Professional Documents
Culture Documents
This article is concerned with the problem of labour scarcity in the road haulage industry
and how it affects small ® rms. The recruitment and retention of lorry drivers is critically
important for the industry because driving is no longer seen as an attractive occupation,
and there are worries that there is an insuf® cient supply of new recruits to replace the
experienced drivers who are leaving the industry. In order to investigate this issue, we
make use of a modi® ed version of the resource-based view (RBV) of the ® rm, focusing on
the notion that a minimum set of `table stakes’ (HR practices) is necessary for the
continued survival of small ® rms. Drawing on longitudinal data from seven small road
haulage companies, we argue that owner-managers have developed an astute combination
of path-dependent and socially complex networking abilities, embedded within an
extensive understanding of both product and local labour markets. We conclude that the
RBV needs extending to make greater allowance for different ownership goals and
diversity in markets, and to consider the forces that promote similarity rather than
difference among ® rms within an industry.
Contact: Mick Marchington, Manchester School of Management, UMIST, PO Box
88, Manchester M60 1QD. Email: mick.marchington@umist.ac.uk
L
abour scarcity in the road haulage industry is of critical importance to the survival
of small ® rms. Recruitment and retention of lorry drivers is important because the
nature of their work is, if not unique, unusual in many respects (Ouellet, 1994).
Driving large goods vehicles is a skilled occupation requiring a substantial, and often
personal, investment in training. Lorry drivers assume a great deal of responsibility, not
only in terms of needing to drive safely on public roads but also by being in charge of an
expensive vehicle and load. They need customer service skills, often being the only face-
to-face contact with clients who can be very demanding in terms of service quality,
delivery dates and times. Moreover, drivers also enjoy a great deal of autonomy and
work with little direct supervision, although the introduction of technology used for
tracking and monitoring driver activity, location and performance may limit this. There
is little doubt that drivers represent a critical resource for ® rms in the industry, and that
the recruitment and retention of `good’ drivers is a major contributor to satisfactory, let
alone superior, business performance.
However, driving tends to be seen as an unattractive occupation for several reasons.
Drivers work long hours, roads are increasingly congested and many jobs involve
overnight stays. Some drivers, especially those undertaking European work, may be
away from home for weeks at a time, typically starting work very early each morning.
At the same time, the extrinsic rewards are not high and, perhaps not surprisingly, ® rms
face chronic skill shortages, even though there are many more people with an LGV
(Large Goods Vehicle) driving licence than there are jobs in the industry. Accordingly,
road haulage operators ± the majority of whom run small, family-owned businesses ±
face serious problems in recruiting and retaining staff. This is against a background of
rising costs (of, for example, fuel, tax and insurance), competition from other operators
and pressures from customers to keep prices down. Of course, these problems are not
unique to the road haulage sector. However, when combined with the nature of driving
work and the position of trust in which drivers have to be placed, they mean that it can
be very difficult for road haulage operators to recruit and retain drivers of the
appropriate calibre. This article analyses the situation and the coping strategies that our
sample of small ® rms adopted.
In order to provide a framework for this study, we use the resource-based view (RBV)
of the ® rm, an approach that has assumed a much greater signi® cance in analyses of
HRM in recent years (eg Wright et al, 1994; Boxall, 1996; Mueller, 1996). Important and
useful though the RBV of the ® rm is, one of its major shortcomings is that it focuses too
intently on differences between ® rms as a source of competitive advantage (Boxall and
Purcell, 2000, 2003). It tends to overlook the fact that there are also substantial
similarities between ® rms in an industry due to a range of in¯ uences (DiMaggio and
Powell, 1983; Powell and DiMaggio, 1991), and that ® rms often conform to an industry
`recipe’ (Spender, 1989). Consequently, while the RBV framework guides this article, we
remain alert to its weaknesses (Priem and Butler, 2001; Rubery et al, 2003) and seek to
extend the theory here. In particular, following Boxall and Purcell (2000, 2003), we
develop the argument that a minimum set of HR investments is necessary for continued
viability in an industry, let alone leadership.
Our research draws on case study evidence from seven small road haulage companies in
the north-west of England. This study was part of a larger project undertaken during 1998
examining issues of recruitment and retention in ® ve separate industries, the results of
which are reported elsewhere (Carroll et al, 1999). The road haulage study was extended
and a second round of company interviews took place during the early part of 2000 in
order to ® nd out how these ® rms had evolved since our ® rst visits. All the ® rms were
family-owned and operated, having been in business for between 20 and 75 years.
Before analysing the data, we outline the main issues from the literature on the RBV in
HRM, as well as provide background information on the industry and the sample of ® rms.
dif® cult to understand the precise nature and mix of the resources that provide competitive
advantage. Thirdly, a ® rm’s resources `may be very complex social phenomena, beyond the
ability of ® rms to systematically manage and in¯ uence’ (Barney, 1991: 110). For example,
the web of interpersonal relations that develops in an organisation, or the ® rm’s reputation
in the local labour market or the industry as a whole, are often highly complex.
members of their industry or sector ¼ First and foremost, HRM must support the viability
of the ® rm as it faces the challenges of stable operation and radical change in its sector.
Firms that fail to adequately resolve this complex of problems are doomed, sooner or later,
to receivership or to take-over by better managed companies’ (Boxall and Steeneveld, 1999:
459). The second, and more dif® cult, task is to enact those HR strategies necessary for
industry leadership. How to do this is neither obvious nor easy. It is a strategic opportunity
that not all ® rms choose to embrace.
In summary, we believe that the RBV can, with suitable adaptation, offer a useful
framework for analysing and theorising how human resources are managed within
individual ® rms. Following Oliver (1997) and Boxall and Steeneveld (1999), we believe
that the RBV can be modi® ed to handle issues concerned with conformity as well as
differentiation, industry survival as well as leadership. It is also important to recognise
that not all ® rms have pro® t maximisation as their primary (or sole) objective; this is
particularly apparent in small and growing firms, and often even more marked in
family-owned businesses. Our data con® rms this point.
The road haulage industry has expanded over the last century to become the main
method of transporting goods in the UK. In 2000, about two-thirds of all domestic
freight was moved by road (158 billion tonnes-km) compared with a third by all other
transport modes ± rail, water and pipeline ± put together. Currently, there are
approximately 422,000 goods vehicles of all types ± rigid and articulated ± registered in
the UK (Department for Transport, Local Government and the Regions, 2001). The
industry is divided into `hire and reward’, covering those companies that move goods
for others under a contract, and `own account’ where companies move goods as part of
their own production or distribution systems. It is now likely that the former move more
than three-quarters of all tonnage in the industry (Bayliss, 1998; Smith, 1999: 620).
Eighty-seven per cent of the industry in the UK comprises ® rms that employ 10 or
fewer people, with just over 1 per cent employing 100 or more staff. The road haulage
and distribution sector alone employs 600,000 people, approximately 40 per cent of
whom are drivers, in more than 60,000 companies. A further one million people are
employed on road haulage-related tasks in other industries (Road Haulage and
Distribution Training Council (RHDTC), 2001: 4-6). The labour force is predominantly
male and full time, and most drivers are paid weekly. Expressed in terms of weekly
rates, drivers’ average gross earnings in 2001 were £345.90, and a typical working week
was 49.7 hours (Of® ce for National Statistics, 2001).
In recent times there has been an almost permanent shortage of drivers and the
RHDTC’s Workforce Development Plan 2001-2004 con® rms that this is now very serious
indeed. The Report highlights that driver shortage `is the single most important issue for
the sector. RHDTC research in October 2000 reported a need to increase the number of
LGV drivers by 20,000 per year in order to meet current sector needs.’ (15) Other issues
that are critical for the sector include the need to raise skills levels among all employees,
raising the skills of owners, managers and supervisors, and ensuring that owners and
managers engage in continuous professional development (15-17). Employers remain
very concerned about the low status of the industry among young people. In the UK
drivers have to be at least 21 years old to train for an LGV licence, so school leavers have
to work in other jobs before they can turn to driving. In addition, it is common for
prospective drivers to ® nance their own training, thus presenting a further problem for
labour supply.
Our sample is taken wholly from small-to-medium-sized firms in the `hire and
reward’ sector of the industry, in contrast with that of Smith (1999) who focused on large
organisations. The ® rst phase of the study took place during 1998 and included visits to
eight companies in north west England, access being gained in most cases with the help
of the Road Haulage Association. Data was collected through semi-structured interviews
with owner-managers, the managers or directors responsible for the recruitment of staff,
inspection of company documentation and, where possible, discussions with drivers
themselv es. The main interview schedule covered the following areas: genera l
information about the business, the composition of the labour force, HRM practices in
general and the recruitment process in particular, awareness of the legal issues associated
with recruitment, recruitment problems and any steps taken to overcome them. We had
repeat discussions with seven of these ® rms in the spring of 2000 ± with additional
questions about changes in sales turnover and the number of drivers employed ± about
the major problems which confronted the ® rms, and about recruitment and retention
more speci® cally. This provided an excellent opportunity to follow up on what we had
observed in 1998 and to see how the ® rms had changed. Since we had already written up
the data from phase one, we were able to ask very speci® c questions the second time
around. This kind of longitudinal method is essential if interpretations that hinge on
`path dependence’ are to be explored. In addition, several of the firms have been
involved with other studies undertaken by the authors.
Table 1 provides information on the companies studied in terms of their age, family
history, main type of business, numbers of drivers and vehicles, and their sales turnover
per annum. We present data from 1998 and 2000.
All the ® rms remained under family control and in each case the owner(s) played a
major part in continuing to run the organisation. Three were third or fourth generation,
while the remainder were either ® rst or second generation, family businesses. In most
cases, they were involved in the same line of business, albeit with some adjustments to
cope with changing customer requirements (for example, the increased demand for
providing road haulage operations for the large food companies) or a shift towards a
provision of a wider range of services. The two oldest companies had actually moved
from their original niche markets, which were in decline, to provide general road
haulage facilities. It was typical for at least two family members to run these ® rms on a
daily basis and in some the wider family was also involved. The most extensive case
was at Company E where the two brothers who ran the company also employed their
other ® ve brothers and a mixture of daughters, sons-in-law, nephews and nieces in a
range of jobs ± including cleaning and of® ce work as well as driving.
In 1998 the companies varied in size from 35 to 68 drivers, with a small number of
other staff working in the of® ce, warehouses or repair shop, and by 2000 the range ran
from 45 to 78. Sales turnover also showed some variation, both between firms and
between 1998 and 2000, ranging from approximately £2.5 million per annum up to
about six million. This increased at all but one of the ® rms over the two years, and the
biggest increases were of the order of £1 million per annum. All the ® rms reported that
the markets in which they operated were very competitive, with prices pared down to
the margins and pro® ts eroded by the rising costs of diesel, tax and insurance.
It was apparent from our visits that the owners had somewhat limited ambitions about
continued growth. They gave four sets of reasons for this. First, most expressed satisfaction
with their existing market niche, largely because customers valued the dedicated service
that a ® rm of their size could provide ± not too big and not too small. Companies F and G
both referred to the fact that `their biggest customers could ring up and speak to the same
person each time they got in contact’, and that this was a major advantage over the larger
companies. Moreover, a number of ® rms were concerned that if they did stray into a wider
® eld, their prices would be undercut by larger ® rms and they would struggle for business.
Secondly, several of the owner-managers were clear that they did not want to grow much
larger and become `one of the big boys’. Apart from the fact that they would lose a specialist
market niche, there was also a view (expressed at Company E) that the large companies are
`run by the bankers and we don’t want that’. Linked into this is a third point, driven by
motivational or operational forces, that limited their desire to grow bigger. Sometimes, there
were anxieties that larger premises would be needed if there was further growth or more
drivers would need to be recruited. One of the owner-managers (Company D) had actually
been out driving since 5am the morning on which we had our repeat discussions with him,
and he was clearly struggling to keep on top of the business even at its present size.
Finally, there was a strong desire to retain family control to allow for succession to
future generations. By remaining within specialist market and geographical niches, these
® rms lessened the probability that they would be attractive to larger predators. Most
® rms reported that other haulage companies in the area had gone out of business recently
and that some had merged or been taken over. This degree of ¯ ux is fairly common
among small organisations, and the relatively limited ambitions of our sample of owner-
managers needs to be seen in this context. Other studies suggest that little more than half
of small businesses survive beyond the ® rst three years (Jennings and Beaver, 1997: 71)
and that only 30 per cent of family-owned ® rms continue into the second generation (Fox
et al, 1996: 15). It could be argued, therefore, that these ® rms are actually quite successful
merely because they have survived as family businesses for so long.
All the ® rms reported that, along with the price of fuel, the dif® culty of ® nding `good’
drivers represented their major problem over the last few years. A respondent at Firm D
put it succinctly when he said: `If I could ® nd 100 decent drivers, I could put 100 trucks on
the road.’ Company C agreed that a shortage of `good quality’ drivers was its most serious
problem because large numbers of quali® ed people were currently working outside the
industry: `They just keep their licence as ª something to fall back onº if times get hard and
they are unable to ® nd better paid work in local factories.’ Several of the respondents were
convinced that this problem was likely to worsen when older drivers retired because much
smaller numbers were now being trained. The nature of the work involved was typically
quoted as a reason for this shortfall in applicants. One respondent noted that `there is a
shortage of people willing to put up with the hassle of driving through heavy traf® c and on
the motorways’ (Company A), while another commented that `people don’t want to be
ª proper driversº , just chauffeurs who don’t do any loading and unloading’ (Company G).
One way around this problem was to try and use `internal labour markets’ as a source
of drivers, and indeed in the past this had been common. Young people would be
employed on leaving school or college to work around the yard or help out with other
duties, ultimately progressing to driving small vans and then up to larger vehicles as
they became more experienced and old enough to drive these trucks. But competitive
pressures and cost constraints had lessened the opportunity for this, and ® rms ended up
with what Holliday (1995) refers to as a mixture of core and transient workers. The
former group had long periods of service with the ® rm, possibly in a number of different
spells of employment. The latter, by contrast, tended to have no more than a few weeks’
or months’ service before moving on to employment elsewhere.
Organisations in other sectors of the economy have made increasing use of contract
or agency workers in order to cope with variations in demand and/or to shift some of
the burden of risk from employers to individual employees (Rubery, 1996; Ward et al,
2001; Marchington et al, 2003). This was not widely utilised by our sample of road
haulage firms, largely due to concerns about competence, trustworthiness and
reliability. Agencies were particularly despised as a source of labour, and virtually all
the owner-managers were able to tell stories about problems that had been encountered
with drivers from this source. At Company B, experiences had been so bad that the
owner or one of the other directors would deliver jobs themselves in an emergency
rather than rely on an agency driver. The ® rms were not keen to use agencies because
they were not prepared to trust `strangers’ with valuable goods and equipment. They
were particularly concerned about the lack of vetting that took place, as well as the lack
of motivation on the part of agency workers; as the manager at Company A noted, `I
want people who want to be here and can be trusted’ . If temporary drivers were
needed, Companies A and B relied on one or two regular `casual’ or `self-employed’
drivers rather than agencies.
the problem was in replacing individuals who were about to retire or who left after a
number of years’ service.
According to Marlow and Patton (1993), small firm owners believe that informal
recruitment channels based on previous knowledge held by the owner, the management
team or trusted employees provide a much more comprehensive pro® le of the prospective
employee than more formal methods (see also Cully et al, 1999: 258). This method is viewed
as `both cost-effective and sophisticated in its scope for information’ (Marlow and Patton,
1993: 62) ± surely an argument that ought to stand in its favour. Other studies have found a
preference for word-of-mouth recruitment, as well as recruiting people who are already
trained and experienced, such as from a local competitor. Family members of existing
employees are frequently recruited, as it is believed that they possess `the most important
quality an individual can bring to the job ¼ an ability to ® t in with the existing workforce
and company culture’ (Holliday, 1995: 146). Certainly, the notion of `® tting in’ is a recurring
theme in the literature on recruitment in small ® rms.
We found an equally extensive use of such `informal’ techniques as well as some
formal practices. Given the relatively autonomous nature of lorry driving work, and the
responsibility for expensive vehicles and loads, all the companies felt it was vitally
important to be able to recruit drivers who could be trusted. In order to do this, the ® rms
tended to rely on `tried and trusted’ practices that were typically characterised by
informality. None of the case study companies employed a quali® ed personnel specialist
and there was little evidence to suggest that they followed the formalised recruitment
procedures recommended in the prescriptive literature. For example, none of the
companies had carried out job analyses, only two had written job descriptions and only
one had person specifications. The most often stated reason for not having job
descriptions was the need for ¯ exibility. According to Company F, `they are too rigid,
and we are not big on titles’. Knowledge of the industry and HR practice were passed
down from one generation to the next. In effect, practices that had proved successful in
the past ± both within their own ® rm and those of others that were known within the
industry ± were used to guide current activities.
The companies used a variety of different recruitment methods to attract drivers from
the external labour market. All but one of the companies advertised for drivers in the
local press, and the same number used Job Centres. The success of these methods varied.
While local press advertisements often produced a good response, the companies
complained about the quality of the applications; according to Company F, `nine out of
10 applicants have no experience other than working for an agency’ . Even though
respondents were highly critical of Job Centres, complaining that people they sent often
failed to turn up for interview, they were not despised like the agencies.
Most of the companies received direct requests for driving work and kept a register
of interested applicants. These people were regarded favourably on the assumption that
this showed a desire to work for that particular company. This was felt to be a potential
indicator of positive attitudes. Indeed, most of the drivers at Company B were recruited
in this way. However, there were now fewer people seeking driving work so, instead of
using the waiting list, the ® rm had been `forced to recruit actively or take on someone
not quite quali® ed and train them up. We have to go through everything with them, and
monitor every move because there is lots of responsibility.’
In an industry notorious for high staff turnover, nearly all the companies had taken
back former drivers who had moved to other ® rms to `see if the grass was greener.’
Company D felt that it was appropriate to recruit former staff provided that they had left
on good terms and in the `proper manner’ by giving notice. Company G had suffered
major labour turnover problems in recent times as a large supermarket distribution centre
had opened up nearby and had managed to attract a number of drivers before Christmas
who were looking for higher rates of pay. When there were lay-offs just after Christmas,
several of the drivers asked for their jobs back and were re-employed. Some companies
`poached’ good drivers from rival ® rms or enticed them from companies regarded as
`bent’ ± that is, operating outside the law ± if the drivers were known to the owner-
managers or to other trusted employees. If a local competitor’s business was failing, this
was also often regarded as a source of potential recruits.
All used word-of-mouth recommendations, either from family and friends of existing
staff, or through the `driver network’. Company C, situated in a close-knit community,
particularly liked to employ members of the same family, and several of its drivers had
gone to school together. Drivers frequently met employees from other ® rms at truck stops
and exchanged information about vacancies. At Company B the owner-manager argued
that `if a driver had been working for a similar company in the local area for several years,
we would know he would be okay for the job, and we would probably know him as well.’
Overall, word-of-mouth recruitment methods were popular, not only because they were
cheap and quick but because the recruit was, to a greater or lesser extent, a `known
quantity’ and existing staff helped to ensure that they `blended in’.
The recruitment problem had become so intractable in some ® rms that they had been
forced to adopt continuous recruitment activities, including a permanent notice in the
Job Centre or a regular press advertisement. Some of the companies also had regular
`recruitment days’. For example, one of the directors at Company E saw about three
potential new drivers every Saturday morning. Suitable recruits were contacted when a
vacancy occurred: `If they are keen, they will come back.’ However, for some
companies, even this had not produced enough suitable applicants, and there was no
list to fall back on because all suitable candidates were given jobs straight away. All the
respondent s believed they were doing all that was humanly possible to attract
applicants. The problem, as they saw it, was not with recruitment methods per se, but
with a lack of suitable applicants.
Drivers were usually selected by a combination of interview, road test and licence
check, and occasionally references were taken up if someone was not known. All the
companies had some form of induction procedure for new drivers, incorporating
checklists, company standing orders, drivers’ manuals and lists of `dos and don’ts’. In
one case (Company C) the manual stretched to over 30 pages, and in another all new
drivers were required to spend time with the safety of® cer before taking out a vehicle. It
was also normal practice for new drivers to be given only local deliveries initially, and
only allowed on the road when accompanied by a more experienced driver. Probation
periods ranging from two to six months were typical.
What the HRM literature calls `realistic job previews’ were regarded as essential in
order to reduce labour turnover, but even though new starters were warned about
conditions of work, many failed to appreciate just what the job involved. Getting up at
4am every day and being out on the road for up to 12 hours, for example, soon took its
toll on drivers. One of the ® rms even asked a driver at interview what his wife thought
about him leaving another job to move into driving, taking the reply quite seriously. The
answers were seen as very important in establishing how deeply the applicant had
thought about the nature of the work.
Road tests were a key element in the selection decision and, not surprisingly, people
were not offered jobs unless they could demonstrate competence in this aspect of the
work. Since the owner-managers had all been drivers themselves, this was a task they
often undertook, but quite often it was devolved to a trusted senior driver or one of the
other managers in the company. Respondents regularly commented on the tacit skills
required to drive different types of truck, and they felt it was easy to tell whether or not
an applicant was at ease with driving.
The use of a combination of job-relevant selection practices, albeit relatively simple
ones, indicates that the case study companies were trying very hard to recruit high
quality drivers. All the companies used road tests, which are highly appropriate and
realistic examples of `work sampling’. Even drivers who had been recommended were,
unless already very well known to the companies, subjected to the same selection tests.
The range of methods used indicates that the companies were, indeed, trying to ® nd out
as much information as possible about each applicant, or seeking at the `intensive
margin’ (Koch and McGrath, 1996).
Retention
Once they had recruited suitable drivers, it was important for the ® rms to retain them.
Although there were many examples where drivers had been with the same company
for over 20 years, in others two years’ continuous service was considered to be long-
term employment. Recruitment problems and driver turnover have been endemic in the
industry for 30 years. While there was an almost fatalistic acceptance of the situation, all
the companies had made some attempt to retain `good’ drivers. The methods varied
between firms but they included training, incentiv e payment system s, open
communications and provisions for employee voice. Once again, the HR practices that
were chosen owed virtually nothing to external professional advice but were drawn
from a mixture of ® rm-speci® c routines and informal conversations with other road
haulage companies in the local area.
Providing opportunities to train drivers was often seen as a strategy for reducing staff
turnover. However, this was an issue that aroused strong feelings, and was widely
recognised as a problem for the entire industry because good, experienced drivers were
in short supply. Training for new drivers has changed over the years. New recruits used
to start in the yard ± loading, roping and sheeting ± or in maintenance before progressing
to deliveries as a `second man’. Nowadays, it is neither necessary nor affordable to have
extra people on deliveries, so there are not the same opportunities for young people to
develop careers in this way. Potential new drivers attended training schools, but even
after they obtained a licence, they were not considered trained until they had learned
other aspects of the job. This made some companies reluctant to train up drivers for fear
of losing their investment. Most of the ® rms engaged in other forms of training, typically
connected to work-related issues and health and safety, especially when drivers were
responsible for handling trucks carrying hazardous chemicals. One of the firms
undertook some safety training for new and established drivers every Saturday morning,
usually working with groups of four or ® ve drivers. Company D also provided training
for drivers to upgrade their skills in order to drive skips or cranes.
Rising costs of fuel, tax and insurance are said to have kept drivers’ wages low, but
the companies had tried to attract and retain staff by paying some sort of incentive or
bonus in addition to weekly rates of pay. For example, Company F paid `at the top end
of the range’ and had an incentive bonus and pro® t-sharing scheme. Although it was
acknowledged that there were dif® culties in monitoring the system, most companies
had some sort of bonus scheme for drivers, typically involving performance indicators
related to number of accidents, goods in transit claims, relationships with customers, cab
cleanliness and so on. In the case of Company D, this was an attendance allowance
designed to discourage absenteeism. At Company A, drivers’ pay was linked to their
vehicle’s `earnings’. Company B had incremental pay scales based on length of service
and linked to a performance review scheme, which was also used to identify training
need s. The system was design ed to encourage long serv ice as well as good
performance, although there had been some dif® culties attracting new recruits at the
bottom of the range and it had been adjusted accordingly. The same company also
operated a pension scheme for all staff who had been with the company for three years.
Other strategies for reducing driver turnover included providing `more paid holidays,
better trucks and better training’ (Company G). The more the ® rms could retain high
quality labour, the less they needed to risk searching for replacements.
Respondents regularly mentioned the `informal’ nature of working relationships as a
key factor in retaining good staff. The owner-manager at Company C felt that it was `a
relaxed place to work’, holding a Sunday meeting at a local pub once very two months for
the drivers and company directors. Company A used `drivers’ clinics’ where the staff
would meet the directors for discussions, suggestions and the communication of company
policies. In this case, twice a year for three nights each week, two of the directors made
themselves available to meet staff, both individually and in small groups of up to 10
drivers. We were told that `not a lot of grievances are aired because they tend to be more
personal and individual in nature’. The rest of the companies placed a great emphasis on
informality and an `open-door’ policy for dealing with issues that arose.
Compared with small ® rms across the economy as a whole, these companies were
more likely to recognise trade unions, with three of the seven having agreements either
with the TGWU (Transport & General Workers’ Union) or URTU (United Road Transport
Union). In each of these ® rms a majority of the drivers were members. Some of the other
® rms also employed union members but there was no union representative onsite. Most
of the owner-managers expressed a neutral view about dealing with the union, although
one (Company D) felt it unlikely anyone would want to be a union member `because
they get a good deal from me now’. Company A had about 80 per cent union density and
the owner regarded relations with the TGWU (the union recognised here) as good. All
but one of the ® rms had written grievance and disciplinary procedures that offered an
opportunity for employees to discuss their problems as an alternative to the `open
forums’ which some of the companies operated. When procedures are present, and
unions are recognised, this does at least provide some form of support for employees,
and increases the possibility that they may choose to express their concerns to
management rather than just resign ± as happens in many small ® rms.
Overall, then, these ® rms had evolved a number of HR responses to their labour
turnover problems. To be sure, this included the rather obvious, but nonetheless
important, efforts to use their small company, family-oriented atmosphere to advantage.
Good atmosphere supported company reputation which was seen as a vital factor in
attracting and retaining staff. It was particularly important to be regarded as a `good’
employer by the local community, especially in an industry where some ® rms operate
illegally. However, the efforts of these ® rms to retain labour were not simply informal or
cultural. The firms also used a mix of formal HR incentives, including training
opportunities and performance-related pay systems, which are often developed where
employee retention is a major concern.
The data here lead to a range of valuable conclusions. Before considering the resource-
based questions, the study is interesting for what it says about the balance of employer
objectives in different industry conditions. Much of the literature since Atkinson’s (1984)
landmark contribution has argued that employers respond to product market uncertainty
by seeking greater ¯ exibility in employment conditions. There was no evidence in this
study to suggest that these lorry ® rms were trying to construct a ¯ exible workforce of core
and peripheral employees. Indeed, there was a universal reluctance, or even refusal, to use
temporary agency drivers ± `strangers’ who would have to be trusted with a valuable
vehicle and load. Instead, the companies were trying to recruit competent, reliable drivers
who would stay for the long term. Our data lend support to Rubery’ s (1994: 57)
hypothesis that `® rms have a general need for a stable, committed workforce’. As she
notes, small ® rms often struggle to meet this need and it can bring about their demise.
The context here, of course, is one of a high labour-turnover industry where employer
objectives for labour stability ± for stable, reliable productivity ± can be expected to
dominate over the need for flexibility in labour management. The tension between
stability and ¯ exibility is decided very much in favour of the former in this industry. This
must stem from the fact that the work itself challenges not only the individual’s tolerance
to on-the-job stress (awkward vehicles, dif® cult driving conditions and responsibility for
valuable loads and customer relations) but also challenges their private life (anti-social
hours and the impact on relationships of so much time spent away from home). The pool
of people who will tolerate these conditions in the face of alternatives is naturally small,
even when labour markets are loose. While respondents said that there was no shortage of
drivers looking for work, those of the `right calibre’ were dif® cult to ® nd. There is no
doubting the fact that employers react in their modes of labour management to different
product market conditions but we must bear in mind that employer objectives also vary
with different labour market scenarios. Here, where the key labour supply is so fraught,
employers are naturally preoccupied with creating employment stability.
Secondly, the study says something important for the debate over the quality of
recruitment and selection decision-making in small firms. Although the firms were
unlikely to utilise so-called `sophisticated’ selection techniques, they did employ a range
of intelligent methods, both formal and informal, to attract staff. These included the
widespread use of word-of-mouth recommendations. The companies also used a
combination of interviews, road tests and licence checks that were thought to provide a
better guarantee of suitable drivers. The use of work sampling to test for core work skills
in this context cannot be faulted in any way. On the attitudinal or motivational aspects,
the importance of `known quantities’ was mentioned repeatedly, even to the extent of re-
hiring ex-employees or targeting particular drivers at other ® rms. The owners felt that
their personal knowledge of driving and customer relations rendered these practices an
effective way of reducing uncertainty in recruitment decisions. Overall, these methods
should not be castigated as `unsophisticated’. They are cost-effective and relevant ways
of hiring staff in this industry.
What, however, can we conclude from this study about HR strategy and the more
interesting questions associated with the resource-based view of the ® rm? The obvious
and completely non-controversial point is that drivers in these ® rms satisfy the ® rst two
of Barney’s (1991) conditions for critical resources: they are valuable (because they are
essential to any concept of a viable, competitive business in this sector) and they are rare.
The companies were trying extremely hard to ® nd and keep drivers with the relevant
combination of skills and motivations. All acknowledged the critical importance of
having good drivers if the company was to survive, and those with what was
considered to be the `right attitude’ were especially valued. Most companies were as
selective as prevailing labour market conditions would allow, and were adamant in their
refusal to hire `just anybody’. Evidence for this can be found in the reluctance to use
agency drivers ± widely regarded as unvetted and unreliable. Given the critical
importance of drivers to the continued viability and success of the ® rm, the companies
tried to obtain as much information about potential recruits as possible, and they could
not be accused of being careless about selection decisions. On the contrary, great
importance was placed on getting the right people.
But value and rareness are easily demonstrated. The more interesting question turns
on how these ® rms attempt to deal with the resource-based problems of imitability, non-
substitutability and appropriability. Of these, non-substitutability can be put aside. All
lorry ® rms need drivers and there is no way of out-¯ anking this requirement while still
remaining in the industry in its current, and longstanding, technological state (large,
`manned’ vehicles and roads). The real questions are whether ® rms can simply imitate
others by quickly capturing some other ® rm’s labour force (`poaching’ the lot quickly or
gradually), and whether ® rms can motivate drivers to perform while also making good
financial returns. Clearly, the problems of competition for critical resources from
without and competition for good returns from within are closely connected. If ® rms do
not make it attractive to stay, they encourage poaching of good drivers by rivals.
How did the ® rms deal with these critical competitive issues? Having found drivers
with the appropriate skill/motivation set, the owners used a variety of incentive-
oriented HR practices to encourage them to remain with the ® rm, and to perform well.
In the absence of internal labour markets, the ® rms had adopted various strategies to
encourage loyalty and high performance. Although paying above the market rate was
not always an option, most ® rms had some form of ® nancial inducement to encourage
drivers to stay, such as bonus systems, a pro® t-sharing scheme and company pensions.
Providing good working conditions, quality vehicles, employment security, some
training, a friendly atmosphere and good relationships between management and staff
were also regarded as important. Indeed, to attract and retain the calibre of staff they
wanted, the companies were extremely keen to be regarded as employers with a good
name in the local labour market.
The implication is that the owners in our study had developed an astute combination
of path-dependent and socially complex networking abilities. They were very well
networked in both product and labour markets, something achieved by good leadership
over a long period of time. Longstanding commercial connections, developed across
family generations, had built forms of business that were appropriate to these ® rms and
their clients but did not attract takeover bids from larger rivals. As argued by
organisational ecologists who have developed the theory of `resource partitioning’
(Carroll and Hannan, 1995: 215-21), small, specialist businesses at the edge of markets
can survive as long as it remains sub-economic for the dominant ® rms that occupy the
middle ground to move out to the margins. In other words, these ® rms have `strategic
assets’ which are critical to their viability but which do not arouse heavyweight, envious
rivals. The ® rms in our sample were relatively successful, in the sense that they had
managed to stay in business for at least 20 years while many others had closed down.
The owner-managers were more than satis® ed with their rate of growth, and none of
them had any desire to be among the leading ® rms in the industry. The resource-based
view, and the strategy literature more generally, obsessed as it is with the concept of
`rent’, can be blind to this kind of phenomenon (Boxall and Purcell, 2000, 2003).
If longstanding business connections and less demanding pro® t expectations explain
one side of the story, the picture is completed by the use of `intangible assets’ in the labour
market. These ® rms survive because they have become good at networking for suitable
labour among family, friends and acquaintances in their local communities. They are
probably helped in this by the frictional costs of leaving a good employer, including the
cost of working too far away from home, and the cost of losing accumulated bene® t
entitlements. Without these networking abilities in the labour market, they simply fail. In
other words, astute, largely (but not entirely) informal HR strategies are a necessary
condition of their survival, although not a suf® cient one. These ® rms have a type of
`organisational process advantage’ that underpins their human capital and which is not
easily imitated by more impersonal, large employers. Although the HR practices used at
the ® rms differed in detail, it was apparent that they had enough of the right type of small
business culture and HR incentives to recruit and retain good labour. Should they lose this
ability, perhaps at the retirement of a key family leader, they would most likely fail.
This study, then, provides empirical support for the use of an RBV framework in the
area of HRM, albeit one that is amended to account for features that are particularly
pertinent to small firms. This is especially important in relation to notions of
`competition for rents’ and industry leadership that we found to have little meaning in
the context of small, family-owned road haulage ® rms where long-term viability and
cross-generational transfer, are more meaningful goals. The RBV is useful, however,
because it explicitly links HR strategy with competitive strategy by focusing on key
resources, a critical element of which is the kind of employee relations style required for
the firm to be viable. On the other hand, the RBV needs extending to make greater
allowance for different ownership goals, for diversity in markets (market middles and
margins), and to consider forces that promote similarity rather than difference among
firms in an industry. It is in this respect that institutional theory and organisational
ecology, with their focus on similarities in approach across an industry sector, provide
useful complements to the RBV that has traditionally focused on ® rm-speci® c resources
as a route to competitive advantage.
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