MYTHS ABOUT PEOPLE AT WORK:

A CRITIQUE OF HUMAN-RESOURCE MANAGEMENT

MYTHS ABOUT HUMAN- RESOURCE MANAGEMENT

1. LARGE ORGANIZATIONS PRACTICE HUMAN-RESOURCE

PLANNINGA new breed of human -resource specialist has emerged in the last few years, "the human-

resource planner" complete with a professional society, annual meetings and an academic

journal. Human-resource planning connects the human-resource systems—recruitment,

training and promotion—to long-range organizational strategy. Through planning, the

appropriate human resources should be on hand to meet changing organizational

requirements in the future. An explicit advantage of this discipline is to minimize shocks on

organizational members caused by planned changes: technology, products and markets. Two

big problems confront this myth, one conceptual and the other mundane. In the first place, the

United States is, at least to some extent, a market economy, not a government-planned

economy. Individual firms reap the fruits of their comparative economic advantages and

suffer the consequences of economic miscalculations as well. The recent experience of the

gigantic Chrysler Corporation demonstrates the futility of workers relying on corporate

viability as protection for their jobs, salaries or pensions. However, owners and managers of

large firms long ago figured out how to deal with uncertainty in the product market. Chandler

in his recent book The Visible Hand describes, for example, how the Dupont family decided

against trying to monopolize the market for explosives. Since only 70% of product demand

could be counted upon through economic downturns as well as boom times, the company

decided explicitly never to seek a larger share. Rather Dupont and all other monopolists or

oligopolists have left the remaining thirty percent to smaller firms who prosper in good times

and suffer in bad.

Piore has formulated a general proposition relevant to human resource planning. Large firms,

he argues, leave the uncertain fluctuations in demand to small firms who in turn provide

unstable, generally demeaning work to the disadvantaged groups in the society: women,

minorities and the young. These jobs offer low pay, little training, no promotion, arbitrary

discipline and constitute the "secondary" labour-market. By contrast, the larger firms satisfy

the constant demand (70%) in the industry and provide "primary" labour market jobs.

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Primary jobs offer better pay, training on the job, some advancement and due-process

protection against arbitrary discipline. At the most general level then, the planning of human-

resource opportunities for workers is the consequence of product market decisions made by a

number of employers more or less independently in order to deal with uncertainty in the

product market and maximize return on their investment. Such decisions are not in the

control of one firm. Thus human-resource planning in a capitalistic market economy is a

contradiction.

The second problem with the myth of human-resource planning is more mundane; it just

doesn't amount to much in practice. Two years ago, we studied the human resource planning

efforts of three large private sector employers. Smokescreen. Financial considerations

dominated the long-range planning effort in each of the three firms. The human-resource

considerations in two of the three were strictly secondary, despite their reputations for

sophistication in this field. For example, in one company, if divisional human-resource

projection failed to conform to the financial projections of corporate managers, the planning

staff simply changed their numbers at corporate headquarters. The new numbers never sifted

back to the divisions, so it is difficult to imagine how much the final "human-resource plan"

affected operations. In the second firm, the financial plan preceded the human-resource plan

each year, so the financial estimates dominated subsequent human-resource projections. The

third firm, to its credit, gave substantial power to its human-resource staff, but again financial

considerations predominated.

2. JOB EVALUATION PLANS DETERMINE OBJECTIVELY HOW

MUCH THE HOLDER OF A GIVEN JOB SHOULD BE PAIDLike so many other human-resource management systems, job evaluation blossomed under

government pressure during World War II. Salaries had to be set without allowing workers to

earn as much money as their labour power could earn during a war-induced, full-employment

economy. Various systems for assigning value points to jobs based on job characteristics

factors such as responsibility, effort and skill emerged. Today they still determine in an

allegedly objective way how much a given job is worth. Of course, the pay of a specific

worker in such a plan depends on other facts such as his or her time on the job. The best-

known job evaluation system is the main product of a large- consulting firm of the same

name, Hay Associates. The scientific basis of this system is the more or less durable

psychological finding that workers only notice about a 15% change in salary. Smaller

differences are not much noticed. Therefore, all the complicated steps and grades in the Hay

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System are based on 15% increments. The fallacy in the Hay reasoning is apparent. Here is a

system designed to measure objective job content, but based on workers' subjective

perceptions. Therein lays the empirical refutation of the job-evaluation myth. At bottom, the

plans reflect, as accurately as possible, the shared norms in a given culture generation,

community or ethnic group about the relative importance or value of different jobs. No

competent job-evaluation practitioner would present to management proposed pay plan

without testing it and modifying against the opinions and feelings of the workers. Indeed, a

committee serves exactly that purpose in the Hay System. Eliot Jaques makes this subjective,

cultural basis of job evaluation explicit in his own system of job evaluation.

The next few years promise a dramatic defence of job evaluation as specialists attempt to

conceal the subjective nature of their craft from the Equal Employment Opportunity

Commission. The Commission is worried because the subjective norms of our culture have

always assigned higher value to male jobs than to female jobs. To cite a recent court case,

janitors in a hospital earned more on a job-evaluation plan than did nurses women. Because

of the "objective" nature of the salary plan, the Court upheld the pay differential. Therefore,

job evaluation simply reutilizes cultural, often discretionary, stereotypes of what given jobs

are worth. It is a conservative influence that as often contradicts as reflects the supply and

demand of labour for the different occupations as the example of nurses confirms; nationally

they are in short supply. It is pseudoscience at best.

3. LARGE EMPLOYERS RECRUIT WIDELY FOR THE BEST PEOPLE

AVAILABLEStaggering arrays of institutional mechanisms support this myth. Want ads advertise jobs in

the newspapers; state employment agencies maintain banks of job openings; indeed, welfare

recipients can lose their benefits if they fail to consult job banks. Of course, the facts of

recruiting contradict this myth. Anyone who has ever looked for or filled a job knows the

reality. Only the most difficult jobs to fill ever get such wide publicity—the lowest-paid,

most menial jobs and the highest-paid, most prestigious positions. Almost all jobs in business

are filled by informal means—word of mouth, personal contacts, and special school-

employer relationships built up over time. An interview with a Dupont plant manager in

yesterday's Wall Street Journal summed up the philosophy of U.S. employers: "We hire the

best employees we can find and their families ". If we assume the ail-American family of

four, then that's three informal references to one wide search.

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If we extrapolate Piore's distinction between primary and secondary labour markets into the

firm, we find an internal labour market. The market within the organization determines how

most jobs are filled by large employers. They are filled from among current employees

according to well-known, usually formalized rules. For example, machine operators are

promoted from expeditors; setup men for several machines are promoted from current

operators. However, internal labour markets only display such vertical movement by

promotion in the primary labour market. In the secondary labour market hotels, dry cleaners,

temporary office agencies, etc. there is little promotion or upward mobility. Jobs exist at one

level and are filled externally. Thus the reality of recruiting is a closed and highly structured

process, except for the least attractive jobs. So reality contradicts the recent rash of books and

training programs on how to quit and move to a better job. To their credit, some consultants

provide an accurate description of the recruiting process and counsel their participants to

keep away from want ads and the employment agencies. They suggest, more realistically, the

cultivation of informal contact with people where jobs may open up in the future. However,

the contradiction between their description of reality and their purpose is clear. The United

States is not an open market for labour. The best predictor of the job you will have next is the

job you have now.

4. PSYCHOLOGICAL TESTING ALLOWS THE SELECTION OF THE

BEST PERSON FOR THE JOBThe mainstay of industrial psychology—that is psychologists serving large work

organizations—is the development and administration of standardized tests of ability and

personality to select from many job applicants the successful candidate. Such testing

originated—again like many personnel practices—in support of the federal government's war

efforts, in this case selecting draftees for World War I.

The most sophisticated example of selection testing is the assessment centre for managerial

candidates pioneered in the private sector by AT&T, but modelled on the Office of Strategic

Services method for picking spies in World War II. The assessment centre is a battery of tests

—written and behavioural lasting several days and tailored in most cases to picking

candidates who closely resemble successful managers in the organization where it is applied.

By contrast, the most simple-minded form of testing relies on general psychological tests to

determine "suitability" for top management positions. For example, the Thematic

Apperception Test purports to reveal deep-seeded personality characteristics through the

interpretation of ambiguous pictures. At present, very few large employers rely heavily on

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such tests, for the most compelling of reasons. With rare exceptions, they don't work. The

Equal Employment Opportunity Commission nearly eliminated this human-resource

management system by requiring some evidence of its results. In the past, few employers

bothered to check whether their testing programs selected applicants who performed any

better on the job than applicants who failed the test. The dependable result of many tests was

the selection of fewer blacks, females and Spanish-speaking Americans. The reasons for such

discriminatory impact are multiple and poorly understood, but the result from the employer's

perspective was a relatively homogeneous workforce in the permanent jobs and the

assignment of minority groups to jobs with low pay and undesirable working conditions.

Although the reasons are poorly understood, they certainly include some elements of racism

and sexism in employer stereotypes of the economic value of different workers.

Psychological research had questioned the fundamental assumptions of employment testing

long before the government intervened. Walter Mischel, a Stanford Professor, reviewed all

the evidence available in the mid-60' s and concluded that personality tests rarely predicted

specific behaviour in any situation, even the most trivial.

Despite the preponderance of evidence many industrial psychologists to this day use such

personality tests to advise employers in the selection of top managers. There the risks of

exposure and lawsuits are small given the individual nature of the application. By contrast,

the threat of class-action suits based on the requirement for evidence of differences in job

performance laid down by the Supreme Court decision in Griggs vs. Duke Power has

terminated most widespread testing at lower levels. The assessment centre almost alone has

withstood the scrutiny of the courts. When AT&T had to modify almost all its job selection

practices in a consent decree resulting from charges of race and sex discrimination, the court

accepted AT&T's evidence for the validity of the assessment centre.

The reasons for the centres’ ability to predict success for managers are clear. The centre is an

accurate simulation of a wide range of behaviours—leading group discussions, processing

mail and telephone calls, interviewing—specifically modelled on managers currently

succeeding in the organization in question. As Mischel’s review suggested, such close

simulations predict behaviour most effectively. What remains to be challenged is whether the

behaviour of existing managers is somehow desirable or related to the economic success of

the firm. That topic will be discussed in the section on performance appraisal.

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5. NEVER HIRE ANYBODY WITHOUT AN INTERVIEW—FACE-TO-

FACE CONTACT IS THE BEST TEST OF CHARACTERA special word must be said about the employment interview as a form of test for a potential

job applicant. The word is "poppycock". There is no evidence that the typical manager or

personnel department clerk can learn anything about job applicants in an interview that will

predict their success on the job. Reviews of the massive evidence in support of this

proposition are prepared every few years. Nonetheless the practice persists. The reasons for

interviewing a potential subordinate are obvious, but have nothing to do with job

performance. An interview allows the boss to determine if he or she would enjoy working

with the applicant. Do they share common interests, hobbies, philosophies about the job? In

addition, much like a dog urinating to mark its territory, the interview makes clear, from the

onset, the power relationship between the boss and the subordinate. Such a personal power

relationship lasts as long as the people work in the same organization. In fairness to the

discipline of industrial psychology, it must be mentioned that interviews can be used to

predict job performance. However, the process requires the same detailed development of

specific, questions as do assessment centres and computer analysis of the results. As a

consequence, interviewers are rarely if ever used in this professional manner.

6. TRAINING PREPARES PEOPLE TO SUCCEED AT JOBSTraining, especially for managers and technical workers, is a multibillion dollar industry. The

exact total is difficult to estimate because few employers account for the total costs of

training. Rarely for example, do they include the salaries of participants in the cost of

training? However, repeated studies by labour economists show that people learn their skills

on the job and not in training. Even employees' estimates of the skills learned in school and

training certainly inflated to justify the time and money spent in the effort rarely approach

50%. Indeed, most explanations of the failure of the Great Society's training programs for the

disadvantaged rest on the marginal impact of training. The way to develop the skills of the

disadvantaged—according to both liberals and conservatives—is to get them real jobs where

they can develop their skills. Techniques to accomplish this end vary: some economists

favour incentives to private employers; other emphasizes affirmative action. But the

implication is the same. Training does not prepare people for jobs, jobs prepare people for

jobs.

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Another mundane fact supports this grand conceptual insight. Employers rarely try to assess

the economic payoff of training. At best, they ask the participants if they enjoyed the training.

I have never in practice found a training program's costs evaluated against its impact on

production costs or sales revenues. Such assessments occasionally appear in the academic

research, usually with the qualification that the research was not part of the employer's

decision-making process.

7. PERFORMANCE APPRAISAL IS NECESSARY TO REWARD

EFFECTIVE WORKERSPerformance appraisal, according to my colleague Ed Schein (1978), means employer

practices designed to 1) describe worker behaviour on the job, 2) compare the behaviour to

some standard of acceptability, and 3) evaluate the behaviour as meeting, failing, or

exceeding the standard. Most frequently it involves a yearly interview by a manager with his

or her subordinates to review the subordinates' behaviour (rarely the manager's), based on a

written form provided by the personnel department. The results of the appraisal are used, to

varying degrees, to determine the subordinates salary increases, chances for promotion,

career plans, and areas for performance improvement. Like most of the human-resource

systems described in this paper, performance appraisal supports an array of consultants who

advise managers on how to overcome their own fears and subordinate's resistance to this

process. Some counsel separation of salary judgements from performance feedback; others

develop specific questionnaires to describe subordinate performance; all tinker with the

system rather than questioning its assumptions. The fundamental assumption of performance

appraisal is false: there is no such thing as objective performance which can be described,

much less appraised. This is not a new assertion. Of all the unlikely places, Harvard Business

School supported a study in the 1950's which concluded that performance or what the authors

called "productivity" was a political concept. Performance is the judgement a manager

applies to a subordinate. It has no meaning apart from that power relationship. As attest of the

proposition, the reader should ask any manager to appraise his or her own performance. He or

she will immediately begin to waffle, citing the ambiguous nature of his or her responsibility

and the difficulty in connecting specific results with their actions. Recurring surveys of

workers—managers and non-managers alike—reveal that 75% feel their performance is

above average. It is extremely difficult for two managers to agree on the relative performance

ratings of the same individual. My own attempt to measure the extent of agreement took

place in a small 135 people high-techno logy job shop where everybody knew everybody

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else. I asked two managers who felt comfortable with their knowledge of each particular

workers' job activities to rate the worker's performance. The correlation was .16 indicating

that knowing one manager's rating would improve on a random guess of the other manager's

rating by 2%. Such results are common, even in highly-structured research projects. The

ways organizations cope with this conflict between the assumptions of performance appraisal

and reality are two-fold. First, they have groups of managers meet to reach a "consensus"

about an individual worker's performance. As anyone who has participated in such meetings

can testify, they quickly degenerate into explicitly political horse-trading over those

judgements that really matter—promotions, extra salary increases, layoffs. (Most assessments

are non-controversial as will be discussed in the section on merit salary increases). The

critical factor is not how the person performs but how influential his or her sponsor is relative

to other managers. The other tactic used by organizations to show up performance appraisal

is to gather multiple measures of the results of an employee's efforts during the year.

Professors' publications are counted as are engineers' patents, and a managers' unit may

generate a hundred separate descriptions—profit, total cost, cost per transaction, accidents,

etc. Industrial psychologists have for mailed this distinction between behaviour what the

manager, for example, actually does, such as who he or she talks to, how long they talk, what

is said performance the organization's assessment of the behaviour) and effectiveness (the

actual impact of behaviour on results the organization values, such as profit, sales revenue

etc. The authors concluded that a large number of factors outside the manager's control

influence effectiveness, other than his or her behaviour. Examples might include economic

conditions, supplies, and strikes. The list varies by job, but is endless. Therefore, using

measures of effectiveness without considering outside factors is a meaningless assessment of

individual behaviour. In practice, multiple measures of performance are used in the same

political assessment described above. Managers emphasize the specific effectiveness

measures that support their subjective assessment of the subordinate under review. An

interesting example of the results of such juggling of effectiveness measures can be found

each year when Business Week compares the raises granted to chief executives of private

companies with the change in profits for their firms. Invariably there is little or no

connection. The respective boards of directors must be able to find some measures of

effectiveness in their performance appraisal reviews to justify the bonuses. What is the effect

of performance appraisals in action? Sennett and Cobb, 1972, two radical sociologists, have

summarized the impact of systems designed to reward individual performance on those who

are evaluated negatively. Since the system is described as meritocratic, failure is accepted by

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the worker as his or her own personal fault. There is no resentment of the evaluation system,

as might be expected for an explicitly arbitrary system such as inheritance of positions or

promotion based on the college attended. As a consequence, Sennett and Cobb find deep

seated frustration, self-hate and resentment of one's own family in blue collar workers

underlying the superficial expressions of job satisfaction found in most attitude surveys.

(Usually about 70% of any group of workers will say they are satisfied with their job or

would take the same job if they had it all to do over again) But what about the winners in this

political lottery? Since the system is meritocratic, there must be something about them and

what they do on the job that sets them apart from those people who do not get promoted (or,

get large salary increases or get special training). Indeed, one might argue that peace of mind

for a successful manager depends on his/her retrospectively to impute personal causality to

essentially random events or political connections. Rather than encouraging identification

with other workers or raising questions about the legitimacy of the current organizational

distribution of power and resources, performance appraisal systems insure that upwardly-

mobile managers believe profoundly in both the fairness of the system and their own right to

control it.

8. MERIT SALARY PLANS REWARD TOP PERFORMERSMerit salary refers to the practice of giving workers (usually managers and other

nonunionized people) different sized pay raises (usually each year) to reward them for

performance. The alternative is a straight across-the board increase for all workers (usually as

a percentage of base pay, but sometimes a fixed dollar amount). The latter case may result

from union contracts geared to prevent high-paid workers from increasing their advantage

over the low-paid workers). Given the preceding discussion about performance as a political

concept, it's clear that there's less to merit salary than meets the eye. In fact, Fred Foulkes,

while he was at Harvard Business School, surveyed large non-union companies (many of

whom advocate merit salary) and his findings support a cynical conclusion. In almost all

cases, merit salary plans include an implicit cost-of-living increase for all workers. In

addition, the difference between the highest and lowest salary increase is usually trivial. Plus

or minus 2% is a typical spread. If 2% of 15,000 is $300 and a reasonable estimate of federal

and state taxes is 20% at that level, then the annual after tax difference between high and low

performances is $240. On a monthly basis, merit salary means $20, ($5) a week would

separate the best and the worst performer: that's two dollars and change between the best and

the average. In fact, almost all workers get the average. Such small differences in merit raises

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increases testify to the lack of confidence managers have in their own ability to distinguish

objective performance differences among their subordinates. Another testimonial is the

passionate, often paranoid refusals of most large employers to allow workers to know what

salary increases are given. Ed Lawler of the University of Southern California, the best

known psychological expert on the administration of salary plans, argues strongly for

organizations to make their salary decisions public. How else an organization can motivate

performance with salary, he asks, unless it pays major differences in the size of salary

increases between high and low performers and makes these decisions public. How else

indeed? The failure of companies especially non-union companies who are free to act without

the constraint of a union to make such distinctions, or even to let workers know their

respective salaries r supports the argument made in the last section. Performance differences

are political and therefore controversial. By keeping so-called "merit" salary increases secret,

managers avoid controversy. They also preserve the conservative impact on organizational

stability that was described above for performance appraisal. To wit, a worker who gets a

raise feels he or she earned it as an individual. Pay secrecy keeps him or her from realizing

that most other people are getting the same (or nearly the same) increase; and he or she exults

in their exceptional—and individual—merit.

9. PROMOTIONS ARE FROM WITHINMost large employers pride themselves on promoting people from within the ranks of current

workers. The advantages of this practice and image in terms of worker commitment and

loyalty to the organization are obvious. What is less obvious are the major restrictions placed

on promotion in all large employers? In a recent survey we conducted of management

development practices in large private sector employees in the U.S., I was most impressed by

the absence of promotion from within. What those words had always conjured up was the

image of the bank teller rising from the ranks to become president. While there exist a few,

very highly publicized examples of such movement from the bottom of the organization to

the top, the regular practices of hiring, assignment and promotion in large organizations

prevent such mobility. Typically organizations promote managers from two sources,

depending on the job to be filled. First -level managers—usually called foremen (even when

they're women) or supervisors—are promoted from among the highest skilled, highest paid

workers to be supervised. Such blue collar workers are almost never promoted more than one

or two levels into the managerial hierarchy. Moreover, given traditional job structures, the

holders of most jobs will never be promoted to the high skill, high pay jobs from which

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supervisors are promoted. Again Piore and his colleague Peter Doeringer have provided the

best description of the rules for job assignment which limit promotion opportunities for most

blue-collar workers. Figure I describe such an internal labour market. People assigned to

different job hierarchies, either at or shortly after hiring, and those hierarchies largely

determine who will acquire skills and, in the present context, become eligible for promotion

to first level management. However, a second, and in some ways even more pernicious

practice, limits promotion from within. Graduates of college, especially professional schools

such as engineering and business, are hired by large employers not as managers, but into

special positions just below management levels. Formerly called trainees, they now have

newer titles to satisfy the aspirations of new graduates for immediate job responsibility—

budget analyst, assistant store manager, or financial assistant. These newly-hired college

graduates, after a year or two of exposure to organizational routines, are usually promoted

promptly to management. Promotion from within therefore means the new manager was

promoted from a non-management job, even if he or she held the job for a very short time. In

terms of the total number of first- level managers. However, higher level managers are drawn

from the college graduates whose nearly entire career in the firm has been as a manager. This

two-track system for managers affects the former blue-collar worker and the college graduate

differently. The blue-collar worker is literally trapped in the middle between non-managers

and top managers. Sometime ago, I joined the long research tradition exploring the

psychological conflicts experienced by first-level supervisors as they sit on the boundary of

management. What never occurred to me then was the upward limit on their mobility. They

are probably not conflicted just because they are new managers; they are probably conflicted

because they know they can never become real managers. The personnel literature frequently

carries articles citing the difficulty in recruiting first-level supervisors from non-management

jobs. The solution to the personnel problem is not the training programs so frequently

advocated, but a structural change that would allow blue-collar workers to continue true

management careers. The promotion-from-within mythology simply encourages the former

blue-collar worker to see him/herself as better than other workers over whom he or she was

chosen, but, at the same time, to blame him or herself for not being chosen for higher

responsibility. Their attention is thus diverted from the structure which limits their

opportunity. Interestingly enough, at one time first-level supervisors formed, as consequence

of these working conditions, strong unions in the US. Especially in Ford Motor Company

(counterparts exist today in most industrialized nations). However, the Taft-Hartley

amendments in 1947 to the National Labour Relations Act exempted supervisors from

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protection against discrimination based on union activity. Today a first-level supervisor who

complained about the existing structure and gathered a group of his peers together to discuss

the problem could be fired as a union agitator and have no legal recourse, regardless of his

years of service. The college graduate is affected by the two-track structure in a complicated

way. Of course he or she believes that promotion above his or her peers at the first or second

level is based on personal merit, even though the odds dramatically favour their

advancement. Their competition, the former blue-collar worker who represent the large

majority of their peers is excluded from consideration. In addition, the college graduate

develops a false sense of identification with the workforce. In fact, he or she has never

experienced life as a true rank-and-file worker in the organization. Nevertheless, the brief

period of specialized non-management work combines with the myth of promotion from

within to convince top management that they truly understand the blue-collar workers. In

many cases, they find the blue-collar complaints groundless in terms of their own experience

on the college-graduate track. Of course, the only defence of this two-track system is that

college graduates, either because of their training or previous selection based on natural

ability, have the skills to be top managers. Unfortunately no empirical research supports the

superiority of college graduates as managers.

10. CAREER DEVELOPMENT LETS INDIVIDUALS PLAN THEIR

FUTURES IN ORGANIZATIONSCareer development means providing individual workers with information about their own

skills and interests (based on tests and counselling), knowledge about future job opportunities

in the organization, and the chance to influence their own assignment to jobs and training

programs. Again, a new army of consultants and popular authors are showing organizations

and workers how to implement a career-development program. The facts about career

development are clear from previous sections and will not be repeated here. In large

organizations, rigid structures determine who gets what jobs. These structures are rarely

explicitly written and reside as much in the shared assumptions and values of top managers,

shaped by their unusual personal experiences and progress through the organization. The

commitment of any employer to career development can be easily gauged. Worker influence

over job opportunities means open posting of job and training opportunities at all levels, open

bidding for all openings, and open feedback to applicants of the reason for selecting one

applicant over the other. I have reserved a special section for this human-resource system

only to highlight the psychological impact of this myth. Again the individual is portrayed as

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responsible for his or her organizational destiny. In the words which I have often used in

management training programs, "If it is to be, it is up to me". Such personal responsibility

discourages collective resistance to organization practices and to attempts to change them.

Failure is a personal problem. By contrast, holding top management prerogatives is a

personal accomplishment.

11. MANAGEMENT TRAINING AND DEVELOPMENT PREPARES

THE LEADERSHIP OF LARGE ORGANIZATIONSLarge employers invest substantial resources in the development of individual managers. The

tuition on the Sloan Fellows Program at MIT exceeds $10,000 for one year during which the

manager/student continues to receive full salary, living expenses, and support for education,

travel and other expenses (such as entertaining fellow students). During this year, the

managers learn about economics, psychology, mathematics, finance, labour relations,

marketing, and other disciplines presumably related to their jobs. Similarly, many less

expensive programs are offered by an increasing number of colleges; many companies and

government agencies are offering their own in-house programs for supervisors, managers and

executives. Although I may be accused of biting the hand that feeds me, there is no more

evidence that managers become more effective as the result of such training than there is for

any other training program. Indeed, there is a lingering suspicion on the part of many

instructors and participants that there is less tangible impact since the work that managers do

is very poorly understood. Management development is cited separately as a myth since it

directly contradicts the vast body of research accumulated over forty years in organizational

psychology on the nature of leadership. Originally, psychologists attempted to identify what

types of people made effective leaders. That effort failed since effective leaders come from

all backgrounds; educational training, ethnic groups, sexes, ages, and personality

characteristics. Next, researchers tried to discover what effective leaders did. Again, there

was no simple answer—some helped provide direction on a task, while others focused more

on the social needs of the groups. The current consensus among most industrial and

organizational psychologists is that effective leadership is a characteristic of a work group,

not of the individual manager. In effective groups, different members do what is required in a

given situation. Some will contribute information about the task? Others, or sometimes the

same people, will deal with social problems, like the need to relieve tension or provide

sympathy. It is therefore logically useless to take one member of the group away to improve

the leadership of the whole group or department or plant or company. He or she will come

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back to a larger unit whose capabilities have not changed and who will exert pressure on

managers to revert to customary ways of behaving. The rationale behind organization:

development of which more later is precisely on this point. It is necessary to develop the

leadership capabilities of social units for effectiveness. Despite this logical absurdity, legions

of psychologists who are taught to know better, continue to run leadership training courses

for individual managers. The question remains, what is the purpose of such training? Some

cynics have claimed they are vacations, time off for good behaviour. I offer a cynical, but

slightly different interpretation as follows. Management development as a movement

supports the dominant mythology in human-resource management. It encourages managers to

view the leadership of organizations as an individual effort rather than the collective

endeavour research has shown it to be. In addition, selection for a development program

signals to a manager that there is something about him or her in particular that stands apart

from the mass. Again, the top management of large organizations are persuaded that they

have earned the right to control other peoples' lives. In reality, as anyone remotely associated

with the administration of training courses knows only too well, selection of participants is

often haphazard and always political. Of course, given the political nature of assessing

managerial performance, how could it be otherwise?

12. ORGANIZATIONAL DEVELOPMENT APPLIES BEHAVIOURAL

SCIENCE TO IMPROVE THE FUNCTIONING OF THE ENTIRE

HUMAN ORGANIZATIONOrganizational development has been defined as a planned effort to improve the functioning

of an entire organization directed from the top of the organization. Usually O.D. involves a

third party from outside the target organization whether professor or private professional and

a range of techniques based on the behavioural sciences (interviewing, attitude surveys,

participant observation, organizational structure, etc. Most large organizations employ some

behavioural scientists on their staff to provide advice on either the practice or the techniques

of organizational development organizational diagnosis, team building, job redesign, etc. The

reality of organizational development is less benign. There is a strong anti-union thrust to

many organizational development efforts. M. Scott Myers and Charles Hughes are the

consultants most frequently associated with the use of organizational development to keep

unions out. But the problem is more widespread. Some of my best friends from graduate

school make or supplement their incomes by keeping unions out of entire companies or

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specific operations in largely unionized firms. Indeed, the AFL-CIO has begun to publish a

regular Report on Union-Busting _ consultants to warn their membership. The very first issue

of the report which I picked up listed the author of one of the best-known organizational texts

as an active union buster. I wrote him with the news, but so far he hasn't spoken to me about

it. This anti-union animus is probably more of a symptom than a cause. The more general

proposition is that O.D. supports not the entire organization, but top managements' goals,

definitions of problems, and range of acceptable actions. Some O.D. consultants claim the

organization is their client, but that usually boils down in operation to top management (or

the highest-ranking manager who will support the program). Therefore, O.D. is an intensely

conservative political force. Rarely is the question asked whether the top management client

should resign or whether the rank and file's desire for more pay is a valid organizational

intervention. Such changes are, as my O.D. friends tell me, "off limits". Recently O.D. has

entered into the quality-of-work-life area. This expands its product market by segmentation to

counter its anti-union image. Quality of work life consultants are O.D. experts who work for

a joint union –management committee to identify and resolve common problems confronting

workers and managers jointly. My personal experience colours my judgement on QWL

projects. I studied one intensively and it failed, (Driscoll, 1980). More importantly the QWL

consultants redefined their mission as O.D. (or, as a cynic might phrase it, took off their

sheep’s' clothing) and began working on a variety of management problems—team building

for the highest manager who supported the QWL project and management development with

one of her subordinates. The United Auto Workers report a much more positive experience

with QWL, at General Motors, but an objective assessment of that massive effort has yet to

be undertaken. O.D. in general has flourished to help managers and professionals work with

one another or to help managers work with non-managers in the absence of a union. Not

surprisingly it has been soundly criticized for its failure to address issues of power

distribution and inequality in organizations. Its focus is the organizational task/mission as

defined by managers. The recurrent struggles over the distribution of power and resources

that characterize all organizations in industrial societies have somehow escaped the attention

of these behavioural scientists. For example, I know of no O.D. consultant who has called for

a labour union or even outside arbitration as a means of dealing with individual complaints.

To a cynic, simply knowing that an O.D. consultants' pay check and future billings are

provided by managers is sufficient to predict the cosmetic reforms they are likely to

recommend. Thus while O.D. at least reflects the need to deal with human resources on an

organization-wide basis, politically it cannot deal with the major problems faced by workers.

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13. ORGANIZATIONAL PSYCHOLOGY DESCRIBES LIFE IN

ORGANIZATIONSBeginning in the late 1940's, a major focus for social scientists was life in the large work

organizations that emerged in manufacturing at the end of the 19th century and spread into

the government and service sectors as they matured in the 20th century. While there had

already been pioneering work by Roethlesberger and his colleagues at Harvard Business

School and by Kurt Lewin at MIT, major research programs blossomed at Michigan, Cornell,

Yale, Ohio State and elsewhere. Topics of investigation included leadership, motivation, job

satisfaction, absenteeism and job performance. Swarms of newly-minted PhD's carried out

the research at a geometrically-increasing number of institutions. However, as we reflect now

on these thirty years of research and ask ourselves what we know about life in organizations,

the answer is "Not much!" If an organizational psychologist claims to know how to increase

productivity or decrease absenteeism, he or she is viewed by colleagues as a huckster

exaggerating their capability. We can't select, much less train effective leaders; we can't

define productivity apart from a political context, much less increase it; and we can't

modernize American management, because we don't know what managers do (much less

what they should do in more productive and equitable work organizations). What is the

reason for this sad state of affairs? Two explanations cry out for mention: first, the trivial

subjects treated by organizational research and second, the superficial methods of

investigation. The most popular subjects of research on organizations continue to be job

satisfaction, leadership behaviour, motivation, commitment and loyalty. What these subjects

have in common is their interest to managers in their political role as holders and maintainers

of power in current organizational structure; rarely do we find subjects of pressing societal

concern such as productivity, industrial Health, causes of unemployment or inflation. Second,

the method most commonly applied to organizations is a questionnaire survey of workers in

a, single operation. Rarely do we find studies with a long term perspective, focused on

observable behaviours of workers, or examining their detailed beliefs, or aggregating the

impact of simultaneous changes in many organizations.

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CRITICISMS

1. NEED TO STEP UP, ADD MEASURABLE VALUE, AND BE

MORE ‘STRATEGIC’Many HR people invest more in activities than outcomes. A high quality senior HR

person is as critical as the CFO but HR need to get out of the picnic and insurance

forms business. Sometimes HR brings a problem without bringing an answer to how

we should handle it, or some options on different approaches. HR needs to be more

proactive, not just reactive.

2. LACKING FINANCIAL/BUSINESS ACUMENHR will not add enough value if they have not experienced the real world. That’s a

criticism of the role – HR doesn’t understand the business and they don’t have that

commercial nous, which in many cases is probably true.

3. THE PAPERWORK & POLICY POLICENo consideration is done supporting a termination unless there have been 3 verbal

warnings, 4 written memos and a suspension on file regardless of the individual

situation. — HR Manager Design and enforce too many rules.

4. MINDLESS HIT-MEN HR is unpopular, but one reason they are the unpopular is that HR is the pet. It isn't

just that HR does the bidding, but HR does it as if they are robots. They are like hit-

men — they do as they are told without thinking much.

5. LACKING PR/COMMUNICATION/INFLUENCING SKILLS63.5% of HR respondents believe that employees in the business do not understand or

are unsure about what the human resources department does or what it should be

doing. Of non-HR respondents to the survey, which number stands at 80.4%" —

AHRI, HR pulse Research Report 2007. HR needs to be better at selling itself,

communicating what it does, and influencing others in the organisation.

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6. LACKING RECRUITMENT EXPERTISE

In one worst case scenario, the HR staff hired a single mum, placed her in the city

office, and never told her that she would be expected to travel about 25% or more of

her time. This was a disaster for a single mother with no support structure in a new

city. Many HR people don't have proper recruitment training on how to create a job

description, write advertisements, source candidates, or conduct interviews. HR is

often judging employees on jobs they have no actual experience in.

7. LACKING LEGAL EXPERTISEMany current HR teams seem to be less knowledgeable about workplace law than in

the past. This Court unfortunately sees too many instances similar to the matters in

this case that are inappropriately and incompetently approached by persons who

parade under the banner of Human Resources specialists.

8. LACKING PERFORMANCE MANAGEMENT EXPERTISEThe annual review needs to be killed and really think about how to give people

timely, appropriate, relevant feedback that’s not coming from a HR-driven process,

but from a business-driven process. Often the process is managed by lower-level HR

administrators without a complete understanding of performance and productivity.

9. HR JARGONHR is full of bloody jargon. "If you are unfamiliar with HR’s well-earned reputation

for the overuse of creative language and jargon, a simple Google search can quickly

reveal that those outside the profession often refer to it as “HR gobbledygook,” and

“HR speak.” "- Dr. John Sullivan. Examples: Downsizing, Rightsizing, Redundancy,

Retrenchment, Outsourcing, Remuneration, Executive Search, Competency

Framework, Employee Value Proposition, Intellectual Capital, Performance

Appraisal, Key Performance Indicators, Human Capital Management, Employee

Engagement, Change Management, Strategic HRM, Training Needs Analysis, Talent

Pipeline, Alignment, Centralisation, Value-Add, Leverage, Paradigm.

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GLIMPSEWe are going to explain through various case studies that HRM is not a Myth.

Following company’s case studies are discussed as under:

1. Honda and Maruti – Conflict and Resolution.

2. IKEA- Unique HR policies.

3. Philips- Reconstructing Policies

4. Google and Wal-Mart- Flipside

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CASE STUDIES

1. CONFLICT AND RESOLUTION IN HONDA CASE

COMPANY PROFILE:

Company: Honda

Headquarters: Minato, Tokyo, Tokyo, Japan

CEO: Takanobu Ito

Founded: September 24, 1948, Hamamatsu, Shizuoka Prefecture, Japan

Founders: Takeo Fujisawa, Soichiro Honda

INTRODUCTION:

The case discusses the various reasons which led to the dispute between the management and

employees of Honda Motor Cycle India (HMSI). It elaborates the incidents, which led to the

strike at the company that resulted in HMSI workers being severely beaten up by the police.

Labour strife and the management's inability to deal with it effectively had resulted in huge

losses for the company due to the fall in the production level at the plant. The case highlights

the growing number of instances of clashes between the employees and the management of

companies in India, which is often guided by external parties such as trade unions and

political parties.

ISSUES CONSIDERED:

Understand the factors that lead to labour unrest at a factory and the impact of such

incidents on the employees and the company.

Study HR policies adopted by organizations to prevent labour unrest at the workplace.

Examine top management's role in maintaining a peaceful working environment.

Analyze the role of external parties such as trade unions; political parties etc., in

disturbing the working environment in a company.

On July 25, 2005, the management of the Honda Motorcycle & Scooter India Limited, a

wholly-owned subsidiary of Honda Motor Company Limited, encountered violent protests

from workers that disrupted production at their plant in Gurgaon.

The protest followed six months of simmering labour unrest at the HMSI factory in which the

workers also resorted to job slowdown since December 2004 when the workers' demand for

an increase in wages was rejected by the HMSI management. With their demands being

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rejected by the management, the workers tried to form a trade union and this resulted in a

confrontation with the management. Fifty workers of the production team were suspended

and four others dismissed in May 2005.

On July 25, 2005, the workers of the plant were demanding reinstatement of the suspended

employees when some workers allegedly attacked policemen on the plant premises. This led

to police intervention and a violent tussle ensued between the police and the workers in

which workers protesting peacefully were also beaten up. The police were reported to have

overreacted and it was alleged that they had been overzealous in protecting the interests of

the HMSI management, even without any direct request from the company's management.

For companies, the incident brought to the fore the need to maintain sound industrial relations

to ensure productive and profitable operations.

THE BLAME GAME:

The management and the workers traded allegations and counter allegations on what the root

cause of the dispute was. They blamed each other for the situation that ultimately took an

ugly turn on July 25, 2005. The management held the workers responsible for indiscipline

and for slowing down production, while the workers insisted that there had been no

indiscipline on their part and that the management was bringing up this issue only to prevent

the formation of a trade union at HMSI.

There is lot to be rethought about the working style of the Honda Management, the Gurgaon

Government & Police.

HERO HONDA MANAGEMENT:

Some of the issues the Hero Honda management didn't take into consideration before the

Lock-out.

Didn't adhere to the Labour Laws: As per Indian labour laws, the lock-out is not

allowed until cleared by the government. This was an illegal lockout. The

management should always adhere to the law of the land, which somehow, Honda

management failed to do.

Weren’t diplomatic enough: The main issue revolved around the suspension /

dismissal of some mischievous employees. Before dismissal, the management should

have done the analysis of the possible outcomes and should have dealt with it in more

diplomatic way. Maybe a counselling session, transfer, VRS or some other action

would have been a better solution, as these were labour union leaders.

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Failure of Public Relations Department: The Hero Honda Management has not

handled the PR well. Almost all the press and televisions were projecting the Honda

Management as culprit. With the Budget, Hero Honda has for PR, they should have

clarified their stand in front of all the national televisions and Newspapers before the

actual dismissal of the first 8 employees took place. It has been Failure of PR

department of Hero Honda as well. This are some of the points, which if taken into

consideration before the dismissal of the said 8 employees, the event would not have

taken place in first place.

THE GOVERNMENT AND POLICE FAILED ON FOLLOWING FRONTS:

Failed to administer the Law: The Hero Honda company didn't adhere to the Labour

laws and had illegal lock-out. The Chief Minister / Industry Minister / Labour

Minister should have immediately intervened and should have resolved the matter as

it is one of the biggest firms of the state and the country. Further as this lock-out being

illegal, the management should have been dragged to the court by the government,

even before the employees took to the street.

Failure to Handle the Employees Agitation: The violence which erupted during the

agitation can be attributed to the failure of the government / police to handle the rally

situation. They were quite aware of the dimensions the rally could take, still instead of

water guns and tear gas to disperse the crowd, they used lathis. The major problem

with lathis is that, it may and did actually injure people. The purpose was to disperse

the crowd and not cause injury to them.

No Proper training to the Police Force: Only the IPS officers get proper training to

handle difficult situations and are trained to understand the psychology of crowd. But

it is the ground units which actually require it. The police constables should have

understood that the agitating employees are agitating against their employers and are

as much a citizen as anybody else in India. They are not terrorist or criminals. If the

ground police personnel would have understood this and would have taken this into

consideration while dispersing the crowd, lot of unnecessary injury to the Hero Honda

Employees could have been avoided.

COULD THIS UGLY SITUATION HAVE BEEN AVERTED?

Several factors can lead to a conflict between the workers and the management of any

company, and as such, companies should be prepared to trace the root cause of the problem

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and solve it. Industry experts opined that with proper understanding of the industrial laws and

causes of disputes, the management and the workers of any company could avoid incidents

such as the one at HMSI.

2. CONFLICT AND RESOLUTION IN MARUTI CASE

COMPANY PROFILE:

Company: Maruti

Headquarter: New Delhi, India

CEO: Kenichi Ayukawa

Founded: 1981

Founder: Sanjay Gandhi

INTRODUCTION:

On 18th July, auto factory workers in Maruti’s Manesar plant attacked supervisors and started

a fire that killed a company official and injured 100 managers, including two Japanese

expatriates.

The attack was allegedly influenced by:

A caste slur by a supervisor against a worker.

Failed negotiations about employee regularization.

The company has faced several incidents of employee protest, but never of such scale and

violence. The incident is the worst ever for Suzuki since the company began operations in

India in 1983.

THE REAL ISSUE:

Independent union for Manesar.

Suspended colleagues are taken back.

Sign and accept good conduct bond.

Both sides refuse to budge- Who will blink first?

WORKERS DEMANDS:

A five-fold increase in basic salary.

A monthly conveyance allowance of 10,000.

A laundry allowance of 3000.

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A gift with every new car launch, and a house for every worker who wants one or

cheaper home loans for those who want to build their own houses.

In addition to this compensation and normal weekend/holidays, the union demanded

the current four paid weeks of vacation be increased to 7 weeks.

REASONS FOR UNREST:

The plant workers wanted to register a new union- The Maruti Suzuki Employees

Union (MSEU) – and had already applied for registration, something the management

was opposed to.

More than 90 percent of these are contract workers who work for 10-12 hours for

4000-5000 per month. The workload and speed is extremely high and they have to

face verbal abuse and even beating by the supervisors and security guards.

Although the strike at Maruti has been called off and the matter resolved for the time being,

there are hushed discussions across companies on the way managements handle workers and

trade union issues. BMS spokesperson Amar Nath Dogra said, “A strike is not the first but

the last option for workers. If it happened, it was because there were issues with the way the

management dealt with workers’ demands. There is a mechanism where workers and

management recognise unions and decisions are taken with mutual discussion. We are

concerned about the way the company handled the situation.”

Experts stress that the trend of hiring workers on contract rather than taking them in as

permanent employees gives company managements the right to hire and fire on issues of

performance or in times of recession, something not easy in case of permanent employees

under Indian laws.

The demand for a new union at Maruti’s Manesar unit may be a signal of discontent amongst

workers regarding management practices and their own rights and the lack of a redressal

mechanism. A new era in the trade union movement will happen only if unions can operate in

full freedom.”

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New union will bring a third party-Political party

No clear demand

Lack of descipline

Accept and sign the "Good Conduct bond"

LABOUR’S SIDE:

THEORIES CONNECTED TO THE ISSUES:

AREAS SPECIFIC TOPICSLabour Laws Industrial Disputes Act (strikes, lock-outs,

conciliation etc.)Trade union actFactories act (working conditions)

Managing Employee Relations Principles of natural justiceGlobalisation and industrial relations

Human Resource Management Collective bargaining and grievance management.

Human Resource Planning Employment decision like hiring etc.

MANAGEMENT SIDE:

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Rs 1500 is deducted for every day on casual leave

long working hours

What part did we get of the profit that company earned by exceeding the targets?

Contract labourers-less pay (no speacial benefits) and permanent labourers-high pay (with special benefits)

A separate union for Manesar

WHAT WENT WRONG?

MARUTI’S SOLUTION:

HR PROBLEMS:

Human Resource Managers claim themselves to be professionals and they have professional

associations like National HRD Network to promote professionalism among them. The work

at the Manesar factory of Maruti Suzuki Limited was stopped from 18th July 2012 to 21st

August 2012 due to the failure of human resource management function, which has resulted

in the death of a general manager and injuries to around eighty managers by the vengeance of

frustrated workers. While everyone has condemned the attack and expressed condolences to

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Workers are not commodities

Trust and confidence between the 'white and blue

collars'

Strikes is ethical whereas deliberately

creating faults in products is not.

Politics has no place in unions

No unnecessary comments in the

mediaLure of contract

labour

Maruti showed insouciance towards workers

The stir ended after over 1000 protesting workers agreed to sign the 'good conduct bond'

Company agreed to take back 44 regular employees after they serve a suspension period.

Within a week he company started recruiting temporary manpower from ITIs

The company said that the workers would not be paid for last 30days

the demised manager’s family, no one from the HR profession has tried to find out whether

and if at all there was anything wrong with the HR department of MSL.

The Maruti Suzuki Workers’ Union leaders have peacefully negotiated throughout the day for

the revocation of suspension but management has taken a rigid stand not to negotiate in the

matter. When the situation was going out of control the management has orally informed the

union leaders that suspension order will be kept in abeyance. Workers wanted this oral

information in writing and management refused to give it in writing which has finally led to

the violence. If management was sincere in its words, it was prudent to give it in writing to

avoid the violence.

3. UNIQUE HR POLICIES FOLLOWED BY IKEA

COMPANY PROFILE:

Company: IKEA

Headquarters: Delft, Netherlands

Founder: Ingvar Kamprad

Founded: 1943, Älmhult Municipality, Sweden

CEO: Peter Agnefjäll

INTRODUCTION:

IKEA is a Sweden based retail chain which deals in furniture and house decor items. It has

been ranked 20th in 'The World’s Most Attractive Employers 2011' in the Universum

Awards, an employer branding event. It also got mentioned in Training magazine’s annual

“Top 100” ranking of companies that excel at human capital development (four consecutive

years) and in FORTUNE’s “100 Best Companies to Work For” list (three consecutive years).

IKEA has branches in around 41 countries.

FEW IMPORTANT INSIGHTS THAT CAN BE DRAWN FROM THE JOB

DESCRIPTION PATTERNS FOLLOWED AT IKEA ARE: 

By emphasizing co-worker, it is emphasizing equality in terms of how one should

treat fellow employees.

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About the job, “at the lowest cost” emphasizes the core DNA of the organization i.e.

creating value by incrementally reducing cost points.

“Quick decision making” and “Solving problem while on the go” creates a vivid

picture of dynamic work environment at IKEA.

By highlighting “improving the productivity”, Task portion reemphasizes that cost-

consciousness is highly valued at IKEA.

POLICIES FOLLOWED BY IKEA FOR INCREASING EMPLOYEE’S

DEVELOPMENT:

Training:

- Co-workers who have mastered their current job are encouraged to seek new

challenges.

- Job enlargement/enrichment, changing the Job scope/location.

- Annual development talks to discuss and outline career paths.

- On-the-job training complemented by traditional classroom courses.

- A wide range of web-based training activities for all aspects of IKEA operations.

Selection:

- Emphasis on value-fit as its selection criteria.

- IKEA provides a co-worker as a mentor for new co-worker for some time.

Compensation:

- IKEA has developed global, mandatory guidelines for compensation and benefits.

- Each country must offer the same benefit structure for all co-workers in the country.

- Benefits are to be based on core IKEA values as well as local laws and market

conditions.

HRM POLICIES ENHANCING MOTIVATION:

Internal Promotion:

- One year development adventure programme that any co-worker with potential can

apply for in the beginning of their career.

- The participants travel to two different countries for six months each to work in

different fields to what they are used to.

- These Co-workers are absorbed to take leadership responsibility, forming the pool of

highly skilled IKEA managers of the future.

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Incentive System:

- Line management takes a direct role in the design and determination of reward policy

in IKEA.

- Emphasis on designing reward systems that best fits the local context.

Encouraging Diversity in the workplace:

- About 40% of the Co-Workers are women with a great mix of nationalities.

- IKEA’s purchasing and retail operations in 41 different countries are led by country

managers of 14 different nationalities.

EMPOWERMENT ENHANCING HRM PRACTICES:

Grievance Procedure:

- “VOICE”- IKEA uses a company-wide survey called “VOICE” to monitor how co-

workers view various aspects of their employment at IKEA.

- The “IKEA leadership Index” quantifies how co-workers view their managers.

Flexi Time:

- One of the best work practices espoused at IKEA is flexible timing as per co-workers

need.

Keeping Co-workers Informed:

- IKEA Intranet is complemented by a variety of different channels such as regular

meetings, easily accessible notice boards, newsletters and closed-circuit radio.

- The global co-worker Magazine Readme which is distributed to all co-workers is

translated into 19 languages.

- IKEA has web-enabled services on the Internet to better reach co-workers with

limited computer access at work and better access outside work.

Supporting Work-Life Balance:

- Co-workers of different ages are at different stages of their lives and are delegated

different activities as per their convenience.

IWAY STANDARD:

It is a code of conduct that defines the guiding principles that governs the organisation.

- Prevention of corruption: Company has established the IKEA Corruption

Prevention Policy and The IKEA Rules on Prevention of Corruption for its co-

workers and external business partners.

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- Dialogue with Unions: IKEA supports each co-worker’s right to freedom of

association and does not express any preference within the institutional and

recognized co-worker associations. IKEA respect the rights of its co-workers to join,

form or not to join a co-worker association.

- Workers’ accident insurances: An accident insurance covering medical treatment

for work related accidents is available to all workers.

- Safe and Healthy Work Environment: All co-workers within retail and distribution

undergo safety training before starting to work at IKEA.

CONCLUSION:

IKEA’s innovative human resource management practices have helped build a strong and

nurturing culture that promotes diversity and creativity. In an industry characterized by high

turnover, their employee friendly policy has made IKEA a preferred employer in the retail

sector. Working in line with strategy, its HRM practices has helped in sustaining IKEA’s

growth. In many countries, IKEA is the “Employer of Choice” and globally IKEA is listed as

one of the top 50 most attractive employers in 2010.

4. RECONTRUCTING POLICY OF PHILIPS

COMPANY PROFILE:

Company: Philips

Headquarter: Eindhoven, Netherlands

CEO: Frans van Houten

Founded: May 15, 1891,

Founders: Anton Philips, Gerard Philips, Frits Philips

INTRODUCTION:

Philips was founded in 1891 by Gerard Philips (Gerard) who established a facility at

Eindhoven, Netherlands, to produce incandescent electric lamps.

Gerard's younger brother, Anton, joined the business in 1895 as a salesperson and helped

Gerard's company to become one of the largest producers and marketers of carbon-filament

lamps by the early 1900s. Philips laid a strong emphasis on research right from the start.

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ISSUES FACED:

Strategy setting and decision making in globalized firms.

Unsuccessful in translating its technological prowess into marketing success.

Netherlands-based Royal Philips Electronics (Philips) was on the verge of bankruptcy in May

1990 when the company posted losses of $2.6 billion. At this point, the top management of

the company launched a set of initiatives aimed at turning the company around. One of the

measures initiated was 'Operation Centurion' which aimed to bring about drastic changes in

the work culture of the company and reduce costs.

The restructuring efforts continued throughout the 1990s when Philips initiated job cuts, sold

unprofitable businesses and closed down many manufacturing facilities worldwide

These efforts helped in improving the financial health of the company but were not able to

address concerns like the bureaucratic work culture and the company's poor marketing of its

products.

Philips had a history of breakthrough inventions but the company failed to market them

effectively. In late 1999, Philips embarked on a worldwide marketing campaign for the first

time in its history. Thus, the company made a clean break from its past image as a

technology-oriented company to one that was market-oriented.

Gerry Kaufhold, senior analyst at In-Stat, a technology research firm based in Massachusetts,

US, commented, "Historically, they've been a great engineering company with less than

fantastic marketing, so this signals sort of an awakening by Philips."

In 2001, Philips launched a company-wide restructuring program called 'Towards One

Philips'. The program attempted to foster greater cooperation among its various divisions and

to make Philips a unified company. The aim of the program was to get rid of the bureaucratic

work culture prevailing in the company and promote teamwork. The initiative also aimed to

cut costs, develop innovative products and technologies and improve relationship with

customers.

Initiated by Gerard Kleisterlee, the President and CEO of Philips, the TOP program aimed to

provide long-term solutions to the company's problems The program helped not only in

lowering costs but also promoted a spirit of collaboration.

'Strategic Conversations,' a key part of the TOP initiative, promoted cooperation in setting

company strategies across product groups.

Commenting on the importance of strategic conversations, Ian Wylie in an article wrote,

"What is at the heart of Kleisterlee's plan to create 'One Philips' isn't technology or tactics: its

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talk. In order to build internal confidence, stimulate cross-boundary cooperation and spark

new-product speed to market, Kleisterlee is sponsoring what he calls 'strategic conversations':

dialogues that centre around a focused set of themes that Kleisterlee believes will define

Philips' future."

THE OPERATION CENTURION PROGRAM:

Timmer realized that Philips' poor performance could not be blamed on weak markets alone.

Competition from aggressive Asian companies like Sony was intensifying especially in

Europe. Philips was finding it hard to get its innovations converted into saleable products

quickly. The company's manufacturing costs were high, and this put a lot of pressure on its

profit margins. The biggest problem was a highly bureaucratic corporate culture that was very

resistant to change. Facing the tough challenge to change the company's culture, Timmer

remarked, "You just can't change a deep-rooted corporate culture in one or two years. It takes

at least five years or long.

RESTRUCTURING UNDER BOONSTRA:

One of Boonstra's first moves was to get rid of businesses that were making significant

losses. Philips' 32% equity stake in Grundig was brought down to 5%. Boonstra also sold off

Philips' cable operations, car navigation systems, and the Super Club video-rental chain.

Another problem Boonstra faced was excessive vertical integration in the company.

TOWARDS ONE PHILIPS:

By 2001, more than a decade had passed since Philips began restructuring. Timmer's

Operation Centurion did not succeed in changing the company's bureaucratic culture.

Boonstra's efforts too could not achieve a culture change. Now it was Kleisterlee's turn to

fight bureaucracy in the company and bring in a culture that promoted teamwork. Kliesterlee

called his initiative 'Towards One Philips' (TOP), and through it, he aimed to make Philips

work as a single, unified company. Apart from bringing in a cultural change, the initiative

also aimed to cut costs, develop a range of new technologies and products, and improve

relationship with customers.

PROMOTING COLLABORATION:

The TOP program also called for extensive collaboration among product divisions - a big

change from the past when Philips was run as a set of disparate companies that acted

independently (See Exhibit V for corporate structure of Philips in 2004).

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FOCUS ON CUSTOMERS:

As part of its TOP initiative, Philips also began developing a range of new technologies using

its traditional strength in technology research. One such technology was known as 'Connected

Home. 'This technology depended heavily upon Philips' leadership position in the fields of

display, storage and connectivity technologies. The concept made use of wireless

technologies to connect and seamlessly communicate with various household devices.

Gottfried Dutine, the CEO of Philips' Consumer Electronics division explained, "If you're

watching a film in the living room and you want to move to the kitchen to wash the dishes,

the content will follow along with you uninterrupted. This will happen through an integrated

network of home displays, content storage and connectivity devices - what we call the

“Connected Home”.

THE BENEFITS:

The TOP program yielded encouraging results by bringing about a clear cultural change in

Philips.

The increased collaboration between product divisions helped in knowledge sharing. An

example of this collaboration was the 'Ambient Experience’ project that created a

personalized healthcare environment aimed at individual patient comfort and increasing the

overall efficiency of a hospital's radiology department.

The project was a combined effort of Philips' Medical, Lighting, Consumer Electronics and

Design divisions.

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FLIPSIDE OF GOOGLE AND WALLMART

1. COMPANY PROFILECompany: Google

Headquarters: Mountain View, CA, United States of America

CEO: Larry Page

Founded: September 4, 1998

Founders: Larry Page, Sergey Brin

2. GOOGLE’S ORGANIZATIONAL CULTURES

They are not only one of the fastest and most useful web search engines around; they are also

one of the top 100 companies to work for according to Fortune (2007).

Google strives to have the fastest, most reliable search engine on the web and in order to

accomplish this Google has to hire employees that are the best in their technological field.

Google rewards their employee's hard work with an extremely relaxed workplace that

encourages creativity through fun activities such as roller hockey and through a casual dress

code. Google also encourages their employees to take care of their minds and their bodies by

offering them the ability to work out in the gym and get a massage inside the company

building. "There is an emphasis on team achievements and pride in individual

accomplishments that contribute to the company's overall success". Google understands that

their employees have active lives outside of the workplace and they encourage their

employees to bring those parts of their lives into the Google employee community. One good

part is the fact that they build such loyalty from their employees that many of the employees

see each other and the Google management as a family.

Google values a commitment to their users in that they strive to give a higher level of service.

It does not matter where you work, if you are dealing with people, you should give them the

best experience possible. Even though Google works with their users virtually, they still

value the customer relationship.

Google embodies the team orientation primary characteristic of organizational culture. As

stated earlier, Google encourages its employees to work and play together so that a family

bond is formed. According to Google (2007), "Meetings that would take hours elsewhere are

frequently little more than a conversation in line for lunch and few walls separate those who

write code from those who write checks." This really does reinforce a team environment.

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Everyone is pretty much on the same level and everyone works together. The limited walls in

the building help the employees to feel like a group rather than an outsider in another

department.

Google's organizational culture is very strong. Google hires people that embody their

company's values and feel the same intense desire for unlimited amounts of information. This

desire allows the company's employees to work towards the same goals and intensifies the

bond that they share. Google tends to have a low turnover rate and receives over 1,300

applications a day (Fortune, 2007).

Google's culture is a combination of things. It is ethical, customer-responsive, and spiritual.

Google encourages its employees to be creative in problem solving which sometimes calls for

risk taking. These employees are allowed just enough freedom in their jobs that they do not

take it for granted and this keeps them on ethical ground. The Google employees also have a

sense of team instead of self so this encourages them to work together to achieve goals rather

than compete against one another. This also prevents unethical behaviour.

Google's low formalization and service-oriented employees work to be customer-responsive.

They are allowed the freedom to make decisions that benefit Google users. The employees

strive to provide the best service available and to do this they must be able to relate to their

users. They understand that "thinking outside of the box" is what they are known for so they

go above and beyond what others would do to satisfy a customer need while maintaining

company values.

This "outside of the box" type of business also puts the company into a spiritual type of

organization. Employees are rewarded for individual successes and for team

accomplishments. They are also encouraged to have fun with their job. Google's ability to

allow their employees to have fun while at work is motivating in itself. This motivation

shows itself in the work as well. It is a give and take relationship both sides get something out

of it. Google has a unique way of conducting business that appeals too many. It is this sort of

culture that creates individuals that have the desire and the motivation to stay with a

company.

3. A CRITIQUE OF GOOGLE'S CULTURE

Many analysts feel that Google's zero per cent employee turnover rate during the dotcom

boom, was a testament to its salubrious organizational culture. But not everyone was

convinced that Google had got it right in terms of its work culture. They felt that company's

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culture was not set to manage its growth. A 12-hour working day had become norm at the

company. Google's recruitment process was also criticized by analysts.

It was pointed out that Google had become too narrow in its recruitment by focusing only on

the academic records and graduate ranks of the applicants rather than on experience.

Commenting on the recruitment process, one Googler said, "If you've been at Cisco for

20years, they don't want you." But the management defended the recruitment process saying

that they valued intelligence and brainpower more than experience.

4. SOME OF THE NEGATIVE ASPECTS OF GOOGLE’S

CULTURE

Amidst the successful reputation of Google in the Internet industry, there are few criticisms

in the organisational culture of the Company. The following negative features: absence of

clear management structure, poor employee relations and work ethics, and its informal work

culture.

An organisation must have a core management structure. Although Google has plus as key

figures, the rest of the staff are not strictly structured. Organisational management structure is

a basic element in planning and decision-making. On the case of project engineers and even

the rest of the workforce, the unclear definition of management structure can lead to

organisational conflict.  Recognising the diversity of skills and Googlers, conflict is a risk

because employees have differing values and experience differing situations. The lack of

hierarchy resulted to confusion about control and decision making power and practically

affects overall working conditions. To address such, management theories serve as

established body of knowledge that will guide the engineers and project managers in making

excellent decisions for the benefit of the whole organisation. Similarly, the understanding of

management structure is directly linked to enhanced organisational performance requiring

Google’s management to review its organisational composition, job positions, and area of

control.

On its HRM functions, Google is acknowledged with a unique recruitment process yet some

aspects of the process are criticised. Some critics describes Google’s recruitment process is

narrow. Companies worldwide undergo changes and utilise various job selection and

recruitment methodologies due to some affecting factors i.e. globalisation and technology

innovations. For Google, there is a need to re-evaluate and study the HRM functions and

policies particularly its recruitment process to meet the demands of the target market. A lot of

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organizations began to significantly switch their people-managing policies and systematise

them in new directions (2001). It is acknowledge that selection and recruitment of potential

employees, like on the case of Googlers, is directed to the attainment and accomplishment of

companies’ goals in the global scene. Knowledge, skills, and abilities that include job-related

information and the necessary human abilities to perform certain job activities should be

considered by Google HR team rather than academic proficiency alone. The importance of

valid KSAs cannot be overstated, as the relationship between them and individual

performance in the organisation is well-established. Most KSAs are gained through

experience yet Google oversee this point. It is accepted that quality, competence and

flexibility among the employees had efficiently replaced quantity of task accomplished and

imperceptive obedience gained through extensive experience. Thus, Goggle should

reconsider its recruitment and selection policies and practices.

Further, Google is also called upon its problematic employee relations and work ethics as

seen on the unjust treatment of contractual employees and inefficient organisational

behaviour. Around 30 percent of Google’s total employees are contractual, not given any

employee benefits, and treated unfairly. To solve such problems, hiring, training, and

providing pay and benefits to employees are essential tasks that must be accomplished by the

organisation. For example, the 12-hour working day is arguably stressful especially when

expectations are needed to be exceeded i.e. the workloads and task requirements among

employers and employees themselves. Stress lowers the efficiency of the employees to

perform their tasks. According to and in order to help organisations alleviate stress within

them, they must consider the forms of stress management. The major stressors in the

workplace must be properly identified and assessed, and the concerned personnel must help

their employees identify their major personal sources of stress. Furthermore, the employees

must be assisted in identifying their own stressors and stress tolerance levels. Before learning

how to deal with stress, employees first have to identify those stressors which they react to

because not everyone responds the same way to the same stressors. To aid this process,

organisations might provide health risk appraisals which test for their employees' levels of

stress. In general, it is suggested that organisation’s HR policies are responsive to the needs

and welfare of the whole workforce. The HRM role must be proactive rather than reactive,

that is, serving the employers and employees needs and welfare as directed to the

achievement of competitive advantage. It should not only on the basis of attracting the best

employees but taking care, developing and grooming them as organisation’s indispensable

assets. As according to and, the organisation’s HR personnel must understand its workforce

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and create organisational systems that will result to the development of human labour that

works for the valuation of a larger organisational unit.

On the issue of work ethics, Googlers are branded to be arrogant at times and never kept their

appointments and always turned up late for clients’ presentation. According to ethics is a

moving target. Social values change over time as influenced by a composite web of factors.

To solve this, the HR leader/manager is the key person that upholds the welfare, matters of

concerns, as well as conditions of the entire workforce. With this given intricate set of tasks,

the need to identify its overall role is imperative as it determines the scope of its managerial

functions and power. The presence of strategic planning in management minimises the

potential pitfalls of the said process such as uncertainty. Managing workplace diversity is also

a potent solution. Diversity is one of the most effective strategies that manage individuals

with different characteristics who eventually create the team. It seeks to address issues related

to human resources, internal communications, interpersonal relationships, conflict resolution,

quality, productivity, and efficiency. To solve work problems within Google working

environment, the recognition of its strengths as well as it weaknesses in all areas of

production is basic so as to be used as the form of practical guide for reinforcing its strengths

and similarly creating potent solutions to its weaknesses.

All in all, the negative issues of Google are not yet reflected to its current organisational

performance. However, it is forecasted that such negative issues are threats to its success. Its

organisational culture is claimed not to be set to manage its growth. With these given

negative aspects of Google, they surely have their own organisational plans and initiatives of

addressing such difficulties.

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5. COMPANY PROFILE

Company: Walmart

Headquarters: Bentonville, AR, United States of America

CEO: C. Douglas Mcmillon

Founded: 1962, Rogers, Arkansas, United States

Founder: Sam Walton

6. CRITICISMS OF WALMART

WALMART AND WAGESWith regards to wages you don’t get rich working at Walmart. A typical Walmart worker,

they report the average wage is between $10 and $11 an hour. Wages are one of the issues

that arise in walmart. A team of HR studied the issue arising and came communicated to the

employees that they will be given incentives on quarterly basis as per the achievement of

targets and performance of the employee. The incentives were given once in 6months but

now it is said to be done quarterly.

Walmart does have a large number of its employees that own common stock in the company,

which makes it somewhat different than some of the others. And there seems to be some high

level of loyalty to the company, on average, even though, obviously, there are some

exceptions.

WALMART AND HEALTH BENEFITSHealth benefits got a lot of the attacks from the labour unions and it is the unions that are

leading this attack on Walmart.

Health benefits in the industry tend to be relatively low in retail trade. Never higher than 50

percent, never lower than 40 percent of the workers, receive health insurance through

Walmart. That’s not a typical of that industry.

HR made sure that they inculcate a scheme under which the company provides health

benefits on partly basis i.e. a part of insurance instalment was given by company and rest was

done by the employee himself.

WALMART AND LOCAL BUSINESSESWalmart faced a big criticism that it is one of the reasons of shutting down of the local

business players. In here HR made sure to inform the media and the customers that it is not

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the reason for the same, but it is the new technology, comfort, variety and structure that is

attracting the people to buy the walmart products.

WALMART AND THE ENVIRONMENT

One of the arguments is, it brings congestion to communities it builds unsightly stores. HR

informed the world that usually Walmart goes into some pretty grubby areas of town, where

the stores that are already there are not architectural wonder. And one person’s eyesore may

be another person’s Taj Mahal.

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CONCLUSION

So to conclude we would like to say that from the above mention case studies on various

issues we would like to conclude that HRM is not a Myth. HR played an important role in

handling and resolving issues that occurred in the company like Maruti and Honda even when

situation seemed to be out of control. Same goes for IKEA that HRM played a major role in

proper working of the organisation and solving the problem timely. Following are some of

the few more observations to conclude the topic.

1. HRM helps management in the preparation adoption and continuing evolution of personnel

programmes and policies.

2. It supplies skilled workers through scientific selection process.

3. It ensures maximum benefit out of the expenditure on training and development and

appreciates the human assets.

4. It prepares workers according to the changing needs of industry and environment.

5. It motivates workers and upgrades them so as to enable them to accomplish the

organisation goals.

6. Through innovation and experimentation in the fields of personnel, it helps in reducing

casts and helps in increasing productivity.

7. It contributes a lot in restoring the industrial harmony and healthy employer-employee

relations.

8. It establishes mechanism for the administration of personnel services that are delegated to

the personnel department.

Thus, the role of human resource management is very important in an organisation and it

should not be undermined especially in large scale enterprises. It is the key to the whole

organisation and related to all other activities of the management i.e., marketing, production,

finance etc.

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REFERENCES

http://voices.yahoo.com/the-organizational-culture-exists-within-google-1657615.html?cat=3

http://www.icmrindia.org/casestudies/catalogue/Human%20Resource%20and%20Organization

%20Behavior/Google%20Organizational%20Culture-Human%20Resource%20Management%20Case

%20Studies.htm

http://www.independent.org/events/transcript.asp?id=125

http://www.workplacefairness.org/reports/good-bad-wal-mart/wal-mart.php

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