human resource management in the service sector lectures 10 and 11: creative firms
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Human Resource Management in the Service Sector
Lectures 10 and 11: Creative Firms
2
Objectives
• Understand the basic characteristics of the sector and establish our focus on advertising/marketing agencies
• Identify the key forms of capital present in these firms
• Identify the challenges this presents for HRM especially the development and retention of staff
• Draw contrasts between two practical cases on the way they manage these HR challenges
3
Overview• Introduction to the sector
• Human and structural capital
• Organisational capital: Business process model: their way of working
• Client and network capital
• Implications for HR – balancing conflicting needs
4
Introduction to the sector
• Creativity is widely present – all organisations include some element of creativity – focus on organisations for whom this is their principal output
• Importance of individual creativity, skill and talent (human capital) to create and exploit ideas, experiences and images (intellectual capital)
• Typical examples: music, writing, performing arts, TV and radio
• Our focus is on advertising and marketing agencies
5
Advertising and marketing agencies
• Firms whose work includes creative output – advertising – ‘above the line’ (branding/generic/high margin) and marketing – ‘below the line’ (directly aimed at consumers/dedicated/lower margin)
• Independent of clients for whom they work – compared with in-house marketing departments
• Huge variation in size – tiny (one-two people) medium sized – 100-500, giants (Omnicom, WPP, Interpublic)
6
IntellectualCapital
Human capital
Social capital
Structural capital
NetworkCapital
Client Capital
OrganizationalCapital
Forms of CapitalKnowledge skills and experience of staff
Knowledge embedded in values, culture and relationships
Ways of structuring work
Procedures, policies and processes
Knowledge of and relationships with clients
Knowledge of and relationships with network members
7
Human and structural capital
• Account managers – (the ‘suits’) interface between the client and the agency – project management skills – the business logic
• Creatives – (the ‘T shirts’) – copywriters and art directors responsible for creative output – ‘freshness’ of ideas – the artistic logic
• Account planners - (the ‘voice of the consumer’) – authenticity in representing customers – testing and validating ideas – the scientific logic
(Grabher (2002))
8
Client project teams: structural and human capital
Account managers
Creatives
Account planners
9
Accounts and projects
• Client accounts – may be a contract for 2-3 years or a one off piece of work
• Campaigns – tend to be within an account – series of activities – complex or simple
• Project teams based around clients and campaigns – membership may fluctuate – involve in-house and external staff
• Work with client representatives – typically marketing managers
• Work allocation managed by ‘traffic’
10
Human, structural and organisational capital
‘Traffic’
11
Organisational capital: Business process model
• Formal procedures for handling campaigns
• Process for taking a client brief and converting that into a desired output
• Series of stages tend to be managed by the account managers
• Different forms and interactions of capital needed at different stages
12
Organisational capital: Business process model
Post job debrief
Client delivery
New business
Agree contract
Organise
project
Work and
Reviews
13
Client and network capital
• Importance of time – need to respond quickly to client requests
• Internal human capital supplemented by external human/network capital
• Personal external networks – often in the local area – interaction of human social and network capital
14
Client contact and client capital
Client
Marketing manager
Agency
(Grabher (2002)
15
Building network capital
Client
Marketing manager
Agency
16
HR challenges presented by these characteristics
• Tensions between needs of clients, employees and firms
• The interaction between the need to develop employees, serve the needs of clients and achieve financial success
• Two contrasting examples: ‘Stonehenge’ and ‘Kaleidoscope’
• Virtuous and vicious cycles
17
Human capital
Social capital
Structural capital
NetworkCapital
Client Capital
OrganizationalCapital
IntellectualCapital
Resourcing
Job and
Work D
esign
Trai
ning
and
Dev
elop
men
t
Pay and Reward
Perform
ance
Managem
ent
Invo
lvem
ent
Delivery
Strategy Structure
The HR Wheel
Kinnie et al 2006
18
Pressures on HR in marketing agenciesProduct market -
Customers and clients
Financial success – short and long term
Employment market – needs of employees
Agency
(Maister, 2003)
19
Managerial challenges• How can organisations retain and develop their
professionals?• Presents three dilemmas that sit between the
employee and the organisation
Retention Employability
Organisation specific
Transferable
Value capture Ownership of value
Mult
iple
Identi
ty
pers
pect
ive
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Key challenges and tensions facing HRM in marketing agencies
• External Resourcing– Attraction and retention of staff valuable to the firm and to existing and potential clients– Recruiting for internal development – recruiting experienced staff
• Internal Resourcing– Promotion and career building – efficient allocation of staff– Rotation of staff - building and maintaining client and network relationships
• Training and Development– Developing human capital - developing client capital– Importance of coaching, feedback and development – importance of serving client
needs• Reward
– Intrinsic rewards linked to development – extrinsic rewards linked to client success– Longer term rewards through promotion – shorter term linked to targets
• Our focus: the interaction between the need to develop employees, serve the needs of clients and achieve financial success
21
Client aims and consequences for employee development
Clients• Want best people of
their account• Build up good
relations with them• People who
understand their customers
Employee development• Work on the account
for a long time• Exploiting existing
knowledge – low creativity
• Become bored – retention problems
22
Firm aims and consequences for employee development
Firm• Serve needs of clients• Retain clients and gain
new business• Repeat business, long
term and profitable/efficiency
• Develop high value work
Employee development• Client led creative work• Repeat business – low
levels of creativity• Insufficient resources
devoted• High value work may
have low priority
23
Employee aims and consequences for the firm and clients
Employee development• Interesting and
challenging work• Develop their
employability and CV• Chance to learn and
develop their skills
Firm• Opportunities to work
on creative/high profile projects
• Variety of projects• Opportunity to learn
new techniques and work with good people
24
Competing identities in marketing agencies
ProfessionalOrganisation
Team Client
PSF employee
25
Managing competing identities and HRM
ProfessionalOrganisation
Team Client
PSF employee
Aim: Commitment, shared values to improve retention and knowledge flow
Aim: Develop knowledge and skills, improve versatility and external networking
Aim: Address client needs, manage relationship, grow business
Aim: Good team working improve performance and knowledge flow
HR: Strategy, staffing, values, participation
HR: Team design and allocation decisions, team working skills
HR: Type of work and client interactions, support for client management
HR: Recruit potential, development opportunities and job design
26
Stonehenge
27
Managing competing identities and HRM in ‘Stonehenge’
ProfessionalOrganisation
Client
PSF employee
Team
Values unimportant in recruitment low participation
Low social capital shared values and language
Development needs met in limited way by firm and clients
Narrow jobs, limited new skill opportunities and development
Strong team boundaries – difficult to contact others
Learning from clients and mostly economic relationships
Movement to and from clients
Team pay is important
29
Managing competing identities and HRM in ‘Kaleidoscope’
ProfessionalOrganisation
Team Client
PSF employee
Good ability to serve client needs, good explore and exploit
Values important in recruitment, strong participation
Training intervention to improve client creative processes
Recruit potential, broad jobs, good new skill and development opps.
Strong social capital, shared values and trust
Strong team permeability – easy to contact others
Development needs addressed by firm and client work
Team pay has some role
30
Pressures on HR in marketing agencies: virtuous cycle
Product market - Customers and clients
Financial success – short and long term
Employment market – needs of employees
Agency
(Maister, 2003)
Good clients = interesting work = attract & retain employees
Interesting work = attract and retain good employees = High margin
Financial success = attract and retain good employees and clients
31
Pressures on HR in marketing agencies: vicious cycle
Product market - Customers and clients
Financial success – short and long term
Employment market – needs of employees
Agency
(Maister, 2003)
Lose good clients and interesting work = difficult to attract & retain employees
Less interesting work = difficult to attract and retain good employees = low margin
Low margin = difficult to attract and retain good employees and clients
32
Conclusions
• Advertising/marketing agencies exist in fast moving environments where there is a complex interaction between different forms of capital
• This throws up a series of HR challenges which can be managed in different ways
• Demonstrates need for HR practitioners to understand how these forms of capital interact throughout the firm