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The International Journal of Human Resource Management 6:4 December 1995

Assessing the adoption of HRM by small and medium-sized manufacturing organizations

Joanne P. Duberley and Paul Walley

Abstract This paper reports on exploratory research which uses a comparative case-study approach with sixteen organizations to study the extent to which HRM has been adopted in traditional brownfield-site, small and medium-sized UK manufacturing organizations. The paper begins with a comparison of HRM practices across the sixteen organizations. It is argued that the most common HRM practices in these firms appeared to relate more to a traditional small firm approach than to any proactive attempt to adopt HRM. The analysis shows that very few of the organizations adopted a strategic approach towards HRM with an integrated set of policies related to corporate strategy being put forward. Instead, the dominant approach seemed to be one of reactive, opportunistic prag- matism, showing little development from the standard modern approach identified as most common in the early 1980s. On the other hand, three organizations are shown to approximate quite closely to the model of strategic HRM and contex- tual analysis is undertaken to attempt to differentiate these from the other organi- zations. A comparison is also made between the findings of this research and a telephone survey that was conducted to assess the use of HRM in Leicestershire. The results of this show that a certain degree of caution should be exercised when accepting reports of organizational practices which do not involve researchers actually entering the organizations. Finally, the paper concludes that in order to get a better understanding of the situation facing these and other organizations we need to broaden our scope and consider the impact of changing economic, social and political conditions on management worker relations.

Keywords

HRM, manufacturing, strategic, SME.

Introduction

A recent editorial comment in The International Journal of Human Resource

Management (Purcell, 1993) identified the need for greater research into the application of HRM in small and medium-sized organizations. It has also been suggested that current research into HRM does not convey a true picture of the

state of the field in the majority of British organizations (Beaumont, 1992). One

of the main reasons for this is that much of the research that has been con-

ducted into HRM seems have been focused on larger organizations (Storey, 1992; Brewster and Smith, 1990; Hendry and Pettigrew, 1987; Sparrow and Pettigrew, 1988) and there has been a tendency for research to be more narrowly focused on industrial relations issues (Millward et al, 1992; Scott et ai, 1989; Marginson et ai, 1988) or employee development (Hendry et ai, 1991). There has also been a tendency to utilize individual case studies in the discussions of HRM practices (Hendry and Pettigrew, 1987; Sparrow and Pettigrew, 1988;

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© Routledge 1995

892 Joanne Duberley and Paul Walley

Garrahan and Stewart, 1991; Gennard and Kelly, 1991; Noon, 1989), although more recently a survey approach has been adopted by some researchers (Brewster and Smith, 1990; Poole and Jenkins, 1990; Yuen, 1990; Pang and Oliver, 1988; Storey et al, 1994). This paper uses a comparative case study approach with sixteen organizations to explore the extent to which HRM practices have been adopted in traditional, brownfield-site small and medium-sized UK manufacturing companies. The organizations under study here are of particular importance as it appears that they are often neglected in HRM research and that most support for strategic HRM has come from larger greenfield-site manufacturing organizations (Garrahan and Stewart, 1991, Guest and Hoque, 1994) or service organizations (Henry and Pettigrew, 1987; Sparrow and Pettigrew, 1988; Storey et al, 1994). We also believe that a comparative case study approach has the benefit of allow- ing greater depth than survey approaches and, by looking at many aspects of HRM, it is hoped that breadth will not be sacrificed. The paper will begin by briefiy considering the meaning of the term HRM, we will then move on to dis- cuss the results of the case studies before comparing these with a survey that was carried out shortly afterwards in a similar area. The conclusions that we draw suggest that a great deal more longitudinal research is required if we are to get a clear picture of how applicable HRM is to smaller organizations and how the employment relationship evolves over time.

Defining HRM

In order to identify the extent to which HRM is being used in these organiza- tions it is first necessary to get a clear picture of what we understand the term to mean. This, however, is easier said than done. The difficulties involved in defining HRM and the inconsistencies and inherent contradictions of the con- cept have been discussed elsewhere (Legge, 1989) and it is not our intention to repeat that here. However, these difficulties do cause problems for researchers trying to identify the use of HRM. While some writers stress that HRM is dif- ferent from personnel management 'by virtue of its integration with business and other strategies' (Thomason, 1991: 3), others suggest that HRM is synony- mous with the adoption of certain practices (see, for example. Guest, 1987). These two approaches could obviously be contradictory. If HRM is a strategic activity which aligns the personnel policies of the organization with corporate strategy then surely it cannot also be a prescriptive set of practices. This can be highlighted by a comment from Noon (1989) who notes that HRM is often assumed to involve a move away from collective relations, yet from a strategic fit perspective this may be the best way for managers to deal with their work- force in certain situations. Thus, the lack of any clear definition of HRM makes research in this area potentially problematic. One of the major issues that had to be confronted in this particular piece of research was whether we should attempt to identify cer- tain practices in order to substantiate the existence of HRM or whether we needed to identify that the process of human resource strategy development was taking place. Obviously, the former is easier to achieve than the latter. A simple checklist of practices could be used (although, as we will show later, this may not be as straightforward as imagined, particularly if a survey approach is used).

Adoption of HRM by small and medium-sized manufacturing organizations 893

Attempts to identify the relationship between HR practices and corporate strat- egy may be limited by an emphasis on the rationalist approach towards strategy development which has been criticized both in mainstream strategy literature (Mintzberg, 1990; Mintzberg and Waters, 1985) and in the HR literature (Arthur and Hendry, 1990; Boxall, 1992; Butler, 1989). Yet a thorough analysis of the emergent nature of strategy and the links between this and HR policies would require an in-depth longitudinal analysis of the organizations. This research has attempted to consider both approaches. In the first half of the results section HR practices are compared across the firms, using a frame- work developed by Storey (1992). A possible limitation of using this framework is that the emphasis tends to be upon HRM as a set of practices (e.g. team working, harmonization, etc.) rather than as a process of incorporating human resource decisions at a strategic level. However Storey does consider the extent to which HRM is central to the corporate plan (factor 10) and the foci of atten- tion for interventions (factor 27). Special attention has been paid to these vari- ables in order to try to get a feel for the extent to which HRM represents a strategic process in the organizations under study. Using this method it was pos- sible to identify three organizations where it was perceived that human resource policies were considered central to the development and implementation of cor- porate strategy and where a coherent set of HRM policies was adopted. In the second half of the results section attempts will be made to identify contextual factors which differentiated those organizations utilizing a strategic approach from those that did not, using a framework developed by Buller (1988). The framework developed by Storey (1992) identifies twenty-seven compo- nents of HRM split into four broad categories of beliefs and assumptions, strategic aspects, line management and key levers. While the authors accept that this model may have some limitations, outlined by Storey himself (1992: 36), and that its description of HRM could be seen as an idealized future state, this does seem to be the best available framework for identifying key HRM assump- tions and practices which can be easily used for data analysis. Table 1 outlines the twenty-seven factors and compares the HRM approach to a more traditional personnel and IR approach.

Research methodology

One hundred and fifty firms were contacted and asked to take part in this study. They were selected from the Kompass Directory on the basis of their size (fewer than five hundred employees), turnover (less than £25 million), product range (manufacturing engineering) and location (East Midlands, West Midlands and South Yorkshire). It is recognized that almost any method of recruitment of study sites would introduce some form of sampling bias. In this case it was noted that the probability of company acceptance of the research did increase with proximity to the university, perhaps due to some 'loyalty' factor. The response rate of 12 per cent highlights the difficulties in gaining access to organi- zations for research purposes which has been discussed many times before (Form, 1969; Bowles, 1976). Walley et al. (1994), for example, have noted that only a small proportion of small/medium-sized UK manufacturing companies regularly co-operate with academic research and that few companies appear pre- pared to commit managerial time to help with this type of study. Unfortunately

894 Joanne Duberley

Table 1 Comparing HRM with personnel and IR

and Paul

Walley

Dimension

Personnel and IR

HRM

1. Contract

Careful delineation of written contracts

Aim to go beyond contract

2. Rules

Importance of devising clear rules/mutuality

'Can-do' outlook

3. Guide to management

Procedures

Business need

action 4. Behaviour referent

Norms/custom and practice

Values/mission

5. Managerial task vis-d-vis labour

Monitoring

Nurturing

6. Nature of relations

Pluralist

Unitarist

7. Conflict

Institutionalized

De-emphasized

8. Key relations

Labour management

Customer

9. Initiatives

Piecemeal

Integrated

10. Corporate plan

Marginal to

Central to

11. Speed of decision

Slow

Fast

12. Management role

Transactional

Transformational

13. Key managers

Personnel/IR specialists

General/business line managers

14. Communication

Indirect

Direct

15. Standardization

High (e.g. parity an issue)

Low (e.g. parity not seen as relevant)

16. Prized management skills

Negotiation

Facilitation

17. Selection

Separate, marginal task

Integrated key task

18. Pay

Job evaluation

Performance related

19. Conditions

Separately negotiated

Harmonization

20. Labour - management

Collective

Towards individual contracts

21. Thrust of relations with stewards

Regularized through facilities and training

Marginalized (with exception of some bargaining for change models)

22. Job categories and grades

Many

Few

23. Communication

Restricted flow

Increased flow

24. Job design

Division of labour

Teamwork

25. Conflict handling

Reach temporary truces

Manage climate and culture

26. Training and development

Controlled access to courses

Leaming companies

27. Foci of attention for interventions

Personnel procedures

Wide-ranging cultural. structural and personnel strategies

Source: Storey 1992

the size of two of the companies was too large for this sample and so they have had to be excluded from the analysis, leaving us with a sample of sixteen. A brief description of each of the companies can be seen in Table 2. Following Arthur and Hendry, we have focused on small and medium-sized business units (SMBUs) and have defined those as 'business units with up to 500 employees that are either independent enterprises or substantially autonomous divisions of larger corporations' (Arthur and Hendry, 1990: 233). Therefore, although some of the firms were part of larger groups, each was viewed as a strategic business unit and therefore was responsible for the majority of, if not

Adoption of HRM by small and medium-sized manufacturing organizations

895

Table 2 The organizations studied ranked by size (no. of employees)

Company

Turnover

No. of

Market - industry

(£m)

employees

1

10-20

120

General engineering (hydraulics)

11

5-10

140

Metal castings

9

5-10

175

Wire products

5

2-5

175

Moulded components

4

5-10

180

Light electrical

7

10-20

180

Industrial filters

6

10-20

200

Measuring equipment

10

5-10

200

Special materials

13

5-10

220

Industrial valves

8

10-20

230

Industrial valves

15

5-10

300

Automotive components

12

10-20

350

Moulded components and light assembly

16

20-30

350

Mechanical engineering

14

10-20

375

Automotive components

3

20-30

400

Electrical engineering

2

20-30

425

Electro-mechanical

all, personnel decisions. The major control exerted over these companies by their owners was usually in terms of financial measurements such as profit, cost and return on investment targets. A question of sampling bias arose as the majority of firms that opted to take part in the research had been going through some type of change programme and it was felt that they may have agreed to take part in the study in order to get some feedback on this. Whether this is symptomatic of increased levels of change in other UK manufacturing companies or is specific to this sample is impossible to say. Nevertheless, by most parameters, such as size, markets served and ownership type or profitability, the sample appears to be representa- tive of this sector of UK manufacturing industry. Although the small sample may preclude generalizations, it is hoped that the use of in-depth case studies should prove illustrative; it has been recommended by a number of writers in the small business field (see, for example, Curran, 1986). It is also suggested that by using smaller, less well-known organizations it should be possible to overcome the problem identified by Guest (1987) and Beaumont (1992) that the literature focuses on what is happening in one or two atypical organizations and does not consider the majority of firms. The use of in-depth case studies should also overcome another problem identified by Guest (1990), namely that what companies tell the world they are doing can hide other practices that they may be less keen to publicize. Thus it is our intention that this study should be seen as an in-depth exploratory study and any findings should not necessarily be viewed as generalizable to all small and medium-sized manufacturing organizations. The results of the research are shown in Table 3. Storey and Sisson (1993), in outlining the use of this model, explain that the way the data were collected is

896 Joanne Duberley and Paul Walley

Table 3 Results

Aim to go beyond contract Impatience with rules Business need = prime guide to action Values/mission Nurturing org'n Unitarist Conflict de-emphasized Customer orientation Integrated initiatives Corporate plan central Speedy decision making Transformational leadership General business mgt to fore Direct communication Standardization not emphasized Facilitative mgt Selection integrated PRP Harmonization Towards individual contracts Marginalization of stewards Fewer job categories Increased flow of communication Teamworking Conflict decreased through culture change Learning co. Wide-ranging strategies HRM present

Notes

X

X

%

X

%

%

%

%

%

%

%

X

X

X

%

X

X

%

X

X

X

X

X

X

%

%

X

X

X

%

X

%

%

X

%••••

X

%

%

%

X

X

%

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X

%

X

X

%

X

%

%

Al

%

%

X

*

%

X

%

%

%

%

%

X

X

X

X

X

X

X

X

%

X

X

X

%

%

X X

%

X X

X X

X

X

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%

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X

%

%

X

X

%

X

X

%

%

%

10

X

%

X

%

X

X

%

X

%

X

X

%

II

12

13

14

15

16

No. of

 

firms'

%

%

%

10

%

%

%

8

••••• •

13

%

12

X

X %

X

X

X

3

X

% %

6

• •

 

15

• •

 

16

 

6

X

X X X

 

X

4

X

%

 

9

%

X

%

X

X

3

%

 

15

%

 

13

%

%

%

%

 

6

%

X

5

%

%

%

%

4

%

%

9

X

%

5

X

%

X

%

5

X

%

X

%

1

%

%

%

6

••••

14

X

%

%

%

%

3

X

%

%

%

6

X

X

X

X

X

%

X

X

%

%

%

%

%

%

Present

X Not present

%

Present in some areas of the organization

• Not applicable, no trade tinion representation

t

The number of firms in which each practice was seen

Adoption of HRM by small and medium-sized manufacturing organizations 897

crucial in that the ticks, crosses and percentage marks are not simply the usual record of respondents' replies to surveys, they are the researchers' own judge- ments based on multiple sources of information. The same approach has been used in the analysis of these firms. During the research visits a minimum of seven people, ranging from senior management to shop-floor operatives, were interviewed in depth in order to give different perspectives on any changes tak- ing place. In addition, written policies and procedures were reviewed and lengthy observation was carried out wherever practical. Not surprisingly, we have encountered the same problems as those found by Storey and Sisson. For example, in many cases there had been particular periods of time when one or more of the twenty-seven features, which may be deemed less important now, was given paramount attention. In concurrence with Storey and Sisson (1993), a tick is given when the criterion in question was being given a clear emphasis at some time during the research, although attempts were made to differentiate between programmes where there was genuine commitment and those to which lip service was being paid. The second difficulty and in some respects the most problematic during this research was the fact that initiatives were often directed at certain sections of the work-force and not others, hence the need for the score 'in part'.

Results

Identification of common HRM practices

Perhaps the most striking result is the large amount of variety that exists with regard to HRM practices across these firms, although it has been noted else- where that small and medium-sized enterprises are very diverse in this regard (Pettigrew et al., 1990). Table 4 below shows the most and least common HRM practices which were seen in this research.

Most common HRM practices Before looking at the trends it is important to note that some of the features highlighted may have more to do with the size and lack of formality in some of these firms than with any strategic approach to HRM. Indeed, it could be argued that the practices which were most common actually represent a traditional small-firm approach rather than any strategic move towards HRM. In most of the organizations the prime guide to action was business need; however, in some of the smaller owner-managed companies the wishes of the owner managers themselves, whether this was perceived to be in the best interests of the business or not, could be seen as the prime guide to action. An example of this was the introduction of MRPII in one company where the owner's rationale for this relatively large investment was that his son was interested in computers and it might be useful. Although some of the larger organizations relied more upon formal procedures, most of the companies were not heavily bureaucratized and there was often a strong sense of the finn's mis- sion. The speed of decision making is also unsurprising in the owner-managed firms where power often rests in the hands of one or two individuals. However, the speed of decision making in those firms owned by a group varied consider- ably depending upon the amount of money which was involved. Certain internal decisions which had few obvious financial implications could be made very

898 Joanne Duberley and Paul Walley

Table 4 Most and least common HRM practices

Most common HRM practices^

Prime guide to action is business need Conflict de-emphasized Values/mission Customer orientation Speedy decision making General business management to fore Increased direct communication

Notes

Least common HRM practices^

Nurturing organization Corporate plan central Transformational leadership Learning companies Wide-ranging strategies

1 Practices seen in more than two-thirds of the companies

2 Practices which were not used by more than two-thirds of the companies

quickly. Those involving capital investment, on the other hand, could take a very long time. In all of the companies general managers were the key decision makers with regard to the employment issues. This is not necessarily a move towards HRM however, as in some of the companies it could be explained by the very low sta- tus of personnel professionals, often viewed as performing nothing more than an employee record-keeping function. In addition, almost 40 per cent of these com- panies employed no personnel specialist. Confiict was de-emphasized in most of these firms and there are a number of possible reasons for this. In the owner-managed organizations a unitarist out- look on the part of managers prevailed and so conflict was not really recognized by them (although this outlook was not always shared by the work-force). In the larger companies the fact that some of them were fighting for their survival, a perceived weakening of the union and desperation on the part of many work- ers to keep their jobs may all have been contributory factors. Finally, both the type and level of communication appeared to be changing. An increased use of direct communication such as team briefing was prevalent. Interestingly, though, communication was not always as widespread in owner-managed firms. In these companies there was often a tendency to keep financial infonnation in particular out of the hands of employees (including managers).

Least common HRM practices These can be split into three main areas. The first is with regard to levels of training and development. This was very low in most of the organizations. There was a tendency to buy in skills when they were needed rather than train existing staff It was generally felt that the current recession had some part to play in this and that few of the firms could afford to train. In addition, many of the firms were situated in areas near to larger employers who provided a pool of skilled workers. In one case where the orga- nization was the main employer in a small market town they did appear to pay more attention to long-term training and development needs. The second area relates to the managerial role vis-d-vis staff. Although a paternalistic approach was common, few of the organizations could be called nurturing as the emphasis

Adoption of HRM by small and medium-sized manufacturing organizations 899

tended much more towards monitoring. Possible reasons for this include a lack

of promotion opportunities in these smaller firms and the effects of the reces-

sion. Similarly, few managers either perceived themselves or were perceived by

their work-force as transformational

tional approach. Finally, the third factor concerns the strategic aspect of HRM. Policies and decisions were rarely seen as central to the corporate plan (although it must be remembered that some of these firms did not have an explicit long-term corpo- rate plan). An example of this can be seen when one of the companies invested heavily in advanced technology in order to broaden their product range, only to

discover once it was installed that none of their work-force had suitable skills to

be able to use it. Similarly, few of the organizations utilized wide-ranging cul-

tural, structural and personnel strategies. As will be discussed later, the approach tended to be far more reactive and piecemeal, with personnel practices often viewed as a bolt-on activity. Other interesting areas found in the results include the following: an increased use of performance-related pay in many of these organizations. This was partic- ularly common in units that were owned by other organizations as it was often one of the controls in place upon senior management. Where the organizations were unionized there was not generally perceived to be an increased marginaliza- tion of stewards, by either management or the stewards themselves, although arguably they were being side-stepped by the introduction of more direct meth- ods of communication. Fewer job categories were found in some of the organizations, although the extent to which this was viewed as a strategic move or a reactive cost-cutting one could be debated. The reduction of categories was more common on the shop-floor, particularly by those organizations that were in the process of imple- menting or had implemented certain new manufacturing approaches such as cel- lular technology.

leaders, tending towards a more transac-

Comparison with results from

A telephone survey of human resource practices was organized by the Human

Resource and Change Management Research Unit of Loughborough University (Storey et al., 1994). This study used a stratified sample of 560 organizations in Leicestershire, representing all industrial sectors, to discover which HRM initia- tives had been adopted in the last five years and whether the initiatives had been sustained. Although not directly comparable with the research reported here, in that it was not restricted to manufacturing and sampled a wider variety of dif- ferent-sized units, it is interesting to note some of the obvious similarities and differences found.

There was some agreement in the results found here and those found in the Leicestershire survey, notably the popularity of teamworking (although in the case studies this was predominantly within functions) and team briefing, an increased use of non-standard employment and the adoption of performance- related pay. However, the survey finding that changes were sustained in a vigor- ous manner was rarely substantiated in the case studies where we found evidence that many programmes such as team briefing and quality circles fell into disuse. Another major difference was the extent to which organizations had

telephone survey

900 Joanne Duberley and Paul Walley

a formal HR strategy. The Leicestershire survey found that between 48 per cent

strategy (this is

difficult to compare as the firms in the case studies fall into two of the size bands for the Loughborough study). This contrasts with under 40 per cent of the case study sample. This could to some extent be explained by the survey's finding that formal HR strategies were more common in the service sector and the public sector. Another explanation could be the discrepancy found by mar- ginson et al. (1988) between the claim to have an integrated approach and the reality of the situation, although every effort was made in the telephone inter- views to substantiate any claims of a formal strategy. Other differences include that the case studies found few examples of harmonization in terms of condi- tions whereas these were more common in the telephone study. This may be because the types of non-standard employment which had increased in popular- ity in the case studies were predominantly part-time working and subcontracting which could be seen as a shift away from rather than towards harmonization (Blyton and Morris, 1992). In many ways we were impressed by the similarities in the findings of the two studies, although the differences do send out signals for caution with regard to how we can find out the true picture of HRM activity in organizations. It may be that organizations like to promote themselves as being forward-looking employers when a lack of strategic integration means that certain practices may be picked up and then quickly dropped when no immediate financial return is seen (Duberley and Burns, 1993). As Poole and Mansfield (1992: 213) found, 'notwithstanding considerable variations in the implementation of HRM prac- tices there are undoubtedly indications that management attitudes are consistent with many of the core elements of HRM'. Therefore we would suggest that the telephone survey discussed here and self-reporting questionnaires like that recently undertaken by Guest and Hoque (1994) should be treated with some caution. From our case studies, it would appear that many of the companies studied had seen a definite change in their employment practices over the last few years. The extent to which these were proactive, strategic initiatives on their part, how- ever, was questionable. Some of these changes do fall into the realms of human resource management, for example the increase in direct communication, the increased use of a peripheral labour force and a certain amount of tinkering with payment systems under the guise of performance-related pay. However, this cannot really be considered strategic as there very rarely existed a coherent approach (note the scores on item 27); and even if there was a coherent set of personnel policies these were rarely linked to the corporate strategy of the busi- ness. Changes were often piecemeal, reacting to specific problems and often con- centrated in only one area of the company, predominantly the shop-fioor. Rather than adopting a strategic stance, the managers of many of the companies appeared to conform to Fox's (1974) standard modern classification, operating with an opportunistic reactive perspective, which seems to indicate little real change from the situation found by Purcell and Sisson (1983). It appears that, instead of wide-ranging strategic changes, what we often saw were piecemeal 'quick fixes' to perceived problems.

and 70 per cent of firms of a comparable size had a formal

Adoption of HRM by small and medium-sized manufacturing organizations

901

Identifying firms using strategic HRM

Although the majority of firms did not appear to be adopting a coherent strate- gic HRM approach, the findings here were similar to research on SMEs carried out by Pettigrew et al. (1990) in that the sample was characterized by diversity and there were three firms (firms 2, 5 and 12) that did appear to be adopting a much more proactive stance. It is also interesting to note that these organiza- tions appear to adopt not only the prescribed practices of HRM but also the process of involving HR issues in corporate decision making, which perhaps indicates that the distinction made at the beginning of the paper is less problem- atic than originally thought. The next section of the paper will try to identify contextual factors which differentiated those organizations which adopted a strategic HRM approach from those that did not.

Contextual factors Buller (1988) identified a number of factors which he claimed had an effect upon the extent to which HR initiatives are integrated with strategic planning. These included the environment, the extent to which the organization had formulated a strategy, organizational characteristics, executive values and skills, work-force skills and management systems. We have consid- ered each of these areas to try to identify whether those organizations which adopted HRM were significantly different from the others.

Environment Buller suggests that environmental forces which have a major impact are the increased levels of competition (this was also found by Pettigrew and Sparrow, 1988b), technological change and changing labour-market demo- graphics. It is difficult to differentiate the HRM firms from the others on these characteristics because managers in all of the companies perceived themselves to be facing increased competition and a more dynamic environment. Perhaps the answer lay more in what was considered to be the most appropriate way to react to an increasingly competitive market. Firm 5, for example, clearly felt that the way to compete was through getting the most out of its work-force (for example by ensuring they were multi-skilled), while others, in particular firm 4, felt that cost minimization was the key and concentrated on reducing the head count and cutting costs. In general terms all of the companies felt that they were facing increasingly competitive markets and many had reacted to this by reduc- ing the work-force. None of the firms were operating at the leading edge in terms of technology and, although the extent to which organizations had invested in new technology varied quite dramatically, we could find no link between this and strategic HRM. The way in which companies adapted to environmental changes varied enor- mously. Many of them made use of part-time labour or subcontractors in an effort to make themselves more fiexibie. This however often seemed to be a reac- tive, opportunistic approach rather than a planned strategy of moving towards a fiexibie organization utilizing the dual labour market (Atkinson, 1986). Indeed, some managers did not see this as a particularly new strategy and felt that it was in many ways a refiection of the economic recession which had also been used in previous periods of economic depression. In conclusion, we would suggest that the relationship between environmental influences and HRM practices cannot be seen in terms of a simplistic

902 Joanne Duberley and Paul Walley

cause-effect equation. However, a key factor influencing the adoption of HRM practices appeared to be perceptions held by senior management about how best to deal with the opportunities and threats posed by the environment. While some firms concentrated on HRM practices, others focused on manufacturing processes or financial controls.

Organizational characteristics We found that the following organizational char- acteristics may have had some infiuence upon the take-up of HRM. Size As discussed earlier in the paper, the size of the organizations in this sample does vary. The extent to which this influenced the take-up of strategic HRM is unclear. The three users include both the largest and one of the small- est companies in the sample so it is not possible to identify a direct link. It would appear though, when comparing these results with those found by the telephone survey research (Storey et al., 1994), that larger companies are more likely to adopt certain aspects of HRM.

History The three companies include one that is fairly young and two that are over 100 years old. These results suggest that age does not necessarily pre- clude the adoption of HRM, although it would be expected that it would be easier to adopt this approach when setting up a new company on a greenfield site than in existing older companies. The history of the organization in terms of relationships between management and the labour force may be a very impor- tant factor. However, due to the difficulty in collecting reliable information in this area, it has not been possible to compare. Structure Buller suggests that a linkage between strategy and HR is more likely when personnel managers have equal status with functional heads (Buller, 1988). This was rarely the case in the sample of firms visited. Of the sixteen companies, only two firms had personnel representatives at senior-management level. Five firms had personnel managers at middle-management level; three had

a personnel function performed by clerical staff and viewed as no more than

employee record keeping and six of the companies had no personnel function as such, with all personnel activities being carried out by line managers. Of those companies considered to be farthest down the road to strategic HRM, one of the firms falls into the first category, with representation at senior-management level, one falls into the second category with representa- tion at middle-mahagement level and the third falls into the final category with no separate personnel function. Obviously, this spread of results makes it difficult to draw any conclusions and perhaps suggests that the level of person- nel representation may be less important than Buller (1988) found in his US sample. Although research carried out by Purcell (1994: 29) in much larger organizations also suggests that 'a very consistent picture emerges of a rounded sophisticated personnel function being much more likely to exist when there is a main board director wholly or mainly devoted to personnel matters'. So perhaps, as organizations grow, there is a need for personnel rep- resentation at senior-management level to ensure that personnel matters are considered strategically.

The style of ownership was found by Walley et al. (1993) to have

a great impact on the control systems operated in companies. The styles of own- ership of these companies varies as shown in Table 5.

Ownership

The three HRM users were split as follows:

Adoption of HRM by small and medium-sized manufacturing organizations

Table 5 Styles of ownership

903

Owner-managed (or family-owned)

6

UK group

7

European group

1

US group

2

Firm 2 - US group Firm 5 - Family owned Firm 12 - UK group

There may be some significance in the US group ownership as it is arguably from the US that the term HRM originated and where it has achieved most popularity. Storey (1992), in his study of larger organizations, also found attempts to transplant US ideas into American-owned firms. The extent of influence in these firms was not that clear, however, due to a small sample of American-owned companies. Level of unionization One might expect that the level of unionization would have a considerable impact upon the extent to which HR policies are adopted. The results of this study show that, of the three HRM users, one was non- unionized and the other two recognized trade unions for production workers. Thus, it is difficult to argue that HRM can be seen only in situations where there is no trade union. It might however be argued that in adopting HRM firms are marginalizing their trade unions. In this sample it could be argued that those companies adopting HRM were more likely to be marginalizing their union by increasing the emphasis on individual rather than collective relations. Many of the companies in this study seemed to be operating with the duality of approach noted by Storey (1992) in that they recognized trade unions for collec- tive bargaining purposes but were also implementing practices such as team briefing which could be seen as a way of side-stepping the union.

Strategy The extent to which companies had an explicit corporate strategy var- ied considerably throughout the sample. Although the three most developed HRM users did have a formal corporate strategy so did some of the non-HRM companies. Hence it is difficult to claim that this is an important factor. One thing that did differentiate the HRM users from some of the others, however, was the extent to which they not only formulated a strategy but also communi- cated this to all of their work-force. The level of secrecy with regard to company strategy was remarkably high in some of the organizations, particularly in one firm whose major competitor was situated only a couple of streets away. In at least two of the other firms which had a formal corporate strategy this was kept secret from all but the most senior managers.

Incumbent executive's values and skills Again, this is very difficult to measure. However, it is the feeling of the authors that this played a major role in deter- mining whether employment issues were considered at a strategic level. This was particularly so in the owner-managed firms where owners had the power to implement the policies they desired without recourse to shareholders or (in

904 Joanne Duberley and Paul Walley

this sample) trade unions. This can be highlighted with reference to firm 5 in which the chief executive's feelings on the value of people and how they should be managed, based on deep religious convictions, had a major impact on corporate decisions. Obviously the extent to which the values of senior management influence corporate policies will depend to some extent upon the constraints which they are facing. However, research done by Miller et al. (1982, 1986) has highlighted how important this factor can be in strategic deci- sion making.

Work-force skills Buller (1988) suggests that if employee skills are considered to be lacking to the extent that they constrain or prevent implementation of the strategic plan, then top management is more likely to enlist the help of the HR function and potentially elevate the strategic importance of HR. Executives in many of the companies visited complained that workers did not have the required skills to move the company forward. However, in most cases they appeared to do very little about this in terms of manpower planning or long- term training provision. It is difficult to say whether the three HRM users were driven to this by a shortfall in their workers' skill levels. What can be said is that due to the reactive nature of some of the other firms they were unaware that the skills of their work-force were lacking until it was too late. For exam- ple, as mentioned earlier, one organization realized that they had no staff trained to operate a very expensive piece of new equipment only after it had been installed. Over six months later, at the time of our research, the machine was still standing idle due to a lack of skilled operators.

Management systems Finally, Buller (1988) found that HR systems were likely to be more integrated with strategic plans at firms whose senior management had a substantial percentage of their compensation 'at risk', i.e. related to com- pany performance. It is fair to say that all of the HRM firms did operate a per- formance element in their senior management remuneration. However, it is also true that many of the non-HRM firms, particularly those which were part of a larger group, did so. Once again, it is difBcult to draw a distinction here.

Conclusions

As the preceding discussion has shown, it is very difficult to pick out any single factor that has influenced the adoption of HRM and it could be argued that any attempt to do so would be overly simplistic and deny the complexities of organi- zations (Duberley, 1993). Instead, we suggest that the inability to identify causal links reflects the diversity found in HRM practices in this sample and the need to take an holistic approach, taking into account the many different influences which impinge upon the management-labour relationship. In attempting to assess implications of these results it is possible to take two different standpoints, emphasizing either the thirteen that didn't appear to adhere to the HRM model or the three that did. In our analysis we have tried to provide a comparison between these two groups to highlight possible contex- tual factors influencing the adoption of HRM, although it appears that more in-

Adoption of HRM by small and medium-sized manufacturing organizations 905

depth longitudinal analysis would be required to get a clearer picture. To a large extent the results here appear to back up Beaumont's (1992: 32) argument that academic literature on HRM is running ahead of organizational practice and that individual HRM changes in most organizations do not add up to a consis- tent integrated package deriving from a long-term coherent management strat- egy. In fact, many of the practices adopted in these organizations which fall into Storey's framework of HRM could have been viewed as typical SME character- istics: for example, the unitarist outlook adopted in some firms, the de-emphasis of conflict, customer orientation and speedy decision making. This leads us to question whether these organizations were adopting strategic HRM or merely operating as they always had done, which could explain the fact that some aspects of the HRM framework (those that reflected traditional small-firm prac- tices) seemed much more popular than others. In some respects we have fallen into a trap here that Storey (1992) warned against. This is the temptation to measure against the template and risk reification of subtle and incomplete tendencies. He claims that both of these divert attention away from extensive and far-reaching changes which may not in themselves constitute HRM but which, none the less, are of profound significance in changing the terrain of labour management. For this reason it is worth remembering that, although only three of our companies have been labelled HRM users, a great many initiatives in the field of labour manage- ment had been put into place in the other companies. Like Storey's sample, these firms have adopted diverse approaches towards managing their employ- ees. On the whole, it would appear that pragmatism remained the order of the day in many companies, which may at first sight indicate that little has changed since Purcell and Sisson suggested this was the most common approach in 1983. However, this ignores the fact that employment issues do appear to be given much more attention now than they once were and numer- ous initiatives aimed at changing the management-labour relationship have been seen in these firms. This research in many ways poses more questions than it can answer. A model of HRM has been used in an attempt to identify the existence of these practices in smaller and medium-sized manufacturing organizations. The results are difficult to assess, the answer seems to be 'maybe'. There have been examples which could perhaps be viewed as strategic HRM. However, the majority of the changes witnessed do not fit easily into the formulated, strate- gic approach. Perhaps the time has come to reformulate our definition of HRM. Recently there has been an acceptance by some writers (Arthur and Hendry, 1990; Boxall, 1992; Butler, 1989) that the approach towards HRM has often relied on a rationalist, formulated approach towards strategy and that we now need to take more account of the emergent process of strategy development identified by writers like Mintzberg (1990). As suggested earlier, this necessitates more in-depth, longitudinal research to be conducted in this field. This research can only be seen as exploratory and for that reason the 'findings' cannot be viewed as generalizable to the whole population of small and medium-sized organizations. However, the research has raised some inter- esting questions about the nature of HRM in these types of organizations and calls into question the extent to which HRM is applied in small and medium- sized manufacturing companies.

906 Joanne Duberley and Paul Walley

At present we may find that the theory of HRM, if indeed it should be called a theory (Noon, 1992), discussed in some academic texts rarely occurs in prac- tice. Perhaps it was put forward as a means of legitimizing management action, trying to show a science of management when in fact the business world is more reliant on muddling through. Or, perhaps, as Keenoy (1990: 374-5) puts it, 'the purpose of the rhetoric of HRM might be to provide a legitimatory managerial ideology to facilitate an intensification of work and an increase in the com- modification of labour'. Alternatively, it may be that the current emphasis on strategic HRM has more to do with the MBA market and the desire for increased professional standing among personnel practitioners and academics than with organizational realities. Keenoy and Anthony (1992: 235) suggest that 'empirical refutations of the claims of HRM are of marginal relevance to the cultural impact of HRM'. They propose that the importance of HRM lies in its role as a source of inspi- ration and conviction. Thus, HRM can be seen as a tool for constructing an image of work that legitimates certain forms of managerial action and control. This is an approach that we would suggest merits further consideration, partic- ularly as the lack of empirical support does not appear to have limited the appeal of HRM. However, we would suggest that the cultural impact of HRM cannot be divorced from the wider social, economic and political context which has arguably had a far greater impact upon the labour-management relationship. We therefore echo the suggestion from Blyton and Turnbull (1992) that research in this decade should consider the impact of changing economic, social and political conditions on management-worker relations and that there should be a return to the fundamental issues of labour management. We suggest that this can only be achieved through in-depth longitudinal research over extended periods of time.

Joanne Duberley Sheffield Business School Paul Walley Loughborough University of Technology UK

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