instructor’s manual -...

Copyright © 2011 Cengage Learning Australia Pty Limited

Instructor’s manual

Human resource management: strategy

and practice

Alan Nankervis, Robert Compton, Marian Baird, Jane Coffee


Contents Chapter 1 Evolution of human resource management 01 Chapter 2 The context of human resource management 16 Chapter 3 Industrial relations: Frameworks and practices 31 Chapter 4 Human resource planning in a changing environment 43 Chapter 5 Work design challenges in a global environment 55 Chapter 6 Attraction and retention of talent 70 Chapter 7 Effective employee selection 85 Chapter 8 Developing human resources in organisations 99 Chapter 9 Management of performance 118 Chapter 10 Strategic reward management 137 Chapter 11 Managing occupational health and safety 156 Chapter 12 Conflict and negotiation processes 175 Chapter 13 Evaluating human resource management: Towards the

future 184


Chapter 1 Evolution of human resource management Objectives After reading this chapter, you will be able to:

• define the purposes and scope of human resource management (HRM) in Australia

• trace the development of HRM in Australia, including its influences, issues and theories

• explain the concept of strategic human resource management (SHRM)

• understand the relationship between SHRM, business strategies and HRM functions

• discuss the links between SHRM and organisational strategy, structure, culture and policy

• describe the principal roles, functions and outcomes of Australian human resource management

• define the professional and ethical principles that guide HRM.

Summary Human resource management is a complex and rapidly changing field of practice in Australian industry. Despite its comparatively recent origins, and the fact that it draws on overseas and local influences, HRM is a crucial factor in the success of Australian organisations. Strategic human resource management (SHRM) began in the 1940s as a series of functions, which usually were not integrated or based on solid conceptual foundations. Modern SHRM is a dynamic specialisation in the process of refining its philosophies, practices and overall contributions to organisational effectiveness.

In response to external influences, including legislation, award restructuring and enterprise bargaining processes, and to its own history, HRM is adopting a strategic approach to the management of human resources for corporate benefit. As with other professions, HRM confronts a number of difficult issues and dilemmas concerning ethics, roles, practices and the nature of its professional association. Further development of SHRM will eventually resolve these issues in creative and effective ways.

2 Chapter 1: Evolution of human resource management


Key terms

employment relationship 10

expatriate 21

globalisation 3

‘hard’ HRM 14

human resource management (HRM) 3

HRM community 28

HRM ethics 30

legal (employment) contract 10

off-shore/off-shoring 16

pluralist 14

psychological (employment) contract 10

resourced-based model 19

social employment contract 10

‘soft’ HRM 14

strategic human resource management (SHRM) 5

strategic international HRM 21

unitarist 14

Chapter outline Introduction The authors begin this chapter with a discussion about the importance of HRM for business. The chapter then provides a historical overview of the development of SHRM in Australia, demonstrating the parallel development of HRM in the UK and US. At this point, it is important to emphasise to students that the discipline of SHRM is still in a state of evolution.

With the history and the foundation of HRM established, the authors also introduce a number of theoretical concepts and models that have been established to describe and explain SHRM, such as the Harvard model, unitarist/pluralist approaches and ‘hard/soft’ HRM.

The chapter concludes with the relationship between organisational structure and culture and SHRM policy. Finally, it presents an examination of the roles and functions of HRM and the professional competencies and ethics required of HRM professionals along with a presentation of their own SHRM model.

Nankervis et al., 7e – Instructor’s manual 3


Student activity The introduction of the chapter suggests that developments in business operations and technology, as well as political, economic and social changes, have begun to transform the nature of jobs and workplaces. To help the participants realise the human resource impact of strategic business decisions, the following discussion topics and activities are offered.

Discussion topics

Either working in groups or individually, ask participants to think about and discuss the following topics.

1 Ask students to consider and identify the technological developments and workplace changes that have occurred in a specific industry over the past 10–15 years, for instance, banking and finance, education or retail.

2 After brainstorming the developments in technology and changes to workplace practices, ask students to examine the HR implications of those developments and changes.

3 Ask students to conduct a visioning exercise. Take a specific industry (e.g., manufacturing, retail, telecommunications etc.) and brainstorm the changes that are likely to occur within that industry over the next 10–20 years. Ask the participants to then explore the HR implications of the predicted changes.

Stages in the development of HRM Australian HRM has developed similarly to that in the UK and US, with some differences in the stages of development and in the influences of social, economic, political and industrial relations factors.

This chapter summarises the following stages of development:

Stage one • 1900–1940s; welfare and administration.

Stage two • 1940s to the mid-1970s; welfare, administration, staffing and training,

personnel management and industrial relations.

Stage three • mid-1970s to the late 1990s; human resource management and strategic

human resource management (SHRM).



Stage four • 2000; SHRM in the new millennium.

Student activity Students are asked to examine and explore the reasons for the evolution of human resource research and practice.

In small groups, or working individually, each person should be allocated with one (or more) stage/s of development. Students can either brainstorm or systematically research the social, political, economic and industrial relations climate during that stage of development and demonstrate what impact and influences these factors had on the way in which human resources were managed.

Teaching note

As with the previously recommended debate, this activity could be done quickly as a small activity during class as a warm-up to the exploration of SHRM. Alternatively, the activity could be expanded and used as a deeper intensive research activity where participants either working in groups or working individually prepare a presentation for the class on the ‘life and times of HRM’ for a specific stage. Again, if desirable, this could form a component of the assessment system.

Human resource management and strategic human resource management—evolving concepts and models In the text, it is argued that HRM differs from earlier personnel management models in focus, principle and application, including the Harvard model of HRM shown in Figure 1.1. The model depicts HRM as a set of broad policy choices in response to the demands of organisational characteristics (e.g., stakeholders, business strategy and conditions, management philosophy, technology) within the context of the external labour market and social, economic and political conditions.

From this model, students should note that the principles that HRM theories are based on are generally broader and more managerial in their emphasis than the principles of personnel management. Application of HRM theory may be diffused and adapted for different environments, and accordingly the text moves into a discussion exploring the different debates evident between the unitarist and pluralist models of the employment relationship and the hard or soft approaches to HRM. The tensions and synergies between HRM and IR are then explored and the impact of industry, workplace and national contexts reinforced.

This is followed by an explanation of SHRM, emphasising the need for HR plans and policies to be developed and formulated with the context of the organisation’s overall strategies and objectives as well as the need for responsiveness to the external environment.



Table 1.3 offers a summary of the major characteristics of SHRM, while Table 1.2 provides specific examples of HRM strategies linked with an organisational strategy.

Finally, the discussion explores the current links between HR and organisational strategies such as, accommodative, interactive and fully integrated.

Figure 1.5 demonstrates the multidimensional reality of SHRM, providing participants with an overall structure for the text.

Student activity Case 1: The Dubai strategic plan

The text offers a brief description of the mission and strategy of Dubai and suggests that HRM in the Dubai government is aligned with its vision to improve the business and investment environment.

In-class case analysis and HRM policy development

Working in small groups of approximately three or four, ask the participants to analyse the mission and strategy of the Dubai government.

1 What institutional strategy is evident in Dubai’s government? (e.g., using Porter et al, Miles et al etc.).

Ask students to consider the HRM key success factors espoused by the Dubai government and determine whether these examples demonstrate accommodative, interactive or fully integrated HR strategies.

If more time is available, students can attempt to generate specific HRM policies and processes for each of the key success factors. Figure 1.5 demonstrates how the policies and processes devised are integrated with the environment or context, the government’s strategy and the HR strategy.

Strategic international human resource management The discussion about the international dimensions of HRM looks at how long it has been in existence and recognises the transition from managing expatriates to the notion of managing global workforces through practices such as global teamwork and international job rotation schemes.

Student activity Provide students with an opportunity to explore the complexities involved in determining how global workforces are managed.

Global expansion



Using either the existing case of the Ritz-Carlton Millenia or a new case of a luxury hotel opening in a new international market, ask the participants to develop an action plan of the strategic considerations that needs to be developed and the SIHRM policies and practices that would follow.

Teaching note

As with some of the activities earlier in the chapter, this exercise can be used as a simple in-class activity that assists the students to begin thinking deeply about the situation and to engage them with the current content of the class. Alternatively, the exercise can be expanded into a larger research activity where the students are required to find a domestic organisation, analyse the organisation and its HRM strategy and then develop an internationalisation strategy for the organisation. The students can then explore and justify the HRM strategy (using research) and the implications for processes and policies of managing an international workforce. This exercise can form a component of the formal assessment.

Relationships between culture, strategy, structure and SHRM Linked to the previous analysis of HRM strategy and the internationalisation of businesses is the importance of understanding the relationships between organisational culture, strategy and SHRM. This includes the debate about the relationship between corporate and HR strategy, the connection between HR strategies and organisational culture and the relationship between corporate strategy and structure. The authors pose a number of questions that could be considered by students in class or in assessment activities.

Student activity

One of the first questions posed is: Does HR strategy effectively modify culture, or does culture drive strategy?

To begin exploring this question, ask the students to analyse their university/college/school.

1 How is this institution different from a neighbouring institution?

2 What are the elements of this institution’s strategy that are attractive to them as students?

3 What competitive advantage does this institution offer in comparison with competitive institutions?

4 What symbols exist that demonstrate the culture?



5 Do you believe that the HR strategy has anything to do with the culture, or has the culture driven the strategy?

Students can continue analysing their current institution. Although it is likely that many students might not have a very clear understanding of the management of their institution, some speculation using the artefacts of the institution might provide some insight. Evaluation regarding alternative structures/strategies/culture options could provide greater insight into the relationships between these important variables.

6 Do the ways in which organisations arrange themselves significantly influence culture, or does existing culture determine the nature of such arrangements?

7 Does the nature of an organisation’s structure hinder or assist proposed business strategies, or do the strategies themselves determine the appropriate structure of the organisation?

Human resources management – roles, functions and competencies The remainder of the chapter explores the issues and concerns of human resource management from the perspective of professional practice. The need of HR practitioners to be conversant with organisational needs at the strategic, operational and functional level is explored.

How HR contributes to organisational effectiveness through the HRM agenda, as defined by the Australian Human Resources Institute (AHRI: Figure 1.2), is then reviewed, with the competencies of HR practitioners examined and distinct HR functions listed.

Student activity This is usually a useful point to engage with the students about their future career thoughts. Often times, it can be surprising to find that many students have not given a great deal of thought to the structure of their own careers and the roles that they wish to play in business or human resources.

My business career

This activity is a very brief visioning and action planning exercise.

Working individually at first, then in small groups, ask the students to predict where they will be in two years, five years and ten years time. Suggest that everything they have planned has gone smoothly, they have received the grades they wanted from university/college/school, they’ve been appointed to the positions that they have wanted, they have sufficient resources to meeting their needs etc.



If required, you could use the following questions as prompts:

• What role will they be working in?

• Where will they be located?

• What is the focus of their life?

• Have they undertaken any additional education?

• Are they employed in the human resources field – if so why, if not why not?

Encourage all students to consider their future and to develop an action plan and specific goals that must be achieved in order for their ‘vision’ to be achieved.

Professionalism of human resource management Recently, business and financial management have become focused on corporate governance and the social responsibility of business. The authors outline that HR is often considered to be the ‘ethical conscience’ of an organisation. Examples of HRM ethics and codes are provided in Figure 1.4

Student activity Exploring ethical dilemmas is frequently the most effective way of asking students to examine the nature of professionalism and ethical codes. Usually, it is not until conflicts between values and ethics arise that the difficulties in decision making occur.

Individually, or in small groups, ask students to visit the St James Ethics Centre on the web at http://www.ethics.org.au. The St James’ Centre has numerous archived cases of ethical dilemmas. Students can choose a specific case from the archive and then prepare a brief presentation for the class exploring the dilemma in more detail from a HR perspective. The students can lead a class discussion and debate about the dilemma and how it might be resolved.

Sample responses to critical issues The critical issues (CIs) are intended to encourage students to analyse the issues raised in the text and should be supplemented with further readings. The following responses are intended as a guide only, to promote discussion, and are not offered as the ‘correct’ response. Used effectively, the CIs should extend students’ appreciation of the conceptual and practical aspects of HRM.

Critical issue 1 As barriers to markets fall due to globalisation, corporations, in particular human resource professionals, face new challenges in navigating a highly complex and dynamic global business environment. Organisations now comprise highly diverse workforces and must develop the capacity of their human capital to function in a global setting.

http://www.ethics.org.au/�



Although opportunities to conduct business across countries and regions have increased, there still remain several barriers to successful participation, which include cultural differences and managing staff in different geographical areas. These issues have major implications not just for the HR function but also the future HR vision for the company.

With increased business transactions occurring in the global arena, the HR function faces several challenges:

1 Organising pre-departure training for expatriates, which includes language and cultural elements

2 Mitigating the effect of cultural differences between parent companies and subsidiaries

3 Navigating foreign industrial relations systems

4 Ensuring equitable pay and conditions for expatriates

From a strategic HRM perspective, organisations are faced with the need to develop a team of global leaders who possess characteristics like excellent communication skills, people management skills, a global mindset, cultural sensitivity and leadership abilities. Through developing this global team, organisations will have the drivers of organisational success on an international level.

Critical issue 2 A psychological contract in a business context is best described as an ‘individual employee’s belief in mutual obligations between that person and an employer’ (Cullinane and Dundon 2006, p. 113). There is the belief though that these mutual obligations have permanently evolved due to changing labour market and generational issues. One of the main ideas behind this permanent evolution is a generational shift within organisations. As the population of generation Y steadily increases and more importantly baby boomers are beginning to retire, organisations are faced with changing demands from employees in the form of retention and engagement. Employees are expecting roles that foster development and have attractive retention packages. This is all made possible by a tight labour market where talent is scarce and there is increased competition between employers to attract and retain employees. In contrast though there is an argument questioning the idea that this change is set in stone and it first and foremost relates to the labour market conditions. With the natural progression of the labour market through surplus and scarcity, it can only be assumed that psychological contracts fluctuate accordingly. Although employees may be in a position of power as it stands, in times of surplus labour employers may not find it necessary to fulfil all mutual obligations to employees. Therefore, it could then be argued that although mutual obligations exist, the level to which each party fulfils these can be volatile to the external environment.



Critical issue 3

The HR function is entering an era of transformation where it looks to move away from the image of a micro-level support mechanism and more towards a strategic business partner within the organisation. Although SHRM theory appears rational and advantageous for organisations, its implementation tends to be hindered from factors within the organisation.

One factor behind the resistance to SHRM is the status of HR professionals within the organisation. There remains a lack of acceptance by other senior organisational managers of the value of SHRM to the business. The major problem in lobbying support for the application of SHRM lies in delivering suitable metrics that measure its contribution to the bottom line of the business.

In order for HR professionals to overcome this lack of corporate support, it firstly needs to develop its business breadth in understanding business operations from a fiscal perspective to effectively contribute to company financial matters. HR also needs to ensure that they have a strong leader who can be involved in organisational politics and lobby for improved acceptance. Finally and most importantly, HR, in order to implement SHRM initiatives, needs to develop a metric system that can communicate to other senior-level managers the contribution SHRM can make to business success.

Critical issue 4 Roles

Strategic – In a strategic role, HR professionals will be more concerned with the macro level of the organisation and act as a strategic business partner to ensure that HR plays an important role in meeting organisational goals. In this role, the HR professional will develop and drive but not necessarily implement HR’s strategic direction. In this role, practitioners would be expected to have excellent communication and leadership skills to gain support for new initiatives. They also need to be forward thinking and creative to maximise the competitive advantage of strategies.

Operational – Operational level HR professionals are more hands on and generally have a higher level of interaction with employees, a perfect example being a line manager. In this role, activities like performance management and dispute resolution will be performed. One of the most important skills at this level is people management skills and the ability to motivate employees to meet targets.

Administrative – At an administrative level, HR professionals will play more of a support role to the overall success and function of the organisation. These administrative functions may include payroll and recruitment. At this level, practitioners need to have good organisational skills and attention to detail.



Capabilities

Expert practitioner – Expert practitioners are HR professionals with expert practice knowledge who can apply this knowledge to deliver on business outcomes.

Credible activist – A credible activist will display strong negotiation and communication skills to outlay HR advice in order to attain objectives.

Strategic architect – Strategic architects in the HR field look to contribute as well as formulate and drive the HR vision for the organisation. Strategic architects will be proactive business leaders with the ability to identify gaps in functions that will improve HR practice within the organisation.

Business driven – HR professionals who are business driven are able to understand the relationship between people management strategies and business goals. To be business driven, HR professionals will need to have a sound knowledge of business operations in order to be able to partner HR strategies with organisational strategies.

Workforce designer – Workforce designers will typically range from support to driving of development of the organisation through elite human capital. A workforce designer will have the ability to motivate their staff in order to deliver the performance the organisation needs in its development phase.

Stakeholder manager – As a stakeholder manager, you will need to be able to identify and respond to stakeholder demands and ensure a functioning relationship is upheld. A successful stakeholder manager would be characterised by excellent negotiation skills and people management skills.

Culture and change agent – Being a culture and change agent will mean being involved in the facilitation and support of change to the actual driving of organisational change. Culture and change agents would need strong interpersonal skills coupled with the ability to diagnose problems and an ability to tolerate ambiguity.

Critical issue 5

The main premise behind this issue is should HR merely develop corporate codes of ethics or act as ethical enforcers for the organisation? Unethical managerial practices that have lead to collapses of companies like Lehman Brothers and Chrysler have signalled the need for more integrity in corporate governance. HR now is being increasingly used in trying to develop ethical organisations.

Ethics and HR are intertwined with most HRM activities consisting of an ethical dimension, and therefore it is argued that HR should play a pivotal role in ethical culture development. As well as the development of ethical codes it is also suggested that HR should act as ethical enforces. Although HR is seen as the most appropriate place for the ethical conscience of the organisation, there still remain doubts about the effectiveness of HR as an enforcer. Factors such as the



normative evaluations of HRM practice and the sometimes conflicting ethical practices, for example, the transparency of the retrenchment process, could undermine HR’s credibility of being an ethical guardian.

Sample responses to tutorial activities 1 In small groups, draw up two separate lists of the features that you

consider would together lead to the ‘ideal workplace’ for ( a ) management and ( b ) employees. Discuss your choices with the other tutorial group members and consider the areas where conflict might arise between management and employees. How might these differences be reconciled?

It is assumed that many of the conflict areas that students will highlight will surround topics such as remuneration, working conditions, work structure, training and development and rewards. In trying to reconcile these differences of opinion between management and employees, it is important to have an open and transparent discussion while at the same time being mindful of the psychological contract that exists. Employees and management have mutual obligations to one another and, while it is important for the business to be maximising profits it must seek compromise with its employees to achieve this. Methods such as equitable remuneration, flexible working hours, performance-based rewards and career plans are all techniques that can be used as tools to meet both employee needs and management needs.

2 Consider any ethical issues you have encountered in your workplace. They might include favouritism, a lack of confidentiality about personal information, cheating about hours worked, minor pilfering (for example, pens, paper), bullying or more serious issues. As a group, discuss the nature and effects of these activities on the work team and the organisation as a whole. Should these issues be addressed, and, if so, who is responsible for addressing them? Does the HR professional have a part to play here?

Unethical behaviour such as cheating hours worked and favouritism can have a major negative impact on not just organisational performance but also organisation culture. As a response to these behaviours, employees doing the right thing may become fed up and leave the organisation or even see legal matters brought against the organisation for cases such as favouritism.

It is very important for organisations to stamp out unethical behaviour, and it has to be a top down approach. Leaders of the organisation need to communicate that behaviour such as favouritism is not acceptable because if they fail to do this then factors such as turnover can sharply rise. HR can play an important role then through acting on management’s power in ensuring all there processes remain free from bias and strive to be



employee champions in stamping out unethical behaviour such as workplace stealing and bullying.

Sample response to ethical challenge 1 What are the major ethical issues in this case?

Major ethical issues:

• Blatant violations of accounting principles (falsifying results and overstating assets)

• Installing spyware on the bank’s computers

• Bribery 2 Evaluate the above issues from both deontological and teleological (p.

31) perspectives?

From a deontological perspective, it looks at ethics from the idea of the common good and the ethics of duty. Therefore, from this perspective Ramalinga’s actions would be seen as unethical, because although he may have helped the Indian economy and people he has still acted in an unethical way to do that. Behaviour such as bribery and lying are not suitable business measures, and because of that his actions fall into the unethical realm.

From a teleological perspective (sometimes referred to as ‘utilitarian’), it aims to gain the greatest good for the greatest number no matter what the ethical repercussions are. So in the case of Satyam it would appear that although committing several unethical acts, Ramalinga acted in hope of providing hundreds of millions of dollars to the Indian economy and supplying thousands of jobs. Therefore, from this perspective his actions may not be so unethical if you look at the benefits his actions have brought to India.

3 How might HR specialists have been involved either before or after this situation occurred? Prior to the situation, a HR specialist could have been involved in a number of ways to try and prevent this problem from occurring. One way would be to start at the beginning and look to develop an ethical culture with Satyam so that this kind of situation doesn’t develop in the first place. HR professionals need to ensure that moral muteness and moral myopia do not develop with the organisation. They can look to mitigate these problems by opening up a forum where ethical issues can be discussed in a professional and safe way. Ensuring that people in the organisation can identify and also communicate ethical issues will go a long way in stamping out poor behaviour.



Sample response to case study 1.1: Raffles International Limited

1 Outline the major business issues involved in this acquisition strategy.

The term ‘strategy’ is used to describe progress towards long-term objectives. The acquisition strategy of Raffles International Limited is aimed at helping the hotel achieve its vision ‘to be the world-class Singapore-based company in the investment, operation and management of hotels and resorts, supported by a strong customer base and developing strong brand architecture under the Raffles International master brand’.

2 Define the relevant HRM issues in the case.

HRM issues

• Ensuring remuneration schemes are streamlined through international operations

• Integrating HR polices and processes such as the CRM, HCMS and FMIS from the parent company Raffles into Swissotel

• Facilitating communication in an international context between different cultures

• Restructuring job duplications as a result of the acquisition

3 Evaluate the effectiveness of the merger process, in both business and HRM terms.

The employees from a hotel that was being considered as part of a strategy had to be taken into account. A system of meritocracy was promoted by not making jobs redundant immediately. Jobholders who held duplicate jobs were reassigned. A period of six months was allowed for employees to demonstrate their competence level, skills and know-how.

They realised that the preference for keeping HR policies and practices standard was not practical. Therefore, a working strategy was developed to ‘think global but act local’.

The three key factors for a successful merger or acquisition were ‘strong leadership, communication and consistency on deliverables’, according to Tommy Ng. In support of their vision to be a world-class Singapore-based company, Raffles International acquired Swissotel Holdings AG. This acquisition allowed Raffles to achieve several strategic objectives: increased global reach, enhanced brand equity, economies of scale and value-added human capital. It also allowed the group to realise synergies and create opportunities for shared services. The integration process acted as a catalyst for the establishment and implementation of various systems



and processes, such as the customer relationship management (CRM) system, human capital management system (HCMS) and financial management information system (FMIS).

Reference List

Cullinane, N. and Dundon, T. (2006) The psychological contract: A critical review. International Journal of Management Reviews 8(2):113–29.


Chapter 2 The context of human resource management Learning objectives After reading this chapter, you will be able to:

• understand that human resource management operates within broad economic, social and political contexts

• evaluate the current global and national economic and political contexts and the implications of each for strategic human resource management

• recognise the impact of changing workforce demographics on the management of human resources

• understand the significance of the chances in workforce participation rates of men and women and the implications for the development of human resource management policies and practices

• explain the legal context of human resource management.

Summary The economic, political and social environments, and the changes to them described in this chapter, highlight the dynamic context that human resource management operates in and some of the challenges.

A strategic approach to human resource management requires that practitioners understand the external context of the organisation and the environments of their workforces. Globalisation has led to increased competition and pressure on organisations to use their human capital as effectively and productively as possible and to compete in global markets for customers as well as employees.

Transferred to the national context, these competitive pressures have seen successive governments introduce policies to re-regulate and de-regulate the labour market, effectively increasing the prerogative of managers in relation to employment matters and enabling organisations to develop more specific human resource policies.

While not all organisations respond strategically, arguably the opportunity is there in the current political environment for human resource management to take a proactive position on these issues. Changes in the demographics of the population and the workforce, notably ageing, challenge human resource managers to find ways to facilitate the transitions in people’s lives as they move



from full-time work to retirement or as they combine work and family responsibilities. This issue is also prominent in relation to the increasing participation rates of women in paid work. As women need to combine their reproductive and child caring roles with paid work, governments, employers and human resource managers also need to provide appropriate policies to enable employees to balance work and family.

Men’s roles are changing too. Combined with changed social attitudes, future generations of male employees may be expected to contribute more to caring responsibilities. Ironically, however, just as business and human resource managers have advocated that employees are an organisation’s most important and valued resource, employees have been subjected to increasing job insecurity, longer working hours, work intensification and workplace stress. One of the dilemmas for Australian human resource managers in this environment is to reconcile the often-conflicting demands of the organisation with the needs of employees.

The changing context that human resource management operates in – globally and domestically, economically, politically and socially – has contributed to human resource management’s rapidly changing role and responses. In terms of job design, employment patterns, employment relationships and reward management, significant changes are evident, and these are discussed in subsequent chapters.

This chapter also outlines the legal context of managing human resources, an important and growing area of interest and concern. Various pieces of legislation emanating from federal and state governments have an impact on employment, and one area that directly affects human resource management and employment matters is the area of industrial and workplace relations. This topic is the focus of the following chapter.

Key terms casualisation 68

employment contracts 68

intergenerational conflict 55

maternity/paternity leave 61

work–life (work–family) balance 55

(workplace) flexibility 65

18 Chapter 2: The context of human resource management


Chapter outline Introduction This chapter begins with the authors reinforcing that the essence of SHRM is to adopt a flexible and strategic perspective, which accurately assesses the external environments of organisations to assure fit between HR strategies and processes and business strategies.

The purpose of this chapter is to explore aspects of the external environment, significant changes to it and the ways in which they currently affect human resource management in Australia. The chapter begins with a consideration of the global economic context and its impact on the Australian economy and moves on to reflect on the changes in the labour market and the nature of employment in Australia. The focus here is on the major demographic changes in Australia, including the ageing of the population, women’s changing workforce participation and work–family and diversity issues. In addition, changes in the employment relationship, such as casualisation and contracting, are discussed as well as the pressures for flexibility. The chapter concludes with an overview of the political and legislative context for human resource management.

The global economic context At the outset, this chapter identifies that a variety of political and economic events over the past few years have encouraged the convergence of national systems and ideologies towards global market economies.

‘Globalisation’ is the term used to describe the increased pace of economic interconnectedness between different countries. However, it is important for students to critique the globalisation concept as it is regularly challenged and debated, and there is considerable difference of opinion about the extent, cause and effect of globalisation.

Student activity One way of exploring the impact of the interconnectedness of the Australian economy with other world economies is to ask the students to consider the impact of Australian organisations participating in the different economic environments. This can be particularly noticeable if student groups are divided into different economic regions. For example, Australian organisations that wish to pursue trade (export or joint ventures) with organisations belonging to the European Union, Association of South East Asian Nations (ASEAN), Asia Pacific Economic Cooperation (APEC) and the free trade agreement with the US face particular challenges.

Research and/or discussion questions for region groups



The discussion could be based on the students’ current knowledge of the different business and political environments, or, alternatively, student groups could be asked to conduct research to identify the major trade issues with these geographical locations and then report back to the class with either a formal presentation or to lead a group discussion.

Divide the student groups into geographical trade centre groups, such as the UK, Europe, US, Asia-Pacific, Middle East and South America. Students are asked to either discuss or research and discuss the issues associated with Australian organisations wishing to pursue trade (export or joint venture) opportunities with organisations located in the geographic area that their group represents.

Students should consider the challenges and opportunities that trading in these geographical areas present, such as the specific trade environment (e.g., free trade agreements, cultural differences, language differences etc.). How does that impact the human resource planning and the management of Australian companies.

The Australian economy This part of the chapter provides an overview of the continued strong performance of the Australian economy, with the authors commenting that since 1991 the economy has been in expansion mode with growth just under 4 per cent. This level of growth exceeds that of other developed economies although it lags behind the growth of regional countries such as China and India. At the centre of the economic growth is the extensive change to Australia’s industry composition.

Changing industry and occupational structure The Productivity Commission reports that Australia has seen extensive change in its industry composition over the past few decades and that the rate of change is slightly greater than the average for a selection of OECD countries. The services sector is now the fastest growing section of the Australian economy, and in line with the growth in services is the emergence of what has been called the ‘new economy’ (or the knowledge and information economy).

In order to effectively develop business and HR strategies, it is critical that human resource professionals forecast future workforce needs and develop the policies and processes necessary to ensure that organisations remain adequately staffed.

Student activity The growth of the new economy or the services sector has highlighted skill shortages in both professional and trade occupations, including non-building professional engineers, electrical trades (building), business professionals, building professionals, carpenters and joiners and plumbers. Given that the anticipated



growth of the services sector is likely to continue, students need to explore what impact these occupational shortages are going to have on the ability of organisations to attract and retain high-quality qualified staff.

Forecasting industry employment needs

Using the industries listed in Table 2.1, assign pairs or small groups of students to one industry. Ask the students to project the annual growth rates for their industry, using the data provided in the table, for the years 2008 and 2010.

1 If the level of growth for their industry develops as projected, what will that mean for the numbers of skilled staff required for the industry?

2 Are current shortages going to be exacerbated?

3 What are the implications for an organisation’s ability to attract and retain sufficient qualified staff?

4 Each pair or small group of students can then lead a class discussion on the industry that they have explored.

Changes in the workforce and the nature of employment To fully explore and understand the changes that have occurred in the Australian workforce during the past 20 years, students need to be aware of the changes that have been occurring in Australia’s population. At the beginning of the 21st century, Australia’s population has reached approximately 20 million and the workforce numbers approximately nine million.

Age distribution The ageing population has become a critical issue of public debate and has significant implications for workplace planning and the quality of life. This, together with declining fertility rates, has emerged as a significant policy issue, with implications for public policy as well as organisational policy. Changes in workforce participation rates among males and females, youth and the aged also need to be considered. In Australia over the past 30 years, male labour-force participation rates have declined, while female participation rates have increased. The pattern is especially marked for older workers.

Student activity

Generational needs

In class, divide the whiteboard/blackboard/flipchart between the four generations of employees: veterans, baby boomers, Generation X and Generation Y. Under the generation heading, place a rough age distribution for these generations (as it would appear in the 2010 workforce). Using a brainstorming method, explore and



list the dominant needs and values of each generation (consider the major events that have occurred during their work life). Afterwards discuss the HR implications of these needs.

1 How can each generation be accommodated to ensure that the human capital of each generation is effectively accessed and incorporated in our organisations?

Attracting more bus drivers

In an open class discussion, explore the situation currently being faced by many large municipal environments, an ageing workforce. This has become of particular concern for occupations that have attracted less interest from younger generations, including bus drivers.

One large domestic city fleet is currently facing a staffing crisis. Their staffing profile reveals that 75 per cent of the city bus fleet staff are male and over the age of 45. Most of the fleet staff are employed on a full-time shift work basis, oftentimes working split shifts (e.g., four hours during peak hour in the morning and four hours during peak hour in the afternoon).

Recruitment of entry-level staff has proven difficult. Many of the current staff have developed lucrative superannuation accounts over their years of employment and recent early retirement seminars have become very popular among drivers. The city bus fleet is in high demand; the growth of the city, the cost of inner city parking and the population’s developing need for public transport are putting pressure on the council to expand the bus fleet.

Brainstorm what the council can do to ensure that it has enough trained personnel to staff its growing bus fleet.

Women and work Over the past 20 years, female labour-force participation rates have risen from 45 per cent to 55 per cent. By contrast, the male participation rate stands at 77 per cent, down from 82 per cent 20 years ago. Women now constitute approximately 47 per cent of the total workforce. Importantly for the issue of work and family, 70 per cent of women in the prime child bearing years (25–34 years) are in paid work.

Further, 48 per cent of mothers are now in paid work, and 45 per cent of mothers with children under the age of six are in the workforce. These figures show the major social changes that have occurred in Australia over the past 20 years and brought into question the male breadwinner model as the typical family model in Australia.

In response to the challenges presented by the increasingly blurred boundaries between the two spheres of home and work, some Australian organisations have introduced a range of human resource management policies variously referred to as family friendly, diversity and work–life policies. Included in



these policies are leave provisions, flexible hours provisions, child (and elderly) care provisions and support measures, such as counselling and referral services.

Student activity Ask students to discuss key debate issue 4 at the end of the chapter.

Maternity and parental leave in Australia

In an era when many employees in market economies are time-poor, one of the most pressing policy concerns at national and company levels is family leave, including maternity, paternity and parental leave. However, in Australia approximately 60 per cent of working women are without paid maternity leave protection. The exceptions are for federal and state public servants where there is some legislative provision or where provision is via awards, enterprise agreements or company policy.

Student activity Students should read HRM in practice 2.3 Companies respond to community debates and social change. Discussion might focus on whether universal minimum paid parental leave should be available for all working women.

Refer students to tutorial activity 2a at the end of the chapter.

Students should carry out library research before a debate on this topic is held.

Women in management

Although female participation rates have increased, women hold a very small percentage of the crucial decision-making roles in organisations. For example, only 14 per cent of general managers are female and about 22 per cent are in middle management. The representation of women on boards is no better – the Equal Opportunity in the Workplace Agency said in 2003 that women hold only 8.4 per cent of available board positions.

The under-representation of women at higher levels of organisations is not the only inequity faced by women in the workplace. Pay equity is also an issue that should be high on the agenda of firms seeking workplace equality. Research shows that women’s wages are only 84 per cent of men’s wages.

For human resource managers, this issue is specifically related to job evaluation systems, which have not adequately recognised the gendered distribution of work and tasks within organisations in the past, often resulting in women’s jobs being undervalued.

Rising education levels

While Australian society is now more educated and better skilled than it was 40 years ago, some employers have discovered that their employees are suffering



from literacy problems that affect their performance. The challenge for HR managers and planners is to identify the future needs of the organisation and its employees and ensure that workers effectively serve the long-term interests of the organisation, while satisfying their own demands for job satisfaction, career opportunities and rewards.

Teaching objective 4

Students need to understand the major changes in the working lives of Australian employees that occurred during the past two decades of the 20th century, as these changes are both a cause and consequence of changing human resource management.

The changes in the patterns of work were concentrated around three areas, jobs, hours of work and wages, and the theme underlying each of them was flexibility. There were calls for increased flexibility in the labour market, increased flexibility in working hours and increased flexibility in payment systems. From the employer’s perspective, a flexible firm allows the employment of staff under variable conditions, for different purposes and periods and with quite disparate expectations.

Australian employers have pursued three main forms of flexibility: numerical, functional and hours flexibility.

1 Numerical flexibility refers to the ability to change the number of employees to suit the peaks and troughs of business. This can be achieved through the employment of casual and part-time workers.

2 Functional flexibility refers to the ability of employees to work across a variety of different tasks and functions as required by the business operations.

3 Hours or working time flexibility refers to the ability of employers to alter the standard working hours of employees, extend the lengths of shifts and alter roster arrangements.

In relation to working hours, Australians are working longer and harder than previously. According to the text’s authors, ‘the definition of what counts as the working day, the working week, has been profoundly reshaped during the past decade’. This is particularly noticeable in the concept of the standard working week, that is, the 35–40 hour week.

Casualisation has become one of the most significant trends in the Australian labour market over the past decade or so. According to the Chifley Research Centre, one in four Australians is now employed on casual terms. This has allowed employers to achieve numerical flexibility.



Student activity Students should consider critical issue 3 at the end of the chapter.

The employment relationship is the last point students need to consider as part of changes in work and employment patterns. Changing industrial relations legislation, the decentralisation of industrial relations, the rise of individual employee agreements, fixed-term contracts and significant increases in part-time and casual employment have led to a re-making of the employer–employee relationship and increasing concern among employees about their job security.


Students need to be aware of the need for Australian industry to restructure its operations towards increased efficiency, enhanced product and service quality and greater levels of national and organisational productivity.

Restructuring has involved substantial micro-economic reform to remove traditional work processes and practices, streamlining production systems and distribution processes and adopting modern technological developments to achieve these aims.

As well as understanding the economic and social contexts, human resource managers must be cognisant of the legal context. Students need to be aware of the two main sources of law in Australia.

Common law

The law created by judges, identified by reading the decisions of judges. Judges create precedents that are binding on judges and magistrates in lower courts. There are two main areas where judges have made decisions that have created an area of law pertinent to employment. These are contract law and negligence.

Statute law

The law made by Parliament. In Australia, there are six state parliaments, two territory parliaments and one federal parliament. This is the other main source of employment law. There are many statutes that apply to employees.

These cover: a Compensation in the event of injury b occupational health and safety c Long service leave d Minimum conditions and superannuation e Legitimacy of trade unions f Mechanisms for dealing with industrial disputation g Provision for awards, collective agreements and individual agreements that

contain terms and conditions of employment



Workers’ compensation Typically, the legislation requires a ‘worker’ (which often includes not only employees but independent contractors) who suffers a harm (typically described as an ‘injury by accident’) that is connected with their work to be paid compensation for lost wages and payment of medical expenses arising from the work done.

Occupational health and safety (OHS) Under state and territory legislation (or federal legislation for Commonwealth employees and maritime workers), employers and employees – including self-employed persons, people in control of premises, manufacturers, suppliers, constructors and designers – can face significant criminal penalties for any activities that affect or bring harm to other’s health or safety in the workplace.

The legislation does not require that a person be injured or harmed for a breach to occur; however, prosecution authorities are more likely to secure larger penalties from a conviction when a death or serious harm has occurred.

Long-service leave In Australia, each state and territory provides three months’ paid leave to employees after fifteen years of continuous service. There is a pro-rata amount after 10 years in certain circumstances, including termination by the employer. Various agreements may alter these entitlements, and some employees in the public sector obtain three months’ leave after seven or 10 years.


Students should be aware of the size and composition of the Australian workforce. At the turn of the 21st century, 8–9 million people constituted the workforce, with men making up 57 per cent and women 43 per cent.

Of these, approximately 80 per cent work in the private sector and 20 per cent in the public sector. Major changes in the working lives of these employees occurred during the past two decades of the 20th century. These changes were concentrated around three areas: jobs, hours of work and wages. The theme underlying each of them was flexibility (as discussed under teaching objective 4).

Jobs Changes to the type and location of jobs available have been occurring since the late 1970s. These changes have been influenced to a large extent by employers’ needs to increase the flexibility of labour in order to meet environmental challenges, such as fluctuating product and service demands. This is known as numerical flexibility. In HR terms, this relates to the ability to freely hire and fire employees, to restructure, outsource, casualise, downsize or rightsize. These policies have resulted in a growing feeling of job insecurity among employees and an end to the once-standard idea of a life-long career.



Work–life balance Another major change in the working lives of Australians in the past decade has been in hours of work. In short, people in jobs are working longer and harder. While the increasing flexibility of working hours provides managers with greater discretion over the allocation of work, it also impacts employees and the benefits are now being contested. For some employees, the flexibility of hours increases their ability to combine work and family, but there is now growing recognition that this flexibility favours employers more than employees and is leading to work intensification and increased stress in the home and family.

Wages Considerable change in relation to wage setting has also been occurring. With the introduction of enterprise-based bargaining and a growing emphasis on the individual, there is far less centralised wage setting. It is worth noting that there are growing inequalities among Australia’s wage and salary earners and that alternative reward systems are gaining prominence.

Student activity Students could discuss the advantages and disadvantages of flexible working conditions from both the employer’s and the employee’s perspectives.

Sample responses to critical issues (see p.74)

The critical issues (CIs) are intended to encourage students to analyse issues raised in the text and should be supplemented with further readings. The following responses are intended as a guide only, to promote discussion. Used effectively, the CIs should extend students’ appreciation of the conceptual and practical aspects of HRM in a changing environment.

Critical issue 1 Students are asked to explain how SHRM is affected by the global economy and specific events such as the GFC. Students need to discuss how practitioners who are adopting a strategic approach to human resources in a global economy need to have a heightened awareness or ‘global mindset’ of how external factors such as the GFC will affect their organisation. In a global context, SHRM becomes more dynamic, with more external factors affecting how strategies are developed and maintained. In the students’ responses, it is advised that they give examples of how external factors in a global economy will affect SHRM. For example in regards to the GFC, SHRM will have to move to downsize workforces in response to tight financial pressures on businesses.



Critical issue 2 a Students are required to discuss HR tools and practices that will help

facilitate the increased integration of females into the workforce and how to meet increasing labour demands with an ageing population.

In regard to the feminisation of the workforce, students need to discuss tools such as work sharing, flexi time and parental leave as means of attracting women into the workforce. It is also important to mention how increased participation by women in the workforce can help meet labour demands generated by an ageing population.

HR also faces another demographically charged problem in Australia’s ageing population. HR will need to employ tools such as part-time work and job redesign to either help with the transition from work to retirement or in an attempt to retain a loyal and experienced sector of the workforce. HR managers need to recognise the contribution elderly workers can bring to their organisation, and it can also be used as a strategy to reduce the effects of labour shortages.

b Students are required to look at current legislative changes that have been adopted to help businesses deal with these demographic changes. Some of the techniques that should be identified include

Paid parental leave scheme.

Critical issue 3 a Lifelong service as a full-time employee in an organisation has become

outdated. In the past, employees enjoyed job security protected by a strong union presence and enjoyed benefits such as overtime and penalty rates, whereas in the current industrial relations framework it has more emphasis on improving productivity and flexibility. This change represents a changing employment contract where employment is characterised by flexible work arrangements such as increased causal employment and contract work. This move has also seen employees surrender entitlements such as holiday pay and sick leave. Therefore, today’s employment contract is classified as volatile, but employees are rewarded for this risk with wage premiums.

Tutorial activities 1 Allocate teams to examine the pros and cons of the following HR strategies. a Increasing the pool of casual and contract employees versus permanent employees. Pros



• Employers have more flexibility in that they can downsize and lay off employees as they wish.

• Employers don’t have to pay benefits such as holiday pay and sick leave.

• Tools such as contracts can improve organisation productivity.

Cons

• Employers have to pay a premium on flexible workers and therefore labour costs can be high.

• Employers won’t have a stable workforce.

• Turnover can be high within the casual workforce due to lack of benefits and nature of the positions.

b Providing more flexible work arrangements exclusively for women with the intent of attracting female employees.

Pros

• Women will feel safer in being able to enter the workforce and balance their family commitments also.

• Increased female participation in the workforce can lead to the discovery of new talent and also help meet labour demands created by an aging population.

Cons

• Students should discuss EEO issues.

• Male employees may feel dejected by the move to offer this option only to females and turnover could result.

c Turning off office lights at 6.30 p.m. to encourage employees to leave work on time.

Pros

• Employees will enjoy a better work–life balance.

• The amount of overtime payments will be reduced.

Cons

• Employees may in fact become more stressed if they haven’t got the opportunity to put in extra hours to complete pending tasks.

• Organisation productivity and effectiveness may fall if employees aren’t meeting their deadlines.

• It reduces the effectiveness of flexible working arrangements.



2 Allocate groups to compare and contrast selected company- and country-specific policies in relation to the following areas for permanent, part-time and contract employees

a Paid parental leave b Access to part-time work c Carers’ leave for all family and elder care related issues

Students should try and focus on East versus West and also study mainly large corporations to give an effective answer. Here are some websites that students can refer to:

BHP - http://www.bhpbilliton.com/bb/peopleEmployment.jsp

Rio Tinto - http://www.riotinto.com/

Johnson and Johnson - http://www.jnj.com/connect/

Australia - http://www.fairwork.gov.au/Pages/default.aspx

USA - http://www.dol.gov/compliance/guide/

China - http://www.chinatoday.com/law/a.htm

Ethical challenge 1 Are quotas to advance women into leadership positions unethical?

2 Do they unfairly give women an advantage over men, or are they the only way to improve the representation of women in senior positions? Student responses here will vary according to ethical standpoints. It is important though to highlight issues of equal opportunity in the implementation of quotas and also the effect on organisational performance. The representation of female voice in organisations is also an important discussion point, and students should look to HRM in practice 2.4 to further the debate. It is also advised that students attempt to recognise their ethical standpoint whether being deontological or utilitarian.

Sample response to case study 2.1: HR director’s challenge: Creating the flexible organisation (see p.75–6)

1 Discuss how the notion of an ‘ideal worker’ is expressed in this case study. Outline how this notion is limiting organisational effectiveness and what can be done to charge current thinking in the organisation.

The case describes the idea that an ideal worker is someone, with gender dependant on position, who is available to work full time, including overtime or long hours and is a “go getter” who is committed to the organisation due to outside family commitments. In discussing how this idea is limiting organisation effectiveness, students should focus on areas of flexibility, changing demographics in the workplace and a perceptual shift.

http://www.bhpbilliton.com/bb/peopleEmployment.jsp�

http://www.riotinto.com/�

http://www.jnj.com/connect/�

http://www.fairwork.gov.au/Pages/default.aspx�

http://www.dol.gov/compliance/guide/�

http://www.chinatoday.com/law/a.htm�



2 Given the need to match the human resources management policies with the workforce’s and organisation’s characteristics, what kind of new or revised policies and practices would you propose to introduce sustainable and successful part time work policies? What are the reasons for your proposal?

In response to this question, students need to address the issues of the review presented above. Sample policies could include:

• Giving equal importance to the career development of both full-time and part-time employees alike.

• Ensuring that job design is reviewed when positions change from full time to part time to ensure equitable workloads.

• HR need do ensure that a re-entry strategy is in place for returning mothers who have been on parental or maternity leave. This strategy needs to facilitate a return to normal or equitable duties that were performed prior to taking leave.

In regard to reasons behind the proposal, students need to outline the importance of having a sustainable workforce and recognising the benefits, such as retention and flexibility, that part-time work brings.


Chapter 3 Industrial relations: Frameworks and practices Learning objectives After reading this chapter, you will be able to:

• understand the concept of industrial relations and its relationship to strategic human resource management

• understand the framework that regulates industrial relations and the major institutions, parties and processes in that framework

• recognise the differing views of the employment relationship and how this is impacted by industrial relations

• be familiar with major changes and debates that have occurred in Australia (and elsewhere) about industrial relations

• understand the implications of these changes for strategic HRM and the implementation of HR practice and policy in organisations.

Summary With growing recognition that human resources are important assets of the modern

organisation, managing the employment relationship has become a critical aspect of strategic HRM. Influencing and determining the terms and conditions of work and understanding the industrial relations system and industrial relations framework are critical to strategic HRM.

In the last two decades, there has been a transformation in the regulation of the employment relationship in Australia, with a move away from the system of industrial relations introduced at the beginning of the 20th century. That system was based on compulsory conciliation and arbitration and the collective representation of employees and employers. The system now favours negotiations between individual employees and employers, with established minimum conditions, in addition to collective bargaining.

The role of HRM in such complex and changing environments is difficult. It highlights not only the conflicting roles of HR managers as agents of management and advocates of employees but also the need to remain alert to changes in the legislative, political and social contexts.

Key terms Australian Council of Trade Unions (ACTU) 94 collective bargaining 96 enterprise bargaining 97

32 Chapter 3: Industrial relations


Fair Work Australia 85 good faith bargaining 97 industrial relations framework 84 right to request 108 union 81 workplace relations 81

Chapter outline Introduction The authors open this chapter with the acknowledgement that industrial relations can be a controversial and contested area of policy and practice. The Australian industrial relation system has a rich and complex history founded in a system of conciliation and arbitration, which has provided a centralised framework for determining work rules and resolving labour conflicts.

However, since the 1980s the need for increased workplace and organisational flexibility, efficiency and productivity has led to successive industrial relations legislative reform. The deregulation has essentially been shifting the focus of attention from national and industry levels to the workplace or organisational level.

The most recent changes are embodied in the Fair Work Act. The current legislation has moved away from the direct relationship between employer and employees and has implemented the use of collective and enterprise bargaining with an increased role for third parties, such as trade unions. The chapter also looks at the new institutional structures, the new safety net and processes of regulation.

Industrial relations and SHRM To understand the contemporary connection between industrial relations and strategic human resource management, students need to appreciate the changes that have been occurring since personnel management and industrial relations were considered separate functional entities in organisations, with neither closely integrated with business objectives.

As seen in Figure 3.1, strategic human resource management seeks to draw these spheres together more directly and closely to the organisation’s business interests and strategies.

Student activity To explore the traditional tensions between human resource management and industrial relations, students can conduct a simple force-field analysis with strategic human resource management as the ultimate change goal in the centre.

In class, students can brainstorm the values, underlying assumptions, basic philosophies and practices of human resource management on one side of the force field and compare them with the values, underlying assumptions, basic philosophies and practices of industrial relations on the other. The discussion could be facilitated and captured on the whiteboard/blackboard/flip chart.

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