The Changing Context of HRM

The Changing Context of HRM Research Paper | 2006

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The Changing Context of HRM

Oday Alnabhan

Anglia Ruskin University,

Essex, United Kingdom

Masters of Arts (MA), Human Resources Management,

2005 – 2006

Introduction

This essay examines the changing context of HRM and how it has affected the employee

relationship. To analyze this report looks at the changes in the economic, political and

legal factors that have had an impact on the study of HRM.

This report looks at the evolution of management from direct supervision and

bureaucratic styles to a more discretionary self-management aspect. To understand the

development of self-management and new HRM techniques the report looks at various

other reasons such as increasing competition, change in the nature of the workforce

caused by de industrialization and globalization. These factors have facilitated the

development of self-discretionary management and led to a new paradigm where

employees are more empowered, and the management does not exert total control as

decision making is based on consensus.

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Diagnostic Model

The HR managers must be able to conduct an internal and external audit of the

environment (Stone, 2002). The challenge for the manager in the competitive business

environment of the 21st Century

is to find a fit between the external opportunities and

threats and the internal strengths and weaknesses in the organization. The diagnostic

model described below describes the how the internal and external influences in an

organization can be studied. After the HR manager is aware of this the management can

set certain objectives and devise certain performance measuring techniques that would

allow the management to evaluate the performance of the organization (Stone, 2002). The

feedback from this diagnostic model can then be given to the HR staff that can then use

this information to implement HR measures such as rewards to increase motivation

amongst the workers. The strategic approach of HRM allows the management to make

better decisions regarding employee management, employee empowerment, redundancies

and recruitment and selection.



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HUMAN RESOURCE

MANAGEMENT STRATEGY

How it is to be achieved

Human Resource Management Objectives

What is to be achieved?

Technological Cultural Demographic Social

Environmental

Business

Legal &

Political

.1 ASSESS INTERNAL AND EXTERNAL INFLUENCES

Industrial

Relations

Economics

HRM AUDIT

Evaluation of Performance

1 HRM OUTCOMES

➢ Commitment ➢ Competence

➢ Cost effectiveness

➢ Congruence

➢ Adaptability

➢ Performance

➢ Job Satisfaction

➢ Motivation

➢ Trust

HUMAN RESOURCE ACTVITIES ➢ Acquisition

➢ Development

➢ Reward and Motivation

➢ Maintenance

➢ Departure

ORGANISATIONAL PURPOSE

ORGANISATIONAL OBJECTIVES

Strategy

ORGANISATIONAL

STRCUTURE

ORGANISATIONAL

CULTURE




Based on the strategic human resource management diagnostic model it is important that

to formulate a comprehensive strategy and conduct an analysis of their operating

environment.

Competing Values Framework

There are many complexities in running the organization and maintaining

competitiveness. There are certain models and frameworks that can enable us to

understand and define the organizational dynamics these include assumptions regarding

the nature of the work, relationships between workers and decision-making functions.

Through the use Robert Quinn’s Competing Values Framework, we can understand the

main areas that the organization should concentrate on. These have been defined as

Concern for People, Concern for Structure, Concern for Production and Concern for

Context. Based on the personal values and beliefs the individuals within the organization

have specific orientations in these above-mentioned four areas.

The challenge for management is to understand these four areas and represent the

competing values. The management should be able to develop skills and competencies in

the organization that would enable them to achieve all these four objectives and maintain

a balance. The organization has to be achieving a balance between the structure of the

organization, which would include policies, procedures, and other processes in the

organization and a focus on the future strategy. The managers must be able to translate all

the changes of the external environment within the organization, so they can understand

the nature of the business they are operating in and formulate strategies that would ensure




competencies and success in the future. The context area of the organization looks at the

outreach to the consumers and future vision of the organization. The management aims

to create a balance between the production aims and the relationships that exist within the

organization (Quinn & Rohrbaugh, 1988).

The traditional models like the Douglas Mc Gregor’s theory X and Y have focused on

examining the dichotomies of leadership. These theories have explained the two various

theories on leadership and management but there has not been much work done trying to

link these concepts in an effective manner. In this model Quinn (1993) defined that an

effective leadership requires a balancing between the vision of the organization,

performance and people orientation. The first dimension of this model is related to

organizational focus, which forms the internal focus on development and wellbeing of the

people in the organization. The second dimension differentiates between the

organizational preferences for structure and represents the contrast between flexibility

and change (Quinn & Rohrbaugh, 1983). Each quadrant of the framework represents the

four major models of the organization and management theory (Quinn & Rohrbaugh,

1983). These include the human relations model, which places a lot of emphasis on

flexibility and internal focus on employees. This model stated that the management

should put its prime focus on the employees to ensure their wellbeing which would result

in greater organizational effectiveness and competence.




Flexibility

1.1 Human Relations Model

Means: Cohesion, Morale

Ends: Human Resource

Development

1.2 Open Systems Model

Means: Flexibility, Readiness

Ends: Growth, Pressure, and

Acquisition

Internal External

Means: information Management

End: Stability Control

1.4 Internal Process Model

Means: Planning Goal Setting

Ends: Productivity Efficiency

1.3 Rational Goal Model

Control




The open systems model emphasizes on flexibility and external focus, this model focuses

on the external focus on the organization and emphases on planning, goal setting and

productivity. The internal processes model focuses on control and an internal focus on the

organization, which looks at the role of information management, communications,

stability and control. The Competing values framework of leadership effectiveness

focuses on two major value dimensions, which include internal and external flexibility

and control. Each quadrant in this model represents the core management skills. The

upper left quadrant represents the human relations model and defines the two main

leadership roles which include the facilitator, which encourages teamwork and

cohesiveness and manages the interpersonal conflict in the organization and the mentor

who is helpful and engages in the development of the people in the organization through

empathetic orientation and caring.

The open systems model in the upper right quadrant of the competing values framework

specifies two additional leadership roles. The first one is the broker, which is politically

astute, persuasive, influential and powerful. The other one is the innovator who is

creative and facilitates adaptation through change. The lower right quadrant contains the

rational goal model, which also presents two leadership roles, the producer and the

director. The producer is task oriented and work focused and motivates people to increase

production and to meet the stated goals. On the other hand, the director engages in

planning and sets objectives for the workforce through clear expectations.




The last model is the internal process model, which looks at the coordinator and the and

the monitor. The coordinator maintains structures, schedules, organizes and coordinates

staff efforts and attends to logistical and housekeeping issues. On the other had the

monitor checks on performance and handles paperwork. The finding of this model

suggests that the managers have to base their leadership style on all of the major theories

mentioned in this framework. The challenge for the managers is to balance the competing

demands. An effective manager demonstrates “behavioral complexity” which refers to

the ability to both conceiving and performing multiple contradictory roles (Denison et al,

1995).

Human Relations School

The Human Relations Movement which led to participative management or democratic

management was pioneered by the works of Elton Mayo. Through his Hawthorne studies

Mayo discovered how the input of the employees could be increased. His studies and

experiments revealed that the employees had a need to be cared for by the organization.

Other findings of Mayo revealed the sociological implications of group relations amongst

the employees. Mayo’s concept of management stated that supervisors should not behave

has superiors but work as friends with the employees and understand their needs. Also

the management must delegate some decision making and authority by establishing trust

and mutual understanding amongst the workers (http://faculty.ncwc.edu/toconnor/).


http://faculty.ncwc.edu/toconnor/)




Other tenets of the Human Relations School were seeking feedback from employees

about the work and employee concerns. This approach that treated employees as humans

revolutionized management thinking and led to employee empowerment and the

participative management styles. The employee needs and satisfaction came into focus

for the first time. Unlike scientific management the focus of Human relations school was

more on employee satisfaction and wellbeing which would lead to better performance.

Fred Hertzberg’s Motivation Hygiene Theory which was focuses on five types of

‘satisfiers’ and ‘dissatisfiers’ in organizations. The other major theory of motivation

based on the Human Relations School came from Douglas Mc Gregor which also focuses

on the ideal of increasing employee abilities by focusing on their wellbeing

(http://faculty.ncwc.edu/toconnor/).

Based on the human relations school Hertzberg discovered that through job enrichment

and opportunity for psychological growth the employees will be more motivated and

hence would perform better. To enrich jobs the management must introduce new

challenging tasking and assign employees to certain tasks that will enable them to

develop additional skills. Another method is to increase the responsibility of the worker.

These methods not only motivate the employees but through the creation of wellbeing the

employees then become emphatically loyal to the organization. The motivator factors

have a long-term effect on the employee’s attitudes than the hygiene factors. Job

enrichment according to Herzberg is a continuous management function and not merely a

one-time proposition. These theories that were influenced by the work of Mayo have had

a major impact on how people are managed today (Robbins & Coulter, 2002).






Thus, the management styles of today address all psychological, social and development

needs of the employees. These include team work where management encourages

employees to work as new. The work culture today is particular about collaboration and

the management is in a more paternalistic role where it is responsible for the wellbeing of

the employees (Robbins & Coulter, 2002).

Employee Empowerment

The influence of the human relations school, led to the emergence of Self-Managed work

teams during the 1990s. Also, the larger corporations and employers adopted a gentler

approach towards managing them with focusing on their needs and developing their

potential through training. Another trend that has emerged in organization has been that

of employee empowerment, this kind of management style favors employees having

more decision-making power and they have more authority than in previous types of

management techniques. Through empowering employees, the motivation of the

employees is enhanced which makes the organization more productive. With the changes

that emerged during the 1980s and 1990s employee empowerment has become an ideal

way to motivate employees and create and organization that can respond to the changing

customer needs. The increased competition and dynamic business environment has been

one reason why new models of management emerged that emphasized on employee

wellbeing and motivation. Through empowerment the employees are motivated and their

feeling of self-efficacy is enhanced. Employee empowerment emerged as a concept




during the 1960s and 1970s and now is the dominant way of dealing with the employees

in many large organizations (Elmuti, 1997).

Many large organizations till the end of 1980s had a controlled and centralized

organizational structure. This structure was compatible with a study and stable business

environment. Since the 1980s and in the 1990s the increased in competition, changes in

technology and increased globalization exposed the businesses to a more competitive and

unstable operating environment. In this kind of environment, the centralized and

bureaucratic management structures were inflexible and ineffective. Another reason for

the development of new management styles has been the de industrialization of the

western economies and the emergence of the services sectors. Today the employees have

to manage more meticulously than before. They need to be developed and the

management has to invest in them in terms of development and training to ensure that

they are motivated and perform at their optimum levels (Armstrong, M, 1987). This has

forced managers to enhance their competitiveness and performance thus this led to

attaining the best results from the employees along with all other resources of the

organization. Guest (1987) defined the new Human Resource Management style as a

people oriented approach, which aimed to maximize the performance of the employee

through a set of, integrated policies and practices which involved consultation and

feedback from the senior management.

The organizational structure is more decentralized today which means that the senior

management does not exercise all the authority, some it is delegated to other employees.

Through having self-managed work teams which receive minimal direction from the top




are more effective; apart from producing greater satisfaction for the employees they also

reduce costs. The decision-making process is much faster and involves less bureaucratic

controls. As each department is working on their own they can be much quicker to

respond to consumer changes and changes in demand patterns. Research has proved that

when employees are more involved and committed to their work they are more motivated

and remain involved to their jobs (Elmuti, 1997). This development in new ways of

managing employees has strongly been influenced by the Human Relations School that

focused on employee development, motivation and leadership. New management

techniques have identified other job-related factors such as employee development and

conditions at work, which can motivate and enhance the employee performance

(Wickens, 1987).

The increased competition which has resulted from globalization has made it necessary

for organizations to adopt a new management style. The top down management is no

longer suitable. The management is now focused on getting the best out of the

employees. Thus, the organizational structures have changed as the new organizational

culture favor a flatter structure which has a more responsive team structure. These teams

are empowered to take action on their own and there is a not much focus on the classical

command and control systems that was typical of multilayered hierarchies.

This is the reason why most organizations today rely on participative management to be

more flexible. The concept of participative management was developed by Mary Parker

Follett. This approach is democratic where all members of the organization are involved

in the decision-making process. This approach emphasizes on a mutual problem solving




where employees work with the management to tackle work related problems. The

management does not take decision anymore and gives the employees a degree of

independence. The self-managed work teams are more efficient, and they do enhance the

job satisfaction. The increased responsibility nurtures employee’s skills and increases

their commitment (Crane et al, 2003).

To implement these self-managed teams the two most important elements the

management has to focus on include trust and communication. The management and

employees have to establish mutual trust in their teams and the entire organization. The

other important element is increased communication in the organization. Open and free

information is necessary for employee empowerment (Crane et al, 2003).

Since organizations now operate in a dynamic, competitive and more complex business

environment the decision-making process is very complex. The management can no

longer rely on the classical decision-making style where all decisions were centralized.

The new management paradigm focuses on participation (Erstad, 1997). Employee

participation has four areas which include goal setting were employees can set goals and

define a task. Secondly the employees can decide on how that will work and deal with the

task and the management provides them with the necessary resources. The third aspect of

participation is the involvement of employees in the decision-making process. Fourthly

the employees are also entrusted to make organizational change. The employee

participation can be in formal or informal group which deal with work issues and make

decisions. The decision making is thus decentralized and through this approach the




management can ensure that various teams work on different projects and their work is

not hindered by a command structure which would slow the operations and make the

organization less dynamic and efficient (Erstad, 1997).

The culture of empowerment enables the organization to meet the expectations of the

customers and ensure that employees are motivated and committed to the organization.

The modern management styles favor a culture where employees do not have any

restrictions in their jobs. The employees need to develop so they can work on their own

this involves training and education of the workforce. The two most elements that can

develop a culture of empowerment includes education and participation of the employees

in the decision-making process. This new organizational culture relies on involvement of

all employees in the organization. The role of the management it to set the vision for the

company and facilitate the various processes in the organization (Erstad, 1997). The new

organizational model emphasizes a focus on decision-making, development of a service

culture that rewards team performance, and integration of operations. For managers, this

changing environment offers many new challenges and opportunities. Managers and

employees are increasingly being asked to become generalists who step outside of

traditional narrowly-defined job descriptions in support of team objectives and goals.

These changes are resulting in the development of new approaches to management.

Most modern organizations today have a diverse workforce and collaborative or

participative styles are better suited. As through coloration various skills are combined.

Thus through empowering employees the employees feel significant and a sense of




loyalty is created. Furthermore, it motivates the employees and encourages them to learn

and develop their skill which is beneficial for the organization. The participative

management styles are made efficient by the availability of direct and immediate

feedback in organizational performance. Also, the leadership in this new management

style tends to be dynamic that can keep the focus of the employees on a single goal. The

systematic representation of all the members in the organization makes this style of

management more effective (Maisela, 1995).

Managerial Power

The main issue of managerial power has been that how managers can manage through

consent and cooperation. In the modern organizations the managers work with the

employees and through empowerment they invoke commitment and compliance. The

management styles today exert their power through consent rather than coercion. The use

of consent and agreement will have a positive effect on the organization, as it will

encourage co-operation and commitment. Now managers are seeking new sources of

power and legitimacy by depersonalizing power and downplaying their personal power.

This has led to an increase in the number of democratic leaders in leading organizations

today. Now managers are seen as a part of the team and they do not use the traditional

methods of power and control. The mangers in modern organization steady are involved

in dialogue that is more open with their employees (Hales C, 2000)




The new management styles favor distribution of power, it is not centralized, and the

decision making is seen as a collective task where employees have a say in the devising

and implementation of policies. The new management theories encourage a more power

sharing technique which integrates all members of the organizations. This type of

management style focuses on transformational leadership that encourages business

objectives to be shared by both the employees and management. The leaders focus more

on people oriented procedures, which include establishing trust and flexibility in the

organization. This is a more flexible way of employment, which encourages the

employees to develop new skills and knowledge to perform better at their jobs. Today the

management motivates and inspires the employees through the use of group profit

sharing schemes and value-added incentives which enhance employee commitment. The

flow of information is not centered to the senior levels and there is free and prompt flow

of information between the lower level employees and senior management (Mullins, L,

1999).

Furthermore, the change in the organizational structure and the devolution of human

resources has changed the role of the managers. Managers now are increasingly

responsible for the total array of resources at their disposal (Armstrong, 1999). The

changes in organizations that where caused by downsizing, and decentralizing increased

the decision-making powers of the management (Brewster, 1999).

The changing structure of organization by due to new management theories and styles

has changed the power politics in organizations. In recent years Network power has been




becoming important in large organizations. This relies on influencing subordinates

indirectly through linkages of various networks in the organizations. This kind of power

realize on communication and interaction. This kind of power is largely bases on the

information and images used by the manager. There are two contradictory models of

power one states that power is possessed by the manager and is used to produce and

manipulate the employees. On the other hand, the second model argues that the power

resides in the collective processes of the employees within an organization. Modern

management techniques favor the collective process and encourage employee

participation, which has led to decentralization and devolution of power (Brewster,

1999).

New management style encourages implementation of a common culture within an

organization that. Through the collectivist approach the managers can minimize the

resistance and reluctance of the employees and enhance their performance by providing

them with all the necessary tools they require to enhance their skills and knowledge. The

new management approach focuses on utilizing employees as the most vital resource of

the organization and they are seen as the main tool that can provide the organization with

a competitive advantage (Brewster, 1999).

The new flatter more empowered organization has a different culture. According to the

dimensions organizational culture the first dimension is innovation where the members of

an organization are innovative and take advantage of any opportunities that may emerge.

Such a culture encourages initiative and innovation both of which are important for

success in the dynamic business environment. The dimension of outcome orientation




refers to a culture of achievement such a culture is focused on attention to detail and

analysis. The team orientation dimension focuses on collaboration and joint efforts. An

organization that is said be under the aggressive dimension is where the emphasis is

placed on meeting the objectives. The management today focuses on a culture of

achievement rather than being status oriented. Such a work culture is facilitated by

delegation of responsibility education, training and providing feedback.

Participative Management

The modern theories on management are focused on participative management which

states that through empowering people in an organization the enterprise will be more

responsive and flexible which will make it more successful. Participative management

has become essential as the issued faced by organizations are too complex and

interdependent to be dealt by an authoritative structure. The empowering enterprise

focuses in accomplishment rather than status. The employees are taken in account in all

management decisions and this kind of collaboration involves leadership initiatives such

as coaching, negotiating and facilitating (Herschel, 1996) in the authoritarian

managements styles the managers transmit order whereas in the participative model the

responsibility is delegated. The manager’s coordinate the group’s work (Davidmann,

1998).

The management practices are changing because of the changing market, advanced

technology and increased competition. Thus in today’s world it is imperative that




employees are managed in a different way. Contrary to the authoritarian structure the

participative style focuses on self-management where employees direct their own work.

The participative management style seeks employee inputs and gives employees the

opportunity to contribute to decision making on all work-related issues (Oosthuizen,

1999). The old management practices were based on the assumption of human limitations

as a basis of organizing. The bureaucratic structure of organizations controlled the

workforce in a way where there was no participation or consideration. In the new

knowledge driven economy, the employees are a valuable resource for the organization.

Thus, to achieve a competitive advantage it is vital to have a highly motivated and well-

trained staff (http://www.1000ventures.com/business).

The participative management creates a work culture that enables employees to receive

feedback on their performance and efficiency of the organization. This allows the

employees top to evaluate their performance and ensure that they uphold the overall

organizational goals. Another feature of participative management is that the managers

through leadership can create a common vision for the whole organization which is

shared by everyone. Also, all members of the organization are represented at all levels of

the decision-making process. These elements make participative management effective

(Oosthuizen, 1999).


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Modern Management Styles

In a decentralized structure the managers are provided with much more autonomy on

decision making such as autonomy, planning and control. Through giving the

subordinates more autonomy and discretion over the work the managers can increase the

level of organizational commitment. This organizational commitment amongst the

employees leads to a greater sense of responsibility. Also, this kind of a style of

managing increases the motivation amongst the employees as they perform better if given

autonomy over their work. Another important management function is to provide the

employees with the right resources and training (Subramanian et al, 2001).

Today organizations must rely in employee involvement and skills to create a competitive

advantage. Thus, it is imperative for organizations to encourage their employee initiative

to do this it is necessary that organizations nurture employees. Thus, today the manager

acts as a leader who inspires the employees in the organization to perform well. In the

modern management techniques, the employees are involved in the planning process.

This ensures that employees are aware of the goals and expectations and the management

helps the employees meet these objectives. The manger establishes the performance

standards and ensures that the employees meet the set performance target. The modern

technique is more focused on monitoring the performance and the management provides

feedback to the employees, so they are aware of their performance (Armstrong, 2001).




The performance measures are used to assess the developmental needs of the employees.

Once the management has assessed the performance they can assess the performance of

the employees and then develop their employees. Employee development as part of the

organization’s overall human resource strategy means the skillful provision and

organization of learning experiences in the work place in order that performance can be

improved. People are an organization’s most precious possession and, so it is extremely

important that they work at their optimum level of performance. Employee development

makes an important contribution to this process (Armstrong, 2001).

The new management theories also focus on collaboration amongst the employs and

management encourages team work. The team building characteristics makes an

organization more competitive and efficient. The workforce is treated to be more flexible

as there are no specific job titles as the focus is on achievement rather than status. Given

the dynamic nature of the business environment a flexible and responsive organization is

the only one that can succeed. Through encouraging team work the managers can ensure

that employees can undertake challenging tasks as they are more motivated to work in a

situation where they are more empowered. The modern management models create

flexible and agile group pf employees which can respond to changes in the business

environment. The communication flow in the matrix or organization structure is

horizontal which allows the employees to be a part of the decision-making process. The

free flow of information makes the organization environment more consistent and stable,

thus strategy and design are increased (Cohen & Mohrman, 1995).




Conclusion

The change the business environment caused by technology and globalization has led to

the emergence of a new paradigm in management. The new management theories adopt a

more participate style, where employees are more involved in the decision making.

Furthermore, the organization structure is much flatter which enables the organization to

be more flexible and agile. All companies today seek to increase their profitability and in

the knowledge based economy this can be achieved only through participation.

Collaboration, development of employees.

Elton Mayo’s work has made significant contributions to the development of the

participative model and the development of new management theories. Also, Mayo’s

work led to many motivational theories being developed which focused on the wellbeing

of the employee. The scientific management was effective when it was introduced but it

overlooked the human aspect of management which is one reason why modern theories

on management focus on the wellbeing and motivation of the employee. However, the

scientific management techniques have been enshrined in the assembly line

manufacturing systems and companies such as Ford still use these techniques.

The managers today have to be able to adopt a strategy that includes all elements of the

organizational behavior that include the external environment and its impact on the

organization. The company must be able to realize that it functions in an environment and

it must be able to assess all the changes that can come about in the environment, which




can affect the efficiency of the organization. The management must be able to manage all

its employees well and assure that the company can successfully develop its workforce to

assure that they can meet all the objectives set by the company. This is where the

management should focus on the human relations model. The management today strives

to provide the workforce with all the necessary elements they need to complete the job.

Also, employee wellbeing and development is an important objective today.




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