MANAGING PEOPLE

- The changing frontiers

PEOPLE MAKE THE

DIFFERENCE

a position paper
This paper was originally launched by Mike Bett,
President of the then IPD, at the 1994 Harrogate
Conference. It was circulated to all members with
the first issue of the Institute’s new magazine,
People Management, in January 1995.

The paper provides both guidance on the changes

expected in people management in the future and
on practical questions which members will want to
ask themselves and their organisations.

The paper has been drawn up following extensive

consultation and research. It is not the last word
on this subject.

The views of members, branches and

organisations on the issues raised would be of
great help to the Institute.

Please address your comments to John Stevens,

Director, Development and Public Policy at the
Chartered Institute of Personnel and Development.
PEOPLE MAKE THE
DIFFERENCE
The challenge for organisations and all those involved
in the management and development of people.

The purpose of this paper is to take the analysis

forward and to stimulate thinking by personnel and
THE DEBATE
development professionals, and managers more
generally, about the people management needs of their
The Institute launched a consultative document
organisations. The paper provides a framework for
‘Managing People – The Changing Frontiers’ that
those organisations which wish to use the competence
discussed a wide range of economic and social trends
standards, published by the personnel and training and
with significant implications for organisations over
development lead bodies to plan their approach to
recent decades. It argued that, as a result, new thinking
competence development.
about people management strategies and practices
would be needed to secure long term organisational
The questions below indicate the scale of the
success.
challenges facing organisations. Few organisations will
feel really confident that they have answers to all the
Responses to the paper have been received from chief
questions.
executives, CIPD branches and individual members
and the subject has been debated at many regional,
People management – the key challenges
branch and sectoral personnel conferences and
international meetings.
• What will competitive success be like for your
organisation in five or ten years time?
Almost without exception, those consulted agree with
the analysis of the challenges that organisations face as
• Will your organisation be able to adapt repeatedly
they make their way in the 21st century and the
during this time to regenerate its competitive
implications of these for people management. There is
capability?
widespread recognition that survival and success in the
years ahead will increasingly depend on the ability of
• How will you define and build the core capabilities
organisations to realise the full potential of their people.
your organisation needs?
There is also a feeling that a turning point has been
reached. The importance of effective people
• How will employers at all levels contribute to
management has often been proclaimed in the past but
continuous innovation and improvement?
has not always been reflected in changes in
management practice. Now more managers in more
• To achieve success, can people management
organisations are committed to converting people
policies and practices continue as before or will
management theories into reality.
radically different and more flexible approaches be
necessary?
The Institute has carried out research activities and
consulted widely with members and others on a number
• How is change measured? Do you use external
of topics of relevance to this subject. The results have
benchmarks, and h ow do you know whether
fed into the development of this paper and they will be
changes in people management are working?
published separately. This paper, and future work on
this topic, will be used to inform the Institute’s approach
The major drivers in the process of change, the ways in
to development of membership qualifications and the
which organisations are responding and the people
continuing professional development of its members.
management changes foreseen are set out overleaf.
COMPETITION – THE DRIVING
FORCES AND CRITICAL
SUCCESS FACTORS
The driving forces
• customers demanding products and services
increasingly customised to their needs
• customer satisfaction standards which are
increasingly established by global competition
• reductions in international trade barriers
• industrialisation of Pacific Rim countries
• slow growth in the mature economies
• new overseas competitors in mature production
and service sectors
• technology which is rapidly changing and easily
transferable
• public sector financial constraints, political
pressures for higher value for money and
privatisation or market testing
• communities becoming more concerned about the
effects of economic development on the
environment and social well-being
How organisations are responding
• highly differentiated goods and services
• customer-led organisations
• ‘step’ change and continuous improvement of
products, processes and services
• quicker response times
• lower costs and sustainable profits
• flexibility from people and technology
• investing in and developing the core competencies
of people
How this is affecting the way people are organised
and managed
• decentralisation and devolvement of decision-
making
• slimmer and flatter management structures
• total quality and lean organisational initiatives
• fewer specialists directly employed
• developing a flexible workforce
• more project-based and cross-functional initiatives
and team working
• partnership approach to supplier links
What this means for employers
• customer-orientation to meet the needs of both
internal and external customers
• greater self-management and responsibility for
individuals and teams
• contributing to the continuous improvement of
processes, products and services
• commitment to personal training, development and
adaptability
What this means for managers
• facilitating, co-ordinating roles
• greater interpersonal, team leadership and
motivational skills
• integrated management and communication
systems
• openness, fairness and a partnership in
employment relations
• managing constructively the interests of groups of
employees and their collective and individual
representation
• ensuring part-time and temporary employees and
those contracted to supply services are fully
integrated
THE CHANGING
CONTRIBUTION OF
PEOPLE MANAGEMENT
The faster pace of competition at the start of the 21st
century and the entry of new competitors in a more
open world economy are forcing the pace of change in
the advanced economies. This effect is spreading to
organisations in all indus tries and is affecting the public,
private and voluntary sectors.
Organisations therefore need to respond in more
sophisticated ways than in the past. Survival and
success will not be achievable by continued reliance on
hierarchical structures, adversarial or paternalistic
employment styles. Neither will success be founded on
productivity approaches geared mainly towards
economies of scale, simplistic cost cutting and the
conventional application of the theories of scientific
management. People management practices are
changing irreversibly. For more and more organisations
the success of people management practices now
depends on the ability to stimulate and focus:
• initiative
• creativity
• motivation
• judgement
• willing contributions
• capability
• adaptability
• business orientation
• responsibility
The results of such changes and the prizes for
organisations which can work successfully with their
people are already clear. Numbers of organisations are
achieving world-class standards of performance and
many world-class organisations are setting up here.
Their people management practices differ markedly
from what has gone before. They use text-book
theories but devise innovative solutions to tackle the
needs of the organisation and threats from outs ide.
How to do it
Successful management of people does not depend on
the application of a single set of techniques. The
requirements of organisations are dissimilar and no
single prescription is appropriate. However, the
following characteristics can be seen time and again in
organisations which have a reputation for transforming
their approach to people management.
• interdependence between the various parts of the
business, extensive team working and strong
individual contributions
• performance management to identify results,
measure attainment and continuously improve
• motivational systems to underpin achievement in
outputs, behaviour and competence development
• training and development geared to operational
needs, longer-term adaptability and personal
growth
• conscious effort to make sure that these changes
are understood and supported by the culture of the
organisation
These characteristics on their own are clearly not
enough, however. They need to be bound together and
focused by an understanding that business has to be:
• strategic: aiming at customer-related objectives
• integrative: ensuring that values, management
actions, information and support systems are
mutually reinforcing
The increasing importance of people as the primary
sustainable s ource of competitive advantage makes it
ever more important that dedicated resources and
thinking time are applied to the strategies through which
people are developed and managed.
Ownership of people issues and understanding of
people management at top m anagement level is
essential. Without leadership from the top and the
promotion of people management strategies from this
level, progress elsewhere in the organisation will be
difficult to initiate and impossible to sustain. For this
reason it is increasingly important that chief executives
and the rest of the top team recognise that the
management of people is a coherent and learnable
discipline which they need to understand and be able to
apply.
Personnel and development professionals need to work
in close partnership with the management teams of
which they are part. They particularly need to contribute
to the top management team’s shaping and
implementation of the strategy of the organisation.
Guidance and policies handed down by the top team
are not enough on their own. Policies and systems
need to be integrative, ensuring that planning and
performance management build in values and
standards relating to the management and development
of people. To be able to design such systems,
personnel and line managers need to develop a real
understanding of the effects of people management on
the performance of the organisation and put this into
practice.
Line managers require, and many are acquiring,
knowledge of the principles and practice of effective
people m anagement. And, as line managers realise
more fully the potential of more effective people
management, their demands on personnel and
development professionals will grow. Increasingly, time
spent in the personnel function will prove a valuable
part of the development of all managers.
The essential change
Much has been done in recent years to introduce a
sense of reality into employee relations. But managers
should not kid themselves that acquiescence is the
same thing as enthusiastic involvement. The pace of life
and changing work patterns in the future will put a strain
on the best of relationships between employees and
managers.
Building trust is the only basis on which commitment
can be generated and these tensions contained. For
these reasons, attaining or sustaining world-class levels
of performance will be increasingly unlikely in
organisations which do not treat their employees in
ways which are consistent with their status as the key
business resource. So, high performance means that:
• employees cannot just be treated as a factor of
production
• organisations must translate these values into
specific and practical action. In too many
organisations inconsistency between what is said
and what is done undermines trust, generates
employee cynicism and provides clear evidence of
contradictions in management thinking.
Adversarial relationships, with customers and suppliers
as much as with trade unions, are changing to
partnership approaches in which both parties are
motivated to add value to the business. The need for
inter-dependence is increasingly recognised. Again,
inconsistency is unlikely to lead to robust success.
Industrial relations in particular need to be based on a
more pragmatic approach, reflecting the importance of
the organisation/employee partnership for business
success and the well-being of employees. Trade union
representatives and managements need to abandon
the “management proposes, union opposes” basis on
which too many relationships have grown old. Unions
and managers need to welcome advances in people
management and help to equip people to cope with and
benefit from improved relationships.
Focusing the people management contribution
Personnel and development professionals face a
complex challenge. They need to administer
employment systems effectively in compliance with the
law and recognised standards of fairness and good
practice. However, that isn’t enough.
While systems are very important to the smooth running
of organisations, they don’t make the difference
between success and failure in the market place. To
add value practitioners need to:
• understand and share the objectives and business
methodology of their managerial colleagues
• import best practice from outside the organisation
• build and measure strategic capability through the
development of the capacity of people
• define and promote the values of the organisation.
Line managers and personnel and development
professionals share the responsibility for policies and
processes in such areas as performance management,
organisational design, management development and
motivation. Personnel and development professionals
add most value when they act as facilitators in close
collaboration with, and help to raise the people
management understanding of line managers. Whether
they are employed in-house or as external consultants,
the relationship works best when objectives are worked
out jointly and solutions are tailor-made. New skill and
understanding are needed for this.
In this context, it is of key importance to understand
business objectives and methodology. The objectives
will range over many issues, for example embedding
quality consciousness thoroughly in the business or
developing a sharper business focus to research and
development. Whatever the objectives, they will have
complex people management implications. Line
managers will look to personnel and development
professionals for the right answers and these have to
be simple to understand, practicable to implement and
effective in their outcomes.
The personnel function will have to make an
increasingly important contribution. Practitioners should
be scanning the outside world to identify and bring in,
adapt and improve best practice. This is not a matter of
blindly following the latest fashion, but requires skill and
knowledge in evaluating the practices of
competitors and comparators in other industries.
It also implies more than the benchmarking of factors
such as absence, labour costs, productivity and health
and safety. The ability to make inter-firm comparisons
of methods and outcomes in relation, say, to continuous
improvement or employee attitudes will provide a
substantial additional contribution.
Personnel and development professions also have the
opportunity to see how the people capability of
organisations can be raised. Organisations need to be
robust to survive and innovative to succeed.
Developing the ability of employees and the teams in
which they work enables organisations to take
advantage of known market opportunities. The need is
to go further and create capacity to take advantage of
as yet unforeseen opportunities, and provide a defence
against as yet unforeseen threats. Mobilising ambitions
and the awareness of the potential of individuals
throughout the workforce is a key contributor to
continuous improvement and sustainable competitive
advantage. Challenging ambitions and stretching
capabilities to achieve organisational goals are the key
management tasks.
Going beyond the fine tuning of existing systems offers
a real opportunity to add value and competitive
advantage. Experimentation with new forms of
organisation, with developments in pay systems and
new ideas on competence development, provide a ‘hot-
house’ within which the practice of people management
can be seen to grow.
Widening understanding that ‘People Make the
Difference’
Other than improving people management and
development, there are very limited solutions to the
competitive pressures that will come from the advanced
and developing countries in the coming years.
Demonstrating the point to unbelieving chief executives
and line managers will not be easy, but the growing
intensity of competition will itself stimulate a search for
radical solutions. In such circumstances, those who
claim expertise in the management of people will have
to be ready to provide the answers.
 •
PEOPLE MANAGEMENT: A strategy needs to identify those things the
organisation needs to learn.
THE CHALLENGE • A strategy leads to an action plan and clear tests,
showing whether objectives have been reached
and, as far as possible, identifying the links
While there is no single route to success in people between action and outcome.
management, the following pages set out some of the
key issues which should be considered by managers
and a self-audit checklist to help organisations assess
their people management approach to the changes
which are facing their business.

The ideas will be of equal use to line managers and

personnel and development professionals. The issues
remain the same: what will the effect of other systems
be on the changes envisaged; and how should success
be measured?

Strategy The challenge

• Whether written or unwritten, vision and mission
statements and strategies need to be effective, and
capable of being understood and s upported by
managers and employees within individual
business units.
• A strategy must be long term.
• A people management strategy needs to recognise
that the core competitiveness of organisations is
rooted in people.
• The people management element on business
strategy needs to address major output objectives,
including opening new markets, developing new
services and products, ensuring customer
satisfaction and reducing costs and overheads, as
well as methods.
• Attaining strategic objectives depends on the
abilities of people and their commitment eg to
improving involvement, stimulating continuous
improvement and gaining flexibility.
• Can you describe your organisation’s vision and
business strategy in terms of customer,
competition, products and services and financial
objectives?
• Where are the critical success factors in this
strategy? What ‘blockers’ need to be overcome and
what ‘enablers’ does your organisation possess to
deliver the strategy?
• From the first two points what are the key elements
of people management strategy to support your
business strategy? How do you test awareness of
this at all levels of management?
• Can you describe the people management
measures which demonstrate the successful
implementation of your people management
strategy?
• How far ahead are you looking? Are there things
which need to be done now to provide the basis for
the next ten or so years?

• A people management strategy has to address the

organisation’s capacity to change, adapt and meet
changing customer needs flexibly while maintaining
momentum.

• A strategy needs to identify the factors which are

blocking longer term progress, eg lack of
commitment in key areas, shortages of in-house
skills and ineffective team working.
Management
• Management capability is the essential ingredient
in the development and realisation of strategy.
Knowing how to develop management capability is
important; so is the involvement of managers in
developing strategy.
• While there is no single best way for all
organisations, many are having to tackle the same
challenge, having to manage in flatter organisations
and under pressure to design and implement
solutions quickly.
• The role, knowledge, understanding and
competence of top management, line managers
and personnel and development professionals is
now seen to be the key to the effective
management and development of people.
• Defining the changes needed is difficult.
Measuring change is yet more difficult. However,
without measurement progress is impossible to
chart. Opinion surveys, project reviews, process
analysis and other methods can be used to
measure change.
• The range of issues and policies which need to be
covered by a people management strategy is huge.
Prioritising, and identifying ‘blockers’, helps to
identify the actions which are most important. The
connections between the parts of people
management also need to be addressed so that,
for example, the value set, the reward and
recognition package and management
programmes are integrated so that th ey do not
emerge as ‘blockers’ themselves at a later stage.
The challenge
• Have you a clear definition of what your managers
need to do to build tomorrow’s organisation? Can
you describe the ‘leadership’ model in your
organisation – in practical, measurable terms?
• What plans do you have to make this definition
become a reality? In particular, what is your
approach to instilling management capability to:
• stimulate innovation?
• create an ‘empowering’ style?
• move from ‘managing’ to ‘leading’?
• handle performance management in a
way which reflects these values?
• manage much wider organisational
spans?
• inspire and motivate rather than instruct,
task and manage?
• identify and satisfy the development
needs of individuals and groups?
• According to your definition of tomorrow’s
manager, what is the role of the personnel and
development function? What changes are
necessary to develop an appropriate partnership
between line and functional managers?
• What needs to be done to build your future people
management capability – systems, skills, out/in-
sourcing, training, coaching and career
development, values and culture development,
leadership, motivation and reward etc?
Values
• People management policy will have an impact on
values.
• Values may be explicit or implicit. They are not
necessarily written down, yet must be apparent to
everyone.
• Values need to be relevant and understandable.
Unless they relate to mission and/or vision
statements they may undermine them.
• Top team training will be necessary to make sure
that top managers understand the values of the
organisation and their influence, to enable them to
act in ways which are consistent with the values.
• Inappropriate alternative values may be created if
there is incompatibility between stated values and
standards and management action.
• It will be more difficult in the future to develop trust
if fewer people are working in full-time jobs on
indefinite contracts.
The challenge
• How clear are you about the value-set within which
your business strategy is developed? Is it
articulated, owned by the top team and widely
understood in the organisation?
• Does the top team understand the development
and implementation of values in terms of:
• their own responsibility as ‘role models’
• behaviour which positively undermines the
values and the sanctions associated with
this
• ‘supportive’ behaviour and the
recognition/reward which follows?
• What specific actions – statements, training
procedures and awareness raising – does the
organisation need to reinforce the required values?
Are these visibly supported by top management?
• If it operates internationally, to what extent should
values be applied consistently throughout the
organisation? If they are not, what are you doing
about it?
• As examples, tomorrow’s organisation will require
values of respect for the individual and trust to be
deeply embedded. Where do these feature in your
organisation’s value set? And how is your
organisation going to handle the tensions between
the generation of trust and the working of a more
volatile labour market and less secure jobs?
People development
• Identifying the people development needs of
organisations should start with the business
strategy. The Investors in People standard
provides recognition for organisations which have
made this connection.
• People need to participate fully in the identification
of their own development needs. Those closest to
the job are best able to define development
objectives so long as they are fully aware of what is
expected or needed for the future. However, line
management understanding of training/learning
needs analysis is generally undeveloped.
• Individual responsibility for planning work-based
and longer term career-based training and
development is growing. Reinforcing this process
through recognition and reward systems is
important.
• Flatter organisation structures mean that in the
future many individuals will have to develop
laterally within their organisations, and between
organisations, to maximise job and career
satisfaction.
• Broadening and deepening individual skills,
knowledge and experience should, over time,
provide the basis for a more flexible workforce.
Much more sophisticated records of achievement
will be needed to keep track of the mix of technical,
management and other skills and experience
thereby developed.
• There is a greater opportunity now to consider
whether to employ people on a full-time basis,
some other basis, or whether to use temporary
labour or sub-contract suppliers. Organisations
need a highly skilled workforce and competitive
strengths using a much more diverse and
decentralised workforce throughout their supply
chain.
The challenge
• To create the flexible organisation of tomorrow,
individual employees must be helped to take on
greater responsibility for their own department and
growth. What strategies do you have to make this
happen in your organisation?
• What changes to your reward and other processes
are needed to stimulate and support ownership by
every employee of his/her development?
• How do you know that your education, training and
development expenditure is cost effective? What
can you justify on the basis that you believe it
makes sense?
• The flexible, empowered organisation places high
reliance on formal and informal networking across
organisation boundaries. What initiatives do you
have to make this happen?
• To what extent does your business strategy require
a highly flexible workforce in terms of
deployment/development? What programmes do
you have to achieve/deliver this?
• What is your strategy for the use of flexible
employment patterns – part-time, temporary, sub-
contract, tele-working, consultants etc? How does
this contribute to your business strategy?

Organisation
• Some organisations still operate very effectively
using traditional hierarchical organisational
structures to deliver standardised ranges of
services and products.
• Increasingly, however, customer orientation,
product differentiation and service support require
new forms of organisation, often using customer-
based and other project teams.
• Delayered, downsized organisations operate on
wider spans of control. Responsibility is devolved
with the drive and ideas for continuous
improvement coming at all levels but particularly
from front-line operators, sales people, service
providers, clerks and other grades.
• This requires, more than ever before, a very clear
statement of strategy and effective cascades of
performance management systems. Motivation and
reward systems need to reinforce the devolution of
responsibility, moulding and shaping the use of
initiative and the practice of empowerment.
• Creating new organisational structures can be
achieved fairly quickly. Getting them to work
effectively requires back-up training and process
development, making sure that the right people are
available from the organisation, or from outside it.
The challenge
• What impact does the need for customer
orientation of your people have on your
organisation strategy?
• How do you reconcile the need for
‘global’ integration with the need for
‘local’ responsiveness?
• How do you decide what is
‘centralised’ and what is
‘decentralised’?
• What is your strategy for moving from
traditional organisation hierarchies to
project-based, flexibly resourced
teams?
• How have you designed/will you
design the number of levels and spans
of control in your ‘delayered’
organisation and how will you use IT to
support the ‘wide-span’ manager?
• How do/will you maintain control,
motivation and continuous
improvement in a devolved and
outsourced organisation?
• What investment plans – training, education,
systems, processes, recruitment – do you have
to create an organisational mind-set focused
on customer service, quality, empowerment
and flexibility?
• Are systems and procedures appropriate to the
structure of the organisation and the roles and
responsibilities the structure implies?
Measurement
• Being able to measure outputs – customer
satisfaction, sales, market share – is well
understood. However, measuring outputs, other
than on a financial basis, is much less well
developed, and making connections between
input and output practices is not well
understood.
• Top management teams emphasise the
difficulty of measuring the effectiveness of
people management but also express their
belief in the importance of its contribution to
performance.
• Although direct measures of performance
improvement are difficult to make, indirect
measures of changes in understanding,
commitment, culture change and attitudes can
be made. Equally, where cause and effect are
fairly closely linked, for instance in training for
the operation of equipment and customer care,
measures can be used effectively.
• Benchmarking the performance of particular
functions performed by competitors, and by
organisations carrying out the same functions in
other industries, provides an opportunity to
establish targets for performance improvement.
These can be used to discuss the relative
contributions made to performance made by
differences in equipment, organisation and
aspects of people management.
The challenge
According to your various strategies, how will you
measure the success of their implementation? In
particular:
• What processes, eg opinion surveys,
communication audits, exist to measure
employee understanding of company direction
and strategy?
• For the people management element in each
strategy, what measures exist for judging
‘effective’ implementation? For example, do you
check the quality of performance management,
in terms of process and outcomes? The
perceived quality of leadership and the extent to
which values are seen to be reflected in action
can be measured using opinion surveys.
• To what extent do you use benchmarking to
compare your own organisation’s practice with
best practice amongst your competitors?
• Do you examine the root causes of customer
dissatisfaction and take corrective action?
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