Transfer and Adaptation of Management Systems - Case Study Example

Personnel Management: Theory and Practice Introduction Matching jobs with people is the nitty-gritty of personnel management, but the more important function of personnel managers is to unlock the productive powers of employees and creatively influence them to function as one cohesive unit for the achievement of an organization's goals. There are as many ways of doing so as there are different attitudes, notions and behavior toward certain tools of present-day management and employee relations. On the matter of labor unionism, for example, there are those who frown on its presence as disruptive, those who accept it grudgingly as unavoidable, and those who look at it as a necessary means by which to interact with employees collectively and attend to their needs at less cost and effort. When a company takes on a particular mode of employer-employee relations, the choice is often dictated by Purcell's (1987) "guiding principles" which give due consideration to such factors as the stockholders' interests, the market conditions in which the company operates, the company's level of growth, management's biases and its perceptions of power and conflict. It is believed that personnel management systems are also determined by the different dimensions of organizational ownership, size, strategy and structure, not to mention past history and market conditions. Based on these influences, the management-labor relations mode that emerges is either the "unitary" or "pluralist" type (Fox, 1966, 1974). The managers inclined to a unitary frame of reference believe that management and employees share a common interest, namely, the survival and growth of the company, and as such should find as aberrant any conflict that may result from the existence of a labor union or any company troublemakers. The pluralist view, on the other hand, recognizes that all stakeholders in the company have legitimate interests that should be met, diverse though they may be. For this reason, the different interest groups, including the unions, are within their rights "to bargain and compete to get a share in the balance of power and to achieve a negotiated order out of diversity (Legge, Karen)." Individualism and Collectivism The unitary and pluralist theory of Fox on employee relations resemble Purcell's concept of individualism and collectivism in many ways, except in the attitude towards unionism and collective bargaining. Individualism and collectivism, as defined, are not opposites but two facets of a managerial belief system concerning employees. The individualist style of management attaches value to the individual and his right to advancement and fulfillment at work. Hence, this leans more on paternalism and eschews the group action characterized by unionism. In a collectivist regime, management recognizes the collective interests and rights of a group of people in the decision making process, which can best be expressed through a labor union. There is another, more radical frame of reference said to be of Marxist origin that looks at society as a jumble of antagonistic class interests. Called "macho management," this theory runs along the same lines of the dog-eat-dog concept in which the weak will be eaten alive by the strong if the former do not watch out. Society, according to this concept, is cleaved by deeply rooted social and political inequalities and is held together as much by coercion as by consent. Management in this configuration keeps a distance from employees and generally treats them with suspicion. As work inducement, the macho managers try to keep the workers in line with the carrot-and-stick approach. 5 Employee Relations Models Under the Purcell and Fox frames of reference, there are five different models of management-employee relations: traditionalist, sophisticated-paternalist, consultative, constitutionalist and standard-modern. The traditional style views people as simply a factor of production, as hands to be exploited or a cost to be minimized. In this perception, labor unions are an anachronism and are thus opposed and vilified. It is military in orientation, opposes collectivism and often adopted in small management-owned companies or franchises with little use for personnel specialists. It is in essence a paternalistic system, where individualism is enshrined. Also big on individualism and paternalism is the sophisticated paternalist model, which considers employees as the company's most valuable resource. In avoiding unionism, the sophisticated-paternalist management tries to exact employee's loyalty, commitment and dependency through pay raises, skills training and merit awards. This model is popular in American-owned one-product industries, which are usually large and financially successful with high market share in such industries as electronics and financial services. A common characteristics of these firms are their strong personnel departments that develop and implement organization-wide policies. In the consultative style, unions are recognized but the company tries to avoid confrontation by seeking partnership with the unions and engaging in broad discussion over many company issues such as plans for change. Like the sophisticated-paternalist mode of management, the consultative style is also popular in large single-industry firms with high market share. These are usually British-owned companies engaged in industrial processing and paid less for labor. Their personnel departments are also strong and involved in policy making. The constitutionalist style, for its part, is animated more by collectivism than individualism such that unionism is accepted as something unavoidable. Management jealously guards its prerogatives and emphasizes the need for stability, control and containment of conflict by neutralizing union constraints on operating and strategic management. This style is more popular in the US than UK and is prevalent in large, unionized single-industry firms with standardized products like the automaker Ford. As for the standard-modern style, this is the most prevalent, pragmatic and opportunistic since it is moved by prevailing circumstances. There is no consistent policy on the recognition of trade unions, and management-employee relation is not a strategic issue but a responsibility of operational management at the unit or division level. From Theory to Practice To make these management theories work in actual practice, Friedman (1977) suggests that managers choose the models that allow employees "responsible autonomy" with management in direct control. Such responsible autonomy may come in the form of workers' status, authority and responsibility. This would maximize the output of labor and allow workers to adapt to changing conditions in a manner beneficial to the firm. Responsible autonomy is described as the "caring face" while direct control is the "controlling force." Thus, the method sees to it that the workers do not abuse the autonomy granted to them by limiting the power of labor for coercive actions through direct control. Marchington & Parker (1990) propose the same strategy but want to replace the individualism-collectivism dimension in Purcell's model and build instead upon Purcell's ideas on development and the legitimacy accorded to unions. This means giving the employees the investment orientation and the unions, the partnership orientation. But this is easier said than done. According to Storey & Bacon (1993), individualism and collectivism change from company to company and from country to country, such that no model is reliable across the spectrum. In Japanese companies, for example, individualism cannot be equated with employee development because the Japanese style is marked by the group effort. The same approach will not work in UK-based companies since the British apprenticeship system is union collectivism in action. The criteria for an ideal approach, Storey & Bacon add, must be set based on industrial relations, work organization and personnel management practices. Each criterion should then be assessed in relation to individualism or collectivism. Tyson & Fell (1986) offer another type of personnel management that could make the theories work in actual practice. The objective is to make personnel management a contributor to the "building of the business" instead of merely handling people. Under this model, the company people are assigned tasks as "clerk of works," contract managers and "architects." The "clerks of works" handle the dirty work and are allowed little discretion, while the contract managers are the experts, ensuring that every sub-clause in the contract is fulfilled. The architects, on the other hand, combine both high discretion and long-term planning. Management-Union Relations Under the right conditions, trade unions can be effective partners in working for a company's long-term growth with a mutually reinforcing management style and union activity. Unless marginalized, trade unions will cooperate and employees will be supportive of the company's goals. This usually occurs when competition and customer pressure on the company is low, thus enabling it to take on an investment-oriented management style. It is another matter when the market pressure is intense, because then management is forced to treat employees as costs to be minimized and commodities to be utilized to the fullest. In this case, management-union relations will be adversarial if the company is unionized, and employees may withhold cooperation or work without enthusiasm. The decision to diminish the role of labor unions is an increasing trend in UK, which is a government-supported policy reinforced by Japanese multinational corporations that have established plants in that country. One of these Japanese firms is Acme Engineering, previously known as Mazak, which does not even have a strong personnel management department but is operating like clockwork insofar as management-relations are concerned. In such a situation, the questions may be asked: Is Acme Engineering a model of strategic human resource management To what extent is the human resource policy of Acme a model of strategic HRM Non-Unionized Industry From the start, the Acme operations in the relatively remote Worcester sought to run in a "team environment," a group of people working together for a common goal and without a third party or trade union. The company's recruitment policy alone is proof positive that it is carrying out a classic human resource management strategy. For one, Acme initially sought young people, such that 80 percent of the first 100 recruits were people under 25. Those over 30 were only the experienced engineers, which can't be helped. The idea was that the youth have no preconceived ideas about working for the Japanese who are known for morning exercises, company songs and lifetime employment. (In the company today, the only Japanese are the managing director and the production head.) Apart from age, the other criteria were that the applicants must have a stable work background and domestic life. The applicants go through a series of job interviews, first with personnel, then with the team leaders, followed by the supervisors and finally with the managers. This management hierarchy fits the Tyson & Fell model that calls for clerks of work, contract managers and architects. Acme's operations also fulfill the traditional and sophisticated-paternalistic theories of strategic management-employee relations by providing on-the-job skills training, personal loans and credit to employees in need, among other activities. This is complemented by a generous salary increase system based on a regular appraisal process that takes into account the employees' work quality, interest in innovation, ability to think around problems and contribution to company. It should be noted that the sophisticated-paternalist theory seeks to generate employee's loyalty, commitment and dependency through pay raises, skills training and merit rewards, which is exactly what Acme does. Conclusion To develop an effective human resource management framework, Heng, T. & Low, L. (1994) have cited the importance of defining personnel management in its broadest sense, especially if a company is operating in a foreign setting. There could be different systems of workforce governance, work organization, staffing development and reward systems. Collett, P. (1998) agrees that the best method takes into account the inherent complexities of culture. In the case of Acme Engineering, for example, the situation is ripe for conflict between Japanese culture, which encourages individual initiative and thrives on it, and the UK production system, in which individual initiative is kept on a leash and there is little variety of work (Mair, A., 1998). Acme took this counsel to heart by fusing both styles in its personnel management policy, operating both on the individualist and collectivist style. The result is a team management effort that puts emphasis on the primacy of the individual and creates synergy by incorporating individual strengths, approaches and opinions. This seems at odds with the Asian culture of communalism where the individual operates for the common good (Shi, Y. & Tang, H., 1997), but it works like a charm for Acme because of its unique work environment. Works Cited: Legge, Karen. "Human Resource Development: Rhetoric and Realities." Anniversary Edition, Basingstoke; MacMillan, Chapters 1-6. Mair, A. (1998). "Internalization at Honda: Transfer and Adaptation of Management Systems." Employee Relations, 20:3 1998; pp. 285-302. Shi, Y. & Tang, H. (1997). "Team Role Behavior and Task Environment: An Exploratory Study of 5 Organizations and their Managers." Journal of Managerial Psychology; 12: 2 1997; pp. 85-94. Collett, P. (1998). "Contrasting Styles in International Management Research." Journal of Managerial Psychology; 13: 3-4 1998; pp. 214-224. Heng, T, & Low, L. (1994). "Human Resource Development in Asia Pacific." Research and Practice in HRM, 2 (1), 47-66. Read More