Influencing Organizational Effectiveness

A Critical Take on the HR Contribution

Linda Holbeche

• Publisher: Routledge
• Year: 2016
• ISBN:
  9781317808848
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

In this book Linda Holbeche offers an historical narrative on the changing landscape of work since the 1980s and considers how definitions of organizational effectiveness have changed over time. She considers the characteristics and effects of the neo-liberal work culture of new capitalism, and how HRM practices have contributed to shaping this work culture.

Influencing Organizational Effectiveness challenges mainstream thinking around business strategy, change and organizational effectiveness, and about the roles of HRM and management. While the overall tone of the book is critical, Holbeche argues that HRM can play an active role in giving voice to employees and advancing organizational effectiveness.

Grounded in research, this book includes reflective questions, case studies and helpful guidelines to support HRM and organizational development professionals and master's-level students. It illustrates what 'better' might look like and how HRM can contribute to a new definition of effectiveness which is aligned to the needs of modern organizations.

Section V

HR influencing organizational effectiveness

12HRM, stewardship and organizational effectiveness

For too long the benchmark for good HR has been so-called ‘best practice’. These solutions that worked in the past are now proving unreliable across a range of business, economic, and political contexts that are not just fluid but positively metamorphosing due to the impact of global trends like changing workforce demographics and digitisation.

Ksenia Zheltoukhova, Research Adviser, CIPD

As we discussed in the last chapter, the discourse on the ‘new capitalism’ is gaining ground, even if the values that should underlie a reinvigorated and more responsible capitalism of the future are under debate. We discussed how, now more than ever, the emerging business paradigm will define what it means to become a high-performing, sustainably effective organization. The notion of measuring performance according to a quadruple bottom line is gaining credence and it is clear that the needs of different stakeholders are often in tension. Achieving a fair distribution of performance benefits will require a shift in contemporary business priorities and practices. Adopting a stakeholder approach implies opting for a multidimensional concept of performance. If the definition of business performance viewed through a stakeholder lens becomes more complex, the means to achieving desired results must also be reconsidered.

In this chapter we shall consider how HR, as the people- and organization-behaviour experts, could influence organizational effectiveness according to the stakeholder paradigm. Sparrow and Cooper (2014) argue that HR practitioners should focus on influencing the intermediate organizational variables that lead to business results. Therefore, improving the working practices, climate and culture of organizations becomes central to HR’s agenda. Above all, since many firms now recognize ‘talent’ and ‘human capital’ as the foundation of their business models, and the most important source of value, HR must exercise stewardship with respect to one of a firm’s key stakeholder groups – its workforce. This may mean revising HR’s primary focus and priorities since acting as business partner to deliver HR’s contribution to shareholder value often appears to be achieved at people’s expense. What would ‘sustainable’ look like with respect to people?

Taking a stakeholder perspective in today’s challenging employment context would require a new approach to HRM that is business focused but more ‘human’. In a more ‘human’ (or ‘employee-centric’) HR practice, HR would seek to work towards achieving a balance of mutually beneficial outcomes for the business and its workforce. In what will be uncharted waters for many, the risk is that we reach for the latest bright, shiny, new idea or for tried and tested ‘best-practice’ models of the past. While these no doubt contain useful nuggets, we need to rethink what might work when and where, since context relevance is everything. As Paauwe and Boselie (2005) point out, ‘Along with corporate or business strategy, a whole range of other factors play a role in shaping the relationship between HRM and performance, among which the institutional context is critical’.

Of course, I recognize that in this section of the book I am shifting my stance away from analysing what is and what has been, to advocating what might be (Watson, 2010). In one sense therefore this cannot be a fully evidence-based approach, but there are sufficient indications emerging from various studies to suggest a possible (and desirable) direction of travel. In the remaining chapters of this book we shall consider in more detail how HR might better influence organizational effectiveness to equip their organizations and their stakeholders to thrive in the twenty-first century. I shall include case examples of practice which hint at ‘new organization’ approaches that overcome some of the limitations of what has gone before, and also produce more social justice and organizational effectiveness.

Here we shall cover:

•What employee-centric HR might look like;

•Towards a new employee relations approach;

•A positive work environment;

•Employee wellbeing;

•Job quality; and

•Careers.

An evolution in priorities

We have discussed in earlier chapters some of the trends that are reshaping work and organizations as we know them. As businesses pursue agility, we can anticipate some of the future changes both for organizations and employees. There are potentially many conflicting outcomes, as Paauwe and Boselie (2005) point out. For instance, as businesses seek to increase productivity, which managers will appreciate, there will be increased levels of stress, which workers will probably dislike. Labour intensification through increased employee participation, decentralization and emphasis on performance management (practices that can be seen as high-performance work practices) might create competitive advantage in terms of financial performance, but the individual worker might experience increased levels of stress and anxiety (Legge, 1995). Being aware of, and making choices regarding conflicting HR outcomes in HR practice is an important step.

By anticipating what lies ahead, HR professionals can help build their organizations' resilience by focusing on the people and cultural enablers of good business outcomes – such as effective leadership and management; governance, transparency and ethics; the ability to attract and retain key talent the business needs; diversity; the ability to operate fluidly across boundaries; and enabling knowledge exchange and collaboration. For many HR teams this broader remit is relatively new territory. HR’s skill set needs to expand accordingly to include business acumen, effective role and organization design, analytical capability, awareness of organization-development principles and significant influencing ability.

The HR profession has a major role to play in ensuring that technology-enabled cultural trends shape the future of work in a way which meets stakeholder needs and produces sustainable value for everyone. HR needs to keep asking the fundamental questions about the purpose of work and the kind of future we aspire to, since this provides a platform from which to influence business decision-makers and achieve win–win outcomes. Encouragingly, the CIPD, HR’s professional body for the UK and Ireland, is now championing a vision of better work and working lives. This implies an evolution in labour–capital relations, with HR practices helping shape harmonious working relations and workplaces in which there are high levels of staff engagement, voice, training and empowerment.

This means HR must address questions relating to the changing nature of work. We need to make sure that the future of work is human, that we are designing workplaces that help people work well and realize their potential. For instance, automation is already affecting entry-level jobs, and mid- and higher-skill jobs will be soon impacted by artificial intelligence in ways that have not been seen before. The number of people working flexibly, part-time and on contract is set to rise considerably over the next five years. In such a world, according to Peter Cheese, CEO of the CIPD, work might be displaced more to individuals than organizations, to trade and craft skills and a gig economy. As Cheese asks, if many of the jobs we know today could be automated in the future, then what kinds of jobs will we all be doing? And how can people working in HR and learning and development actively design for that future, for example by developing new skills, shifting reward mechanisms or adopting new norms relating to working hours and relationships?

This means tackling questions for which there are no easy answers such as, how can flexibility be made to work for both organizations and workers? How can HR ensure that business achieves its ends and that employees are treated ethically and fairly? Some consider the ‘gig economy’, where largely self-employed individuals use online platforms to choose parcels of work that suit them, to be mutually advantageous. Employers benefit from a ‘human cloud’ of talent they can dip into at will, while employees can work the hours that suit them – in theory. However, in situations where the flexibility demand is driven by employers, the consequences for employees can be largely negative.

For example, Wood (in Jeffrey, 2015) studied a large high-street retailer that uses a system of ‘labour-matching reviews’ to plan how its employees’ shifts should be scheduled. This is a common practice in many industries, but has previously been an annual or biannual process aligned to financial results. Technology, says Wood, has transformed it entirely: the retailer was using complex information on footfall, weather and buying patterns to shift its forecasts on an almost weekly basis. This meant staff were told with just a few days’ notice when and if they would be required to work, their precise shifts (and weekly pay) changing from one week to the next. All were permanent workers with pensions and employment rights, but their contracts stated only a minimum number of hours and no guarantees over consistent patterns or suitable notice of changes. Mental ill health arising from labour-matching reviews and general insecurity over hours is so great, Wood believes, that it is a health and safety issue, and employees could potentially bring a case for a breach of relevant Health and Safety Executive legislation.

With respect to the ‘zero-hours’ debate, some of its principal advocates are occasional academics who enjoy being paid for a few lectures on a piecemeal basis while on a permanent contract elsewhere and enjoying a healthy income. On the other hand, care-home workers or the average barista have no such choice and may not benefit from such supposed autonomy, especially if they end up having to juggle two or three such precarious jobs to make ends meet. This new transient category of workers is still aligned to the business but less known to HR, and in some cases disenfranchised from engagement initiatives and development opportunities. The risk is that the shift in the UK to a service-driven economy has facilitated, ‘not a race but a weary trudge to the bottom’ (in CIPD, 2014).

HR needs to take a view about how the wider workforce should be treated. For instance, the rise of the gig economy raises questions about workplace protection in the future – such as pensions, benefits and healthcare. How, if at all, should employers look after a workforce that could be very transitional in nature? There will always be different styles of work relationships and contracts that work for the employer`: these need to be appropriate for the individual as well. HR’s challenge is to find solutions that meet both sets of needs.

If the relationship between the employer and the individual employee is out of balance – for example, in the case of increased performance pressures without fair pay – employees might feel they are being exploited, resulting in low commitment levels towards the organization (Paauwe, 2004). This is where principles can help guide decision-making and practice. In an employee-centric approach to the management of people, the guiding principle is fairness, not simply expediency, with the aim of achieving the best outcomes for both the organization and the people.

Employee-centric HR

‘Employee-centric’ HR approaches are not simply about being nice to people. Mainstream HRM theory views people as a resource, so when we factor in the importance of ‘knowledge workers’ to the productive aims of the firm, competitive labour economics theory (Blundell and MaCurdy, 2008) suggests that people are the key competitive resource and should be treated as such. This aligns with the mainstream strategic thinking that says that only firms with unique and valuable resources or capabilities will gain and maintain competitive advantage. Capital is a fungible, non-differentiating resource that rarely provides a competitive edge (Barney, 2001). Today it is labour’s generation and use of knowledge that is the greatest source of advantage for most firms. Employees with high levels of skill are shown to be those that bring most value to the firm (Wright et al., 1994) and highly skilled people are rare and not easily substituted by other factors. Moreover, it has long been assumed that a motivated, engaged and inspired workforce generates higher long-term productivity, yet UK surveys regularly report widespread disengagement. Indeed, the need for committed, engaged workforces who are able and motivated to contribute to the success of organizations is arguably the most pressing business question of the twenty-first century.

So, employee-centric approaches are increasingly being adopted, more often than not by CEOs who recognize the need to create better value through and for employees. For instance, Vineet Nayyar, CEO of HCL Technologies, the India-based global information-technology services company, and author of Employees First, Customers Second: Turning Conventional Management Upside Down (2010) argues that putting employees first is a philosophy, a set of ideas, a way of looking at strategy and competitive advantage that came from observing the company closely. ‘We create value in one very specific place: the interface between our HCL employees and our customers. The whole intent of Employees First is to do everything we can to enable those employees to create the most possible value.’ This has led to the hierarchy being reconfigured, essentially turning the organizational pyramid upside down so that management is as accountable to the people in the value zone as the people in the value zone are to management. This is an example of benign unitarism, or progressive HRM (Budd, 2004), in which the interests of employees and the business are assumed to be identical and therefore aligned. Here the focus is on designing the organization to facilitate the creation of value through people, rather than on simply saving cost which is a common driver of restructuring from a neo-liberal perspective.

Under HRM the collective employee voice has largely fallen silent, leaving workers potentially at risk of exploitation. There are encouraging signs that some multinational companies are beginning to use their might across jurisdictions to improve conditions for their workers globally. For instance, the US is the only developed country that does not guarantee paid maternity or parental leave to its citizens. Vodafone introduced a policy to provide 16 weeks’ paid maternity leave to all applicable staff worldwide, together with full pay for a four-day working week for up to six months on returning to work. This is thought likely to result in an overall saving for the company of billions of dollars. While employees benefit, so does the business since providing this benefit...