All entries for October 2008
October 26, 2008
Question: With reference to your own experience, critically evaluate the idea that there is a business case for family friendly working practices.
Before answering the question, one might wonder if family friendly working practices are really important in my country (Spain). Some research has provided me with the following data:
60% of families with children have both parents working (INE, Instituto Nacional de Estadistica)
Family responsibilities are being increasingly shared between working men and women.
The high divorce rate its increasing the number of single parents with dependent children
The aging population (Spain is one of the countries with the lowest birth rate in the world) means that working people are increasingly responsible for the care of elderly relatives
The previous lead to some issues in the workplace:
About 65% of absences are related to family issues, caring for children, and dependent elderly, sick and disabled family members (INE, Instituto Nacional de Estadistica)
The performance of employees who have difficulty balancing work and family may suffer as their concentration, motivation and productivity will be affected.
Some employees may resign to meet family needs
Single parents need flexible work practices to remain employed
Non-custodial parents also need to balance work with family responsibilities.
These issues are more important as more skilled and experienced is the workforce and if there are difficulties in the labour market to find appropriate substitutes for the people leaving. In my case, I work with highly qualified human resources with a lot of experience and tacit knowledge about the customers and the industry, thus the costs (for example training costs) associated with the replacement of personnel leaving the company because of the impossibility to balance family and work are significant.
The short absences due to family issues (for example taking care of sick family members) are difficult to quantify, but will undoubtedly have an impact on the performance of the organization, mainly as an opportunity costs resulting from the time that the organisation is underperforming while the employee is away.
Finally, some people could just leave the company for another who offer better work-life balance characteristics. So, in this sense family friendly practices can also be used as a weapon, to debilitate competition attracting high skilled employees to our company.
Clearly, family friendly practices can alleviate some of the work-life balance issues. Some benefits for the employer would be:
Increased ability to retain skilled employees
Improved productivity and reduced staff turnover
Increased return rate of female employees from maternity leave
Reduced amount of people leaving due to family issues and therefore, reduced recruitment and training costs
Reduced absenteeism, lateness and stress in the workplace
Increased flexibility to meet varying work load demands
Fulfilment of equal opportunity objectives and legal requirements
Enhanced corporate image
Employer a competitive edge when recruiting
On the other hand, the employees will perceive an increase in job security in knowing that the employer understands and supports workers with family responsibilities which will probably lead to improved motivation and job satisfaction.
Although these costs and benefits are difficult to quantify and in correspondence is impossible to tell if the case is advantageous for the employer in terms of improved business results, it looks like there is strong support for a positive business case for family friendly working practices.
Nonetheless, the convenience of the business case depends on a number of context characteristics. We have assumed a situation when the cost of replacement is considerable, thus easy substitutes can’t be found in the market. Perhaps this narrowly-defined situation is not common in the majority of the industry. If this is the case, employers on those industries could consider if there is really a business case for their company. However, this would lead us to the philosophical discussion about the purpose of the enterprise. If its maximizing benefits for the owners while providing benefits for the whole of society, family friendly practices should be in any case considered.
Helen Newell, Warwick Business School (2008) “Course Material – Human Resource Management”
INE (Instituto Nacional de Estadistica) Website. www.ine.es
Marchington, M. and Wilkinson, A. (2005), 'Human Resource Management at Work' (3rd edn), London: CIPD.
October 25, 2008
1. To what extent do you think that the employment relationship is necessarily based on conflict between employers and employees who have competing interests?
For most employees, the rewards associated with their employment relationship will determine to a considerable extent the standard of living they can enjoy. On the other hand, for most employers the cost of labour is often a major influence on the profits and subsequently on the success of the organization.
The previous constitutes a conflict of interest between two parties. However, it is in neither party’s interest for the organisation to perform poorly because of the effect that this would have in profits (for the employer) and wages or job security for the employee (Marchinton and Wilkinson, 2005:266). Hence cooperation is also needed in the employment relationship.
The theory of “frames of reference” (Fox, 1966) approach the study of employment relationship through a different number of perspectives. These are the unitary and pluralist approach (there's also the radical approach that won't be considered in this discussion).
The unitary approach looks at the organisation as a machine or a living organism in which everybody plays their part and share a common goal. The leader makes the decisions and everyone else implements with no room for opposition.
On the other hand, the pluralist theory states that there are multiple interests groups in the organisation. The pluralist view puts more emphasis on the fact that an organisation is a collection of individuals and that common purpose is achieved through debate, negotiation and conflict.
In my opinion, there will inevitably be pluralism in the interests of different people within the organization, and therefore there will not be a unitary, common interest that can be expected to totally eliminate conflict. At the political level, while pluralist theory underlies democracy, unitary theory underlies, perhaps, communism. The underlaying comunism thinking states that, if the major conflict of interest between sellers and buyers of labour its eliminated, and organizations could be managed in the interests of all, this will lead to a return to a unitarist utopia.
Given the existence of plural interests between employers and employees in work organizations, the unitary approach tries to solve a conflict through coercion by the management while the pluralist uses compromise and collective bargaining to solve a conflict.
The pluralist view inevitable leads to conflict in the employment relationship. While some aspects of the relation can be written in the contract, some others, won’t be (and probably can’t be in long-term contracts) leading sooner or later to conflict. Therefore management will always have to initiate a negotiation process with the employee, to solve those bits in a process of mutual adaptation, that I see as something inherently positive for both parties. This is in line with the interactionist perspective that states that conflict is inevitable and some level of conflict can be optimal (Rosenfeld and Wilson, 1999).
2. What factors influence the extent to which the employment relationship is harmonious or conflictual?
Many factors can influence the extent to which the employment relation can be harmonious or conflictual.
The nature of relationships between employers and employees can vary greatly and has influence on the foreseeable level of conflict. For example, a short-term exchanges of labour for limited rewards (e.g. an student contracted for the sales period on a shoe shop) will probably have less level of conflict than the long-term employment relationship taking a significant amount of time and energy from an employee, which will also have the expectation of a growing career within the organization.
The type of organization can also influence the level of conflict. We can reasonably expect more conflict in the employment relationship in private business than in voluntary bodies or public services.
The role played by unions can have many influence as well. If the unions just play the game of fighting every management decision, conflict will appear more frequently than if the unions choose an approach that is closer to the partnership model.
Economic and socio-political considerations will have considerable influence in conflict. For example, in a deteriorating or turbulent economic environment when tough decisions have to be taken by management, conflict will arise more likely than in a positive and stable economic environment. This applies also to the particular business situation that the firm can be facing, if the business is performing bad many sources of conflict will probably appear.
Many of the previous factors (and some others) influence the relative bargaining power of the parties, which can determine in a considerable extent the management style that is being used in the organization. There’s no doubt that the management style used in the firm, also excerpts considerable influence on the level of conflict in employment relationship.
Fox, A. (1996) Industrial Sociology and Industrial Relations. Royal Commission Research Paper No. 3. London, HSMO. 1966.
Marchington, M. and Wilkinson, A. (2005), 'Human Resource Management at Work' (3rd edn), London: CIPD.
Rosenfeld, R. H. and Wilson, D. C. (1999), 'Managing Organisations' (2nd edn), McGraw Hill.
October 24, 2008
In this blog I will talk about different employee involvement mechanisms in place in Endesa and its effectiveness. This company is the main electricity producer and distributor in Spain, has significant presence in most Latin American countries such as Chile, Brazil, Colombia or Peru and employs more that 45.000 people worldwide. My knowledge from the company comes from the fact that I'm currently managing the outsourcing contract that IBM has in Endesa.
Question 1: What mechanisms and procedures have Endesa used for employee involvement and to give employees voice?
Endesa used to be a public company, accordingly the impact of power-centre/indirect methods of involvement policies such as collective bargaining has been historically high. However, in the last years the prominence of collective bargaining is declining in favour of high performance systems in which negotiation over a wide range of subjects, affecting workforce's conditions and wages, takes place between employees and line managers. At the same time, many others direct methods for employee involvement (EI) have been created.
Alongside collective bargaining, Endesa has joint consultation committees to discuss with staff on aspects not covered by collective bargaining. Regular meetings are being held and discussion ranges from the most trivial things to the more strategic.
However, during the last years significant shifts have occurred in the way that workforce is being managed, towards improving EI. Among others:
· Move from a culture in which people were paid to obey and "not to think" to a culture in which people are being paid (and rewarded) to think. Among other actions, this has led to the deployment of some tools to facilitate the flow of ideas (bottom - up).
· Quality Circles. People were required to participate on teams created to improve a particular process (this can be characterized as a task centred/direct method of EI). Hundreds of teams were created, they were given a problem and a limited amount of time (usually within the range of 2 to 3 months) to come up with a solution.
· Day-to-day management moved from controlling people to tracking information (Endesa thinks that if they create an environment in which people participate, control is less necessary).
On the other hand, during the last years, Endesa's been communicating a "new vision" which focuses on benefits for the society. Costly advertisement campaigns with mottos such as "a better future for the children of our children" have recently been seen in TV in an attempt to improve the company's image to the general public. However, big posters with this motto are also shown in the company headquarters, where they can only be seen by employees. I think that this is one form of EI, in the sense that Endesa's trying to communicate to their workforce that they are part of something bigger than themselves. One can expect people getting energized by this feeling thus improving EI as well.
Question 2: How effective were each of these voice mechanisms in a) giving employees an effective voice at work and b) adding value to the organisation? and Question 3: Account for any variation in effectiveness of different mechanisms
The feeling that unions do not really represent the interests of the majority of employees and the fact that their power has been diminishing over the years has made them very ineffective in giving employees voice at work.
Hence, in the last years, indirect means of communication, like joint consultation, have been progressively replaced by initiatives that directly involve the employees. A considerable percentage of the workforce population think that these initiatives promote higher performance in the organization and they prefer them over the traditional union representation.
However the change from indirect to direct methods of EI in Endesa has found many obstacles.
In my opinion, the main obstacle in increasing direct EI, lies in the attitude of the line managers. Many "old school" managers support EI by words but they not truly believe in employee empowerment. Some workers soon discovered how serious about EI their managers were and if they really walk the talk. In some cases, cynism appeared in the organization as apparently employees were given the power to decide, but the reality was that few things had really changed.
On the other hand, some managers didn't really know what EI really meant and they just come up with the creation of some teams to just analyse morale or to organize the next department's dinner event, but they did not really allow employees to take decisions on the way the things were being done or in the organization and scheduling of their own work.
However some EI mechanisms worked very well. Some quality teams did an excellent job and some of their recommendations were successfully implemented. They key here was that these teams focused on "day to day" issues rather than "strategic" issues. Is my reflection that on one hand, management must make an effort to communicate strategic direction to the employees and on the other hand, allow them to take decisions on "day to day" activities. Using this approach, these "quality teams" added great value to the organization.
However the question here is where are the boundaries of the decisions that lie in the employee's domain or the management's domain. And it's a difficult question.
On the other hand, the tools that were created to facilitate the flow of ideas obtained a great success. It took some time but once the employees learned that their voices were being heard, an exponential stream of ideas appeared. Some of these ideas were awarded a small prize (for example an iPod) and sometimes the author was nominated as "champion" for its implementation.
Some direct EI mechanisms in place didn't work as expected either. For example, the web pages that were created in which employees can ask questions to executives were hardly used. Also the survey to measure the organization climate, perhaps is a powerful for HR, but is not clear if the surveys really ended in actions to improve climate. Apparently, the only executive action in response to the survey was to tell the first line managers that they had to "do something" to improve the "numbers" in the next survey.
Some attempts of team working, in the sense of full self-managed teams, were undertaken but these didn’t work very well either and were dismantled after some time. The reason why these teamwork initiatives have failed is not clear but I think that in any case, they have helped in the creation of a new culture across the organization.
The Warwick MBA for IBM – Human Resource Management, Lesson 4
Mick Marchington and Adrian Wilkinson, Human Resources Management at Work. People Management and Development, Third Edition, CIPD, 2007
October 05, 2008
Question 1. Reflecting on your experience as an employee and as a manager, to what extent do you think pay motivates or demotivates employees? Why?
One of the things that I have leaned from my experience as manager in IBM is that pay is not equally important in all situations or to all individuals. For example, if one employee is facing a complicated financial situation it's going to give a critical importance to pay while an employee with their 'basic necessities' covered will probably give more importance to other factors such as career opportunities. On the other hand, young employees usually give more importance to cash when the older ones are more interested in job security or retirement options. Many more situations and employee individual characteristics can affect the extent pay is important for employees.
But what do the employees say about pay and motivation?
When employees are asked for the main motivational factors at work, pay hardly ever appears in the first position. Instead, security, job interestingness, possibility of promotion and others show up as the principal motivators at work above pay. Some studies have corroborated this view. For example Jurgensen (1978)collected information from more than 50,000 applicants to the Minneapolis Gas Company over a 30-year period concluding that pay ranked fifth in importance to men, and seventh in importance to women. Towers Perrin (2003) surveyed more that 35000 US employees concluding that competitive base pay ranked sixth in retaining employees, but pay didn't even appeared in the top ten in terms of motivating employees.
However, during my time in IBM I have seen so many people leaving the company only because they were paying more in another firm (specially during the dot.com fever) that I wonder if people are really being frank when answering those surveys. Reflecting on this, I think that people do not put pay on the first positions in surveys because of the culture or social norms that view money as a less noble motivator factor in comparison with challenging or meaningful work. This suggests me that money is more important to people than people admit.
On the other hand, I have seen people accepting one promotion even when this implied losing money (at least in the short term) because some salary incentives didn't apply to the new position. Hence a lot of factors apart of money can influence people's behaviours and (probably) motivation.
In my experience I have also found that the motivational effect of money is nonlinear across different pay levels. For example giving a salary increase of 100€ to a person who earns 1000€ a month will be more motivating than giving the same increase to a person that makes 5000€ a month. This is in line with Hertzberg’s (1966) two-factor theory of motivation. In this regard I believe that salary is a hygiene factor in the sense that, when certain level is reached, the motivational effect will decrease, but on the other hand if this level is not reached, the pay will be more a demotivating factor. Other motivational factors will be of little use when the employee is below the hygienic salary level, however these will be needed to motivate people above it.
Finally, Equity theory (Adams, 1963) focuses on people’s perceptions of the fairness (or lack of fairness) of their work outcomes (pay, rewards...) in proportion to their work inputs (effort, skills...). If one employee perceives that their outcome/input is inferior than another worker's ratio, he will feel that is not getting the outcomes that he should and will try to rebalance the situation either by asking for a raise of by reducing their inputs (demotivation).
In my experience, the equity issues are one of the most important aspects to consider in reward management, as people judge the fairness of pay in relative terms, although this can vary among different cultures.
Question 2.Thinking about different pay system that you have experienced, which have been the most effective? Why?
In my opinion, the aspect of pay that will most directly motivate performance, is the extent to which pay is contingent on performance. If raises make no differentiation on the basis of performance, pay won't make much influence on motivation.
IBM has a complicated pay system that in general follows the rule to reward the best organizational performers. Among some others, existing reward methods comprise:
* Broadbanding (Armstrong and Brown, 2001)
* Performance Related Pay (PRP)
* Incentive plans
*Awards recognizing job well done
* Awards for achieving one particular objective
* Bonuses linked to organizational performance
* Employee share ownership
Not all the methods are available to all kinds of employees. For example, incentive plans are open only for employees with certain responsibilities and above some "band level".
Among them, the most influential one in people's motivation is in my opinion PRP. Under this scheme people's performance is evaluated using the following scale:
2+=Above Average Contributor
The employee achievement is used to calculate the amount of the variable part of the salary that the employee will receive and also determines, in a considerable extent, the next salary increase. This method is a powerful motivator but only for the top performing employees and individuals with high needs for achievement. As the method include quotas for the number of 1's and 3's that one particular department have to achieve, many people fall into the middle ground where the pay incentive is very low.
PRP is awarded on the basis of individual performance appraisal by employee's manager against pre-agreed objectives aligned with organizational strategic objectives. This introduces the problem of the subjectivity of the assessment and also the issue coming from the fact that the appraisal process is viewed just under the PRP view but not under the view of the employee's development and recognition for well done work . Another significant issue is inconsistency, as quotas are deployed by department, hence managers with different "quality standards" will give inconsistent evaluations when comparing different departments.
Incentive plans could be an important motivational tool if they were used correctly, which apparently is not happening in IBM today. The objectives that a particular employee has to achieve (normally financial objectives such as gross profit or revenue) are being set in a highly bureaucratic way for the financial department, who doesn't know the intricacies of a particular project. Most of the time, the objective being set is either very easy or very difficult (most of the times impossible) to achieve. In the first case the motivational effect is very low, in the second it has a powerful demotivating effect (If you make the basket smaller than the ball, people won't even try playing). First line managers should have influence in the objective setting, in order to improve this process.
Awards in recognition for the job well done, if used correctly, have the ability to reinforce the desired individual behaviours and signal them for others.
On the other hand, bonuses linked to organizational performance and share ownership have little (if none) influence in performance as is very difficult to relate individual performance with organizational performance although it can maybe boost a "community" feeling.
Finally, awards for achieving a particular objective can be very useful to motivate people in order to achieve particular organizational objectives and as a way to signal strategic priorities, however employees can "get used" to it leading to demotivation in absence of these "one time" rewards.
Adams, J. S. (1963). Toward an understanding of inequity. Journal of Abnormal Psychology, 67, 422–436.
Armstrong M (2002). Employee Reward, 3rd edition, London
Hertzberg, F. (1966). Work and the Nature of
Jurgensen, C. E. (1978). Job preferences (What makes a job good or bad?). Journal of Applied Psychology, 63, 267–276.
Towers Perrin. (2003).Working today: Understanding what drives employee engagement. The 2003 Towers Perrin Report.