A chameleon function?

HRM in the ' 9 0 s

Veronica Hope-Hailey, Crunfield School of Management

Lynda Gratton, Patrick McGovem, Philip Stiles, Catherine Truss, London Business School

his article focuses on the changing nature of HR practice from the perspective of

T the HR function. The article is not seeking evidence of the implementation of HRM
in terms of the various prescriptive models presented in the 1980s. Instead, we argue
that it is time to move the debate forward by examining the critical strategic and operational
issues that organisations are facing in the 1990s and the way that the HR function is
responding in practice to those issues. The sample of companies that this research draws
upon is small, but they are drawn from diverse business sectors as part of the Leading Edge
Forum project (a title given by the member organisations). The central conclusion that
drawn is that the context in which HRM is practised has changed markedly in the 1990s.
There are new dimensions and constructs for both the role of the HR function and the way
in which it is enacted within organisations.
The models of HRM which were primarily drawn up and prescribed in the 1980s are bri-
efly detailed and the key assumptions about the role of the HR function and its potential cont-
ribution to business strategy underpinning such models are pinpointed. Aims and objectives,
methodology and data collection of the Leading Edge Forum researchproject are examined.
The central section presents some of the data collected in the course of the research under
the headings of the main groups of assumptions identified in the first part. In the final
section, we also present new assumptions underpinning HR practice. These have emerged
in response to the changing organisational context in which role and practice are enacted.
Given the scope of this research project, we can only present these assumptions as
hypotheses which start to map a new conceptual framework for understanding the practice
of people management in the late 1990s.

HRM AND THE HR FUNCTION

In contrast to the 1970s, when the personnel function was associated with a role as
negotiator in collective bargaining and an administrator of policies and procedures (Tyson,
1987; Legge, 1978), the 1980s witnessed a swing of the pendulum. Right-wing Thatcherite
and Reaganite governments on both sides of the Atlantic supported the search for a new
kind of uniformity in management through the prescriptive certainty offered within the
excellence literature (Guest, 1990; Wood, 1989; Du Gay and Salaman, 1992). Organisations
were exhorted to move away from the bureaucracy of personnel management to the
apparent flexibility and responsiveness of HRM. However, in this potential and promising
role, HRM could not help but look more desirable than personnel management, as the
comparison was between an unrealised ideal and an imperfect reality (Noon, 1992). This,
coupled with the great uncertainty experienced by management at that time, allowed an
almost evangelical management movement to dominate the area of people management.
This movement was HRM. The language and rhetoric of HRM became the property of
management consultants and organisational development departments (Keenoy and
Anthony, 1992; Legge, 1995a, 1995b, 1989).

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A chameleon function? HRM In the ‘90s

Many different models of HRM were put forward, but for ease of summary it is possible
to group them into two camps: best practice models, or those concerned with outcomes (eg
Beer et al, 1985; Guest, 1987); and contingency models, or those concerned with strategic
integration with business strategy (eg Schuler and Jackson, 1987; Dyer, 1985; Tichy 1983;
Kochan and Barroci, 1985). For a comprehensive review of these models see Storey and
Sisson (1993) and Legge (1995b). In the case of the outcome models, the prescribed sh& was
a turnabout in the nature of the psychological contract from mere ‘compliance’ - with rules
and regulations laid down in bureaucratic form, often within personnel policies and
procedures - to a high level of commitment (Penley and Gould, 1988; Salancik, 1977; Etzioni,
1975). In terms of control, the aim was to achieve cultural control - through the management
of organisational culture - such that subjects of HR strategies (the staff) would become self
disciplining, and thereby exercise self-control, obviating the necessity of having overt
controls of rules and regulations (Smircich, 1983; Ray, 1986; Guest, 1987; Hope, 1990). In the
contingency models, a fit was sought between business strategies and HR strategies. Thus,
some sought links between HR strategy and structure, some between strategic options -
such as quality or innovation - and HR policies and behaviours (Fombrun, Tichy et al, 1984;
Schuler and Jackson, 1987). Both schools of thought advocated shifting ’responsibility’for
people management back to the line management function.
In order to implement these HR models from either school of thought in practice, the HR
function was to take on a strategic and business role more in line with Legge’s ’conformist
innovator’ (1978) or Tyson and Fell’s ‘architect’ model (1986). It was anticipated that the
need for the roles of ‘clerk of works’ (welfare and low level administration) and ’contracts
manager’ (provider of legal and bureaucratic services) would decline (Tyson and Fell, 1986).
The move for the personnel function to identify itself clearly with the strategic business
manager camp - rather than being seen as the ‘loyal opposition’ (Sisson, 1989) - was
prescribed as universally applicable. Yet Storey (1992), in describing a study of HR’s role in
change management, reported four different roles being enacted. He identifies these using
a two-by-two matrix whose axes are strategic/tactical and interventionary/non-inter-
ventionary. From this he derives four potential roles for personnel/HR managers: change
agents, advisers, handmaidens and regulators (see Figure 1).Since this study reported on
research conducted in the 1980s, it is possible to argue that many HR functions were still in a
state of transition towards strategic, business manager roles.
The evidence from the surveys in the late ’80s and early ’90s suggest that, while there had
been changes in management practices in terms of the management of people, many of
these changes had been introduced as piecemeal initiatives, implemented as responsive
changes rather than any determined strategic shift in pursuit of prescriptive models (Storey,
1992; Sisson, 1995; Kochan and Dyer, 1995). The prompt for this shift has helpfully been
phrased ‘thinking pragmatism’ (Legge, 1995a).
What implications does this have for the HR function today? Following the recession of the
1990s, commentators seem even more prepared to consider the potential demise of the
HR/personnel function. Adams (1991) puts forward four different ways in which personnel
services can be delivered beyond the traditional personnel function model: as an in-house
agency; as an internal consultancy; as a business within a business; and by using an external
agency. Flood et al, in their recent and important collection of articles on new management
methods, also examine the idea of personnel management without personnel managers (1995).
In general, the delayering and downsizing of the 1990s, with the resulting fractured
psychological contract (Herriot, 1995; McGovern, Stiles and Hope, 1995) and its reduction in

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 Hope-Hailey et al

CHANGEMAKERS ADVISERS

Interventionary Non-interventionary

REGULATORS HANDMAIDENS

numbers of both line managers and HR speuahts, has thrown into doubt the relevance of
the HR rhetoric of the 1980s for the harsh organisational reality of the 1990s.The picture that
emerges is therefore confused. The rhetoric of HR practitioners remains: that HR should
have a strategic role; personnel management should be devolved to line managers; and that
HRM has a valuable contribution to make to bottom line business performance. Yet the
empirical evidence suggests that the HR function is not achieving integration with business
strategists, that the devolution to the line has been problematic and the function's
contribution to business performance has been questioned. We examine these three
fundamental dimensions in greater depth in the next section of the article. We believe these
dimensions to be fundamental because the first two (strategic integration and relationship
with the line managers) are critical points of linkage between the function and the rest of the
organisation,and the third is a measure or outcome of the others. In other words, what does
an HR function contribute to overall business performance?

FUNDAMENTAL DIMENSIONS IN THE RELATIONSHIP

1. Access to strategic decision-making

Storey and Sisson (1994) note that both the 'best practice and contingency' models carry
assumptions that the HR department would have access to strategic decision-makingwithin
organisations,and that if given access, the business strategy would be in such a coherent and
overt form that integration - if accepted as desirable - would be achievable. The continued
absence of boardroom representation for the HR function in 66 per cent of large
organisations surveyed in WIRS would imply that HRM's access has yet to be achieved
(Sisson, 1995).The second assumption of coherence of strategy is challenged by the theories
of the processual/incremental and interpretative perspectives on strategy and strategy
formulation. Whittington (1992) and Johnson (1987) illustrate that in strategy formulation
there is a complex interplay of social, cultural and political factors. In addition, strategy may
be very vague, or formulated in such a disjointed manner that it becomes more of a 'pattern

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A chameleon function? HRM In the '90s

in a stream of decisions' rather than a formally-produced plan, designed and implemented

in a rationalistic way (Mintzberg, 1988).

2. HR function and line managers

Within both the contingency and best practice models there were assumptions about the
roles and responsibilities of senior, line and personnel managers. First, there was a vague ill-
defined assumption that 'responsibility' for people management would be devolved to line
management from the personnel function (Guest, 1987; Legge, 1989; Storey, 1992). Quite
what that responsibility looked like in everyday terms was hard to idenhfy, other than in
terms of accountability for good or bad people management.
However, there was an assumption by managerial sponsors of HRM that line
management would be capable of taking on this responsibility, would want to take on this
responsibility and had the time to do so (Storey, 1992). Fowler (1992) argued that there were
two possible roles for the HR function in this scenario: to provide basic personnel
management and administrative support to line managers; and the setting and monitoring
of standards of personnel practice while the operational decision making is carried out by
line managers. Nevertheless, the models also implied that through this devolution of
personnel management practice to the line there would be a reduction in the bureaucracy
traditionally associated with the specialist function itself (Sisson, 1989).
Implicit within these imperatives of devolution is the management of managers (Legge,
1989).This point has perhaps received less amplification in the literature than it deserves. It
is possible to argue that, in returning responsibility for personnel management back to the
line, organisations are merely trying to recreate the paternalism of the past (Anthony, 1986).
The idea of paternalistic management is often associated with pictures of caring
supervisors/managers, who know their subordinates personally and are unfettered by
bureaucratic rules and regulations from the personnel function. So the paternalism of the
past also meant considerable autonomy for the line manager in the way they carried out
recruitment and selection or payment systems. The devolution in HRM does not carry with
it such freedom for the line managers; indeed, their managerial style is likely to be more
systematically prescribed and monitored. Within paternalistic styles of management,
effective management of people may be encouraged more for its familial and moral qualities
than for its contribution to business performance. In contrast, in HRM the impetus behind
shifting HR/people management responsibility to the line is in order to contribute to the
bottom line. Therefore, line managers are held more accountable for their HR/people
management practices under HR models of practice.
Lastly for the HR function, the models imply a role akin to that of Tyson and Fell's 'arch-
itect' model ie a hybrid of business manager and personnel specialist. Recent research by
Tyson et al shows a resurgence of the 'contracts manager' role at business unit level (1994).

3. Contribution to business Derformance

A further implicit assumption within the literature was that HRM was critical to business
success and a key determinant in an organisation's bid to secure competitive advantage.
Following on from this,a fundamental assumption of the HR models, and one of the reasons
for their immediate attraction to practitioners, was that they implied that, at last,
HRM/personnel would gain recognition for its contribution to business performance.
However, just as in personnel management models, HRM remains in the position as a
management practice of providing inputs for other functions' outputs (Legge, 1978). It

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remains very difficult to quantdy the contribution of HEW to the ‘bottom line’. This has been
exacerbated by the recession of the 1990s, when increased competition, globalisation of
labour markets and the consequent delayering has heightened a sense of cost consciousness
and value for money. The HR function has been both an implementor of policies of
downsizing and, at the same time, a victim itself of those policies.

METHODOLOGY

The fieldwork was conducted as part of a wider research project examining HRM and
organisational transformation. The research is a five-year longitudinal study and was com-
missioned by a multi-sector group of organisations. The research reported in this article is
drawn from stage one of the project and was collected over an 18-month period (1993-1995).
The group comprised Glaxo, (pharmaceuticals), Citibank (investment banking), Hewlett
Packard (hi-tech), WH Smith (retail and distribution), Lloyds Bank (retail banking), BT
(telecommunications), KJS (fast moving consumer goods - fmcg), and an NHS Trust
(healthcare).We believe that our sample of organisationsshare a number of interesting prop-
erties which enable us to make a sigruhcant contribution to the debate on the role of the HR
function. First, the sample was self-selected,in so far as the HR director of each organisation
was a member of the Fonun who commissioned the research. This-self selection suggested
that these organisations have a high level of interest in HR issues and some of them pride
themselves on being at the ‘leading edge’ of practices and initiatives. Secondly, the sample
allows us to provide a detailed investigation of practices among ‘blue-chip’ multinational
private sector firms and a progressive public sector organisation. During the time of the
study, all the private sector firms were in the top five of their sector with regard to profit.
Therefore, if we are going to see sophisticated- if not innovative - HRM, we might expect to
find it in this sample. Finally, the sample provides us with a wide range of business sectors,
although it does not allow us to make generalisations. However, the depth and breadth of
the research allows us to examine the interlinkages between the HR function and other
business activities, and also perceptions of its contribution from the whole organisation.
In each participating company we selected one region or business in the UK to be the
research site. A detailed audit was undertaken within each sponsoring organisation which
assessed their HR strategies, reviewed how their policies and procedures were conducted
and examined how these are implemented in practice by senior, line and general managers.
Focus groups were held within each HR department to identify topical issues or initiatives
within the company Between 20 and 25 semi-structured interviews were conducted with
senior managers or directors, and also managers within the HR department, line managers
and non-managerial staff. Each interview lasted at least one hour. In addition, 12
unstructured interviews were conducted with middle managers, taking as their starting
point the question: ’What does it take to get on around here?’ These lasted at least one-and-a-
half hours, and followed the methodology of the ’rules of the game’ devised by Scott-
Morgan (1994).This aspect of the project was sponsored by Arthur D Little, the consulting
group. A lengthy questionnaire was also sent out to at least 25 per cent of staff from which
we were averaging over 50 per cent response rates. Secondary data in the form of
documentary material is also examined.
The output from each organisation is a detailed diagnostic audit of its people
management practices and their perceived impact within the company. In addition,

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executive summaries of the audit reports were prepared, which include a brief analysis of
key issues believed to be of critical importance to that particular company.

1. Access to strategic decision-making

i) Access We separated out the levels of strategic decision making between group/corporate
level decisions and divisional levels. In most cases we were researching at divisional level. In
only one of our 'leading edge' companies - Citibank - did the HR director at group level
have a place on the corporate board, but in Hewlett Packard and WH Smith the group HR
director was fully involved in formulating corporate strategy. Interestingly, in WH Smith the
group personnel director came from an accounting background and had held MD positions
in other divisions within the group. The other organisations showed varying degrees of
control in their relationships with group/corporate strategy. For instance, in Lloyds the HR
director was able to advise on the people implications of a strategy once it was formulated.
The HR director at BT was informed of the strategy once it was formulated and asked to
implement it through the HR function. In Glaxo the HR director was simply informed of the
strategy. However, the relationships at group level did not determine the nature of the fit
between business strategy and HRM at a divisional level. Indeed arguably, in a diversified
group - whether the diversification is by national location or product division - the extent to
which HR strategy can be tightly defined by corporate strategy at group level is highly
debatable (Purcell, 1989).
In Glaxo HR issues were pursued vigorously at divisional level and were an integral part
of the corporate strategy of the MD. However, the reason for this was not so much the formal
role ascribed for HRM at the vital decision-making bodies as the close mformal relationship
the HR director enjoyed with the MD. At Hewlett Packard HR policies and practices were
held to be the only cement that made the national division a distinct entity. However, again
the formal assumptions of the HR models may be erroneous: people management issues
were so integrated within business strategy that the formal presence of an HR director on the
board would be an irrelevant criterion for assessing access to corporate strategy.
ii) Strategic integration Most divisional or group directors in our sample could point to
strong linkages between HR strategy and business strategy, but HRM was always a second
order decision-making process. It was much more of a process than a purposeful strategy
and emergent rather than intended in nature. For those directors who enjoyed a high profile
within their companies, this second tier relationship did not seem to be an issue. For
instance, one of the strongest HR functions in terms of coherence, influence, power and
strategy was that of KJS. Yet their director affirmed that:
I don't think HR gets factored into the development of business strategies.HR would be
involved in our three year planning... but it doesn't determine which way the company goes
or how the company is going to expand into differentcores... HR falls out of business strategy.
Reinforcing the finding that strategy was much more emergent in nature was the fact that
there were few examples of written HR strategies, which surprised the research team. This
reinforces the idea that HR strategy formulation is much more of an interactive process,
based on what is feasible in terms of organisational politics at board level and practical in
terms of implementation. Furthermore, there is little evidence that the absence of formal
written strategies affected the reputation or effectiveness of the HR function at a senior
management level. This would indicate that there is a reciprocity between business and HR
strategy which can be informally recognised between members of top management teams
and effectively managed without formal evaluation. However, the absence of written
strategies did seem to impact on whether the purpose of the HR function was understood.

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2. HR function and line managers

i ) Shiff to the line All the companies were in a stage of shifting responsibility for people
management to the line. Some were more advanced in this than others. For instance,
Hewlett Packard has a strong tradition of line managers managing people, and therefore
little transition was needed. KJS, Citibank, BT and Glaxo likewise had shifted 'responsibility'
to the line managers. Lloyds and the NHS Trust were both committed to devolving
responsibility to the line but had had only varying degrees of success in so doing.
In Lloyds, for instance, the senior management had embraced the tenets of HR models:
'We have put the management of staff as close to the staff as possible.' However, there was
some evidence within the bank that too much had been pushed onto the line managers
before they were ready for it. For instance, the branch managers had traditionally always
held responsibility for people management but in an ad hoc, paternalistic, inconsistent
fashion. This inconsistency had been ironed out at one level through the design and
implementation of sophisticated systems of policies and procedures. But there was evidence
that the line managers themselves had been given insufficient support, motivation, training
and time to fully absorb the change in managerial style and process that the effective and
consistent implementation of these policies necessitated.
At WH Smith, like Lloyds, the line managers had traditionally held power over the
people who worked for them in the various local and regional units all over the country.
These had, in effect, been like individual fiefdoms within the division. Therefore the
personnel department first had to incrementally systematise, or in some cases introduce,
interventions such as appraisal, changing reward systems etc. This was to be a gradual
process for many reasons: first, the division served as a 'cash cow' for the rest of the group,
therefore change could not be allowed to jeopardise short term business results; second, the
line managers were not sufficiently developed in all aspects of HRM to simply devolve
sophisticated systems down to them for implementation; third, they were too powerful to
alienate through more punitive methods of change. The tactic adopted by the newly-
appointed personnel manager was to try to move from paternalism to more of a personnel
management model before going towards a more HR style of employment practices.
ii) Workload What exactly is meant by the notions of 'devolution' and 'responsibility'? In
many of the models of HRM, devolution seemed to imply a movement of both the decision
making and the activity of personnel management from the HR department to the business
activity. HR/personnel staff in the form of generalists were working alongside business unit
managers in the businesses, while specialist/policy HR staff remained within the
department. To unpack what is meant by 'responsibility', it seems that responsibility for
decision-making in HR issues has moved to the businesses and the line managers, but the
operational activities of personnel/HRM - for example, recruitment and selection or the
operation of pay systems - remain the responsibility of the function's staff. There seemed
little indication that this move had reduced in any way the level of necessary bureaucracy
associated with the implementation of personnel policies and procedures.
A negative result of this move of HR staff towards the business unit was that the presence
of the personnel/HR department itself was diminished. As a personnel manager from
Citibank explained:
We operate fairly independently within broad parameters and guidelines. We don't
behave as a department on a weekly basis... I don't think you could look at us and say
we are a department... this puts us very close inside, next to the business.

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Yet by diluting their presence on a functional basis, the consequences were that there was
a lack of co-ordination between the units. There were examples of secretaries being released
on one floor of the bank because of overstaffing and on another floor or department
secretaries being recruited because of workload, with no communication between the two.
In the same bank, lower level staff complained that they did not understand the purpose of
the function.
However, the positive reactions to this move to the business units were that the line
personnel/HR staff were highly regarded by business managers for their work and most
seemed to have established good relations with their business units managers.
iii) Management of managers Legge’s (1989) identification of ’the management of
managers’ as a distinguishing criteria of an HR model for people management practice
seemed to be a practical reality in the companies we examined. To understand this fully we
need to explore both the causes for this shift in emphasis for the function and the effect that
this shift was having on employment practice.
The policy of giving responsibility for people management to line managers inevitably
results in less direct contact for the personnel/HR function in those staff that the line
managers are managing. At the same time the downsizing exercises that most of the
organisations had experienced had also cut the size of personnel departments. There were
simply fewer staff available to deal with any direct requests for help from staff. Yet,
paradoxically, this shift was also accompanied by increased regard for the function’s
contribution at a strategic level. In this respect the aims of the HR models seem to be being
achieved: personnel/HRM as a function was clearly seen to be working with managers
rather than non-managerial staff.
However, the effect of this was threefold. First, as we have pointed out already, lower
levels of staff often had little understanding of the role or purpose of the function, and little
contact. Secondly, perhaps as a result of the high levels of insecurity about issues such as
careers or job security, many interviewees identified the need for a neutral body or
department within an organisation that could be consulted for independent opinions. This
seems paradoxical: having spent decades trying to shed the welfare image and the
perception of personnel/HRM as the loyal opposition (Sisson, 1989) to management, once
this is actually achieved, there is a demand for exactly those services. Third, there seemed to
be a demand for counselling services within the organisations. Again, it seems interesting
that a function that started by administering practical welfare in factories in a labour-
intensive economy should now be asked to provide psychological ’welfare’ for staff
operating in a knowledge economy.
Hewlett Packard stood out in this respect. The administrative heritage of line managers
being concerned about people management, and the formal and informal rules of the game
stressing that being a good people manager was essential for advancement within the
company, meant that line managers were fulfilling these roles and functions for their staff. In
other organisations the responsibility for these softer elements of personnel/HRM seemed
to have fallen away from being any function’s responsibility.
With fairness to the line managers, in many companies the spans of control that were
now operating and the multi-skilling which was now expected of them meant that their time
was at a premium.
in) HR function and the ‘architecthybrid‘ role In this area there was enormous diversity
among the companies. This seemed to reflect the maturity of the company in terms of
organisational change and sophistication of the personnel/HR function. There are a number
of points that can be made about this.

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First, the personnel/HR officers working alongside the line function are in a matrix
reporting situation where they have reporting relationships with a both a divisional/group
personnel/HR function and also a business unit manager. Where this was the case, the
business unit managers appeared more significant than the personnel director.
Secondly, the organisations that were demonstrating a more sophisticated/HR style of
people management - ie devolution to the line, and senior management aware of people
issues - had surprising expectations of the HR/personnel function itself. For instance, in
Hewlett Packard the levels of satisfaction with the management of people delivered by the
line were high, but the personnel/HR function was criticised for not delivering basic
platform administrative services efficiently:
As a standard HR department their contribution is quite high -but as a Hewlett Packard
department it is not high enough.
HR is handicapped by the culture. Hewlett Packard provides a culture where most of
these human relations issues are not hot. There are no unions;managers do believe they
have an obligation to develop their employees, and so every manager believes s/he has a
role as a personnel manager.
Thus, as the line managers took on more responsibility for people management, the
personnel function’s perceived value to lower levels of staff declined.
In contrast, in WH Smith, which is in the early stages of transition to an HR style of
management, the personnel function is valued more. The function is in the process of
inserting basic standard personnel management interventions as it emerges from a
welfare/clerk of works function:
The personnel function contributes an enormous amount to the bottom line, providing
higher standards in recruitment and fewer mistakes in dismissal.
Similarly, Lloyds illustrates the importance of understanding the context of the change
process, and the stage in this change process. Despite having the espoused strategic intent of
passing responsibility to the line function, the bank still had some way to go in changing
perceptions of staff and managers alike: ‘A lot of managers still feel that managing people is
what personnel do.’
The third issue that emerged from the data was the position of group personnel functions
in the sample. Most seemed to have declined in size and this was accompanied by a decline
in influence. In many cases, the group personnel/HR function had no ability to direct what
the business units should do. As one group director observed, their role had moved to one of
‘group as coach. In BT the line personnel staff were well regarded, the group personnel less
well. This is despite - or because of - the fact that the group function had led a successful
major downsizing exercise throughout the company. This would bear out Tyson and
Witcher’s (1994) finding that influence had moved to the divisional level, but more
importantly, that these divisional functions were carrying out a role more akin to a contracts
manager than an architect.
Where the divisional directors were playing more of an architect role, this appeared to be
as a result of their personal influence and standing and, crucially, their relationship with
their particular managing director. Therefore, the ability to fulfil an architect’s role was
dependent on the perceptions of the importance of people management by other senior
managers’ and directors’ interpersonal skills of influencing and negotiating.

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3. Contribution to business performance

The sample of companies in this project must necessarily skew any comments made under
this section. Insofar as the sample were self-selecting and were able to commit significant
sums of money into researching this area, this demonstrates that HRM is already holding a
position of some influence in these companies. As always, it is very difficult to prove that
these companies were gaining competitive advantage from their use of HRM in the sense of
providing hard data in terms of business performance that can be attributed to HRM. While
we have outcome measures in the form of organisational commitment and satisfaction
scores, it is still difficult to prove that high commitment actually helps business performance.
What was clear was that in all the organisations there was a perception that people or
HRM were a potential source of competitive advantage. The distinction between people as a
source of competitive advantage and HRM as that source is an important distinction. It is
possible for paternalistic organisations, for instance, to see people as an important source of
competitive advantage without also developing any purposeful or differentiated form of
managing people. This would be true of the paternalism that both Lloyds and WH Smith
were trying to move away from, and to an extent the NHS Trust. Therefore, in these
organisations, line managers would recognise their staff’s performance as a source of
competitive advantage. However, the extent to which they recognise that they, as line
managers, are responsible for managing them in a particular form in order to achieve added
value, varies. It is this perceptual linkage that results in HRh4 being practised rather than
merely ’good people management’.
Several variables can be identified which affect the use of HRM as a critical level in
gaining competitive advantage. In Glaxo, KJS,WH Smith,BT and Lloyds market conditions
were a determining factor in the increased attention paid to the possible use of HRM as a
strategic lever. In the NHS Trust and Citibank market conditions were demanding increased
leverage and both of these organisations required performance from their staff. However,
the presence of knowledge workers/professional staff meant that the management of people
could not be too tightly prescribed, because staff needed latitudes of discretion in order to do
their work. In contrast, at KJS the management of sales staff and the nature of the product,
fmcg, determined that staff should be managed in a tight, purposeful manner within
consistent guidelines, to induce a performance-oriented culture (cf Paauwe, 1995). Finally,
while in Hewlett Packard people and their management was seen as a critical source of
competitive advantage, the reason for this commitment to HRM was one of administrative
heritage and the influence of the founding entrepreneurs.
In conclusion, there was general awareness that people were an important source of
competitive advantage within all the organisations. There was increasing awareness that, in
order to tap into that potential, some purposeful management of people needed to be
designed and enacted by line managers. However, the nature of that deliberate management
varied across organisationsbecause of variables such as product, staff, service etc.
From our sample, there appears to be increasing recognition of HRM at a strategic level,
but decreasing recognition at the non-managerial level. Even given the increased awareness
of HRM’s potential contribution at senior levels, the qualitative data within the survey still
threw up some disappointing comments on the contribution of the HR function, given the
frenzied take up of HRM rhetoric in the 1980s.

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 Hope-Hailey et al

DISCUSSION

1. Access to strategic decision-making

First, the condition that personnel/HRM would gain access to strategic decision making
seems to be true, but this is at a divisional level rather than a group level (cf Tyson and
Witcher, 1994). It is worth noting that for the senior managers with whom we were dealing,
having greater access to strategic decision-making did not appear to be a major issue for
them. Second, the integration with any strategic direction occurred through personal
influence of the HR senior managers with their senior colleagues, in an interactive, emergent
and informal fashion and being seen as a second-order decision-making process, derived
from business strategy. A number of observations can be made about these trends. As
business strategy is devolved to strategic business units, the integration of HRM and
business strategy will take place at lower levels than boards within companies. For that
integration to take place, whether between managers or directors, it will be the skills and
attributes of individual HR practitioners that make the difference.

2. HR function and line managers

An interesting result from our study is the strong refutation of the idea that people
management was a definable workload that could easily be devolved away to the line
managers. Within these companies, two things seem to have happened: generalist
personnel/HR staff have moved out into the business unit to be close to line managers; and
the line managers have far more control over personnel/HR decisions and budgets.
Nevertheless, the actual workload of personnel/HRM still seems to be performed by
specialist staff. This had a bearing on the other assumption or condition for HRM, that there
would be a withering away of bureaucracy. Our study is interesting in this respect also. The
notion of bureaucracy had declined to the extent that personnel was no longer seen as a rule
maker or enforcer, but it was still regarded as - in part - an administrative function. Indeed,
the excellent provision of these platform services was crucial to personnel/HRM's influence
at more strategic levels. Thus, Fowler's hypothesis that HRM may end up providing
personnel management services to the line function seems correct (1992).However, it is not
the only role that HRM is playing - the advisory/consultancy role is also important.
In terms of the established typologies for understanding the role of HRM, the following
was observed. Legge's (1978)notion of the conformist innovator seemed to be adopted by
many of the more successful directors. Tyson's (1987)roles of contracts manager and
architect both seemed to be enacted, often at the same time within organisations.However, it
was often a non-HR specialist who fulfilled the architect role. The clerk of works role
appeared to have disappeared. Using Storey's typology (Figure l),there seemed to be a mix
of types and a great deal of transition between different roles.
The HR function of both the hospital and the investment bank followed strategic, non-
interventionary roles. This reinforces the point that, in these organisations, the management
of people cannot be too closely prescribed because of the latitude of discretion needed by the
professional/knowledge workers who make up the majority of the managerial staff. It is
likely to be inappropriate for the HR function to remain a fullchange agent in these circum-
stances, although for speafic interventionsthey may move into that role briefly. HR functions
in other organisations seemed to be moving into more advisory roles. The HR function in
Hewlett Packard, for instance, following a more interventionary role during the downsizing
exercise, was reverting back to an advisory/consultancy role. In BT, the function was also

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A chameleon function? HRM In the ‘90s

moving in this direction, following their downsizing intervention, but this was a new phase
rather than a reversion to type, as was the case in Hewlett Packard. Arguably, if we are
moving more into a knowledge economy, this trend may be followed by other organisations.
There were no examples identified of the function being outsourced as both Paauwe (1995)
and Adam’ (1991) work suggested. However, given the self-selectingnature of our sample,
this is hardly surprising. There was substantial evidence of the strategic intention to imp-
lement changes which, as Paauwe states, ‘implies that components or tasks of the personnel
function are transferred to the line management or regular workforce’ (1995: 201). We saw
little evidence of ‘personnel management without personnel managers’, although Hewlett
Packard could be said to be practising people management without personnel managers.
Throughout every company the management of line managers had become a feature of
organisational life. The companies were all at different stages of achieving this. In Hewlett
Packard the ’unwritten rules of the game’ research showed that being a good people
manager was an essential criteria for ‘getting on’ in the company. Lloyds have the same
strategic intent, but are just beginning to put the systems in place for selecting, assessing,
developing and rewarding managers for this aspect. Undoubtedly, the phenomenon of
managers as both managing and managed seemed to be a critical aspect of their strategies
and policies in the 1990s (Legge, 1989; Hope, 1993). In other words, the devolution of
‘responsibility ’ to the line for people management meant that the line were being held more
accountable for their actions in this area.

3. Contribution to business performance

In terms of perceptions of HRM as a critical lever in gaining competitive advantage, in some
companies this was a universally-held view, while in the majority it seemed to be a
perception shared by the HR department and a few enlightened senior managers only. As
explored before, nearly all staff in these organisations believed that people or staff were a
source of competitive advantage. However, it required additional understanding to realise
that the purposeful and strategic management of staff could afford the organisation an
innovative and competitive place within their respectivemarketplaces.

4. New dimensions for HRM

New assumptions or conditions for the practice of HRM also emerged from the research.
Senior managers are being brought closer to people issues and staff themselves as a
consequence of delayering. This seems to have increased their awareness of HR issues and
their appreciation for the complexity of the issues within this area. Yet senior personnel/HR
managers still need sophisticated networking and personal influencing skills in order for the
function itself and the general management of people to be considered adequately at a
strategic level. In addition, increasingly strategic HRM and the provision of platform
services are being separated out, and it is our belief that this separation will continue.
The traditional welfare role has been transferred from the personnel/HR department to
the line function but in many of our case studies, welfare counselling, care etc was not being
carried out by line managers. This was either through lack of time, skill or awareness that it
was an issue for staff, as staff felt unable to express their need for this service for fear of
being seen as an under-performer. However, the need for a neutral service of this kind was
expressed to us in a number of interviews.
There appears to be more emphasis on achieving behavioural change through a more
’nuts and bolts’ systems type of approach, such as performance management rather than
large scale organisation development interventions across organisations. The emphasis is on

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 Hope-Hailey et al

performance and output, and accountability and measurement - much harder measures
than some of the softer human relations issues put forward in the HR models of the 1980s.
Control appears to be moving from superior/subordinate relationships to one of peer
control and being seen ‘not to let down the team’. Lastly, there is sigruficant emphasis on
individualism and self-management,whether it be of careers, learning or actual workload.
In conclusion, our research suggests that it is unlikely that HRM in the stereotypical
forms suggested by the models of the 1980s is being enacted in organisations a decade later.
The diversity of practice we have found suggests that contextual variables dictate different
roles for the function and different practices of people management. These variables go
beyond the factors of structure, business life cycle, product and market place identified by
contingency models to an understanding of internal factors such as occupational groups,
culture etc. This theme begs further attention within the research study. Despite this div-
ersity, certain new and common shifts in practice were apparent from our small sample. It
seems clear that these shifts are responding to the new employment conditions of the 1990s.

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