1. “Organizations which gain their competitive advantage by relying on their staff using extra discretionary effort, need a strong culture with a ‘big idea’ which shared by most of its staff, coupled with line managers trained in people management skills.” Discuss.
It is important to examine the essential link between performance and people management based on empirical data and relevant theory. It is generally recognized that the way employees are managed influences the performance of the organization. There are some methodological problems in this field that should be closely examined. They include the scope of HR practices, data collection, and measuring performance (Purcell, et. al., 2009).
Although the scientists seem to accept that human resource management practices have an important impact on organizational structure, it should be taken into account that there are two main approaches in this regard.
1) The conviction concerning the link;
2) The doubt about the link or even its denial (Savaneviciene, & Stankeviciute, 2010).
To adequately demonstrate the impact of HR methods on profitability, it is necessary to understand the way they may influence immediate and more distant outcomes. The use of financial measures is quite problematic as the distance between the majority of market indicators and HR interventions is comparatively large and may be influenced by other business characteristics.
It is important to analyze the distance between HR practices and the specific kinds of outcomes and the sequence of performance outcomes.
However, there is a wide debate over the mediating characteristics and their number. This means that until now there is no answer to the question – how many “black boxes” should be taken into consideration in the process of studying the HRM-Performance linkage. The answer to this problem is crucial because “a clearer articulation of the ‘black box“ between HRM and firm performance“ is the most important empirical and theoretical challenge in the strategic management literature (Becker, & Huselid, 2006).
In many ways, these problems are inward looking and quite narrow. A focus on these issues alone runs the risk of missing a cause and an effect. It is necessary to analyze the broader theoretical questions. Once this aspect has been done it is possible to concentrate on the concept of the organizing framework and Human Resource Advantage.
The use of “ability, motivation and opportunity” concept raises the question of how the choice of the given practice affects a company’s performance. This theoretical problem has two main aspects: the definition of HR itself and the nature of the relationship between performance and HR.
It seems that the “linking mechanism” between human resource management and performance and the mediating effects of main characteristics are not analyzed accordingly. There are many acknowledgements of the existence of the “black box” and some discussion on its possible structure, but few studies analyzed the internal cause-and-effect relations.
It is necessary to specify an HR causal chain. The main aspect of the chain is the employees’ behavior and attitude and this moment raises the most difficult question in this debate. However, very few companies used employee survey data.
It relates with the use of multiple-firm data sets where single management respondents are only responsible for the indication of the given practices and their coverage. These respondents are not able to reliably report on other employees’ perceptions of some practices as they experience them. In this case, the typical steps in research, of theory determining the choice of method and the research questions, have been modified. Methodological aspects have determined what questions should be asked, and other factors outside the research of the given method, while important, have been ignored.
The primary issue in the constructing of the theoretical model is which variables should be included in making the transition from HRM to organization results (Hope-Hailey, et. al. 2005). It seems correct to propose a sophisticated model of the HR causal chain which may be divided into five main steps, moving from intended, to actual, to the best HR practices, influences by employees’ reactions, and actual results. This model should provide a strong basis for understanding the relations between performance and HRM that can be analyzed in the given organization. The employees-performance model should be focused on peoples’ opportunities to participate, abilities, and motivations (Boselie, 2010).
It is the general effect of the HR system then the characteristics of such a system need to correspond as closely as possible to the employees’ beliefs regarding their job and the number of practices the employer uses to manage the company. The roles of line and top managers as agents making HR projects possible are of utmost importance for the transmission of organizational culture.
There are some examples of line-management decisions, leadership, and organizational culture and influencing performance.
The close correspondence may exist if there is a real correlation between performance and measures of HR practice, there is no direct causal relation between the two characteristics.
HR practice measurements may be using as approximate values for the wider variables of manager behaviour, leadership, and culture. It is possible that studies that do not control for a whole range of variables may lack the information important for making valid causal deductions. At the same time, in order to be able to apply controls, different characteristics should be measured. The necessity for collecting such data merely to control for variances, alongside the usual suspects of firm certain workforce characteristics, age, sector, and size can only be proved if there is an agreed, clear, and unambiguous, definition of what HRM means. From a manager’s point of view, questions of managerial behavior, leadership, and culture are commonly seen to belong within the HR manager’s sphere of activities with increasing roles in the organizational transformation and management of change (Purcell, et. al., 2009).
Thus, on grounds of management science, and from both HR manager and employee perspectives, it seems that a broader definition of HRM should be provided. However, it is necessary to stress that there is consensus regarding one issue: any theoretical or empirical effort should specify some important mediating variable(s), but there is no consensus regarding their number (Wright, & Gardner, 2003).
Although there is a great number of forms of capital which are important to organizational profitability it is necessary to be focused on the generation of human capital advantage which means developing more sophisticated practices in main areas such as team building, recruitment, training and selection designed to ensure the most appropriate people are employed and the personnel is able to demonstrate high levels of productivity.
Thus, it seems reasonable to use extra discretionary efforts in HRM sphere as it allows gaining long-term comparative advantages and receiving additional profits.
2. Using the SWOT analysis technique, discuss which you believe to be the most important factors which will potentially affect decisions on people management strategies and policies in Pearson Australia.
Pearson Australia is one of the world leading learning companies with a portfolio that includes integrated services, innovative textbooks, software solutions, and online testing. Pearson changed completely its organization structure in May of 2013. These reforms should help to accelerate the company’s results in emerging markets, digital learning, and education services. The changes also include consolidating the company’s marketing and customer services functions, Pearson’s digital and print production teams, as well as the sales teams (Pearson Australia, 2013).
It is reasonable to use SWOT analysis technique in order to understand the main factors which may affect decisions regarding people management strategies and policies in Pearson Australia.
The strengths of Pearson Australia include the following.
- Pearson Australia has a number of opportunities for its employees. The company encourages its employees to develop their careers by moving around the businesses and regions in which the company operates.
- Pearson Australia Group is a global organization. Thus, it is possible to exploit “the economy of scale” during the operation. It also allows diversifying production and minimizing risks.
- The company’s employees are highly motivated and committed. Thus, the company’s human capital is its main asset. It may help to maximize the profits in the long run.
The weaknesses of Pearson Australia include the following.
- Pearson needs to ensure that its policies and procedures are aligned globally as it is a global company. The control in the global companies is very problematic. The structure of the company should be optimally decentralized.
- Most of the sales are concentrated in North America. It has comparatively small presence in Asia and Africa. Thus, some large markets are not included in the company’s strategy.
- There is a high focus on English language publishing. The rates of growth in the higher education segment are quite slow compared to other segments.
The opportunities of Pearson Australia include the following.
- Expansion in Asia Pacific segment and in countries like China and India where there is a huge consumer market is a very big opportunity.
- There is a worldwide growth opportunity for Pearson education centers and e-learning solutions which is currently available in over 60 countries and whose demand has grown by 50 % over the past five years.
- Strengthening the position in publishing languages other than English could also be considered as one of opportunities.
The threats of Pearson Australia include the following.
- Pearson Education’s intellectual property may have been insufficient protection in some countries. In spite of copyright laws, infringements may still exist.
- Operation in digital distribution channels in a competitive environment is difficult and need adaptability.
- Competition from non-profit organizations can also be a considerable threat.
- Foreign currency rates fluctuations pose a major financial threat.
Thus, the integrated SWOT analysis of Pearson Australia is presented in Table 1.
The integrated SWOT analysis of Pearson Australia
1. Pearson Australia has a number of opportunities for its employees
1. Pearson needs to ensure that its policies and procedures are aligned globally as it is a global company.
2. Pearson Australia Group is a global organization
2. Most of the sales are concentrated in North America.
3. The company’s employees are highly motivated and committed
3. There is a high focus on English language publishing
1. Expansion in Asia Pacific segment and in countries like China and India
1. Pearson Education’s intellectual property may have been insufficient protection in some countries
2. There is a worldwide growth opportunity for Pearson education centers and e-learning solutions
2. Operation in digital distribution channels in a competitive environment is difficult and need adaptability
3. Strengthening the position in publishing languages other than English
3. Competition from non-profit organizations
4. Foreign currency rates fluctuations
Pearson Australia has a developed education culture. It includes the following.
- Vision (transform into the leading provider of services and educational solutions).
- Values (decent, brave, imaginative).
- Brand promise (“Always Learning”).
- Purpose (help people make progress in their lives through learning).
- The big idea (help others improve their lives through education (Indeed, 2013)).
Appropriate policies for Pearson Australia will align with the Pearson Education People Strategy which includes organizational goals, success through creativity, investing and developing talent, culture, and aligning teamwork.
The Employee Engagement Survey 2012 demonstrated that there was a large satisfaction decrease in learning and development opportunities (Indeed, 2013). An optimal area for policy formation is around learning and development. It corresponds with the customers’ decreased satisfaction and aligns with the people strategy of investing and developing talent.
The Employee Engagement Survey 2012 also demonstrated that “Faith in managers” received a favorable score among staff. It may have a positive impact on the role that line managers play in implementing HR policies.
It is possible to stimulate the employees’ discretionary behavior. It is reasonable to provide career progression pathways that focus on the continual development of staff. Coaching and mentoring are also available to staff; it allows increasing necessary transfer of knowledge and skills. There is a high level of openness to new suggestions and ideas to enhance the working environment. Employees are also able and willing to participate in the strategic direction that Pearson is taking.
The implementing policies should be closely related to the employees’ needs. There are 768 employees across the two business units in Australia: Pearson Education Australia, which is made up of production and design, marketing, digital, editorial, sales, and publishing; and Shared Services which is made up of IT, HR, finance, distribution and customer service and facilities. The major focus for Pearson Australia is on learning which is further reflected in many adopted HR policies. HR has focused on the investment and development of their talent (through career development opportunities and talent management) and building success through creativity and culture (through diversity and equal opportunities, reward and recognition and flexible working arrangements).
It is important to understand whether Pearson Australia may be classified as a professional organization. A professional organization refers to one which is made up of and designed for professional, such as the Australian Human Resource Institute. Thus, Pearson Australia does not fit into this, and there are no real implications to HR policies at this stage.
However, Pearson Australia has its HR strategy, and if it is successfully implemented it will have significant positive results in the long run.
- Becker, BE, & Huselid, MA 2006, Strategic Human Resource Management: Where Do We Go From Here? Journal of Management, 32, pp. 898-925.
- Boselie, P 2010, High performance work practices in the health care sector: a Dutch case study. International Journal of Manpower, 31(1), pp. 42-58.
- Hope-Hailey, et. al. 2005, The HR department’s role in organizational performance. Human
- Resource Management Journal, 15(3), pp. 49-66.
- Indeed 2013, Pearson, viewed 6 September 2013, http://www.indeed.com/cmp/Pearson
- Pearson Australia 2013, Media/external stakeholder statement, viewed 6 September 2013, http://www.pearson.com.au/media/609908/pearson_australia_external_stakeholder_statement_16_july_2013.pdf
- Purcell, J, et. al. 2009, People management and performance. New York: Routledge.
- Savaneviciene, A & Stankeviciute, Z 2010, The models exploring the “black box” between HRM and organizational performance, viewed 6 September 2013, http://www.ktu.lt/lt/mokslas/zurnalai/inzeko/69/1392-2758-2010-21-4-426.pdf
- Wright, PM, & Gardner, TM 2003, The human resource-firm performance relationship: methodological and theoretical challenges. In Holman, D., Wall, T.D., Clegg, T.D., Sparrow, P., Howard, A. (Eds), The New Workplace: A Guide to the Human Impact of Modern Working Practices, Wiley, Chichester.