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Human resource planning and development contribution

'A British Foreign Office official looking back over a career spanning the first half of the twentieth century commented: 'Year after year the fretters and worriers would come to me with their awful predictions of the outbreak of war. I denied it each time. I was only wrong twice!'Some would see this as the arrogant complacency to be associated with planners. Critics think of the inaccuracy and over-optimism of forecasting - the 'hockey stick' business growth projections. They regard planning as too inflexible, slow to respond to change, too conservative in assumptions and risk averse. These points are made about any sort of planning.

When it concerns human resources, there are the more specific criticisms that it is over-quantitative and neglects the qualitative aspects of contribution. The issue has become not how many people should be employed, but ensuring that all members of staff are making an effective contribution. And for the future, the questions are what are the skills that will be required, and how will they be acquired.

There are others, though, that still regard the quantitative planning of resources as important. They do not see its value in trying to predict events, be they wars or takeovers. Rather, they believe there is a benefit from using planning to challenge assumptions about the future, to stimulate thinking. For some there is, moreover, an implicit or explicit wish to get better integration of decision making and resourcing across the whole organisation, or greater influence by the centre over devolved operating units.

Cynics would say this is all very well, but the assertion of corporate control has been tried and rejected. And is it not the talk of the process benefits to be derived self indulgent nonsense? Can we really afford this kind of intellectual dilettantism? Either these criticisms are fair or not, supporters of human resource planning point to its practical benefits in optimising the use of resources and identifying ways of making them more flexible. For some organisations, the need to acquire and grow skills which take time to develop is paramount. If they fail to identify the business demand, both numerically and in the skills required, and secure the appropriate supply, then the capacity of the organisation to fulfil its function will be endangered' (Institute of Employment studies, 1996).

Task 1

Human Resource Management

Human Resource Management (HRM) is the task inside an organization that focuses on employment of, management of, and giving direction for the people who work in the organization. Human Resource Management can also be performed by line managers.

Human Resource Management is the organizational function that deals with issues related to people for instance reimbursement, hiring, performance management, organization development, safety, wellness, benefits, employee motivation, communication, administration, and training.

The chosen Banking Industry is The Co-operative Bank. The Co-operative Bank is a completely owned supplementary of the Co-operative Wholesale Society (CWS). The bank has a network of 90 branches and some 4,000 in-store banking points in supportive stores. It has seen itself as an alternative force in UK banking and has a reputation for innovation, in banking products. While the history of the bank shows development away from the CWS (25 years ago 90% of deposits came from Movement and 10% from other sources: the reverse is now the case) it remains the banker to the Co-operative movement and as it's Chief Executive stated in the 1986 Annual Report, "our co-operative philosophy dictates that we approach the bank market in a fundamentally different way". (Wilkinson, 1991).

The development of the bank's policy on the management of people illustrates the move from the narrower reactive function towards broader, more proactive human resource management. Certainly, in its early years as a clearing bank, labour was seen more as a cost than a resource to be developed. For instance, there was no formal succession planning process, and training tended to be limited to providing technical skills for clerical staff, much of which was "on the job". With its rapid expansion in the 1970s, a greater emphasis was placed on recruiting staff from other banks.

Over the 1970s the Personnel Department was largely concerned with the administration of salaries and negotiations over pay with a significant input from the CWS. In the later 1970s, with the rapid expansion of staff in the bank and in the context of changing legislation and incomes policies, there was a move to greater specialisation and professionalism. As in other banks, the personnel department had been staffed by generalists, who tended to prevent the development of a strong autonomous function; furthermore the highly centralised nature of management, controlling both procedural and substantive matters (to the extent that each clerical member of staff appointed would be seen by Head Office) limited discretion at local level.

However, the Co-operative Bank differed from the major banks because of its historical roots and the influence of the movement was reflected in various agreements with the union, most notably the New Technology Agreement, The Job Mobility and Job Security Agreement and the Union Membership Agreement which exercised more of a constraint on the management of labour than that faced by other banks.

Changing Strategies

By the mid 1980s, it became increasingly clear to some senior managers in the Bank that there was a need to re-examine its entire policy towards managing staff. There was little point in producing corporate plans with major strategic changes envisaged unless the staffs are committed to achieving these. As one senior manager put it:

"It was beginning to register amongst management that unless the staff were got up to scratch and on board with change, the bank was not going to get there".

It was felt that the entire bank culture needed to be changed to a more performance orientated culture, a view which fitted in with the popular trend towards emphasising the so-called "soft" aspects of management exemplified by "In Search of Excellence" (Peters and Waterman, 1982). With increasing competitive pressure in the sector, and with stagnant profits and accounts and only a small percentage of the current account market, there was a clear need to grow the customer account base by adopting a new "focus strategy" (Porter, 1985). Furthermore, it was recognised that any significant differentiation in products was short- lived especially for small banks with limited resources and to create sustained differentiation it was necessary to create a favourable perception of the Bank by its customers. The Bank would emphasise a "caring, sharing" image, and employee goodwill as well as technical competence was required to project this.

There were several other reasons for the new approach to the management of staff. Firstly, infrastructural problems - growth in the Bank had taken place in the relatively "soft" markets of the 1970s and had to some extent hidden rising costs associated with the clearing centre and Head Office which were widely regarded as being overstaffed. Secondly, the increasing competitive pressure in banking had led to greater attention to controlling labour costs and increasing labour productivity. Thirdly, as we have noted, the nature of change had moved the emphasis towards being a market driven rather than an administratively driven organisation and the importance of staff quality was being emphasized.

Hence, the need to manage human resources more effectively was formally recognised in the Corporate plan of 1986 and in particular it was seen as necessary to change the attitude of staff towards customers, create profit awareness and to encourage a greater identification with the organisation. As a senior manager put it:

"The staff had to see that it was the customer not the pieces of paper which the bank were concerned with."

However, the Corporate Plan, while recognising the need for changes in the personnel area, did not explore in any detail what such changes would be, or how they were to be brought about. Thus references were made to operating with "maximum flexibility" and "maximum efficiency on optimum numbers of staff" but only broad indication as to how this was to be achieved. Thus a sales culture was required, but what did this mean in terms of personnel policies and practices?

Rothwell writes that:

The starting point of a company employment policy must be corporate policy: The employment policy must stem from the business policy and be an integral part of its implementation. (1984, p.31)

However, the links between business strategy and employment policy are by no means clear cut: one is not simply able to read off from company objectives a set of corporate employee relations policies.

Task 2

HR Planning and Development

The Co-operative Bank is a wholly owned subsidiary of the Co-operative Wholesale Society (CWS). The bank has a network of 90 branches and some 4,000 in-store banking points in co-operative stores. It has seen itself as an alternative force in UK banking and has a reputation for innovation, in banking products. While the history of the bank shows development away from the CWS (25 years ago 90% of deposits came from Movement and 10% from other sources: the reverse is now the case) it remains the banker to the Co-operative movement and as it's Chief Executive stated in the 1986 Annual Report, "our co-operative philosophy dictates that we approach the bank market in a fundamentally different way". (Wilkinson, 1991)

The development of the bank's policy on the management of people illustrates the move from the narrower reactive function towards broader, more proactive human resource management. Certainly, in its early years as a clearing bank, labour was seen more as a cost than a resource to be developed. For instance, there was no formal succession planning process, and training tended to be limited to providing technical skills for clerical staff, much of which was "on the job". With its rapid expansion in the 1970s, a greater emphasis was placed on recruiting staff from other banks.

Over the 1970s the Personnel Department was largely concerned with the administration of salaries and negotiations over pay with a significant input from the CWS. In the later 1970s, with the rapid expansion of staff in the bank and in the context of changing legislation and incomes policies, there was a move to greater specialisation and professionalism. As in other banks, the personnel department had been staffed by generalists, who tended to prevent the development of a strong autonomous function; furthermore the highly centralised nature of management, controlling both procedural and substantive matters (to the extent that each clerical member of staff appointed would be seen by Head Office) limited discretion at local level.

However, the Co-operative Bank differed from the major banks because of its historical roots and the influence of the movement was reflected in various agreements with the union, most notably the New Technology Agreement, The Job Mobility and Job Security Agreement and the Union Membership Agreement which exercised more of a constraint on the management of labour than that faced by other banks.

A comprehensive review of policy and practice was also being undertaken in the remuneration area. There were a number of aims: firstly, to reflect organisational change and remove outdated remuneration practices, secondly, to safeguard the Bank from equal value claims and grading issues; thirdly, to integrate the Bank's salary structure into a single continuous evaluated structure to ensure stability and cost control; and finally to move away from automatic increases, award key objectives and place a greater emphasis on line management contributions rather than the central functions.

Hence there were a number of processes that took place in the Bank. There was the job evaluation exercise for managers and appointed staff upon which trade unions were consulted, and the clerical and technical scheme where the unions were involved in the design of the scheme, up to the point where agreement was reached on the format of the grading structure. With each job in every branch being highly individual, the task was a long one.

The remuneration review took place separately from the pay round already discussed; this enabled the Bank to set the scene for change and maintain the initiative. The Bank insisted upon a separate bargaining unit for managers and then extended this to the whole management group including assistant managers and branch administrators in order to keep the whole management team together. By mid 1988 senior managers had been removed altogether from the negotiating sphere. The Bank also insisted on freezing salaries for staff whose jobs fell above the grade boundaries and no increases of salary for those operating below an acceptable performance level. It was only then that the Bank would enter into negotiation on the composition of the scheme including salary ranges to apply to each grade. The new structures were introduced in 1989.

Profit sharing was also introduced in this period. As one senior manager said about staff:

"If that doesn't crystallise their minds and make things easier for them to see how to help customers, I don't know what will!"

The third leg of the new remuneration policy was getting staff to accept a "pay what the Bank can afford" principle in annual negotiations. The Human Resources Committee agreed that it was necessary to show that the Bank had to pay less than other clearing banks because of the difference in it's profitability along with the fact that possibly the skills in the fields in which it operated were not required to be the same as the others.

Furthermore, the Bank stressed that if a reasonable settlement was not reached, head count reduction might be necessary. The eventual settlement of 6% in 1988 was seen as a clear sign of the success of its new HRM policy. Firstly, the settlement was reached speedily. Secondly, the Bank's new open pro-active communications policy had been seen to deliver the goods. The day after the settlement a terminal message was sent across the network and faxed to London and Skelmersdale (the major employing centres). The Personnel newsletter was hand delivered to managers in Manchester and staffs was consequently briefed within 24 hours, and importantly, before the union had been able to give its message. Hence, management had taken the initiative. Thirdly, there seemed to be evidence that something of the argument that the Bank had been trying to put across concerning profit/head and the dangers of being priced out of the market had been taken and there was positive feedback from the staff, with regard to the early receipt of information.

Task 3

Performance

the Bank to changes in the financial sector which has been experiencing deregulation, increasing competition, technological innovation and an increasingly discriminating public (Morris, 1986). It examines both changing business and employee relations strategies and the links between the two. As greater diversity begins to exist amongst the retail banks the study explores the Bank's attempt to find itself a niche or adopt a focus strategy (Porter, 1985). This paper is primarily concerned with Human Resource issues. Changes in the nature of banking clearly have a knock-on effect on employee relations (defined broadly to include industrial relations, communications, training, remuneration policy, etc.) as banks move towards being more market driven organisations with a culture consistent with that, and with staff being regarded more as a resource than a cost (Wilkinson, 1990).

Historically, it has been the case that employee relations have been regarded as a 'second order' strategy, purely facilitative and not fully integrated into overall business strategy (e.g. Timperley, 1980; Purcell, 1983; Wilkinson, 1990). Hence, there was little consideration of employee relations at the top corporate level implications unless the level of unrest was such that labour was seen as a problem, as for instance in the car industry (e.g. Willman and Winch, 1985). Although there has been a gradual rise in the number of personnel professionals at Board level, these are still a minority. Lack of serious consideration of employee relations has also been said to owe something to the dominance of financial control at this level (Batstone, 1984, pp.70-2) and the lack of union influence (partly because bargaining tended to focus on the plant.) Research in the 1970s discovered an 'avoidance strategy' whereby industrial relations were regarded as somehow 'external to the enterprise (Winkler, 1974). Certainly many would argue that while senior, management do think about human resource issues, the degree of unpredictability in this area pushes it fairly well downstream in corporate planning. However, there are dangers of looking at HR issues in this way. The importance of ensuring the active co-operation of employees in industry has been emphasised for example by Walton (1985), who examined the shift away from emphasising control to one of commitment, and this can be even more significant for the service sector. Thus, in retail banking, the banks do not yet provide significantly different products and hence consumer choice is heavily influenced by convenience and image, the latter partly created by contact with staff, and there is thus a clear strategic link with quality of service and staff quality. Yet, in banking traditionally staff have not been recruited or developed for customer contact skills but for technical and administrative ability. 'Mth banks wanting to move away from being regarded merely as providers of a money transmission service to the selling of a range of financial products and services with "tellers" becoming "sellers", the organisation will, need to become more organic and less mechanistic, (Burns and Stalker, 1961) which will require far greater commitment and co-operation rather than mere compliance from staff.

The recent emphasis on human resource management, e.g. Storey (1992), Torrington and Tan Chee Huat (1994), suggests that not only is the management of labour being given more attention, but that the issues discussed are broader and more strategic as well as tactical (see also Wilkinson & Marchington, 1994). Miller (borrowing from Porter (1985)) defines strategic human resource management as 'those decisions and actions which concern the management of employees at all levels in the business and which are related to the implementation of strategies directed towards creating and sustaining competitive advantage' (1987, p.352). Thus, unlike the traditional peripheral function of many personnel managers, the newer style of human resource managers attempts to:

'relate personnel practices to beliefs, to link each and every process of the recruitment, induction, training, appraisal rewarding of individuals to an overall set of articulated beliefs of organisation' (Hunt, 1984, p.16)

Human resource management is seen as part of the movement away from concentration on unions and collective bargaining, to an emphasis on staff as individuals. Behind all this is a belief that it will release greater commitment from employees although one has to be careful to examine the extent to which 'human resource management is genuinely concerned with creating a new equal partnership between employer and employed, or are they really offering a convert form of employee manipulation dressed up as mutuality' (Fowler, 1987, p.3). Hence it is significant that human resource management was, particularly in the USA, initially associated with non-union companies.

Guest (1987) highlights the different between personnel management and human resource management inherent in the literature so as to form criteria for the measurement of change (see Table 1). However, one must be wary of evaluating HRM simply by the range of activity being undertaken. HRM is about both new processes new outcomes. The existence of the former does not guarantee the latter. Many initiatives may be no more than 'flavour of the month' changes; others may be opportunistic rather than strategic, taking advantage of slack labour markets; in many uses the gap between the rhetoric and the reality may be wide.

The banking sector has been characterised by apparently harmonious industrial relations and has not suffered from the "British diseases" of industrial action and demarcation issues associated with parts of manufacturing industry (e.g. Batstone, 1984). Banks have promoted unitarism (Fox, 1966) encouraging an ethos of teamwork, shared interest and loyalty, wanting commitment beyond the cash nexus. While banks are generally seen as having a passive approach to employee relations, paternalism did underpin the system and particularly important was the system of internal promotion supported by an unwritten agreement between the major UK banks on no poaching. The internal labour market created two categories of employees: career and non-career which equated to a male/female divide.

Retail banking is a highly labour intensive industry with labour costs forming 70% of total operating expenditure and "involvement in funds transmission meant that the majority of clerical staff have not been used as a means of marketing the bank's products nor directly for increasing business but to process existing accounts. They have accordingly been regarded as an overhead rather than a resource". (Morris, 1986, p.22) Until the 1980s competition between banks has been limited, banks operating as an oligopoly and Government's concern with maintaining economic stability with limits to lending, and control over interest rates facilitated this. The oligopoly fed through to the management of staff as national wage bargaining minimised competition for labour. However, deregulation led to the collapse of the national system and a questioning of old employment practices.

There were a number of methods by which the Personnel Department attempted to devolve responsibility. We have already noted that team briefings were thought to reinforce the line role as the chief disseminator of information. Secondly, the new disciplinary code put authority and accountability in the hands of the line (although initially Personnel would take a slightly more active advisory role until the system was "bedded in"). Thirdly, managers were given accountability within their budget to replace staff that left rather than leaving it to the Personnel Department to provide the skilled replacements. As evidence of a more integrated human resource approach such policies were reinforced by a new performance appraisal system which took greater account of human resources. Previously, financial targets were paramount and in the words of the training manager:

"If they met financial targets, managers weren't criticised even if the staff were close to mutiny"

A series of training courses on human resource management issues were designed to reinforce this priority.

However, many of the initiatives met with apathy, cynicism or obstruction. Changes in the disciplinary code were regarded as cosmetic: as one manager said, "Personnel can't bring itself to let hold of the reins".

In so far as staff reflect the values of top management, this was a major cause for concern (Brewster et al , 1981) One of the key complaints to come out of the courses being run was the absence of top management. More direct difficulties also became apparent. One of the themes in the human resource management courses was reflective of the new management style. This was designed to discuss the relationship of staff with their managers, and in particular the need for staff to question their boss in an informal and constructive manner. The course was aptly entitled "How to Manage Your Boss". However, it became apparent that it was unfortunate that managers had not taken a course on how to accept constructive criticism!

References

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