Chapter 1: Human Resource Management PDF

1. The balancing act of managing human resources 1.1. What is Human Resource Management? Human resource management (HRM) refers to the constellation of decisions and actions associated with managing individuals throughout the employee life cycle to maximize employee and organizational effectiveness in attaining goals. This includes functions that range from analysing and designing jobs; recruiting individuals to apply for jobs; selecting individuals to join organizations; training and developing people while they are employed; helping to manage their performance; rewarding and compensating employee performance; and protecting and improving employees’ well-being. At its core, HRM revolves around the critical task of making informed decisions concerning people within an organization. This decision-making process involves many questions that those within an organization must ask and answer. For example, those involved in HRM need to address questions such as these:  Where will we find the best employees?  How should we motivate and reward employees to be effective, innovative, and loyal?  What training do our employees need, and how can we further develop them?  How can we decide which employees deserve to be promoted?  How can we design jobs so that employees remain engaged?  Why are employees leaving, and what can we learn from their exits? All these questions and more are part of managing the HRM system of decisions and actions associated with managing individuals throughout the employee life, from the hiring stage through the exit of an employee through voluntary or involuntary turnover. 1.2. Human resources matter Human resources refer to the pool of human capital under the firm’s control in a direct employment relationship; simply put, the people employed by an organization. Human resource practices, on the other hand, are the organizational activities directed at managing the pool of human capital and ensuring that the capital is employed towards the fulfilment of organizational goals. Examples of human resource practices are employer branding, structured job interviews, outward bound training, multisource feedback, and pay-for-performance; practices that will be discussed extensively in later chapters. Using the term 'human capital' within the realm of human resource management or when characterizing employees can spark debate, and its appropriateness hinges on the viewpoint and context in which it is applied. Critics argue that labelling employees as 'human capital' diminishes individuals to mere economic resources or assets, insinuating that their sole worth lies in their economic contributions to an organization, thus overlooking their inherent value and dignity. For some, this terminology is regarded as dehumanising, as it portrays individuals in business-oriented terms, as if they were interchangeable or expendable resources. This perspective has the potential to weaken the significance of treating employees with respect, empathy, and equity. Consequently, numerous HR professionals and organizations opt for alternative terminology, such as 'human resources,' 'talent,' or 'workforce,' to underscore a more comprehensive perception of employees that transcends their economic contributions. It is noteworthy that the term ‘human capital’ remains in use across different academic and business settings, and it may not invariably convey negative undertones. Nevertheless, numerous organizations and HR professionals opt for language that mirrors a more equitable and human-centric approach to the management and appraisal of employees. The selection of terminology frequently aligns with an organization's values, culture, and approach to human resource management. Irrespective of the terminology used, there are few managers who would dispute the assertion that “people are the most valuable asset.” After all, it is through their employees that organizations can generate value and attain a lasting competitive advantage. This proposition, asserting that people are a crucial, if not the most crucial, source of sustained competitive advantage, runs as a common theme throughout this course and undergoes critical examination in Chapter 2. If Chief Executives and Board of Directors subscribe to this belief, one would anticipate the Human Resources (HR) department to hold a pivotal role within any company, with the head of HR assuming a key role in strategic business planning and performance. However, reality paints a different picture. In numerous companies, the HR department predominantly fulfils administrative functions, often lacking substantial input into the business's strategic aspects, rendering HR susceptible. Furthermore, numerous companies often take the step of outsourcing routine HR activities, including payroll administration, recruitment, selection, training, outplacement, and compliance and legal support, to external contractors who can handle these functions at a lower expense. Why is it that HR often struggles to have a significant say in important business decisions?1,2 Well, one reason could be that many HR managers aren't very interested in or prepared for the business side of things. In the world of companies, this can be a problem. HR's job is to take care of the company's people, but to do that effectively, they also need to understand how people can help the company succeed. Another reason could be that HR sometimes cares more about doing things efficiently rather than making sure those things add real value. For example, I once talked to an HR manager at a big bank who said they were doing a great job because “80% of employees got more than 40 hours of training last year.” However, when I asked why they needed all that training and what it achieved for the company, the HR manager couldn't give a clear answer. So, HR should not only focus on making sure things run smoothly (like paying employees on time or hiring quickly) but also on making sure that what they do really helps the company. Another issue is that HR often tries to make everything the same for everyone, even when people are different and have different talents. Companies keep their best employees by recognizing and rewarding their unique skills and performance, not by treating them just like everyone else. But HR often follows a one-size-fits-all approach, like comparing salaries for similar jobs with other companies, which can limit how much they pay, even to top performers. Lastly, many top executives see HR as mainly dealing with 'soft' stuff like planning team outings or family picnics. HR sometimes chooses to stick to this role instead of actively helping to shape the company's strategy. But this approach has made HR seem more like event planners than valuable contributors to the company's success. Considering the points made above, one can deduce a solid consensus among executives that human resources constitute a pivotal source of sustained competitive advantage. However, there is also a level of scepticism regarding how these resources should be managed. 1.3. The main message (spoiler alert)  In this course, we will assert that companies can attain sustained competitive advantage by adopting HR practices that align with the business strategy and that are mutually aligned.  These aligned practices will ensure a continuous influx of skilled and motivated personnel, who, when given the opportunity, will exert efforts that benefit the business strategy.  We will contend that certain positions hold more significance than others in achieving the organization's strategy, justifying the need for a differentiated HR policy.  HR is seen as an integral component of business operations, thus students in this course are expected to acquire proficiency in the language of business.  We position ourselves in the role of HR professionals; consequently, this course does not offer optimal recommendations for prospective or current employees (e.g., advice on job applications or salary negotiations).  The course's central focus lies in the connection between HR and value creation. In each chapter, we explore how HR can contribute to the organization's strategy. Therefore, this course does not revolve around 'soft' HRM (e.g., organizing team-building activities or corporate picnics); rather, it concentrates on how well-considered HRM can enhance overall firm performance. 1.4. Performance and well-being Indeed, the HR-firm performance relationship is the central focus of this course, but this constitutes only part of the narrative. Human resources are active individuals with past experiences, internalized values, and norms that may not necessarily align with those of the employing organization. They are part of various communities both within and outside the organization, and their conduct is influenced by a multitude of factors, partially extending beyond the institutions they work for. Therefore, in this course, we surpass the perspective of viewing employees solely as a means to an end, where they serve as instruments to outperform competitors. Instead, we adopt a humanist viewpoint, considering employees as an end in themselves, deserving of development and nurturing. We argue that organizations hold a significant societal role and bear at least partial responsibility for the well-being of their employees. Their duty is to safeguard the well-being of their workforce, not solely because a healthy workplace leads to superior outcomes (which is, indeed, the case), but also because well-being possesses intrinsic importance. Full stop. Now that we have outlined the contours of this course, it is time to zoom in a little further on the work of the HR manager. 1.5. HR roles and competencies In this part, we try to answer the questions ‘what HR managers actually do’ and ‘what it takes to be a successful HR manager’. Arguably, the most effective way to gain an in-depth understanding of the responsibilities of (successful) HR managers is to observe them in their roles and engage in discussions regarding their job responsibilities. An alternative, somewhat more sophisticated approach involves surveying HR managers about their roles and competencies. Subsequently, we can explore which roles and competencies exhibit positive associations with both individual and organizational success. This latter approach has been adopted by Dave Ulrich and his colleagues; a research inquiry initiated in 1987. Following extensive research, Dave Ulrich introduced his 'HR business partner' model in 1998 (see Figure 1.1), wherein he delineated four distinct roles for HR professionals along two dimensions: the strategic versus operational focus and the processes (HR tools and systems) versus people. These four roles encompass HR as an administrative expert, HR as an employee champion, HR as a strategic partner, and HR as a change agent. 1.5.1. HR as Administrative Expert In this role, HR should become an expert in the way work is organised and executed, delivering administrative efficiency to ensure that costs are reduced while quality is maintained. Instead of acting like bureaucratic administrators, mindlessly following existing procedures and maintaining the status- quo, HR professionals should try to improve the efficiency of their own function, lowering costs by removing steps or leveraging technology. Similarly, they can prove their value as administrative experts by rethinking how work is done throughout the entire organization, not only their own function. It is by improving efficiency that HR will build credibility, which, in turn, will open the door for it to become a partner in executing strategy. Ulrich’s ideas are still relevant today. For instance, a few years ago, the HR Director of a multinational pharmaceutical company delivered a guest lecture at the VUB. He shared that one of his initial priorities upon assuming his role was to identify efficiency improvements. Once he could demonstrate HR's value in terms of cost savings, he received an invitation from the executive board to actively participate in strategy planning and development. Administrative experts aim to achieve efficiency improvements in various HR functions, including work analysis, employee recruitment and selection, training and development, organizational career management, performance appraisal and management, compensation and benefits, labour legislation, and human resource planning, among others. 1.5.2. HR as Employee Champion In this capacity, HR should assume the role of an advocate for employees. This role involves vigorously conveying employees' concerns to senior management while simultaneously enhancing employees' commitment to the organization and their capacity to deliver results. Ulrich contends that HR professionals in this role should be responsible for ensuring employee engagement. He believes that engaged employees are more likely to demonstrate commitment to the organization and go the extra mile. Fostering an engaged workforce involves offering employees challenging tasks, opportunities for personal and professional growth, and providing resources to help them meet their demands. Consequently, HR professionals should possess a strong understanding of how job design (or redesign) affects employee morale, with job design being regarded as a fundamental HRM function. Lastly, HR personnel must serve as advocates for employees, representing them to management and acting as their voice in managerial discussions. Of course, HR can only serve as a spokesperson to the extent that employees have confidence in HR's ability to represent their views and uphold their rights. In summary, as employee champions, HR professionals strive to impact workers' ability, motivation, and opportunities to enhance firm performance. Employee champions dedicate their efforts to collaborating with union representatives, advocating for employee involvement and participation, facilitating communication, fostering trust, monitoring work-related stress and job satisfaction, and managing 'psychological contracts' (see box 1.1). Clarification box 1.1 The term ‘psychological contract’ refers to the unspoken set of expectations within the employment relationship, distinct from the formal, written employment contract 3. For instance, employees may anticipate opportunities for career advancement and support from the organization in exchange for putting in long hours, while employers may expect loyalty in return for providing a competitive salary. These psychological contracts can be breached (e.g., when a diligent employee isn't promoted), leading to potential consequences such as reduced well-being, increased intentions to leave the organization, diminished job satisfaction, trust in the organization, organizational commitment, and job performance4,5. Therefore, as employee champions, HR professionals are advised to proactively manage employee expectations to prevent unintentionally creating false expectations that might not be fulfilled. 1.5.3. HR as Strategic Partner According to Ulrich, HR should become a partner alongside senior and line managers in executing the business strategy. However, this does not mean that HR should be solely responsible for crafting the strategy itself. The primary responsibility for strategy lies with the company's executive team, in which HR plays a crucial role. HR's responsibility is to facilitate substantive discussions about how the company should be structured to effectively implement its strategy. To achieve this, HR managers must possess a deep understanding of the company's ‘organizational architecture.’ After all, HR systems are integral components of the broader organizational framework, which encompasses organizational objectives, strategy, processes, structure, culture, and technology. These elements interact with one another and must be considered holistically. In other words, to manage human resources effectively, one must possess comprehensive knowledge of all aspects of the business, although this is often not the case, as mentioned earlier. When HR does possess this knowledge, it can evaluate the alignment (or misalignment) among the various components of the organizational design and take the lead in suggesting necessary changes. Additionally, HR should assess its own work and establish clear priorities that align with the organization's objectives and strategy, focusing on areas most likely to impact business outcomes. Examples of activities and areas of interest that are typical for this role: translating corporate strategy into specific, supportive HR-activities, aligning HR processes, and implementing HR information systems such as HR scorecards and dashboards. 1.5.4. HR as Change Agent Lastly, HR should take on the role of an agent of ongoing transformation, moulding processes and a culture that collectively enhance an organization's ability to adapt. To clarify, as change agents, HR professionals are not responsible for executing change themselves but ensuring its successful implementation. To accomplish this, they must equip their organization with the necessary change tools and models and guide executive teams through the process. The field of change management offers numerous prescriptive models that offer guidance to senior managers and executives on how best to carry out planned organizational change. Most of these models emphasize the formation of a guiding coalition within the organization to oversee the change process, the development and effective communication of a clear and compelling vision for the change, and the assessment of readiness for change, empowering employees to align with the envisioned changes6. Most models also stress the importance of consistently reinforcing the change and integrating it into daily operations. HR professionals should collaborate closely with senior managers and executives to facilitate organizational change, not by dictating the necessary changes but by leading the change process. The role of a change agent primarily involves preparing individuals for change, overseeing organizational culture, resolving conflicts, devising action plans, monitoring progress, and ensuring the sustainability of change efforts. The above illustrates the immense challenge faced by HR managers. HRM must aim to harmonize the interests of all stakeholders in the organization, addressing the welfare and developmental needs of employees, aligning with the strategic objectives of senior management, providing support to line managers, and ensuring compliance with external corporate governance standards. The role of an HR specialist is, therefore, multifaceted, serving as both a facilitator and a leader in steering the firm's strategic direction. In an adaptable manner, HR specialists must swiftly switch roles and handle multiple responsibilities. They may act as strategic partners with senior executives and line managers in strategy development and execution at one moment, and at the next, they may be advocating for employees' concerns to senior management. They may initiate change and transformation on one occasion, and on another, focus on cost-saving and efficiency enhancement. Clearly, not everyone can adeptly navigate this multifarious reality and excel as an HR manager. Given the near impossibility of effectively juggling all HR roles, larger companies often divide these responsibilities among several individuals. For instance, larger firms may establish an HR department with various sub-departments, each overseen by professionals specializing in welfare and employee relations, strategic HR management, change management, and operational HR management. 1.6. HR roles in context All HR professionals operate within a specific organizational and national context, which can influence the significance and applicability of different HR roles. In other words, the importance of HR roles varies depending on the time and location. For instance, the role of an employee champion becomes more prominent in environments with a strong presence of trade unions. In countries with complex legislation, HR professionals may find themselves dedicating most of their time to administrative tasks. When two companies merge, the focus shifts towards guiding organizational change, and during financial crises, HR must prioritize efficiency, among other factors. Furthermore, the role of HR has evolved significantly over time. During the industrial revolution, the emphasis was on efficiency, while around 1880, there was a shift towards increased attention to employee welfare. In the 1980s, with globalization on the rise, HR's focus transitioned to becoming a strategic partner. Today, agility has become a central concept, requiring HR to act as a change agent. More information on the historical development of HRM is provided below. In summary, HR professionals are expected to fulfil all these roles, but the relative importance of each role can change over time and in different contexts. HR practitioners typically express a greater desire to engage in the strategic dimensions outlined in Ulrich's typology rather than the operational roles, such as that of an administrative expert. Nevertheless, it is worth noting that day-to-day operational activities continue to hold a significant sway over the daily routines of HR practitioners. This dynamic suggests that short-term HRM concerns frequently take precedence over longer-term considerations. 1.7. HR competencies In their later work, Ulrich and colleagues shifted their focus to address a different question. Instead of examining HR managers’ roles and responsibilities (i.e., 'what HR professionals do'), they aimed to determine the competencies necessary for HR professionals to fulfil their roles (i.e., ‘what HR professionals should be able to do’). The term ‘competency’ refers to an individual’s demonstrated knowledge, skills, or abilities, along with other characteristics, including personality traits (KSAOs). Further details on competencies are provided in Chapter 3 on Work Analysis and Competency Modelling. In their latest research, after conducting seven rounds of major studies spanning over 30 years and involving a total of more than 100,000 respondents, Ulrich and colleagues identified nine competencies7. For the sake of completeness, these competencies are listed below: Strategic Positioner: Able to position a business to win its market. Credible Activist: Able to build relationships of trust by having a proactive point of view. Paradox Navigator: Able to manage tensions inherent in business (including long-term and short-term tensions, and top-down and bottom-up tensions). Culture and Change Champion: Able to make change happen and manage organizational culture. Human Capital Curator: Able to manage the flow of talent by developing people and leaders, driving individual performance, and building technical talent. Total Reward Steward: Able to manage employee well-being through financial and nonfinancial rewards. Technology and Media Integrator: Able to use technology and social media to create high-performing organizations. Analytics Designer and Interpreter: Able to use analytics to improve decision making. Compliance Manager: Able to manage the processes related to compliance by following regulatory guidelines. Ulrich and colleagues concluded that HR professionals must exhibit behaviours of Credible Activists to be included in business discussions. They also need to act as Strategic Positioners to cater to the needs of customers and investors, and as Paradox Navigators to deliver business value. Even though Ulrich's recent work does not prioritize scientific rigor (as he shifted towards consultancy work), the results reaffirm what was previously emphasized: the role of an HR professional is complex and inherently paradoxical. It demands a versatile balancing act to reconcile diverse roles and responsibilities. 1.8. History of HRM The term 'human resource management' was initially coined by John R. Commons in his 1919 publication, 'Industrial Goodwill.' In this groundbreaking book, Commons introduced the concept that employees are valuable assets to an organization. He also established a strategic choice framework regarding alternative 'bundles' of HRM practices. At that time, Commons was considered one of America's leading authorities on labour issues and is rightfully acknowledged as a co-founder of contemporary (strategic) human resource management. Today, HRM has become ubiquitous and firmly entrenched, forming the basis of an extensive body of academic and practical literature. Almost every medium to large-sized organization boasts a formal HR department responsible for a myriad of employee-related services and programs: Recruitment, selection, training and development, performance appraisal and management, compensation and benefits, employee well-being, among others. These endeavours often involve substantial resources, with dozens or even hundreds of staff and multimillion euro/dollar budgets. Additionally, practitioner-focused organizations like the Society for Human Resource Management (www.shrm.org) have grown significantly, boasting over 200,000 members. In the academic sphere, hundreds, if not thousands, of European and American universities and colleges now offer specialized degrees and majors in HRM. Consequently, a wealth of textbooks, research journals, and course offerings has emerged. However, this widespread recognition and institutionalization of HRM was not always the case. Less than a century ago, the concept of HRM had yet to be conceived, and HRM practices were rudimentary and underdeveloped. Employee management was just one aspect of the broader responsibilities of business owners, lower-level department heads, and foremen. It was conducted without specific training, formal policies, or comprehensive planning and often, by contemporary standards, was executed in a harsh, arbitrary, and counterproductive manner. No business firm had a dedicated HR department in the modern sense, and universities did not offer formal instruction on the subject. This historical context is indeed remarkable. Consider that as the twentieth century began, large- scale firms and industrial plants were already well-established and rapidly expanding. These companies had developed the fundamentals of line and staff organization, led by a professional cadre overseeing operations, finance, accounting, and sales functions. When and where did the early HR departments come into existence? How were they organized, what initiatives and activities did they introduce, and how did their functions expand and deepen over time? In the subsequent part of this chapter, we will delve into answering these questions, embarking on a journey through time that begins just before the industrial revolution. We will outline significant paradigm shifts, tracing the evolution of HR departments until we reach the present day (see Figure 1.2). In the following section, we will also make predictions about the future based on current trends. 1.8.1. Pre-industrial revolution Before the Industrial Revolution, the functions integral to contemporary HRM were executed by guilds. Guilds, associations of skilled artisans and merchants, supervised specific crafts or trades within designated regions. These guilds encompassed various professions, ranging from judges, notaries, and money changers to doctors, bakers, ironworkers, swordsmen, and saddle makers. The backbone of guilds comprised experienced and recognized experts in their respective domains, known as 'master craftsmen.' Novices underwent a structured training period, progressing from 'apprentice' to 'journeyman' before attaining the esteemed status of a master craftsman. Guilds adhered to strict regulations concerning working hours, admission criteria, and the skills taught. Essentially, guild members functioned as both entrepreneurs and early versions of personnel departments, albeit without the formal designation. However, it's essential to note that the term 'personnel' in the traditional sense referred to individuals engaging in labour for a wage and do so for the benefit of the party providing employment. In this context, guilds did not align with the modern understanding of personnel management, as they operated within a different framework and did not precisely match the definition of personnel as we know it today. 1.8.2. Industrial revolution In the late 18th century, the Industrial Revolution emerged in Europe, initially taking root in Great Britain, and later extending to other parts of Western Europe and the United States. This transformative period marked the decline of guilds, fundamentally reshaping the way people earned their livelihoods. The revolution ushered in a shift from agrarian economies to industrial and manufacturing societies, propelled by technological advancements that enabled the creation of machines. These machines significantly increased worker productivity, fostering the rise of extensive industrial enterprises. However, the advent of machinery also brought about a profound change in the nature of work. The implementation of machines led to the establishment of the 'factory system,' where human labour was partially or wholly replaced. This shift permanently altered traditional employment relationships, as workers became integrated into mechanized production processes, leading to significant societal and economic transformations. In the past, work was artisanal, skill-based, and indivisible. However, the advent of the factory system disrupted this paradigm, replacing independent self-employment with permanent wage employment under organizations. Simultaneously, this shift led to the rationalization of work processes, aiming to enhance efficiency by simplifying production, drawing parallels to the concepts of Business Process Reengineering. Another consequence was a new form of labour division, emphasizing task specialization over broad skill sets. Skilled artisans evolved into machine operators, engaging in highly specialized, repetitive tasks. While some argue that this division of labour diminished overall skill, it's more accurate to assert that it confined skill development to specific areas. In these specific roles, expertise was refined through repetitive practice, potentially elevating the end product's quality. Therefore, it's accurate to say that the division of labour doesn't destroy skill but rather channels it into specific domains, encouraging enhancement through continuous, focused practice within designated tasks. The advent of the new manufacturing system necessitated the supervision of large workforces, leading to the establishment of complex hierarchies comprising foremen and managers responsible for overseeing operations. During the initial phase of the industrial age, employees received minimal attention. Entrepreneurs viewed their assets, including their workforce, as personal property. The factory owners or entrepreneurs delegated all workforce-related responsibilities to first-line supervisors, encompassing tasks such as recruitment, training, salary negotiation, grievance resolution, and dismissals. Workers found themselves at the mercy of these supervisors, who wielded complete autonomy. This power dynamic resulted in numerous abuses, including supervisors demanding commission wages from prospective employees before hiring them. Consequently, this period was marked by significant social unrest. Workers united in unions, protesting against the unjust conditions prevalent in factories. This led to intense conflicts between top management and unions. Management frequently refused to acknowledge or negotiate with the unions, while government support typically sided with the employers. The strained relationship between employers and employees during the late 19th and early 20th centuries, characterized by growing dissatisfaction and conflict, is commonly referred to as 'the Labour Problem.' As initially conceived, the labour problem was a unitary construct, symbolizing the generalized struggle between labour and capital. This conflict revolved around the control of the twin processes of production and distribution of income, leading to tensions and disputes. The term 'Labour Problem,' with its singular form and capitalized letters in 'Labour' and 'Problem,' underscored its perceived unity and strategic significance. This notion captured the widespread struggle between workers and employers, often manifesting through large-scale strikes and various forms of conflict and violence. In the early 20th century, the concept evolved into the plural form of 'labour problems,' recognizing that these issues came in various distinct forms. These challenges encompassed issues such as high employee turnover, poor work effort, child labour, poverty-level wages affecting a significant portion of the workforce, as well as bitter and bloody strikes, hazardous working conditions, and autocratic workforce governance. Importantly, these problems had detrimental effects on both employers and employees. Many employers were apprehensive that the Labour Problem might pave the way for socialism, radical unionism, or increased government regulation. On a business level, these issues incurred substantial financial losses due to work stoppages, intentional slowdowns by workers, inefficient labour practices, and excessive costs related to hiring and firing. The seriousness of the Labour Problem escalated between 1880 and 1915, reaching its peak during the late years of World War I, from 1917 to 1919. Notably, it was during this peak period of the Labour Problem that the field of 'Personnel Management' emerged. In an attempt to address these challenges, employers explored alternative management approaches, including welfare initiatives and scientific management. These efforts, in turn, sparked a countermovement known as the Human Relations Movement. Subsequently, in the following section, we will briefly delve into the movements that form the foundation of modern personnel management. 1.8.3. Industrial welfare, scientific management, human relations, and industrial psychology 1.8.3.1. Industrial welfare Welfare work stands as a crucial precursor to what would later evolve into personnel management. Broadly, welfare work denoted employer investments aimed at enhancing the well-being of workers, going beyond mere monetary compensation and legal obligations. This encompassed a wide array of practices, ranging from basic amenities like drinking fountains, locker rooms, and clean plant environments to more comprehensive initiatives such as employing a company nurse, organizing recreation programs, offering language, and cooking classes, providing accident and health insurance, granting holiday and vacation time, and even arranging home visits by nurses. The scope of these activities was extensive, some extending beyond the plant premises, like athletic teams and home visits, while others were internal, such as the provision of restrooms and cafeterias. These initiatives represented a fundamental shift in employer-employee relationships, reflecting a growing awareness of the holistic needs of the workforce beyond mere financial compensation. This trend laid the groundwork for the development of modern personnel management practices. Welfare work emerged from a multitude of motives and objectives, taking diverse forms contingent upon the industry and location. Particularly in its early stages, welfare initiatives were prevalent in textile mills and other rural enterprises, especially those with a female workforce. In such cases, amenities like company stores and women's restrooms were not merely supplementary benefits but rather a necessary response to the circumstances. Conversely, in urban areas and factories primarily employing men, welfare work served as an 'extra' benefit. The implementation of welfare work served several purposes, one of which was to create a buffer against the potential influence of unions and government intervention. While companies often framed these initiatives in paternalistic and social improvement terms, their adoption of welfare work was primarily driven by instrumental reasons. Firms aimed to establish a closer and more amicable relationship with labour, fostering greater cooperation, efficiency, and tranquillity within the workforce. Welfare work, therefore, became a strategic tool for companies to mitigate labour-related tensions and promote a harmonious work environment. 1.8.3.2. Scientific management With the rise of manufacturing, employers actively sought methods to improve efficiency and productivity. Engineers, management scholars, sociologists, and industrial/organizational psychologists delved into strategies to enhance organizational effectiveness, leading to the development of new approaches in managing the workforce. One of these approaches, scientific management, championed by pioneers like Frederick Taylor, Frank and Lilian Gilbreth, and Henry Gantt (credited with the Gantt chart), emphasized the rationalization of work. This method involved studying jobs scientifically, breaking them down into components, and identifying the 'one best way' to perform each task. Frederick Taylor, in particular, is regarded as the key figure in scientific management. His philosophy involved a systematic analysis of work processes, aiming to optimize efficiency. Taylor's techniques revolutionized management practices and laid the groundwork for modern organizational efficiency. Therefore, it is valuable to explore Taylor's management philosophy and the techniques he advocated to understand the foundational principles of scientific management. Taylor’s philosophy of management Taylor's management philosophy, as implied by its name, revolved around a scientific approach to decision-making, setting it apart from the unscientific methods prevalent in traditional management practices. The term 'scientific' in Taylor's context referred to decisions based on established facts, garnered through research and experimentation, rather than relying on tradition, rules of thumb, guesswork, precedents, opinions, or hearsay. While not every modern manager consistently makes purely rational decisions in all scenarios, the concept of scientific decision-making is widely recognized in contemporary management. Taylor significantly contributed to instilling this scientific mindset among managers. His goal of initiating a 'mental revolution' in management was undeniably successful, shaping the way managers approach decision-making processes today and leaving a lasting impact on the field. Another significant aspect of Taylor's management philosophy, central to the mental revolution he advocated, focused on the relationship between management and labour. At the turn of the century, the prevailing belief in both managerial and worker circles was rooted in the Marxist notion of 'class struggle.' It was widely accepted that there existed a fundamental conflict of interest between labour and management, particularly concerning wage issues. Taylor challenged this prevalent belief, asserting that the interests of both parties were fundamentally aligned. He argued that higher production, lower costs, and increased wages could benefit both labour and management if management approached its responsibilities in a scientific manner. Taylor's argument, grounded in the idea of a shared community of interest between management and labour, holds logical merit. He believed that as long as the pie (representing resources and benefits) was large enough, there would be no conflict over how to distribute it. However, Taylor didn't anticipate that as the pie expanded, so would aspirations, especially during times of inflation. Consequently, although Taylor's fundamental premise of a common interest between management and labour logically stands, disagreements over the distribution of resources have persisted, contrary to his idealistic vision of eliminating all conflicts in labour-management relations. Taylor’s techniques  Time and motion studies. Before Taylor's contributions, managers lacked precise methods to determine optimal task completion rates, relying on intuition and experience. Taylor transformed this approach by advocating meticulous time and motion studies. Instead of intuition, he broke down tasks into fundamental motions, eliminating inefficiencies to establish the 'one best way.' By timing these optimized motions, a standardized production rate, known as a 'proper day's work,' emerged. This systematic approach not only increased efficiency but also paved the way for modern industrial practices, ensuring tasks were completed in the most effective manner possible.  Standardized tools and procedures. Before scientific management every worker had his/her own private toolbox which resulted in great inefficiencies, since the proper tools were not always used or even owned. Under Taylor's influence, tools and procedures were meticulously designed based on extensive experiments to determine their optimal effectiveness in specific contexts. This approach involved identifying factors such as the ideal size and shape of coal shovels or the optimal machine speed for cutting specific metals. These standardized tools and machines were not only tailored for efficiency but also aimed to minimize worker fatigue, ensuring a delicate balance between productivity and well-being.  The task. Before the era of scientific management, work assignments lacked precision and often relied on subjective assessments. Taylor revolutionized this approach by introducing the concept of a 'task,' a specific quantity of work to be completed with a defined level of quality within a designated timeframe. This task, determined through rigorous time studies, became the cornerstone of Taylor’s methodology. Taylor’s innovative approach laid the groundwork for modern goal-setting methods, including Management-by-Objectives (MBO) explored in Chapter 6.  Financial incentives. Taylor asserted that monetary compensation was the primary motivator for workers. He advocated for increased wages ranging from 30% to 70% higher, contingent upon employees adhering to scientific management principles. These principles encompassed efficiently executing assigned tasks and consistently following instructions, emphasizing the importance of aligning workers' efforts with the tenets of scientific management.  Individualized work. Taylor strongly advocated for individual tasks and corresponding individual rewards, arguing that group work and rewards could diminish individual productivity. He attributed this decline to phenomena like 'systematic soldiering.' Taylor firmly believed that personal ambition served as a far more potent motivator for exertion than a desire for the collective welfare. This perspective contrasted sharply with the prevailing trend favouring group tasks in the preceding decades. Taylor's stance underscores the enduring emphasis on individual performance within the framework of scientific management.  Management responsibility for training. Taylor's scientific management approach extended to the realm of employee training. Contrary to learning skills randomly from experienced colleagues, Taylor advocated for systematic training under the guidance of management experts. In his view, employees should not rely on potentially inconsistent methods used by experienced workers but should be trained by management professionals well-versed in the scientifically determined 'one best way.' This approach aimed for consistent and standardized skill development, aligning with Taylor's scientific principles.  Scientific selection. Taylor championed the concept of scientific selection, arguing for the hiring of high-aptitude individuals, often referred to as 'first-class' workers. He believed that these individuals possessed exceptional productivity, far surpassing that of the average worker. Taylor's advocacy for scientific selection had a profound impact, giving rise to the fields of Industrial Psychology and 'Personnel Management.' His influence was so significant that he was invited to join the Board of Directors of the Society of Applied Psychology shortly before his passing in 1915.  Shorter working hours and rest pauses. Through his experiments with pig-iron handlers and ball bearing inspectors, Taylor made a pivotal discovery. He found that reducing fatigue and enhancing productivity could be achieved by implementing shorter working hours and incorporating rest pauses during the day. Taylor's groundbreaking research established a link between optimized work schedules and heightened efficiency. By tailoring rest periods to the complexity of the tasks, Taylor not only alleviated worker fatigue but also maximized overall output. This insight revolutionized the understanding of employee well-being in the workplace, shaping future practices in fatigue management. Taylor's scientific management techniques quickly gained traction in both the United States and Europe. The prevailing belief was that efficient utilization of workers, coupled with monetary incentives, would drive motivation. However, these assumptions oversimplified the complex nuances of human motivation, as later revealed in the Hawthorne studies. Taylor's approach, while aiming for efficiency, curtailed workers' autonomy, emphasizing strict supervision to ensure precise adherence to job requirements. Simultaneously, Max Weber proposed that organizational efficiency could be optimized through legitimate rules and authority systems, essentially laying the groundwork for bureaucratic structures. The new design of jobs and the resulting autocratic management systems exacerbated conflicts between workers and organizations. The tensions escalated to the point where labour legislation was enacted, leading to the emergence of labour unions. The rise in unionization and the implementation of scientific management practices prompted the growth of personnel departments. In this evolving landscape, job analysis became pivotal, serving as the foundation for employee selection, training, performance appraisal, and compensation. 1.8.3.3. Human relations movement In the 1930s, managers began to argue that conflict was not inherent in labour relations but was caused by poor management and work systems. As a result, researchers conducted a series of experiments at the Hawthorne plant of the Western Electric Company (near Chicago) to examine the effects of different work systems on worker productivity. These studies, which started in 1924, formed the basis of what became known as the human relations movement. The Hawthorne studies The original aim of the Hawthorne studies was to investigate the relationship between the light intensity in the shop floor of manual work sites and employee productivity (‘the illumination experiments’). The basic idea was to vary and record levels of illumination in a test room with the expectation that as lighting was increased, productivity would too. In another test room, illumination was decreased, with the correlating expectation that efficiency would decrease. No significant differences were observed between the two conditions and so the results did not support the hypothesis that lighting influences productivity. The researchers concluded that a variety of factors must affect industrial output other than just the lighting effect. To observe the impact of these ‘other’ factors, a second set of tests was begun before the completion of the illumination studies on April 25, 1927 (‘the relay-assembly tests’). These experiments were designed to evaluate the effect rest periods and hours of work would have on efficiency. Researchers hoped to answer a series of questions concerning why output (number of relays being produced) declined in the afternoon: Did the operators tire out? Did they need brief rest periods? What was the impact of changes in equipment? What were the effects of a shorter workday? What role did worker attitudes play? Hawthorne engineers led by George Pennock were the primary researchers for the relay-assembly tests. Six women operators (referred to as ‘girls’) volunteered for the study and two more joined the test group in January 1928. The women were isolated in a separate room to assure accuracy in measuring output and quality, as temperature, humidity, and other factors were adjusted. The test subjects constituted a piece-work payment group and efforts were made to maintain steady work patterns. The Hawthorne researchers attempted to gain the women’s confidence and to build a sense of pride in their participation. A male observer was introduced into the test room to keep accurate records, maintain cordial working conditions, and provide some degree of supervision. Productivity increased more than 30 percent over the first two and-a-half years of the studies and remained steady for the duration of the tests. Output did rise in response to shorter hours and the introduction of rest breaks and continued to rise regardless of any changes the researchers made to the experiment. Most baffling of all, output remained high when the researchers decreed a return to baseline working conditions. In 1928, Elton Mayo, an Australian recently appointed to the Harvard Business School, was brought aboard. Mayo's view was that the test room workers had turned into a social unit, enjoying all the attention they were getting, and had developed a sense of participation in the project. After additional study and consideration, the researchers, led by Mayo and his colleague Roethlisberger, realized worker attitudes within the group were influential as was the more personal atmosphere of the test room. They concluded factors such as lighting, hours of work, rest periods, bonus incentives, and supervision affected workers, but the attitudes of the employees experiencing the factors were of greater significance. In November 1931, Mayo’s team started a new series of tests, designed to observe, and study social relationships and social structures within a group of bank wirers (‘the bank-wiring tests’). The job, wiring conductor banks, was tiring and monotonous and required workers to stand for long periods of time. Perhaps the most revealing aspect of the bank-wiring tests was that the workers combined to slow down production, a clear indication of the need for analysis of the social relationships of workers. Research showed the most admired worker among the group was the one who demonstrated the greatest resentment of authority by slowing down production the most. In summary, the Hawthorne studies challenged prior Tayloristic assumptions about human behaviour. Despite the studies’ methodological shortcomings (see below), it was concluded that: (1) workers are not motivated solely by pay and good physical working conditions. Social and psychological needs must also be satisfied in order to increase productivity and job satisfaction; (2) the informal relations among workers influence their behaviours and performance more than the formal relations in the organization; (3) employees perform better if they are allowed to participate in decision-making affecting their interests; (4) employees work more efficiently when they believe that management is interested in their welfare, when they are given attention, and when they are treated with respect and dignity. Beyond the legacy of the Hawthorne studies has been the use of the term ‘Hawthorne effect’ to describe how the presence of researchers produces a bias and unduly influences the outcome of the experiment. Though the Hawthorne experiments have opened a new chapter in management by emphasizing the importance of social factors in output, it is not without criticism. The experiments have been widely criticized by some behavioural scientists because of lack of scientific objectivity used in arriving at various conclusions. Some critics feel that there was bias and preconception on the part of the Harvard researchers, others pointed to the studies’ methodological limitations, such as lack of generalizability, absence of a control group, and small sample sizes. Other pioneers Other well-known representatives of the human relations movement include Mary Parker Follett, Chester Barnard, Douglas McGregor and Rensis Likert.  Mary Parker Follett, also known as the ‘Mother of Modern Management,’ presented analyses of power relations within organizations. She believed that management was ‘the art of getting things done through people’ and highlighted the importance of ‘powering with’ rather than ‘powering over,’ and integrating with employees to solve conflicts. Her ideas run counter to what scientific management claimed, namely that leadership is defined by the exercise of power and that there needs to be a clear division between those who manage the work and those who do the work.  Chester Barnard, a CEO of New Jersey Bell Telephone, developed concepts of strategic planning and the acceptance theory of authority. Strategic planning refers to the formulation of major plans or strategies that guide the organization in the pursuit of important goals. Barnard believed that the most important roles of executives were to establish effective communication systems, hire and retain effective staff, and motivate staff. These functions differ from standard treatments of management in that they include communication systems as an important facet of leadership.  Douglas McGregor is well-known for his X and Y theories proposed in his 1960 book, ‘The human side of enterprise.’ The two theories are opposing methods by which managers perceive employee motivation. Theory X states that people dislike work and need the constant threat of job loss and financial incentives to work hard. These workers are irresponsible and need to be controlled. Theory Y states that people are self-motivated, responsible, creative and need to work. Theory Y has been adopted by more progressive management intellects that follow Mayo's human relations approach.  Rensis Likert is probably best known for his work on scaling and conducting surveys. Also, Likert founded the theory of participative management, which was used to engage employees in the workplace and ultimately allow them to enjoy their job more. His theory distinguishes four management systems. Each describes the relationships, involvement, and roles of managers and subordinates in an industrial setting: o Exploitative authoritative: in this system, responsibility and power lie in the upper echelons of the management hierarchy. Superiors have no trust or confidence in subordinates, with decisions imposed on the latter with no scope for discussion. Motivation is based on threats and fear, and management is highly task oriented. o Benevolent authoritative: authority and decision-making ability remains with upper management, but subordinates are motivated by rewards. As a natural consequence, leaders have condescending confidence and trust in their subordinates like a master- servant relationship. Benevolence also means a limited number of decisions can be made by middle or lower management. o Consultative: this system of leadership uses rewards, autonomy, and participatory teamwork as the basis for motivation. Management has substantial but not total confidence in subordinates, with some degree of horizontal and vertical communication. Employees are involved during some decision-making processes – particularly if decisions are likely to make a significant impact on them. o Participative: Likert considered this system to be the most satisfying for employees. Superiors have full confidence in subordinates and encourage them to participate in group-based decision making – which also serves as a motivational driver. Two-way communication is also prevalent as the subordinate feels empowered to discuss any job- related issue with their superiors. The human relations movement challenged the assumption that people do not want to work, and it stressed that people make important contributions to organizations. One of its central tenets is that employees need to be understood as members of the group before they can be satisfied and productive. Hence, because of the work of Mayo, Roethlisberger and the other pioneers, much attention was paid to the social function that work has, the interactions between employees, and the existence of informal social systems8. 1.8.3.4. Industrial psychology The emergence of industrial psychology also made a significant contribution to human resource management. Scientific management paid particular attention to the work itself. Industrial psychology, on the other hand, paid much more attention to the worker himself and the individual differences between workers. A ground-breaking publication in that area of applied psychology was provided by Hugo Münsterberg. He pointed out that psychology could make many contributions to the testing, selection, training, and motivation of employees. Stanley Hall, the first president of the American Psychological Association (APA), also saw the need for a journal that focused exclusively on the application of psychology in industry. The journal ‘Journal of Applied Psychology’ was founded in 1917 and remains the most prestigious business psychology journal to this day. Simply put, it could be argued that the study of individual differences is done today by personnel psychologists while the study of work characteristics is rather the terrain of work and organizational psychologists. 1.8.4. WWI and WWII The application of psychological principles to business problems took off during the war. For example, no fewer than 2 million people were tested in the U.S. Army during World War I. Like so many other sciences, applied psychology and human resource management experienced explosive knowledge growth during the two world wars. During the wars, for the first time there also rose a clear need for a separate personnel administration, which functioned in a centralized manner under the authority of a personnel director and was responsible for the welfare and efficiency of employees. After all, in both world wars there was a severe labour shortage. Immigration was limited and most workers had to serve in the military. This ensured that the remaining workers could choose from a relatively large number of vacancies, resulting in high personnel turnover. Labour shortages, frequent wage increases, and the increased need for wartime production forced employers to work more efficiently with the employees they could still retain. Consequently, the developments during the world wars led to the emergence of modern human resources management. The recruitment and dismissal of employees was no longer the task of the first line supervisor but was placed in the hands of so-called personnel departments. In addition, activities that were previously unstructured (e.g., training, job standardization, and welfare work) were placed under the responsibility of one personnel manager in a separate department. 1.8.5. Personnel management after WWII The main question in the previous period was: ‘Should our company have a personnel department?’ In the period between 1945 and 1970, having a separate personnel department was standard in large companies. In this period, the new question becomes: ‘How should we organise our personnel department?’ The answer: all separate management activities and practices, with the common feature of being employee-oriented, are assigned to the personnel department. Two themes dominate human resources policy during this period. First, there is a focus on labour relations. After World War II, more and more employees became union members. In the United States, by 1950, two out of every three workers are members of a union. The power of unions also grew because union consultation was now legally recognized and established. Maintaining social peace was therefore one of the main responsibilities of the personnel department during this period. In the late 1960s, quality of work life became a second major issue. Organizations became aware that employees were not an obstacle to efficient management, but rather one of the most valuable conditions. During this period, therefore, a whole series of initiatives were taken that were intended to maximize organizational performance on the one hand, but also to increase employee well-being on the other. These developments came about under the influence of a changing zeitgeist. The student revolt (think of May 1968) had effects on all sections of society. Power and authority were no longer taken for granted. Employees became more articulate, better educated. People required more from work than having to perform the same monotonous actions over and over again. Consequently, personnel departments developed job design and job enrichment programmes that, along with career planning and development, were intended to improve the psychological quality of working life. If a company had more satisfied employees, they would also be more loyal to the organization. Other initiatives focused on increasing employee commitment and participation. These changes in how employees are viewed is also known as ‘revisionism.’ That school of thought broke through the one-sidedness of scientific management as well as that of human relations. It is assumed that people are naturally oriented towards development and accountability. The task of organizations, then, was to adapt to it. This manifested itself in job enrichment and participation programmes. 1.8.6. From personnel management to SHRM Since the 1970s, human resources management has evolved from a function aimed at preserving the status quo, social peace, and good labour relations (cf. Ulrich’s HR roles) to one of the most important and critical functions for efficient and innovative management. This development came about because of profound and far-reaching changes in the economic and social environment. These included rapid technological developments, variable and unpredictable market conditions, greatly increased competition due to globalization of economic activity, a diverse workforce (in terms of gender, race, age, cultural background, and so on), extensive restructuring and downsizing (due to flatter organizations), and reduced union influence. To respond to these challenges, companies have taken various measures that greatly influence human resource management. For example, since the 1970s, organizations maintained more direct relationships with their employees, reducing to some extent the influence of unions. Also, the influence diminished as more and more people started working in the service sector. Moreover, organizations viewed their employees as valuable assets that contributed to gaining competitive advantages. Thus, the issue was to attract the best employees, build a relationship of trust with them and develop them in such a way that they indeed offered an advantage over competitors. Also, quite a few American and European companies adopted management concepts (e.g., Total Quality Management) from successful Japanese companies. Under the influence of American and Japanese gurus such as Deming, Juran and Ishikawa, the idea of Total Quality Management ('striving for customer satisfaction through continuous improvement of all business processes') was also accepted in the West as one of the most important methods of involving employees more closely in the improvement of the organization. When Total Quality Management was applied in companies, small working groups were formed on the shop floor to analyse and solve quality problems in their own departments. In this way people became more involved in their work. These changes have resulted in the human resources function transforming from a low profile and reactive management activity to a primary and strategic partner in organizations. This development was supported by a name change: the personnel officer is now called the Human Resource Manager. Human Resource Management was originally a particular approach to traditional personnel administration, but today the terms ‘personnel management,’ ‘personnel work,’ and ‘personnel administration’ have been all but replaced by ‘Human Resource Management.’ Yet we must recognize that HRM has several different emphases than traditional and more specialized personnel management. In the following chapters, we outline the major differences between traditional and modern HRM. 1.9. The future of HRM Without a crystal ball, it is very difficult to predict the future (with it, too, for that matter). Nevertheless, based on recent trends, we can make tentative statements about what the future of HRM might look like. There are indications that HR decisions in the future will be based on evidence to a much greater extent than is the case today and that the collection and combination of personnel data will become increasingly important. The call for sustainable personnel management is also becoming louder, partly due to the growing attention paid to well-being. These trends are briefly discussed below. 1.9.1. Evidence-based HRM Consider the following hypothetical situation. You pay a visit to a dietitian after gaining some weight during the holidays. The dietitian recommends diet X. It’s very expensive and requires a radical lifestyle change, but the prospect of a slim and healthy body motivates you to stick with the diet. After a few weeks, however, you have gained five pounds and are experiencing serious side effects that require medical treatment. After searching the Internet, you find out that most scientific studies find that diet X is ineffective and has many such side effects. When you confront the dietitian with this, he replies, “Why should I care about scientific studies? I have 20 years of experience. Besides, the diet was developed by a famous American nutritionist, whose book has sold over a million copies.” Does that sound like malpractice? It probably does. Unfortunately, it is daily practice in the management world to disregard sound evidence and rely on personal experience or the popular ideas of management gurus. Managerial decisions affect the working lives and well-being of people around the world. Therefore, managers, including HR managers, should make decisions based on the best available evidence. All evidence-based practices, including evidence-based HRM, start from the premise that good-quality decisions should be based on a combination of critical thinking and the best available evidence. When we say ‘evidence’, we basically mean information. It may be based on numbers, or it may be qualitative or descriptive. Evidence may come from scientific research suggesting generally applicable facts about the world, people, or organizational practices. Evidence may also come from local organizational or business indicators, such as company metrics or observations of practice conditions. Even professional experience can be an important source of evidence, for example an entrepreneur’s experience of setting up a variety of businesses should indicate the approach that is likely to be the most successful. Finally, the values and concerns of stakeholders, that is people who are affected by the decision, may be factored in. According to Rob Briner, professor of organizational psychology at Queen Mary University of London, evidence-based HRM is about ‘making personnel related decisions through the conscientious, explicit, and judicious use of the best available evidence from multiple sources to increase the likelihood of a favourable outcome.’9 It is therefore important to be able through critical appraisal to determine what evidence is the ‘best’ – that is, the most trustworthy – evidence. For instance, the most trustworthy evidence on which holiday destination has the least chance of rain in Ireland in early August will obviously come from statistics on the average rainfall per month, not from the personal experience of a colleague who only visited the country once. The same is true for HRM decisions. When deciding about whether to use a HRM method such as team-based pay for performance, information based on the findings from a study of 150 organizations in which individual and team performance were measured before and after the introduction of team-based pay for performance is more trustworthy than the professional experience of a colleague who works at a small company in a remote town. However, such a study may never have been done. Instead, the best ‘available’ evidence could be case studies of just one or two companies. For some decisions, there may be no scientific or organizational evidence at all, thus we may have no option but to decide based on the professional experience of colleagues or to pilot test some different approaches and see for ourselves what might work best. Given the principles of evidence-based practice, even if we rely on the experience of a colleague, this limited-quality evidence can still lead to a better decision than not using it, if we are aware of its limitations when we act on it. As a rule, the best evidence comes from sources that have high internal and external validity. Internal validity indicates to what extent the results of the research may be biased and is thus a comment on the degree to which alternative explanations for the outcome found are possible. External validity refers to the extent to which the evidence is generalizable to other situations. All research designs are flawed – though each is flawed differently. For instance, research designs with a high internal validity, such as controlled studies, may be less suited to generalization, which restricts their practical usability. Sample surveys and field research, on the other hand, have lower internal validity, but can sometimes be more useful for management practice. So, there is always a trade-off between internal validity (precision in control and measurements of variables) and external validity (generalizability with respect to populations, setting and context). While all HR managers use evidence in their decisions, most pay little attention to the quality of that evidence. This practice results in poor decisions based on unfounded beliefs, whims, and ideas popularized by management gurus. Not convinced? Then take a moment to graze through the repertoire of tools and outdated theories used by HR practitioners: the Myers-Briggs Type Indicator, Enneagram, Insights, Neurolinguistic Programming, Transactional Analysis, Maslow's hierarchy of needs, and Herzberg's motivation-hygiene theory. I could go on for a while. The practices and theories are not supported by empirical evidence10. In other words, they do not correspond to how reality works and lead to false conclusions and poor management. {Every year students in their assignments or case answers continue to refer to these outdated theories as if they are generally accepted truths. It should not come as a surprise that most of these students fail the course}. You may be thinking: ‘If these tools don't work, why are they so popular?’ When I advise companies, I find that business leaders and employees prefer models that are easy to interpret and require little cognitive effort. Business leaders often prefer simplistic, incorrect models to more nuanced, correct models because they are understood by everyone and create a common language within the organization. Many of these models assign people to a category (colours or symbols). Apparently, people like to be assigned to a certain group with which they can identify. The HR professional, advised by highly paid consultants, assumes the role of Dumbledore who uses his Sorting Hat to assign employees to one of the predetermined typologies (“You belong to the ‘blue’ category”; “You are an ‘ISTP’”). There is a risk that employees will be given a label that does not fit them, that stigmatizes them, and will be provided with trivial, non-evidence-based tips and tricks that will cause more harm than good. These simplistic models (and their developers) tend to forget that human traits are normally distributed and that identifying clusters of individuals should be based on sophisticated statistical techniques11. Another frequently asked question is: ‘If these theories are wrong, why then were they covered extensively in my previous courses?’ ‘Were all my previous professors wrong?’ The answer is unmistakable: no. Of course, these theories deserve a place in textbooks on work and organizational psychology and on management. They have important historical significance and show how thinking about work motivation and management has changed over time. However, it is not the case that every theory covered in your textbooks is still valid. The problem is that oftentimes authors don’t mention the fact that theories are outdated and, because of that, are partly responsible for keeping alive unsubstantiated ideas. In my view, this is the main reason why old theories, such as the one by Maslow, continue to circulate and have become common knowledge. Therefore, a warm appeal to you, dear student: Look critically at the study material, dare to question generally accepted truths, challenge your professors, ask for the evidence and/or go looking for it yourself, don't just take everything for granted. This call applies to this course but also to all other courses you will take during your studies. When you adopt this mindset, you act in the spirit of evidence-based practice. 1.9.2. Big data and e-HRM HR information systems (HRIS) are IT-based applications that allow HRM to systematically collect, store and display data, databases, and employee knowledge. Well-known examples of such systems are PeopleSoft and SAP. In addition to HRIS, also the terms Human Resource Management Systems (HRMS) or e-HRM are used. All these terms have about the same meaning. As a first principle, e-HRM allows all personnel information to be easily accessible to line management, which fits in with the internalization of HRM. Staff members themselves also have a more active role and input in their development and career. For example, they can keep track of their development or take online courses. A second principle of e-HRM is to reduce the administrative workload of the HR department and to increase the efficiency of HR applications using technological applications. This gives the HR department more time and space to contribute to the organization's strategic direction. The third principle of e-HRM is that an organization can only gain in-depth knowledge and understanding of its human resources if it has access to all forms of information and if that information can also be used to make strategic decisions. The range of data that can be recorded in such an HR information system is virtually unlimited. That is why it is called big data. Big data stands for volume, speed, diversity, and veracity of data. A fully developed information system can contain data on the following areas: employee biography, employee selection scores for training courses they have attended, personnel planning, applicant monitoring, recruitment initiatives, employee communications, absences, holidays, performance appraisals, training trajectories, remuneration and fringe benefits, pay structure and pay analysis, employee health, employee engagement, etc. Each organization must decide for itself what data to keep and what data not to keep. The HR data can then be linked to other databases (e.g., business data). The big data contained in the various HR databases undeniably offer great opportunities for organizations and researchers. At the same time, it also presents organizations with challenges. Which big data are most informative? Keeping track of all that data and information is only useful if the information is also used effectively to support decisions. In that respect, the distinction between the more descriptive HR metrics and the more predictive HR analytics and artificial intelligence (defined as functional intelligence outside the human brain) is certainly relevant. It goes without saying that employers should handle the multitude of data on their staff with integrity. 1.9.3. Sustainable HRM Measuring the added strategic value of HRM activities has become increasingly important over the last decade. But the pendulum also swings the other way. In addition to the increased emphasis on the ‘hard’ component of HRM (results), we see the importance of the ‘softer’ component (people) reflected in other recent approaches. Sustainable HRM is used to argue that people should be put back at the centre12– 14. Sustainable HRM wants to proactively develop a people policy with an emphasis on the positive aspects at work (e.g., job satisfaction, flow, engagement, variety, challenge, learning climate) instead of focusing on the negative aspects (e.g., stress, burn-out, bore-out, monotony, absenteeism, turnover). Sustainable HRM is therefore a story about 'what people can do' rather than 'what people should do'. In concrete terms, this sustainable HRM is expressed in a series of initiatives that will be dealt with in more detail later in this course. The New Ways of Working, which offers employees the opportunity to work flexibly regardless of time or place and to design their own job (job crafting), is an example of this. Other examples are the stronger emphasis on informal and network learning and the greater responsibility of staff for planning and developing their careers themselves (often beyond the borders of the current organization). But sustainable HRM goes beyond these initiatives, which put people more at the centre and respect them. Other key elements of sustainable HRM are a greater ecological awareness of organizations ('green HRM')15,16 and actions from the business community (‘corporate social performance’)17,18. Reference list 1. Peter Cappeli. Why we love to to hate HR... and what HR can do about it. Harv Bus Rev. Published online 2015. 2. Hammonds KJ. Why We Hate HR: You’re great at administrativa and wasteful. Leadership excellence. 2005;23(2). 3. Rousseau DM. Psychological and implied contracts in organizations. Employee Responsibilities and Rights Journal. 1989;2(2). doi:10.1007/BF01384942 4. Robinson SL. Trust and breach of the psychological contract. Adm Sci Q. 1996;41(4). doi:10.2307/2393868 5. Zhao H, Wayne SJ, Glibkowski BC, Bravo J. The impact of psychological contract breach on work-related outcomes: A meta-analysis. Pers Psychol. 2007;60(3). doi:10.1111/j.1744-6570.2007.00087.x 6. Stouten J, Rousseau DM, De Cremer D. Successful organizational change: Integrating the management practice and scholarly literatures. Academy of Management Annals. 2018;12(2). doi:10.5465/annals.2016.0095 7. Ulrich D, Brockbank W, Yeung AK, Lake DG. Human resource competencies: An empirical assessment. Hum Resour Manage. 1995;34(4). doi:10.1002/hrm.3930340402 8. Roethlisberger FJ, Dickson WJ. An Industrial System as a Social Worker. In: Management and the Worker. ; 1939. 9. Briner RB, Denyer D, Rousseau DM. Evidence-based management: Concept cleanup time? Academy of Management Perspectives. 2009;23(4). doi:10.5465/AMP.2009.45590138 10. Bridgman T, Cummings S, Ballard J. Who built maslow’s pyramid? A history of the creation of management studies’ most famous symbol and its implications for management education. Academy of Management Learning and Education. 2019;18(1). doi:10.5465/amle.2017.0351 11. Hofmans J, Wille B, Schreurs B. Person-centered methods in vocational research. J Vocat Behav. 2020;118. doi:10.1016/j.jvb.2020.103398 12. Lopez-Cabrales A, Valle-Cabrera R. Sustainable HRM strategies and employment relationships as drivers of the triple bottom line. Human Resource Management Review. 2020;30(3). doi:10.1016/j.hrmr.2019.100689 13. Aust I, Matthews B, Muller-Camen M. Common Good HRM: A paradigm shift in Sustainable HRM? Human Resource Management Review. 2020;30(3). doi:10.1016/j.hrmr.2019.100705 14. Kramar R. Beyond strategic human resource management: Is sustainable human resource management the next approach? International Journal of Human Resource Management. 2014;25(8). doi:10.1080/09585192.2013.816863 15. Dumont J, Shen J, Deng X. Effects of Green HRM Practices on Employee Workplace Green Behavior: The Role of Psychological Green Climate and Employee Green Values. Hum Resour Manage. 2017;56(4). doi:10.1002/hrm.21792 16. Renwick DWS, Redman T, Maguire S. Green Human Resource Management: A Review and Research Agenda*. International Journal of Management Reviews. 2013;15(1). doi:10.1111/j.1468-2370.2011.00328.x 17. Waddock SA, Graves SB. The corporate social performance-financial performance link. Strategic Management Journal. 1997;18(4). doi:10.1002/(SICI)1097-0266(199704)18:43.0.CO;2-G 18. McWilliams A, Siegel D. Corporate social responsibility: A theory of the firm perspective. Academy of Management Review. 2001;26(1). doi:10.5465/AMR.2001.4011987

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