as do opportunities and support for further career exploration and planning. Organisations are likely to provide the most support for ‘high fliers’ who are seen as the senior management of the future and who may be on ‘fast track’ programmes.

Stage 4: mid-career

Mid-career may involve further growth and advancement or the maintenance of a steady state. In either case it is generally accompanied by some form of re-evaluation of career and life direction. A few will experience decline at this stage. For those who continue to advance, organisational support remains important. Some people whose career has reached a plateau will experience feelings of failure. Organisational support in these cases needs to involve the use of lateral career paths, job expansion, development as mentors of others, further training to keep up to date and the use of a flexible reward system.

Stage 5: late career

The organisation’s task in the late career stage is to encourage people to continue performing well. This is particularly important as some sectors are experiencing skills shortages and there are moves by some companies to allow individuals to stay at work after the state retirement age. Demographics indicate that in the UK we have an ageing labour force, and the ‘early retirement’ culture of the 1980s and early 1990s, when many retired at around the ago of 50, has all but disappeared, although subtle pressures to retire early probably remain. In addition there is also a pressure on individuals to work longer to improve their pensions and the 2006 Age Discrimination Act prohibits organ­isations from retiring anyone under 65 without good reason and provides a statutory right for individuals to request to remain working after the age of 65.

Despite the stereotypes that abound defining older workers as slower and less able to learn, evidence suggests that the over-50s can be valuable employees who perform well if managed appropriately. Greenhaus and Callanan point out that the availability of flexible work patterns, clear performance standards, continued training and the avoidance of discrimination are helpful at this stage, combined with preparation for retirement. Portfolio careers can be a particularly attractive option at this stage. Organisations are sometimes unwilling to invest in the over-50s as, from an economic perspective, there is less time for payback. However as retirement is delayed and protean careers increase ongoing learning is even more important, rather than less. Greller (2006) found no differences between the employed 50-70 age group and other age groups in terms of the hours spent on professional development (work-related-knowledge skills development and the development of career opportunities) and also found that time spent was associated with career motivation (as for other age groups). Interestingly, though, they found that the initiative for most activities for the 50-70 age group came from the people themselves rather than from organisation.

3.2. Career balance

Much of the original work done on describing career stages was carried out by analysing the experiences of those who were both male and white, so the analyses are clearly inad­equate for our contemporary world of work and we still lack satisfactory explanations of career development that can embrace the full variety of ethnic backgrounds, gender and occupational variety.

There is considerable evidence that women and those from racial minorities limit their career choices, both consciously and unconsciously, for reasons other than their basic abilities and career motives. Social class identity may have the same impact. Employers need at least to be aware of such forces and ideally would explore such constraints with their employees to encourage individual potential to be exploited to the full.

The acceptance of such idealised career development stages as described above, particularly in an era of work intensification, leaves little room for family and other interference in career development, and until recently there has been no place in career development and even in the thinking about careers for those who do not conform to the stages outlined. There are hopeful signs of increasing recognition that career and life choices need to be explored in unison. There has also been little recognition of the com­mercial environment and the impact that this has on career development stages for many individuals. Considerable attention is being paid, currently, to the concept of work-life balance where aspects of work are combined with other life choices and Dickmann et al. (2006), for example, note that this is a significant factor in career planning for growing numbers of both female and male managers. However Hirsh (2003) warns that:

If employees want to get on they should seek qualifications and training, greater responsibility and varied work experiences. They should not work reduced hours, take career breaks, work from home or get ill. (p. 7)

We devote Chapter 31 to this issue, and Rabinowitz (2007) provides a useful review of recent books which focus on work, family and life interfaces.

Source: Torrington Derek, Hall Laura, Taylor Stephen (2008), Human Resource Management, Ft Pr; 7th edition.

1. INDIVIDUAL CAREER MANAGEMENT

If we identify a career as the property of the individual, then clearly the responsibility for managing this rests on the individual, who should identify career goals, adopt strateg­ies to support them and devise plans to achieve the goal.

Many research studies highlight the role of luck in relation to career decisions (see Bright et al. 2005 for a useful summary), and Pringle and Gold (1989) found a lack of career planning in their sample of 50 ‘achieving’ men and women managers. Only around a quarter of people had plans for the future and many identified luck, oppor­tunity or being in the right place at the right time as the reason they had achieved promotions. However, Dickmann and his colleagues (2006) note that individuals are increasingly focused on developing their ‘career capital’ as they seek to enhance their position in the jobs market, but this does not mean that they necessarily involved themselves in planning and setting career goals.

We suggest that planning is an essential ingredient of individual career management even if only to provide a framework for decisions about the opportunities that arise through identifying priorities. We also argue that the more individuals attempt to manage their career, the more likely it is that opportunities will arise that they can use constructively. Similarly the more proactive an individual is in identifying and meeting his or her career-related development needs the better he or she will able to grasp oppor­tunities when they arise.

Identifying a short-or medium-term career goal is probably the best way to start. A career goal will be specific to the individual, such as to become an internal senior organ­isational consultant by the age of 35. The range of strategies that a person may adopt in pursuit of his or her goal can be described in more general terms. The list below describes the type of strategies, identified from a review of the literature by Gould and Penley (1984), and they relate to career improvement/promotion within the organisation.

• Creating opportunities. This involves building the appropriate skills and experiences that are needed for a career in the organisation. Developing those skills that are seen as critical to the individual’s supervisor and department are most useful, as is exercising leadership in an area where none exists at present.
• Extended work involvement. This necessitates working long hours, both at the work­place and at home, and may also involve a preoccupation with work issues at all times.
• Self-nomination/self-presentation. Individuals who pursues this strategy will com­municate the desire for increased responsibility to their managers. They will also make known their successes, and build an image of themselves as someone who achieves things.
• Seeking career guidance. This involves seeking out a more experienced person, either within the organisation or without, and looking for guidance or sponsorship. The use of mentor relationships would come into this category.
• Networking involves developing contacts both inside and outside the organisation to gain information and support.
• Interpersonal attraction. This strategy builds the relationship with one’s immediate manager on the basis that he or she will have an impact on career progression. One form of this is ‘opinion conformity’; that is, sharing the key opinions of the indi­vidual’s manager, perhaps with minor deviations. Another is expressed as ‘other enhancement’, which may involve sharing personal information with one’s manager and becoming interested in similar pursuits.

More recently Siebert and colleagues (2001) suggest that career success hinges on who you know as well as what you know, and often on the relationship between the two. In their research they found that it was better to have a large network of contacts and weaker ties, rather than a smaller network with stronger ties, which generally disadvantages women.

There is evidence however, that individuals are generally not good at career self­management, as demonstrated by Sturges et al. (2002). Nevertheless, they did find that informal career support, perhaps in terms of mentoring, did reinforce self-management activities. This supports the partnership approach to career development. From a slightly different angle, Yarnall (1998) found that career education for employees helps them extract support from the business. In the 2003 career management survey by CIPD (2003, the most recent at the time of writing) 95 per cent of respondents felt that indi­viduals will be expected to take responsibility for their own careers in the future and 90 per cent felt that they must be offered organisational support to do this. Arguing that the public sector seems to depend more on individuals to drive their own careers Hirsh (2003) suggests that this may be related to the lower effectiveness of the public sector.

1.1. Inter-organisational and post-organisational careers and career change

So far we have tended to focus on career moves within the organisation, but many people desire the next career move to be to another organisation or into a new type of career. The concept of a personal career agent has emerged for top-flight executives and for further details on this see Case 19.1 on this book’s companion website at www. pearsoned.co.uk/torrington. However, most us of need to rely on our own skills and effort to make a career move. Arthur and Rousseau (1996b) suggest that individuals need to develop career resilience, which they define as bouncing back from disruptions to one’s career, and Waterman et al. (1994), in an article on the career-resilient work­force, suggest that individuals need to:

• make themselves knowledgeable about relevant market trends;
• understand the skills and knowledge needed in their area and anticipate future needs;
• be aware of their own strengths and weaknesses;
• have a plan for increasing their performance and employability;
• respond quickly to changing business needs;
• move on from their current employer when a win/win relationship is no longer possible.

Career self-management is increasingly the label used to describe the way that indi­viduals need to approach their careers in all contexts, and there is an increasing liter­ature on this. Hesketh (2001) suggests that career goal setting based on self-knowledge and career clarity will lead to more effective career self-management and Chiaburu and others (2006) identify ‘job mobility preparedness’ and ‘developmental feedback-seeking’ as key career self-management behaviours which support the development of career net­works, coping with career challenges and adapting to changes in the organisation and its environment. The same researchers identify that a proactive personality is positively related to career self-management behaviours, and suggest that self-managing individuals are more adept at understanding organisational and environmental changes, and are more likely than those who do not adopt career self-management behaviour to seek out relevant career information and support. Finally, King (2004) defines and identifies three groups of key behaviours. She identifies ‘positioning’ behaviours in which individuals make sure they have the contacts, the skills and the experience to achieve their career goal; ‘influence’ behaviours where individuals make active efforts to influence key gate­keepers who make decisions relating to career progress; and ‘boundary management’ behaviours, which are concerned with balancing the demands of work and non-work.

In particular, moving into a different type of career is very difficult for many of us and so we conclude this section by discussing why this is so difficult and what steps might be taken to improve one’s chances of success. Drummond and Chell (2001) use two case studies to illustrate some of the issues which embed us in our career. They explain, using Becker’s theory of side bets, how other interests influence our choice of career in addi­tion to the work itself, for example the likelihood of high earnings, status, travel and so on. If these desires are fulfilled but we are dissatisfied with our career we may find ourselves trapped. They also show how we use self-justification to defend the careers choices we have made and to stick with them, failure or problems being attributed to external causes. They suggest that decisions made early in life are hard to reverse and that the more we stick with what we have done and the more we rationalise this, the more likely we are to stick with it in the future. Ibarra (2002) also uses case studies to illustrate how individuals try to make the change but fail, because of the way they go about it, and also because of our natural fear of change. There are cases where dramatic changes were attempted and failed, either because they turned out to be the same as before (moving to a new job in a new organisation, but finding the nature of the work just the same) or because they just did not work (as in a new start-up business that could not make sufficient profit). Not only is self-knowledge important, Ibarra argues, but much of this needs to be gained from real experiences. Planning to change and using advisers is insufficient. She suggests that

working identity, as a practice, is necessarily a process of experimenting, testing, and learning about our possible selves. (p. 43)

Her advice is to try out new activities on a small scale before making a major com­mitment to a new career path, for example trying out additional work at the evenings or weekends, or on the basis of temporarily reduced hours, sabbatical or extended holidays, and maybe working on a voluntary basis. She also suggests developing new networks and reference groups in areas where we may be interested to work, as these people will not only provide information and possible opportunities but also a support network when different types of work are begun. Third, she suggests that we to seek out or create triggers and catalysts for change. For example, one may use redundancy as an opportunity to be free to try something different.

1.2. Continuous Professional Development (CPD)

CPD is an umbrella term referring to professional learning and development which is linked to either a licence to practise or professional accreditation, and is relevant whether an individual practises his or her profession within or outside an organisation. Many professions have schemes to ensure appropriate standards for different levels of membership and also to ensure that the professional keeps up to date and continues to develop after accreditation. Examples include architects, surveyors and human resource professionals. In early 1992 CPD became a part of the membership requirements for the CIPD, and was associated with record keeping and the production of evidence. However Floodgate (2006) explains how the focus has changed from the early assessment and policing approach. She suggests that there has been a move from compliance to com­mitment and from enforcement to encouragement in the approach of the CIPD to CPD, suggesting that this approach is no longer about documentation but about reflecting on experiences and building on these insights. This change of approach is reflected, accord­ing to Floodgate, in an approach to upgrading which asks a series of questions that allow individuals to express in their own ways the value gained from their learning and the reasoning behind learning that they plan to undertake.

Interestingly, research by Rothwell and Arnold (2005) involving CIPD branch members found that the drivers for CPD were primarily organisational, that is, dependent on the nature of their job and the perceived benefits to the employer, but following this enhanced employability and career prospects were seen as the most valuable reason for completing CPD. Of least value was the expectation of a reward linked to this. However whilst CPD was valued and the degree of value was associated with degree of CPD activities, valuing CPD did not always lead to CPD actions for the respondents to this survey. In addition the authors argue that just because CPD is carried out, there is no guarantee that any­thing is learned. And Hirsh and Jackson (2004) make the point that CPD may well be carried out by the people who need it least rather than the people who need it most.

There is some evidence that women are more likely to involve themselves in CPD. This was found in the above study and in a study by Rowold and Schilling (2006), who investigated ‘career-related continuous learning’. This is a slightly broader concept than CPD, and defined by them as self-initiated, discretionary, planned, proactive activities carried out for the purpose of career development and being related to improving career options and aspirations. It is interesting that they found that such careeer-related learn­ing was not related to career planning or career exploration activity. This supports the idea that CPD is more about loyalty to the profession, rather than a calculated way to get ahead.

2. ORGANISATIONAL SUPPORT FOR CAREER DEVELOPMENT

Although career management is primarily the individual’s responsibility, organisations can and should support this. This will be relevant whether careers are offered internally or whether employability is promoted, although the support may be different. Most organisations still see career management as optional rather than essential, its future orientation makes it slip down the business agenda, and there is always a tension between individual and organisational needs (Hirsh 2003). Successful career management is dependent on resolving these differences. CIPD (2003) argues that the factors contribut­ing to effective career management are using career management activities valued by employees; training line managers and HR staff in career management; line managers taking career management seriously; commitment of senior managers; a formal written career management strategy; integration with overall HR and business strategy. Based on the 2003 CIPD study Hirsh notes that the main barriers to career management are practical rather than philosophical and involve lack of time and resources, career management being seen as peripheral and lack of senior management commitment. Organisations can help individuals with:

• Career exploration – providing tools and help for self-diagnosis and supplying organ­isational information.
• Career goal setting – providing a clear view of the career opportunities available in the business, making a wider range of opportunities available to meet different career priorities.
• Career strategies and action planning – providing information and support; what works in this organisation; what’s realistic; when considering working for other organisations may be appropriate.
• Career feedback – providing an honest appraisal of current performance and career potential. Organisations can make this contribution through the activities discussed below.

Case 19.2 on this book’s companion website at www.pearsoned.co.uk/torrington focuses on different ways that one organisation supports career development in the restaurant sector.

2.1. Career strategy

Although a career strategy is critical, less than a half of the organisations responding to the 2003 CIPD careers survey reported that a written career strategy existed, and only one-quarter of respondents had a career strategy that covered all employees. Most organisations concentrate on senior managers and key staff that the organisation wishes to retain. There appeared to be little support for traditionally disadvantaged groups such as part-time workers, those returning after long-term sickness absence or a career break, women returning to work after bearing children and workers over the age of 50.

2.2. Career pathways and grids

A career path is a sequence of job roles or positions, related via work content or abilities required, through which an individual can move. Publicised pathways can help people to identify a realistic career goal within the organisation. Traditional pathways were normally presented as a vertical career ladder, emphasising upward promotion within a function, and focusing on full-time jobs meant that career progress for the majority was halted early on in their careers. This inflexibility tended to stifle cross-functional moves and emphasised progression via management rather than equally through development of technical expertise.

There is now increasing use of alternative approaches, often designed in the form of a grid, with options at each point, so that upwards, lateral, diagonal and even down­wards moves can be made. These grids may also be linked into grids for other parts of the business, thereby facilitating cross-functional moves. Ideally, positions are described in behavioural terms, identifying the skills, knowledge and attitudes required for a posi­tion rather than the qualifications needed or age range anticipated. However, as organ­isations continue to change more and more rapidly even such a matrix may prove to be too rigid and career opportunities may need to be expressed in terms of groups of roles, and be fluid enough to integrate newly developed and unexpected types of roles.

Not only do career routes need to be carefully communicated to employees, they also need to reflect reality, and not just present an ideal picture of desirable career develop­ment. Managers who will be appointing staff need to be fully apprised of the philosophy of career development and the types of move that the organisation wishes to encourage. It is important that the organisation reinforces lateral moves by developing a payment system that rewards the development of skills and not just the organisation level.

2.3. Fast-track programmes

Fast-track programmes have been considered as a way of developing and retaining high performers. However, problems have been found with such accelerated progress. Hall (1999) reports that although individuals on such programmes perform well early on, they tend to experience derailment later in their career. He proposed four reasons for this. First, that moving through the organisation so quickly means that they have never been in one place long enough to develop a network of learning support. Second, that in their rapid progress they will have alienated a lot of people on the way. Third, that they have never been in one position long enough to experience failure and setbacks and learn how to deal with these, and, finally, this means that they have not received sufficient developmental feedback, which is critical to career success. Iles (1997) suggests that to make such careers more sustainable there needs to be greater emphasis on developing empowerment skills and more developmental feedback.

2.4. Career conversations

The lack of opportunity to discuss career options is frustrating for employees, and to dis­cover the nature of helpful career conversations Hirsh and her colleagues (2001) asked individuals to explain positive career conversations in terms of where they took place, who was involved, how they were conducted and the impact that they had. They found that only around one-fifth of the discussions took place with the individual’s line manager and many more had conversations with other managers in the organisation, and some with specialist advisers or HR. Around half the discussions took place informally, out­side the remit of, say, an appraisal, development centre, mentoring, coaching, or any other formal system, and of these 40 per cent were unplanned. It was key that discussions were held with people who were trusted and open, prepared to be frank about the indi­vidual’s skills and potential and who were genuinely interested in the individual. Around three-quarters of these conversations appeared to result in some form of career action. Hirsh and her colleagues note that these findings differ from current ideas of best prac­tice, which are to discuss one’s career with one’s line manager in an appraisal context.

2.5. Managerial support

In spite of the above findings managerial support remains critical, not only in terms of appointing new staff, but also in terms of supporting the career development of their current staff. Direct feedback on current performance and potential is vital, especially in identifying strengths and weaknesses, and what improvement is required. The immediate manager is in a good position to refer the individual to other managers and to introduce them into a network which will support their career moves. In addition the manager is in the ideal position to provide job challenges and experiences within the current job which will equip the incumbent with the skills needed for the desired career move.

Unfortunately, managers often do not see these responsibilites as part of their job and see them as belonging to the HR department, and Hirsh notes that managers often need to be cajoled by HR to play their part. Yarnall (1998) found low levels of support from managers, but also found that employees participating in self-development career initiatives did encourage management support. Managers often feel constrained by their lack of knowledge about other parts of the organisation, and often withdraw from giving accurate feedback about career potential, particularly when they know that what they have to say is not what the individual wishes to hear. CIPD (2003) notes that there appears to be a lack of training for line managers to support them in their career develop­ment role. It also found that the most common career goals explored by line managers concerned short-term promotions and projects within the organisation, at the expense of more complex issues such as lateral moves, secondments, work-life balance and career flexibility. Managers are also sometimes tempted, in their own interests, to hold on to good employees rather than encourage them to develop elsewhere.

2.6. Career counselling

Occasionally immediate managers will be involved in career counselling, drawing out the strengths, weaknesses, values and interests of their staff. In many cases, however, those who seek such counselling would prefer to speak in confidence to someone inde­pendent of their work situation. In these circumstances a member of the HR department may act as counsellor. In more complex cases, or those involving senior members of staff, professionals external to the organisation may be sought. This is also more likely to be the case if the career counselling is offered as part of an outplacement programme resulting from a redundancy.

2.7. Career workshops

Career workshops are usually, but not always, conducted off-site, and offered as a confidential programme to help individuals assess their strengths and weaknesses, values and interests, identify career opportunities, set personal career goals and begin to develop a strategy and action plan. Career goals will not necessarily be restricted to the current employing organisation – and one objective of the workshop is often to broaden career perspectives. Workshops may last 2-3 days, and normally involve individual paper-and-pencil exercises, group discussions, one-to-one discussions and private con­ferences with tutors. For some people these can be quite traumatic events as they involve whole-life exploration, and often buried issues are confronted which have been avoided in the hurly-burly of day-to-day life. The most difficult part for many individuals is keeping the momentum going after the event by continuing the action planning and self­assessment of progress.

2.8. Self-help workbooks

As an alternative to a workshop there are various self-help guides and workbooks which can assist people to work through career issues by presenting a structure and frame­work. Organisations such as Lifeskills provide a range of workbooks appropriate for different stages of career development.

2.9. Career centres

Career centres within organisations can be used as a focal point for the provision of organisational and external career information. The centre may include a library on career choices and exploration, information on organisational career ladders and grids, current opportunities, self-help workbooks and computer packages. Such centres appear to be relatively common in large organisations, yet CIPD (2003) reports that participants do not consider them to be very useful.

2.10. Assessment and development centres

Assessment centres for internal staff have traditionally taken the form of pass/fail assess­ment for a selected group of high-potential managers at a specific level. They were focused on organisational rather than individual needs. Recently changes to some of these centres have moved the focus to the individual, with fewer limitations on who is
allowed to attend. These ‘development centres’ assess the individual’s strengths and weaknesses and provide feedback and development plans so that each can make the most of his or her own potential. The outcome is not pass/fail but action plans for personal and career development.

Whatever career activities are in place in the organisation it is important to ensure that:

• There is a clear and agreed careers philosophy communicated to all in the organisation.
• Managers are supported in their career development responsibilities.
• Career opportunities are communicated to staff.
• There is an appropriate balance between open and closed internal recruitment.
• The reasons for the balance are explained.
• There are rewards for knowledge, skills and attitude development, as well as for progression to a higher organisational level.
• Attention is given to career development within the current job.

Although all of these activities focus on careers within an organisation, most are still appropriate for employers providing development leading to employability rather than long-term employment. Waterman et al. (1994) stress that employers need to move to an adult/adult relationship with their employees from that of parent/child, be prepared to share critical organisational information and let go of the old notion of loyalty, thus accepting that good employees will leave. Hiltrop (1996) provides a good range of suggestions for managing the changing psychological contract.

Perhaps the most outstanding challenge is to come to terms with the facts that careers have changed due to a changing organisational structure and competitive demands; that individuals in our current labour market have a greater say in their career and how it relates to their whole life; and that alternative career profiles are equally legitimate. It is a sad reflection that in most research career development activities are not found to have a high profile (see, for example, Atkinson 2000).

Source: Torrington Derek, Hall Laura, Taylor Stephen (2008), Human Resource Management, Ft Pr; 7th edition.

When we surveyed the activities and priorities of HR specialists in the early 1980s, there was no doubt about the pre-eminence of employee relations as being the activity on which they spent most of their time and as being most central to the human resource function (Mackay and Torrington 1986, pp. 149, 161). Only in recruitment and selection did they feel that they had a slightly greater degree of discretion and scope in decision making (pp. 146-8). Twenty-five years on, the situation has wholly changed. Nowadays surveys of HR managers always show that employee relations issues are well down their lists of current and perceived future priorities (e.g. IRS 2006a, pp. 8-12). The emphasis is overwhelmingly on recruitment, staff retention, organisational restructuring, develop­ment and absence management, along with the HR implications associated with the introduction of new technologies and, in particular, legislation. The main reason appears to be a widespread perception that employee relations in UK organisations are in a healthy state. The 2004 Workplace Employment Relations (WER) Survey found that 93 per cent of HR managers believed their own organisations’ employment relations cli­mate to be either ‘good’ or ‘very good’, while only one per cent saw it as being poor (Kersley et al. 2006, p. 277), suggesting that the pressures placed on many workforces to become more efficient and flexible are not in the main leading to overt forms of conflict. Employee relations is not therefore seen as an organisational problem. Interestingly the WER Survey also found that a majority of employees were positive about the employee relations climate in their own organisations, although theirs was a less enthusiastic endorsement (16 per cent characterised the climate as being ‘poor’ or ‘very poor’). Employee relations activities may not be as significant to HR practitioners as they once were, but they remain important. A poor employee relations climate can easily develop, while a good one is not created or maintained automatically; ongoing action on the part of managers is required.

1. KEY TRENDS IN EMPLOYEE RELATIONS

The past thirty years have witnessed a sea change in the UK employee relations scene. Most of the once well-established norms in British industry have been abandoned or have withered away as the nature of the work that we do and the types of workplace in which we are employed have evolved. To an extent, cultural change has accom­panied this structural change too, creating a world of work in which employee attitudes towards their employers and employer attitudes towards their employees have devel­oped in new directions. As we demonstrate throughout this book, ongoing change of one kind or another has affected and continues to affect most areas of HRM activity, but it is in the field of employee relations that the most profound transformations have occurred.

That said, it is important to appreciate that change in this field proceeds at a differ­ent pace in different places. There remain many workplaces, particularly in the public sector and in the former public sector corporations, in which more traditional models of employee relations continue to operate despite attempts by successive governments to change them. What we now have, therefore, is a far greater variety of approaches in place across the different industrial sectors than was the case in past decades.

1.1. Trade union decline

The most significant and fundamental trend is the decline in the number of people join­ing trade unions and taking part in trade union activity. In the UK membership levels reached a historic peak in 1979, when it was recorded that over 13 million people (58 per cent of all employees) were members of listed trade union organisations. In almost every year since then the number has declined as people have let their membership lapse, older members have retired and younger people have not replaced them. By 2005 membership among employees stood at just 6.4 million and represented just 26.2 per cent of the working population (DTI 2006, p. 1). The rate of decline has reduced somewhat in recent years, some unions reporting modest increases in their membership levels, but trade union density (i.e. the percentage of employees in membership) has fallen year on year for all but two of the past thirty years.

Because the decline started in 1979 at the time that Margaret Thatcher was first elected prime minister, the actions of her governments have frequently been cited as a major source of the trade unions’ decline. While it is true that a series of hostile employment Acts passed on to the statute books in the 1980s did not help the union cause, the extent to which these directly impacted on union decline was limited. The only full-frontal legal attack on the ability of unions to recruit members came in the form of regulations which made it impossible to sustain closed shop agreements whereby membership of a specific trade union was a necessary pre-condition of employment in certain workplaces. This was a major reform, affecting over five million employees who worked in closed shops (Dunn and Gennard 1984), but it did not lead directly to a great number of resignations from unions. Membership decline may have been partly precipitated by legislation of the 1980s and early 1990s which sought to reduce the number of strikes by making it harder for a union to press its demands through industrial action, but there is little evidence to support this. The view that ‘anti-union’ legislation can be blamed for membership decline in the UK is thus unconvincing, especially as the substantial downward trend in the number of trade unionists was and still is an international trend (see Vissa 2002).

The main cause of trade union decline has less to do with the employment policy of governments than with the kind of industrial restructuring that has occurred across the developed world. Established industries with union membership, such as mining, shipbuilding and heavy manufacturing, have declined. The jobs lost have been replaced by those in the service sector, in call centres, hospitality, tourism and retailing, where union membership is much rarer. The size of the average workplace has declined too, and this has reduced the propensity of employees to join a union. There are fewer large factories employing thousands on assembly and many more small-scale office and hi-tech manufacturing operations. Management styles in small workplaces, even when part of a much larger group, inevitably tend to be more ad hoc and personal. Grievances, dis­putes and requests for a pay rise are thus discussed and settled in face-to-face meetings or informally between people who know each other well, without the need to involve a trade union. Moreover, in the private services sector the proliferation of small workplaces means that alternative employment is readily available for suitably qualified people. When receptionists, shopworkers, sales executives, call-centre staff or IT people are dis­satisfied with their work, their workplace or their managers, they can simply look for another job and resign. They do not need to move house to find work and are unlikely, in the present economic climate, to suffer any decline in income. Their jobs thus matter less to them than was the case in the days of the steel town, the mining village or the city suburb in which one big employer provided the lion’s share of all employment. In short, there is now less need to join a union because there are other ways of resolving problems at work and relieving discontent. Union members no longer enjoy the substantially higher wages and greater levels of job security that they used to, so the economic incentive for non-members to join is less strong too (Metcalf 2005).

By 2004 49 per cent of UK workplaces employing over 25 people stated that they employed no union members at all (Kersley et al. 2006, p. 110), while in tens of thousands more unions have no influence of any significance. For most employees, therefore, the norm is now to work in a non-union workplace. However, this is not true in the public sector, where union density remains high (64 per cent) and collective bargaining with full union recognition is still near universal. The same is true in the utility firms and in the transportation and education sectors. As a result, employee relations has come to be characterised by a far greater variety of forms than had been the case throughout much of the past century, traditional approaches continuing to decline:

What we find, therefore, is a marked split between the public sector, where traditional industrial relations appears to have survived, albeit with some adaptations, and a private sector which, with the exception of a declining set of large establishments, is predominantly non-union and without worker representation. . . . Management appears to be firmly in the driving seat, controlling the direction of employment relations. (Guest 2001, p. 99)

Whether continued trade union decline is inevitable produces diverse views. From a trade union perspective there are grounds for pessimism, despite years of new initiatives aimed at recruiting new members in the private sector. The proportion of younger people who choose to join unions has declined dramatically, suggesting that they do not see membership of a collective employee body as necessary or desirable. In 1991 as many as 37 per cent of people in the 25-34 age group were union members (Waddington 2003, p. 239). Ten years later, union density among the under 30s had fallen to just 16 per cent, compared with 34 per cent among those over the age of 30 (Freeman and Diamond 2003, p. 29). The second reason to anticipate further decline in the future relates to the continued growth of industries which have not traditionally been unionised. With the exception of some jobs in the public sector, the fastest-growing professions are all ones that have very low rates of union density (e.g. technicians, consultants, software engineers, nursery nurses, hairdressers and beauticians). These factors lead Metcalf (2005) to calculate that ‘long run union density will be around 20%, implying a rate of 12% in the private sector’.

The alternative view rests first of all on the observation that trade unions have been through periods of steep decline before and have later recovered. Kelly (1998) shows how union membership declined steeply during the 1920s and early 1930s, density falling as low as 22 per cent in 1933, only to recover again afterwards. His theory of ‘long waves’ in industrial relations leads him to conclude that workers will only ever put up with so much ‘exploitation and domination’ by employers, before beginning to unite to fight back. Others take heart from research which shows that many employees in the non-union sectors (including young people) are neither strongly opposed to unions, nor unwilling to countenance joining a union in the future. Fifty per cent of those asked in a poll in 2001 said that they would be either ‘very likely’ or ‘fairly likely’ to join if one were available at their workplace (Charlwood 2003, p. 52), while positive attitudes to unions appear to be just as common among non-members as they are among members (Prowse and Prowse 2006). These figures suggest that unions could create a renaissance for themselves if they could find more effective ways of organising and marketing themselves in the private services sector. You will find an article and some discussion exercises focusing on the prospects for trade union revival on our companion website, www.pearsoned.co.uk/torrington.

1.2. Collective bargaining and industrial action

A major consequence of the decline in trade union membership has been a simultaneous decline in the number of employees whose terms and conditions are determined through collective bargaining (i.e. negotiation with a union or unions). Here, too, dramatic changes have occurred over recent decades. We have moved from a position in which a large majority of people worked in establishments which recognised trade unions, to one in which a large majority do not. In 1970 over 80 per cent of the UK workforce was covered by collective agreements. Thirty-five years later, the figure was just 35.3 per cent (DTI 2006, p. 12).

Profound changes have also occurred within the sectors that remain covered by collective agreements, and continue to do so. Over several decades we have seen the breaking down of the system of national collective bargaining established in the middle years of the twentieth century. Agreements of this kind are now very rare outside the public sector whereas once they were the norm. They involve terms and conditions being agreed at industry level between representatives of the relevant unions and an employers associ­ation, resulting in an agreement to which all operating in the industry agree to adhere. One by one arrangements of this kind have collapsed as collective bargaining, where it continues at all, increasingly takes place at the level of the organisation or the indi­vidual workplace. In 1960, according to Brown et al. (2003), 60 per cent of UK employees were covered by industry-level collective agreements. By 1980 the proportion had fallen to 43 per cent and by 2004 to only seven per cent. These remaining agreements are largely in the public sector and are themselves under robust attack from government ministers who see local bargaining as a more efficient and fairer way of distributing public money.

Another significant change in employee relations has been the very marked decline in the incidence of industrial action in recent years. Contrary to commonly held per­ceptions, UK workers have never been more prone to take industrial action than their counterparts in other countries, but the 1970s and early 1980s did see the loss of millions of days’ work as a result of strikes, not to mention the fall of at least two governments in the wake of major disputes. The position is now wholly transformed. The UK’s strike rate has been below the average for both the European Union and the OECD countries in every year except one since 1992 (Beardsmore 2006b), while the subject has long ceased to be one which influences voting patterns. The number of stoppages varies from year to year. In 2002, for example, there was a marked increase due to a long-running dispute in the fire service, but the overall trend has been downwards for over a decade. The number of working days lost to strikes each year is now a fraction of what it was thirty years ago (see Table 20.1). Some argue that we can expect to see an increase in the incid­ence of industrial action over coming years in the public sector as employees respond to government attempts to restructure services and reduce the costs associated with providing generous occupational pensions. Industrial action in the private sector, by contrast, is generally expected to remain rare and restricted to specific sectors (IRS 2006b).

1.3. The rise of employment law

Until the 1960s there was no such thing as employment law in Britain. With the excep­tion of basic protection for child workers and some health and safety regulations, the state ‘kept its distance’ from the relationship between employers and employees. This became known as the principle of voluntarism and it meant that the UK differed very markedly from most other industrialised countries. All workers and employers, it was argued, were free to enter into whatever contractual relationship they preferred and it was not for the state to determine people’s terms and conditions or to set minimum standards. All the courts did was provide a mechanism for contracts of employment to be enforced when one side or the other breached them or sought to change them uni­laterally without the consent of the other party. Protection from injustices perpetrated by managers and abuse of power was provided by trade unions and through collective agreements.

Over the past forty years this position has wholly reversed. In 1965 the first major piece of modern employment legislation was introduced – a right for redundant workers to receive payments by way of compensation. In the years since a major new field of legal practice has been created as the law has intervened more and more in the regula­tion of the employment relationship. As trade unions have declined in size and influence, the law has stepped in to provide a minimum floor of rights and to deter employers from acting without proper employee relations procedures. In recent years many develop­ments have originated at European level, but UK governments have pushed the agenda forward on their own account too.

Unfair dismissal law dates from 1971, sex discrimination law from 1975 and race discrimination law from 1976. Since 1974 we have had comprehensive health and safety law together with a government inspectorate to enforce it. Regulations relating to ‘transfers of undertakings’ were introduced in 1981, when it also became a formal requirement to consult collectively when making redundancies. The past ten years have seen an astonishing quickening of the pace. We now have disability discrimination law, a national minimum wage, restrictions on working time, compulsory union recognition, a host of new family-friendly measures, extensive data protection law and measures pre­venting discrimination against people employed on fixed-term and part-time contracts. In 2003 new regulations outlawing discrimination on grounds of sexual orientation and religion or belief were introduced, and there were significant improvements to the rights of people with family responsibilities. In 2004 new workplace dispute resolution measures came into force and in 2005 significant new obligations were introduced in the field of information and consultation. Age discrimination legislation was introduced in 2006 and 2007 saw a major extentsion of maternity and other family-friendly rights.

Employment tribunals now oversee nearly one hundred separate areas of jurisdiction (i.e. distinct types of claim that an aggrieved employee, ex-employee or job applicant can bring before them). In addition there are some thirty or forty separate types of claim rooted in the laws of contract, trust or tort that can be taken to the county courts. Around 100,000 claims are lodged with the Employment Tribunal Service each year, leading the government to reform procedures and adjust remedies so as to discourage parties from pursuing cases they are unlikely to win.

Given the acceleration of developments in the field of employment law, it is not surprising that its implementation by organisations now comes so much higher up HR managers’ agendas than more traditional employee relations concerns (IRS 2006a). Two- thirds of HR specialists claim to spend in excess of 20 per cent of their time ‘dealing with employment law issues’, while a quarter report that over 40 per cent of their working days are spent in this way (CIPD 2002). In the vast majority of workplaces the nature of the relationship that is established between employers and employees, and the rules that govern it, owe far more to the requirements of employment law than to the demands of trade unions. This represents a total transformation from the position that prevailed a generation ago.

2. STRATEGIC CHOICES

Most organisations in the UK do not have a clearly identifiable employee relations strat­egy which their managers can readily articulate. At no point have managers at senior levels determined what the general approach or philosophy of the organisation should be towards the relationship it has with its employees, either individually or collectively. While it may be possible to identify the operation of a clear management style or the presence of definable employee relations culture, these have not in most cases been shaped in a deliberate or coherent manner by managers (Blyton and Turnball 2004: 121). Instead, pragmatism reigns and employee relations issues only receive serious attention at senior levels when problems arise (Keenoy 1992, p. 97).

The reason for this is that there is often only limited scope for individual managers or teams of managers, however senior, to determine the nature of the employment rela­tionships in an organisation. Whereas a reward strategy or an employee development strategy can be thought through, devised and then introduced by managers with relative ease, altering, let alone shaping the direction of employee relations is far harder to achieve. This is because the nature of the employment relationship in an organisation is controlled to a considerable extent by the attitudes, outlook and responses of employees. While managers can often readily get employees to do what they want them to, they cannot do more than influence their hearts and minds. As a result, even if a strategic approach to employee relations is developed, there is no guarantee that it will be suc­cessfully implemented and the extent of its success will always be difficult to measure objectively and accurately.

Moreover, the defining characteristics of the employment relationship in most organ­isations are heavily determined by the nature of the work that is being carried out and the way that it is organised. For example, a new manufacturing plant which mass pro­duces goods via assembly lines is inevitably going to develop different kinds of employ­ment relationships with its staff than would be the case in a new shop, hotel, hospital or government department. Different types of workplace develop clearly differentiated cultures derived from the complexity of work that they carry out, the nature of customer interactions, the extent of competition and the nature of the skills and qualifications their staff possess. Once established, workplace cultures are difficult to change, and this means that the nature of established employment relationships is difficult to change too.

Despite these difficulties, it can be strongly argued that organisations are more effective when their senior managers do think strategically about the employment relationship and develop policies and practices which help them to achieve clearly articulated objectives. There are strategic choices to be made in the field of employee relations and it is better that these should be considered and rational, rather than determined in an ad hoc, inconsistent and reactive fashion.

2.1. Management control

It would be a great deal easier for organisations if their employees had an innate desire to come to work on time every day and carry out their duties in a highly efficient fashion and were always happy to accept change. If this were the case there would hardly be a need to employ managers at all, while terms such as ‘industrial conflict’ would never have been invented. But, of course, the real world is very different. Employees and their employers share some interests in common, but what they aim to get from their rela­tionship also varies considerably. There is thus an ever-present need, from a management perspective, to supervise what employees are doing and, more generally, to exercise a degree of control over a workplace. However, the nature of the control that is exercised varies from organisation to organisation, and this is largely a matter determined by management.

The central choice is between the two fundamentally different control strategies identified by Friedman (1977); ‘direct control’ and ‘responsible autonomy’. The former involves close supervision by managers who determine what work is done, when and by whom. Employees are required to do what they are told and are not given any meaning­ful day-to-day influence over the way their work is organised or performed. Hard work is rewarded, while disciplinary sanctions are conspicuously used to deter recalcitrant behaviour. This is a model of control that is often seen as being similar to that used in the armed forces, although its origins lie as much in the the ideas of F.W. Taylor (see Chapter 1) and the school of scientific management which sought to organise work in the way that an engineer might design a machine. Responsible autonomy, by contrast, is both subtler and a great deal more pleasant from the employees’ point of view. It is also believed by many managers to be more desirable because it leads to less conflict with staff, and more cost effective because less management time needs to be spent supervising the activities of others. Here the organisation sets the objectives, commun­icating clearly to its staff what it wants them to achieve, but it allows employees as much autonomy as is practicable to decide how and when they meet these objectives.

2.2. Labour-market orientation

In Chapter 5 we looked in detail at the strategic choices available to organisations when interacting with their labour markets. We noted that in recent years most labour markets have tightened, making it harder for employers to recruit and retain good per­formers. Staff who are unhappy now have more alternative employment opportunities open to them and can thus either switch employers, or credibly threaten to do so if they find that their objectives from an employment relationship are not being met. For an employer seeking to respond effectively employee relations practices have a great deal to contribute because of the major role they play in influencing job satisfaction.

One strategic choice that many employers have taken in response to tightening labour market conditions has been to seek status as an ‘employer of choice’ or even as the employer of choice in their industry. This involves making themselves more attractive to prospective employees than competitor organisations, the aim being to secure and then to hold on to the services of high performers. Positioning an organisation as an employer of choice can be expensive in the short term, but over time dividends are reaped because fewer people are required, and those that are employed help ensure that the organisa­tion meets its objectives more effectively and efficiently than its rivals. Sustained com­petitive advantage thus results. It follows that employers seeking to achieve employer of choice status, or simply aiming to recruit and retain more effectively, need to develop employee relations strategies that increase the chances that employees are satisfied and decrease the likelihood of dissatisfaction.

Taylor (2001, p. 15) drawing on the work of Michael White and Stephen Hill states that contemporary research into what employees want to achieve from the employment relationship consistently reports a desire, above other possibilities, for the following:

• an interesting job
• employment security
• a feeling of positive accomplishment
• influence over how their job gets done

This strongly suggests that there are substantial long-term dividends to be gained by employers who develop sophisticated employee relations strategies. Effective employee involvement practices are central as are approaches to supervision which combine responsible autonomy with strong positive feedback mechanisms. Involving employees in the management of change is particularly important so as to minimise perceptions of insecurity. Above all an employer of choice requires an employee relations strategy which is built around a view of employees as individuals with different personalities, attributes and ambitions. A traditional approach which views employees as a mass group of people with identical aspirations is unlikely to deliver jobs which individuals find interesting or fulfilling.

Not all labour markets are tight, and while they have tightened considerably over the long term in most parts of the UK, it is important to recognise that there are areas of high unemployment both in this country and overseas. Moreover, in all countries, there are groups of people who lack sufficient basic skills or whose skills have become obsolete. In such conditions employers are not required to become employers of choice in order to recruit and retain effective staff. People may prefer jobs which are interesting, secure and satisfying, and may desire a degree of influence over how they do their jobs, but management do not have to provide such employment for reasons of commercial necessity. Where competitive pressures require organisations to minimise costs in order to survive and prosper, a rather different employee relations strategy is appropriate. Policies are likely to be highly standardised, employee involvement limited and few formal opport­unities for positive feedback provided. Jobs are designed first and foremost around the need of the organisation to maximise its efficiency rather than the needs or aspirations of employees. In such conditions employers are often tempted to avoid legal obligations, taking short cuts with health and safety for example, and may permit managers at the local level to take a somewhat ‘flexible’ approach when interpreting written policy.

In between these two extreme types of employee relations strategy there are a variety of other possibilities. Shore et al. (2004), for example, refer to employee relations strategies adopted by US companies which differentiate between ‘core’ and ‘non-core’ employees, the purpose of which is to ensure that the former are retained while maximum efficiency is extracted from the latter. They also describe employee relations strategies which vary from division to division within a corporation depending on the particular business strategy being pursued.

2.3. Management style

So far we have only discussed strategic choices in employee relations as they affect the individual employment relationship. Debates about what is usually termed ‘management style’ relate to the different approaches employers choose to take as far as the collective employment relationship is concerned. How does an employer wish to view its relation­ship with its employees as a group? Does it wish to engage with them through repres­entatives whom they appoint or elect? Does it wish to establish formal mechanisms for consultation or negotiation? What is its approach to possible trade union recognition?

One of the best-known typologies of management style is that developed by Purcell and Sisson (1983) following extensive research into the different approaches favoured by employers. These are summarised in Table 20.2. Their categories are useful, although some organisations do not fit easily into any one of them. Most large, long-established companies will be in one of the last three; most public sector organisations will be in category 4; and many newer businesses will be in some version of category 2. Smaller organisations tend to take the ‘traditional’ approach, having no considered employee relations strategy in place.

It is also possible to view management styles in terms of the extent and nature of collective employee participation in decision making. Below we set out seven categories of consent, in which there is a steadily increasing degree of involvement. We begin with a category in which there is straightforward and unquestioning acceptance of manage­ment authority, and then move through various stages of increasing participation in decision making and the necessary changes in management style as the power balance alters and the significance of bargaining develops and extends to more and more areas of organisational life.

1. Normative. We use this term in the sense of Etzioni (1961), who described ‘norma­tive’ organisations as those in which the involvement of individuals was attributable to a strong sense of moral obligation. Any challenge to authority would imply a refuta­tion of the shared norms and was therefore unthinkable. Many of the exercises in corporate culture are construed by some as strategies to develop this type of consent, with strong emphasis on commitment and the suppression of views opposed to managerial orthodoxy.
2. Disorganised. In organisations that are not normative there may be collective consent simply because there is no collective focus for a challenge; disorganised consent is where there may be discontent but consent is maintained through lack of employee organisation to articulate and endorse the dissatisfaction. A Victorian sweatshop would come into this category.
3. Organised. When employees organise it is nearly always in trade unions and the first collective activities are usually those dealing with general grievances. It is very unlikely that there will be any degree of involvement in the management decision­making processes. Employees simply consent to obey instructions as long as grievances are dealt with.
4. Consultative. Consultation is a stage of development beyond initial trade union recogni­tion, even though some employers consult with employees before – often as a means of deferring – trade union recognition. This is the first incursion into the management process as employees are asked for an opinion about management proposals before decisions are made, even though the right to decide remains with the management.
5. Negotiated. Negotiation implies that both parties have the power to commit and the power to withhold agreement, so that a decision can only be reached by some form of mutual accommodation. No longer is the management retaining all decision making for itself; it is seeking some sort of bargain with employee representatives, recognising that only such reciprocity can produce what is needed.
6. Participative. When employee representatives reach the stage of participating in the general management of the business in which they are employed, there is a funda­mental change in the control of that business, even though this may initially be theor­etical rather than actual. Employee representatives take part in making the decisions on major strategic issues such as expenditure on research, the opening of new plants and the introduction of new products. In arrangements for participative consent there is a balance between the decision makers representing the interests of capital and those representing the interests of labour, though the balance is not necessarily even.
7. Controlling. If the employees acquire control of the organisation, as in a workers’ cooperative, then the consent is a controlling type. This may sound bizarre, but there will still be a management apparatus within the organisation to which employee collective consent will be given or from which it will be withheld.

All of the above categories require some management initiative to sustain collective consent. In categories 1 and 2 it may be exhortation to ensure that commitment is kept up, or information supplied to defer organisation. In each subsequent category there is an increasing bargaining emphasis, which becomes progressively more complex. The implication is that there is a hierarchy of consent categories, through which organisa­tions steadily progress. Although this has frequently been true in the past, it is by no means necessary.

Source: Torrington Derek, Hall Laura, Taylor Stephen (2008), Human Resource Management, Ft Pr; 7th edition.

The single most important strategic decisions that managers may have to take in the employee relations sphere concern trade union recognition:

• Whether or not to recognise a trade union, and if so about what form the recognition should take.
• Whether or not to resist a trade union campaign for recognition.
• Whether or not to derecognise a union with an established presence in the workplace.

As we explained above, over time trade union membership in the UK as a whole has declined in recent decades, as has the extent of trade union recognition. But unions still retain a presence of some kind in 36 per cent of workplaces employing over ten people, and in 18 per cent they have the majority of employees in membership. Unions are formally recognised in 30 per cent of workplaces overall, but in as many as 67 per cent of those employing over 500 people (Kersley et al. 2006, pp. 111 and 119). Moreover, since 1999 there has been an increase in the number of recognition agreements that have been established, caused mainly by the introduction of laws which can force employers to recognise in certain circumstances. The issue of trade union recognition thus remains a live one for substantial numbers of UK employers.

1. Defining recognition

Section 178 of the Trade Union and Labour Relations (Consolidation) Act 1992 contains the established legal definition of recognition as being a situation in which, either via a formal written agreement or through custom and practice, employers engage in collec­tive bargaining with union representatives about some or all of the following matters:

• Terms and conditions of employment, or the physical conditions in which any workers are required to work.
• Engagement or non-engagement, or termination or suspension of employment or the duties of employment of one or more workers.
• Allocation of work or the duties of employment as between workers or groups of workers.
• Matters of discipline.
• The membership or non-membership of a trade union on the part of a worker.
• Facilities for officials of trade unions.

The decision to recognise or to withdraw recognition from a trade union has implications far beyond the terms of the agreement itself. Once recognised, the union gains a raft of defined legal rights to exercise on behalf of its members. First, there is the right to be consulted before redundancies are made or before a business is trans­ferred to new owners. Recognised unions also have consultation rights in the fields of health and safety and occupational pensions, and are empowered to conclude workplace agreements with employers concerning the working time and parental leave regulations. Second, officials of recognised unions and union-appointed learning representatives have a right to reasonable paid time off work in order to carry out their duties and for training purposes. Union health and safety representatives enjoy these rights as well as others giving them access to office facilities. Third, recognised unions have the right to receive information from managers to enable them to engage in meaningful collective bargaining. Finally, the Transfer of Undertakings Regulations 2006 require that union recognition continues and collective agreements remain in force after the transfer of an undertaking to new ownership, provided that the transferred undertaking retains ‘an identity distinct from the remainder of the transferee’s undertaking’.

A range of other rights such as protection from discrimination on trade union grounds, the right to accompany an employee at a serious disciplinary or grievance hearing, and the right to organise lawful industrial action apply to unions and their members irrespective of whether or not they are formally recognised. However, these rights are conditional on the union concerned being accepted as an independent body by the Certification Officer who has the responsibility of maintaining the official list of trade unions.

2. The cases for and against union recognition

When a trade union has recruited a number of members in an organisation, it will seek recognition from the employer in order to represent those members. If the employees want that type of representation, they will not readily cooperate with the employer who refuses. In extreme cases this can generate sufficient antagonism to cause industrial action in support of recognition. In such situations the employer may be forced to grant partial recognition or even concede the demand for full negotiating rights over a whole range of issues. Alternatively refusal may lead to a situation in which the employer is forced to recognise the union under the terms of the Employment Relations Act 1999 (see below).

However, there are also positive reasons for considering recognising trade unions, relating to the benefits that can flow as a result: there are employee representatives with whom to discuss, consult and negotiate so that communication and working relation­ships can be improved:

There are a number of reasons why employers should choose to work with, rather than against, unions at the workplace. Firstly, management may regard trade union representatives as an essential part of the communication process in larger workplaces. Rather than being forced to establish a system for dealing with all employees, or setting up a non-union representative forum, trade unions are seen as a channel which allows for the effective resolution of issues concerned with pay bargaining or grievance handling. It is also the case that reaching agreement with union representatives, in contrast to imposing decisions, can provide decisions with a legitimacy which otherwise would be lacking. It can also lead to better decisions as well. (Marchington and Wilkinson 2002, p. 425)

There are also various arguments that can be put for resisting the recognition of a trade union. Employers are often apprehensive about the degree of rigidity in employ­ment practice that union aims for security of employment appear to imply, and they therefore consider to what extent collective consent can be achieved by other means, provided that the management work hard at both securing and maintaining that con­sent. Managers also tend to perceive unions as being resistant to necessary change, the result of recognition being a reduction in their ability to respond quickly and flexibly to market pressures and opportunities.

3. Forms of trade union recognition

Union recognition comes in various shapes and forms. It may be ‘partial’, in which case the range of topics subject to negotiation is limited, or it may be ‘full’, covering pay, condi­tions and all employer policies relating to the employment relationship. The irreducible minimum is assistance by a union representative for members with grievances, but the extent to which matters beyond that are recognised as being a subject of bargaining depends on the type of management regime that is in place. It also depends on the pos­sible existence of other agreements that could take some matters out of the scope of local recognition. A feature of some collective agreements is an acceptance that certain matters are potentially subject to negotiation with the recognised union (e.g. pay and redund­ancy), while in other areas the union has the right only to be consulted or informed.

The second fundamental decision to be taken in respect of recognition concerns the number of unions to be recognised and the type of bargaining to be adopted. There are three basic alternatives:

• Multi-union bargaining involves the recognition of several different unions, each of which negotiates separately on behalf of different groups of workers. Sometimes this leads to a situation in which the separate groups are employed on different sets of terms and conditions. Such an approach has traditionally been common in large public sector organisations such as the National Health Service, although union mergers in recent years have tended to reduce the overall number that are recognised. As a rule different unions will represent different ‘bargaining groups’ such as unskilled manual workers, skilled manual grades and white-collar workers.
• Single -table bargaining is a situation in which a number of unions are recognised, but where only one set of negotiations takes place over terms and conditions at a time. The full range of issues is thus determined for all groups of staff around a single table. It is usual for such arrangements to be associated with ‘single-status’ practices or har­monised terms and conditions, so that all workers enjoy the same basic entitlements as regards matters such as holiday, pensions, hours and sick pay.
• Single -union bargaining is principally associated with situations in which only one union seeks recognition. However, it can also occur where an employer rejects multi­union bargaining and agrees instead only to recognise one union. These are popularly known as ‘sweetheart’ or ‘new style’ agreements and have been the subject of some controversy. They are typically found on greenfield sites and in businesses of techno­logical sophistication, their essential novelty being the closeness and extent of the working relationship between management and union. Union officials find that they have less freedom of action on some matters than their members expect, but also find they are involved in the full range of human resource management questions, not simply the familiar terrain of collective bargaining. The agreements are also frequently accompanied by ‘no strike’ clauses, which supposedly remove the need for industrial action by providing for independent arbitration in situations where management and union fail to reach agreement. Single-status arrangements also often feature in single­union deals.

From a management perspective it is preferable, if possible, to conclude a partnership agreement with the union or unions which have been recognised. Such approaches have been actively encouraged by the government in recent years because they are believed to constitute good practice and to increase prospects for national economic growth. Partnership deals represent an attempt to move away from the traditional, adversarial, low-trust form of union-management relationship towards one which is characterised by high trust and a willingness to engage in joint problem solving. Communication and consultation are watchwords, so that employees and their representatives are kept fully aware of the factors affecting management decision making and are themselves involved as far as is possible.

The third major way in which collective bargaining arrangements differ is in their level. Three approaches are commonly identified:

• multi-employer bargaining
• single-employer bargaining
• workplace bargaining

All can operate within the same organisation at the same time with different matters being determined at different levels. However, in most organisations which recognise trade unions the most important decisions are taken in one forum.

Multi-employer bargaining involves negotiations over basic pay and conditions of employment taking place at industry or national level through the auspices of employers associations. The result is the presence of industry norms, the same rates of pay and agreements on hours being honoured by all employers in a particular industry. Once common in the UK, this approach is now largely restricted to the public sector, but it remains common in many European countries. Most bargaining in the UK therefore takes place within organisations either at employer level, or in multi-site operations at the level of the workplace. The former is better where core terms and conditions are standardised across the organisation. It is also the more efficient approach as it ties up less managerial time than is the case where each workplace carries out its own negotiations.

4. Derecognition

Derecognition of trade unions is often seen in published literature as being redolent of fundamentally undesirable ‘macho’ approaches to employee relations. Outright derecog­nition against the stated wishes of the workforce is rare in the UK, but by no means unknown (Millward et al. 2000, pp. 103-4, Kersley et al. 2006, p. 121). The majority of episodes relate to specific grades of employees rather than the entire workforce, while in other cases partial derecognition has occurred where the scope of matters covered by collective bargaining is narrowed. Such situations often accompany moves by employers to establish personal employment contracts and/or to move towards pay rises based on individual performance or contribution. The result is the retention of collective bargaining machinery, but a tendency for it to be used more and more rarely in import­ant decision making. In recent years some employers have threatened to derecognise their unions if they refuse to adjust established adversarial approaches and enter into partnership agreements. A well-documented example is the negotiation that occurred between USDAW (the shopworkers’ union) and Tesco in 1999 leading to the signing of one of the largest and most controversial new-style union deals (Blyton and Turnball 2004, p. 252).

It could be argued that partial derecognition of this kind ultimately leads to full derecog­nition as fewer staff see any particular advantage in joining the union. Over time the union becomes so numerically weak that there is no longer a persuasive case for its con­tinued recognition – even over the limited range of issues for which it retains bargaining rights. In such circumstances there is a good case for accepting that the union is no longer performing a useful representative function and that employees’ interests might thus be better served with the introduction of other forms of collective or individual involvement.

5. Trade union recognition law

Since 2000 there has been in place a formal legal route which unions can use as a means of forcing employers to recognise them and to bargain with them in good faith about the pay and conditions of the workers they represent. The new law was introduced as part of the Employment Relations Act 1999 and is highly complex. A central role is played by the Central Arbitration Committee (CAC), a statutory body which is independent of government, to which union recognition claims are sent. The CAC is required to con­sider the claim and to seek voluntary agreement between the parties. Where this cannot be established it can require management either to recognise the union or to organise a ballot of the workforce concerned. The law applies in all organisations employing more than 20 people where there is no existing collective bargaining arrangement in place.

Where it can be shown that over 50 per cent of the workers in the defined bargaining group are members of the union/unions bringing the claim, the CAC will order recogni­tion unless there is evidence to suggest that sufficient members may not want their union to be recognised or where the panel is persuaded that it would not be in the interests of good industrial relations to require recognition without first organising a ballot. Where the union concerned shows that over 10 per cent of the bargaining group are members and produces evidence to suggest that a ballot for recognition stands a good chance of succeeding the CAC will order that a ballot should take place. In most cases the evidence required will be in the form of a petition of workers in the defined bargaining group.

The direct impact of the recognition law has been relatively slight. Only 450 claims had been made to the CAC by the end of 2005, and in the vast majority of cases these were withdrawn without the need for a formal recognition order to be made. But the introduction of the procedure has led many more employers to enter into voluntary negotiations and to establish recognition agreements on their own terms before the unions that represent their staff need to force the issue by making a claim to the CAC. It is impossible to know exactly how many new agreements have originated as a result of the new law, but 2,000 or so were recorded in the first five years following its introduction.

Source: Torrington Derek, Hall Laura, Taylor Stephen (2008), Human Resource Management, Ft Pr; 7th edition.

1. THE STUDY OF EMPLOYEE RELATIONS

The profound changes in the employee relations world outlined at the beginning of this chapter have had, and continue to have, important implications for those whose job it is to study and conduct research into this area of organisational life. Until recently most of this work continued to be carried out within a frame of reference founded on the assumption that union membership and collective bargaining were the norm. The ques­tions asked and the research undertaken focused for the most part on trade union organ­isation, forms of bargaining, industrial conflict and resolution, and the ‘assaults’ on established UK employment practices by employers and government. Since 1997 a great deal of attention has been given to the operation of the new institutions that have been set up to provide trade unions with a method of forcing employers to recognise them when they have sufficient support in the workforce, and to other measures introduced by the Blair Government aimed at fostering partnership agreements between employers and employee representatives. The focus for many thus remains the formal, collective aspects of the employment relationship and the prospects of a revival in the fortunes of trade unions. The continued, widespread use of the term ‘non-union firm’, when such employers have constituted the large majority for many years, illustrates the lasting influence of this long-established frame of reference.

Mike Emmott of the Chartered Institute of Personnel and Development (CIPD 2005, p. 15) goes as far as to argue that academic thinking in the field has ‘little energy left’ and that nowadays ‘few managers look to the literature for inspiration about how to manage better’. He goes on to call for an adjustment in emphasis away from institutions and towards relationships, suggesting that the concept of employee engagement ‘is an idea whose time has come’.

Increasingly academics specialising in this field are also looking at employee relations from new perspectives and are asking different kinds of questions in their research. Some have firmly argued that the time has come for industrial relations specialists ‘to move on’ and focus on the lived reality of working in contemporary workplaces in which trade unions and collective bargaining are either peripheral or wholly irrelevant:

the search for the familiar – committees, procedures and so on – could blind the discipline to the relative sociological marginality of many of these new forms. Whereas collective bargaining in 1968 was a central social institution comparable to supermarket shopping today in its impact on the economy and ordinary people’s lives, these new institutions are of far lesser significance . . . The danger is that we cling to one small log that is being washed downstream by a mighty river of socio-economic change. The log is worth grasping, clearly, but Industrial Relations needs to address the encircling current too. (Ackers and Wilkinson 2003, pp. 13-14)

We are thus now witnessing a very interesting period in the development of employee relations as an academic discipline. Prominent figures in the field are directing their minds to different types of issues and the development of new paradigms. Guest (2001), for example, has argued that developments in the state of the psychological contract between employers and employees (see Chapter 1) might provide a good focus for the study of employee relations in the future, while Rubery and Grimshaw (2003) make a good case for focusing on a wider range of employment institutions beyond those which derive from union recognition and collective bargaining. Their comparative studies look at regulatory practices in the areas of training, pay determination, working time, retirement, downsizing and employee involvement.

Edwards (2005) argues that academic researchers need to broaden their frame of reference and that greater emphasis should be placed on contextual issues (i.e. the causes of the trends that are observed), on comparing different international systems of indus­trial relations and on gender relations in the workplace. Sisson (2005) gives a robust defence of contemporary academic research in employee relations, but also sets out an extensive and wide-ranging agenda for the future. His list of ‘major issues’ includes managing diversity, organisational learning, employee voice and corporate social responsibility alongside institutional concerns relating to organisational structure and industrial conflict.

2. INTERNATIONAL PERSPECTIVES

Employee relations, more than other areas of HRM practice, varies considerably from country to country. Although there has been some convergence recently due to increased global competition and new technologies, substantial differences remain. Different countries have seen different responses to the same environmental pressures (see Bamber and Lansbury 1998 for a summary of these). In industrialised countries comparative studies reveal the continued effect of different industrial relations traditions on con­temporary practice. They also identify the importance of historical experience and institutional differences in explaining the observed variations. The major dimensions across which national systems vary are as follows:

• high union membership and low union membership;
• single-employer bargaining and multi-employer bargaining;
• interventionist government role and non-interventionist role;
• adversarial tradition and consensual (or social partnership) tradition;
• autocratic management style and involving management style.

Clearly, of course, there is a great deal of variation within as well as between national systems in all the above areas. It is also true that things do not remain static over time and that prevailing norms within any country evolve in new directions. However, it remains the case that certain approaches remain associated with particular countries. In Japan, for example, union membership is high and management practices relatively autocratic, but the unions themselves are enterprise based and there is a consensual tradition. In Germany and the Scandinavian countries the social partnership approach is well established, but here it is associated with industry-based unions, national-level bargaining, extensive employee involvement in decision making and heavy government intervention. Hence employers are obliged by law to consult and share decision making with their workforces through works councils (see Chapter 21). In France, by contrast, union membership is notoriously low, but the unions maintain a role in negotiating terms and conditions because they are empowered to do so in law. The government is further involved through the setting of minimum standards in areas such as training provision, holiday entitlements, wages, hours of work, health insurance and pensions. Government intervention is also extensive in the Eastern European countries, but here union membership remains relatively high, while bargaining is often carried out at industry level. The main practical implications associated with this variation in approach are for multinational organisations. They have an understandable impulse to strengthen their corporate culture by taking a standard approach to employee relations management across their operations, but also have to take account of local conditions. For them, success comes when they find ways of creating a company-wide, international strategy which is adaptable to the requirements of the various countries in which they operate. Employee relations considerations thus play a major role in determining which countries are chosen as the locations for their operations. They can also contribute to decisions about plant closures when retrenchment is deemed necessary.

Source: Torrington Derek, Hall Laura, Taylor Stephen (2008), Human Resource Management, Ft Pr; 7th edition.