Journal Article Excerpt
Similarities and Differences in European Conceptions of Human Resource Management.
by TIMOTHY CLARK , DEREK PUGH
Toward a Polycentric Study
Increasingly managers need to distinguish between those of their activities and practices that can be successfully transferred across national boundaries and those that will require modification in view of divergences between national settings. This can be determined by initially identifying those features of managing organizations that remain similar across national boundaries and those that are different, and then ascertaining the strength of the forces for convergence or divergence.
This article describes an exploratory attempt to conduct a polycentric (in the terms described below) research study of conceptions of human resource management in seven European countries. It examines whether there is a single, shared conception of HRM that transcends national boundaries, or whether there are multiple national meanings reflecting a variety of cultural and institutional contexts that cannot be integrated into a single truly "international," "transnational," or European model. This research is presented as a distinctive contribution to the debate on the global convergence of management.
Ethnocentric orientation of previous studies
The extent to which conceptions of HRM vary between countries is an area that has received little attention in previous work (for exceptions, see Brunstein, 1995; Pieper, 1990). Rather, the main focus of research effort has been on HRM practices (e.g., Brewster and Hegewisch, 1994; Brewster and Tyson, 1991; Harzing and Ruysseveldt, 1995; Hegewisch and Brewster, 1993; Kirkbride, 1994; Muller, 1998; Sparrow and Hiltrop, 1994; Sparrow et al., 1994; Tyson et al., 1993). A review of twenty years of research on the management of human resources in comparative and international perspectives in thirty leading management journals (discussed by Clark, Grant, and Heijltjes, this issue) reported that the primary focus of research efforts to date has been in three main areas: employment relations (e.g., training, wages, staffing remuneration), industrial relations (e.g., the management of representational and participative systems), and work relations (e.g., Quality Control Circles, Total Quality Management, flexible work ing, and lean production).
The great majority of these comparative studies have adopted a methodological approach that is essentially ethnocentric (Chapman, 1996; Clark et al., 1999). These are research studies designed and conducted in one culture, by researchers from that culture then replicated in a second culture. Despite their popularity, one of the main methodological problems with ethnocentric studies is that they assume the cross-cultural equivalence of concepts. They are underpinned by a universalist approach, in that concepts, measures, and instruments developed in one culture are believed to be equally appropriate and applicable in others. The main methodological aim is standardization in that an attempt is made to keep all aspects of the research design and its implementation (with the exception of language) identical across nations. Consequently, everything is compared in terms of a common reference point--namely, the data collection instrument and the concepts underpinning it. This acts as a lens that tends to filter out the diversity of understandings even where the same terms exist in different countries.
Such an ethnocentric approach risks limiting the identification of the distinctiveness of relevant concepts in each country. It looks for similarity in understanding and frequently finds it. Consequently, the nature of employee management in different nations may appear more unified and similar than it really is. In addition, as ethnocentric studies use instruments and measures that remove societal or cultural dimensions from organizations, they fail adequately to specify the nature of such differences, with the consequence that they become residual variables, used as post-hoc partial explanations, rather than being properly built into the investigative design with consequent predictive force (Child, 1981; Clark et al., 1999; Clark, 1996; Cray and Mallory, 1998; Roberts, 1970).
A polycentric research approach would overcome these methodological problems. Such an approach eschews the imposition of "etic" (i.e., universal) concepts and allows a phenomenon to be studied using locally derived concepts. Adler (1984, p. 41) writes: "Polycentric studies are individual domestic studies conducted in various countries around the world." At their most extreme, polycentric studies view phenomena as only being understandable in terms of concepts derived from their own culture. The Germans understand HRM one way, the French another, the Dutch yet another, and so on. If we are not German, French, or Dutch, we cannot understand what they mean by HRM. If we adopt such a view, cross-national comparison becomes an impossible exercise since we cannot compare that which cannot be compared because it is uniquely understood. We do not take this extreme view since we do think ...
The Future of Lean Construction:
A Brave New World
Stuart D. Green
ABSTRACT
Lean construction is considered from a human resource management (HRM) perspective. It is contended that the UK construction sector is characterised by an institutionalised regressive approach to HRM. In the face of rapidly declining recruitment rates for built environment courses, the dominant HRM philosophy of utilitarian instrumentalism does little to attract the intelligent and creative young people that the industry so badly needs. Given this broader context, there is a danger that an uncritical acceptance of lean construction will exacerbate the industry's reputation for unrewarding jobs. Construction academics have strangely ignored the extensive literature that equates lean production to a HRM regime of control, exploitation and surveillance. The emphasis of lean thinking on eliminating waste and improving efficiency makes it easy to absorb into the best practice agenda because it conforms to the existing dominant way of thinking. 'Best practice' is seemingly judged by the extent to which it serves the interests of the industry's technocratic elite. Hence it acts as a conservative force in favour of maintaining the status quo. In this respect, lean construction is the latest manifestation of a long established trend. In common with countless other improvement initiatives, the rhetoric is heavy in the machine metaphor whilst exhorting others to be more efficient. If current trends in lean construction are extrapolated into the future the ultimate destination may be uncomfortably close to Aldous Huxley's apocalyptic vision of a Brave New World. In the face of these trends, the lean construction research community pleads neutrality whilst confining its attention to the rational high ground. The future of lean construction is not yet predetermined. Many choices remain to be made. The challenge for the research community is to improve practice whilst avoiding the dehumanising tendencies of high utilitarianism.
KEY WORDS
Lean construction, human resource management, utilitarian instrumentalism, propaganda, best practice.
INTRODUCTION
"A really efficient totalitarian state would be one in which the all-powerful executive of political bosses and their armies of managers control a population of slaves who do not have to be coerced, because they love their servitude. To make them love it is the task assigned, in present-day totalitarian states, to ministries of propaganda, newspaper editors and school-teachers." (Huxley, 1994; first published 1932).
The publication of the report of the Construction Task Force Rethinking Construction (DETR, 1998) has significantly shaped the current agenda for change in the UK construction industry. The recommendations of Rethinking Construction (commonly known as the 'Egan Report') have received an almost unanimous endorsement from the bodies that shape policy for the construction industry. Examples include the Construction Clients' Forum (CCF), the Construction Industry Board (CIB) and the Government Construction Clients' Panel (GCCP). The Movement for Innovation (M4I) was established as a direct result of Rethinking Construction to deliver the identified performance targets and to promote change. The Egan agenda places an especially strong emphasis on the ideas of 'lean thinking', drawing heavily on their supposed success in the car industry. The ideas of 'lean production' were originally encapsulated within the Toyota Manufacturing System and are well articulated by Womack et al (1990). Lean thinking subsequently became the generic term to describe their universal application beyond manufacturing (Womack and Jones, 1996). The ideas of lean thinking comprise a complex cocktail of ideas including continuous improvement, flattened organisation structures, teamwork, the elimination of waste, efficient use of resources and co-operative supply chain management. Within the UK construction industry, the language of lean thinking has since become synonymous with best practice. Confidence in these ideas remains so high that 'lean construction' is an established component of construction best practice. The purpose of this paper and is to challenge the assumed neutrality of lean construction and to highlight the potentially regressive impact on human resource management (HRM).
HRM IN THE UK CONSTRUCTION INDUSTRY
There is an established dichotomy in the HRM literature between the 'hard' model, reflecting utilitarian instrumentalism, and the 'soft' model reflecting developmental humanism. The hard model of HRM sees humans as a resource to be 'provided and deployed' as necessary to achieve organisational objectives. In contrast, the soft model of HRM treats human resources as valued assets who offer a source of competitive advantage. In simple terms, the former comprises 'command and control' and the latter 'empowerment and commitment'. This dichotomy is undoubtedly an over-simplification of a complex field where rhetoric and reality are difficult to separate (Legge, 1995). Many organisations undoubtedly apply elements of both. Companies are also often fond of dressing up hard HRM in a soft rhetoric (Truss et al, 1997). The key distinction lies in whether the emphasis is placed on the human, or the resource (Guest, 1987; Storey, 1992). The dichotomy between hard and soft HRM is a direct descendant of McGregor's (1960) Theory X and Theory Y.
Several previous studies have contended that the dominant culture of the construction industry consistently emphasises the hard model of HRM. The 1998 Workplace Employee Relation Survey (Cully et al, 1999) compared three measures of employee participation across twelve industrial sectors: (i) non-managerial participation in problem-solving groups, (ii) operation of suggestion schemes and (iii) formal survey of employee attitudes during the last five years. In the construction industry participation in problem-solving groups occurred in only 21% of workplaces. This was lower than any other sector with the exception of 'other community services' (17%). The construction industry came bottom in the other two categories by a significant margin. Whilst the high degree of sub-contracting in the construction industry may account in part for these results, research by Druker et al (1996) concludes that the hard model of HRM dominates not only for the construction labour force, but also for professional and managerial staff. Coffey and Langford (1998) further observe a low level of employee participation in construction, whilst concluding that there are no inherent reasons that prevent effective participation, even at trade level. The European survey conducted by Price Waterhouse/Cranfield (Brewster and Hegewisch, 1994) showed that the status and influence of HRM on corporate decision making was lower in the UK construction industry than in other European construction industries. These results confirm Hillebrandt and Cannon's (1990) previous findings on the low status of the personnel function within UK contractors. Recent research into career opportunities for women in construction companies has further pointed to a widespread discriminatory culture in the UK construction industry (Dainty et al, 2000).
The conclusion that emerges from the above is clear. The UK construction industry is characterised by an institutionalised regressive approach to HRM. The human resource is primarily conceptualised as a cost. This long-standing allegiance to hard HRM explains the popularity of management improvement recipes based on metaphors such as 'cutting out the waste', 'belt tightening' and 'becoming lean'. The question that arises is the extent to which the current vogue for lean construction will serve to reinforce the industry's established culture of 'command and control'.
AN INDUSTRY IN CRISIS
The dominance of Hard HRM in the construction industry goes some way towards explaining the current recruitment crisis. Student applications for built environment courses, including architecture, surveying, planning and civil engineering fell by 21% between 1994 and 1997 (Gann and Salter, 1999). Construction companies and professional firms find it increasingly difficult to attract the intelligent, creative young people that the industry badly needs. Other industries consistently offer better salaries, better job satisfaction, increased job security and more enlightened approaches to HRM. Whilst it is true that senior industrialists and government representatives increasingly endorse the rhetoric of Soft HRM, there is little real evidence of any significant shift in the industry's default model of HRM. Regressive attitudes to HRM are so embedded within the UK construction industry they will not be easily changed. It is the dominant culture of 'command and control' that determines the agenda for change as advocated by industry leaders. The problems of the construction industry are invariably blamed on impediments to machine efficiency. Progressive improvement initiatives repeat familiar calls for 'attitudinal and cultural improvement' whilst advocating that others should become more efficient at meeting the efficiency targets of the technocratic elite. Rarely is there any consideration of the externalities that lie beyond the narrow domain of instrumental rationality. Even supposedly enlightened practices such as partnering and TQM are ultimately judged in accordance with their contribution to efficiency. Employees are continually conceptualised as cogwheels in a remorseless machine. In the UK construction industry, utilitarian instrumentalism reigns supreme. The primary source of competitive advantage is invariably equated with cost efficiency. There is little recognition of human resources as a source of competitive advantage. None of this does anything to attract new talent into the construction industry, or to empower the existing human resources.
PERPETUATING THE DOWNWARD CYCLE
Howell and Ballard (1999) have previously suggested that lean production techniques are neutral in terms of HRM. As an abstract theoretical construct, lean construction may well be neutral. Unfortunately, lean construction ultimately has to be implemented in real organisations In common with every other change initiative, lean construction has to be enacted by people. Any implementation of lean methods will therefore be inextricably linked to aspects of HRM. The theory of lean construction may well be neutral, the way that lean construction is implemented can never be neutral. In the absence of positive efforts to shape the implementation of lean construction around an enlightened HRM agenda, the default industry recipe of Hard HRM will inevitably prevail. The rhetoric of improving efficiency by the elimination of waste is undeniably attractive in the short term. However, the long-term effect will be to perpetuate the construction industry's downward cycle whilst reinforcing its reputation for unrewarding careers. Long-term competitiveness and sustainability are too easily sacrificed for the sake of short-term efficiency. Whilst this perennial short-termism acts against the development of the industry as a whole, it continues to serve the immediate interests of the industry's technocratic elite. From a critical perspective, the last thing that current industry leaders need is a flood of 'empowered' employees teeming with innovative ideas. Far better to impose a regime of management-by-stress whereby employees are constantly under pressure to meet ever-increasing efficiency targets. Each successive financial cycle heralds a new drive towards cost efficiency. Many construction companies seem to be in a perpetual state of downsizing to satisfy the appetite of financial analysts. The increasingly short-term focus imposed by the marketplace inevitably reinforces the trend towards management-by-stress and regressive approaches to HRM. Such are the barriers to innovation in the construction industry.
As a caveat to the above, it should be emphasised that there are important exceptions. This is especially true for some of the UK's design practices and engineering consultancies. There are a few notable firms that compete very successfully internationally and have invested heavily in knowledge-based services. The competitive advantage of these firms is based on their employees and their capacity for innovation. Such firms seek to recruit and retain highly capable people by providing them with rewarding and challenging careers. Central to the attraction of such organisations is the extent of job variation and the associated opportunities for continuous personal development. Strangely, the agenda for change within the UK construction industry does not look to its own success stories as exemplars of good practice. Instead, the industry is exhorted to follow the precedent of the motor industry. This advice remains intact despite continuing concerns regarding productivity in the UK motor industry. The recent Rover debacle is the latest in a long line of well-published management disasters in an industry characterised by poor industrial relations and lack of investment. The primary lesson to be extracted from the UK motor industry is that the rhetoric of gurus such as Womack and Jones (1996) should be treated with some considerable degree of caution. It is also notable that the Competition Commission has recently found the UK motor industry guilty of price fixing and anti-competitive behaviour. It hardly qualifies therefore as an exemplar of customer responsiveness. The rush towards lean construction seems equally bizarre in the light of the motor industry's questionable track record in HRM.
THE HRM IMPLICATIONS OF LEAN PRODUCTION
Whilst strangely ignored by lean construction researchers, there is a considerable body of research that equates the implementation of lean production to regressive policies of human resource management (HRM) (e.g. Garrahan and Stewart 1992; Hampson et al, 1994; IPD 1998; Rehder, 1994; Turnbull, 1988). The literature warning of the potentially adverse implications of lean methods on the quality of working life is so extensive it is difficult to understand why it has been so systematically ignored. The critical literature on the Japanese model of lean production dates from Kamata 's (1982) description of how Toyota's single-minded drive for success in the 1970s was accompanied by significant personnel deprivation on the part of the workforce. More recently, Sugimoto (1997) describes how the term karoshi is in common use amongst Japanese workers to describe sudden deaths and severe stress resulting from overwork. Benders (1996), Grönning (1995) and Rehder (1994) all refer to growing disillusionment in Japan amongst employees and increasing resistance from trade unions. Hutchinson et al (1998) describe how at a conference in 1992 the Japanese Auto Workers Union (JAWU) emphasised the 'triple sufferings' of the Japanese automobile industry:
" ….the employees are exhausted, the companies make little profit and the automobile industry is always being bashed from overseas." (from Wickens, 1993)
Hutchinson et al (1998) further quote a survey that asked Japanese parents if they would advise their children to work in the automobile industry. Only 4.5% of respondents replied yes (Nomura, 1992). The most frequently cited reasons were as follows:
o pay too low for intense work (43%);
o high work intensity (41%);
o onerous shift system (40%);
o much work on holidays and overtime (36%);
o unfriendly personnel practices (33%).
Given the UK construction industry's difficulties in attracting high quality personnel, it therefore seems strange to model the agenda for change on the Japanese automobile industry. Criticisms are not limited to production plants in Japan, but also extend to overseas transplants. Fucini and Fucini (1990) point to poor safety standards, stress of work, loss of individual freedom and discriminatory employment practices at Mazda's US production plant in Michigan. Garrahan and Stewart (1992) and Turnbull (1988) provide similar criticisms of Nissan's plant in the UK, held up as an exemplar by the Egan Report (DETR, 1988). According to Garrahan and Stewart (1992) Nissan's supposed regime of flexibility, quality and teamwork translates in practice to one of control, exploitation and surveillance. Numerous other studies have demonstrated that the implementation of lean methods leads to work intensification (Parker and Slaughter, 1998; Cappelli and Rogovsky, 1994). On a similar theme, Berggren (1993) equates lean production with 'mean production':
"…unlimited performance demands, the long working hours and requirements to work overtime on short notice, the recurrent health and safety complaints, the rigorous factory regime that constitutes a new and very strict regime of subordinations".
Howell and Ballard (1999) suggest that lean production techniques are themselves neutral. In an abstract sense, this is probably true. However, the implementation of lean construction in real contexts can never be neutral. Every organisational change initiative inevitably disturbs the status quo. Whilst theories of production can be developed in isolation of HRM considerations, they must be implemented in the context of real organisations. Organisational change initiatives are inextricably wrapped around an implicit HRM policy. Existing power structures are changed with direct implications for individual job boundaries and the quality of working life. Frederick Taylor (1911) famously maintained that 'scientific management' was neutral whilst leaving others to worry about the dehumanising side effects of treating people as mindless cogwheels in a remorseless machine. The relationship of lean thinking to Taylorism is well described by Dohse et al (1985):
"Toyotism is…not an alternative to Taylorism but rather a solution to its classic problem of the resistance of the workers to placing their knowledge of production in the service of rationalisation."
Notions of empowerment and participation are therefore carefully controlled. Employees are only 'empowered' to implement imposed targets more efficiency. They are not empowered to participate in the process by which targets are set or in the allocation of the proceeds of any resultant efficiency gains.
Whilst some of the above sources are undoubtedly somewhat one sided, this is equally true for the more evangelical advocates of lean methods such as Womack and Jones (1996) and the Egan Report (DETR, 1998). The most worrying thing is that the debate has not even started. It is of course conceivable that lean construction could be implemented in accordance with Soft HRM. However, given the dominant culture of the UK construction industry, this is always likely to be the exception rather than the general case. What is currently so noticeably absent is any empirical research data on how lean construction is implemented. Strangely, there seems to be little interest in research of this nature. International researchers in lean construction seem content to develop theories of production entirely in the abstract, leaving others to worry about the dehumanising side effects.
BEST PRACTICE
None of the above doubts have prevented lean construction becoming an established component of construction best practice (CBPP, 1998). This is despite an alarming absence of convincing case studies. Lean construction seems to have been accepted as an essential part of best practice on the recommendation of the Egan Report (DETR, 1998). The existence of an extensive and convincing literature that equates lean production to regressive policies of HRM is clearly not sufficient to prevent lean construction from being immediately accepted as best practice. Lean construction is a good idea because Sir John Egan and the technocratic elite say it is a good idea. The task of the research community is seemingly limited to supporting the prejudices of current industry leaders and thereby maintaining the status quo. Of course, the emphasis of lean thinking on eliminating waste and improving efficiency makes it easy to absorb into the best practice agenda because it confirms with the existing dominant way of thinking. Best practice rarely strays from the narrow domain of instrumental rationality in that it is invariably concerned only with the most efficient means of achieving a given end. Economic externalities such as traffic congestion, pollution and the human cost of regressive management regimes consistently fall outside the adopted frame of reference. The limitation of 'best practice' to issues of instrumental rationality is well illustrated by a recent flyer published by the Construction Best Practice Programme (CBPP):
Best Practice = Better Profits
* Find out more about the relationship between Best Practice and improving profit levels.
* Learn how to increase efficiency, reduce costs and improve competitiveness.
* Hear, first hand, from organisations that have benefited from implementing Best Practice.
* Discover the bottom line benefits from putting the theory into practice.
The above illustrates the way in which current conceptualisations of best practice are invariably limited to narrow issues of instrumental rationality. Note also that the CBPP is funded by the DETR to the tune of £6M over three years (DETR, 1999). Why the UK taxpayer is being asked to help make construction companies more efficient remains unclear. The abandonment of the principles of the free marketplace seems strangely at odds with the frequently espoused doctrine of neoliberalism. The reality is that free-market principles seldom apply to the large organisations that seek to influence industrial policy. The status of BAA as a privatised quasi-monopoly did not prevent Sir John Egan from preaching best practice to the construction industry. The trend towards corporatism is readily illustrated by the way large organisations seek increased control through partnering and integrated supply-chains. Come back Adam Smith, all is forgiven.
The above analysis provides a different starting point from which to understand 'best practice'. There is a subtle process at work across the numerous committees that shape the best practice agenda. It is not necessary to believe that such committees deliberately act to further their own vested interests; merely that they take no action that goes against their interests. The end result is the same. It then becomes understandable why definitions of performance improvement rarely stray beyond the domain of instrumental rationality. 'Best practice' is judged by the extent to which it serves the interests of the technocratic elite. Whilst it is true that the CBPP flags the importance of 'developing people', the caveat is quickly added that the effectiveness of training should be measured by its contribution to business performance. In other words, training is only worthwhile if it contributes to company profits. Metaphors such as 'teamwork' and 'customer-responsiveness' mask the reality that employees are required to act as mindless cogwheels in a remorseless machine. There is little pretence that any efficiency gains will be shared equally amongst the diversity of stakeholders in the construction industry. Targets abound for reducing the cost of construction and enhancing profitability. Lean construction thereby becomes the latest manifestation of a long established trend. The rhetoric is heavy in the machine metaphor whilst exhorting others to be more efficient. Nothing really changes.
RESEARCH ON THE RATIONAL HIGH GROUND
The preceding discussion provides a very different perspective on the mechanisms that have generated the current interest in lean construction. The lean construction literature consistently reduces organisational complexities to a mechanistic quest for efficiency. The intellectual origins are shared with the broader disciplines of production engineering, operational research and systems engineering. All of these are worthy areas of academic endeavour, but none are ever neutral in their implementation. Rarely have lean construction researchers descended from the rational high ground into the swampy lowland of human affairs where messy and confusing problems defy technical solution (Schön, 1987). The contribution of Koskela (2000) represents a significant intellectual achievement, but rarely does he descend from the level of high theoretical abstraction. Further important contributions have been made by Howell and Ballard of the Lean Construction Institute (LCI) (e.g. Ballard and Howell, 1997) and Tommelein (e.g. Tommelein, 1998). These US-based contributors draw heavily on the tradition of production engineering and are primarily concerned with the 'physics of production in the service of higher performance' (Howell and Ballard, 1999). The domain of enquiry is invariably limited to instrumental rationality and as such provides no challenge to the industry's dominant ideology of utilitarian instrumentalism. Such research therefore passes the basic test of 'best practice'; others must become more efficient in serving the interests of the industry's technocratic elite. Tommelein has also done much useful work in supply-chain mapping and simulation, although consideration of the HRM implications of lean construction is once again notable by its absence. The dominant theme of all these sources is the quest for optimisation with associated assumptions of scientism and the treatment of people as passive objects. Whilst not addressing HRM issues directly, the contribution of Seymour (1999) to the development of a sociological perspective on lean construction nevertheless warrants mention as a notable exception to the general trend.
The tendency of international researchers to ignore the HRM implications of lean construction is also reflected amongst many that have advocated lean methods in the UK (DETR, 1998; Flanagan, et al 1998; Saad and Jones, 1998). When issues of HRM are raised they tend to be at the level of the team, rather than being treated as issues of strategic significance. This tendency is notable within the people management research agenda of the Agile Construction Initiative (ACI) at the University of Bath (Hall, 1998). As with other generic notions of best practice, effective teamwork is seemingly judged by the extent to which it meets the needs of operational efficiency. Teamworking equates directly with compliance and conformity. Utilitarianism instrumentalism reigns supreme.
CONCLUSION
There is significant evidence to suggest that the UK construction industry possesses an institutionalised regressive culture of HRM, despite notable exceptions. This acts as a powerful disincentive to the young, intelligent and creative people that the industry so badly needs. Lean construction has been accepted as an essential element of best practice despite widespread concerns regarding the HRM implications of lean methods. The emphasis of lean thinking on eliminating waste and improving efficiency makes it easy to absorb into the best practice agenda because it conforms to the dominant way of thinking. Lean thinking too easily translates in practice to anorexic thinking. New ideas are only accepted as best practice if they reflect the construction industry's ingrained culture of hard HRM. Seemingly by definition, best practice must support the interests of the technocratic elite. Otherwise it does not quality as best practice. Best practice therefore cannot be innovative, but is inevitably concerned with making others more efficient. There is seemingly no demand for ideas that challenge the existing world views of industry leaders. The champions of best practice are programmed to consider only the narrow domain of instrumental rationality. Even supposedly enlightened practices such as teamworking, partnering and total quality management are ultimately judged in terms of their contribution to cost efficiency.
The dominant 'industry recipe' of HRM will inevitably shape the way that lean methods are implemented. Unless this issue is tackled explicitly, the implementation of lean construction will continue to reinforce the industry's dominant culture of 'command and control'. The ultimate victim will be the sustainability of the construction industry and its long-term capacity to serve the needs of the UK economy and society. The future of lean construction is not yet predetermined. Many choices remain to be made. The immediate challenge for the research community is to investigate the implementation of lean construction in real organisations. The HRM implications are of prime importance. Researchers must leave the sanctity of the rational ground if they are to reverse current trends. To be neutral is to be passive. The analysis of this paper will only become true if we allow it to become true.
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CHAPTER 2
LITERATURE REVIEW
1. Introduction
This chapter covers the study of aspects elaborating the concepts and practices in perspective construction industry, Design-Bid –Build method, Human Resource Management, Strategic Human Resource Management in Construction. The study also embraces coverage of Project level SHRM namely Project Human Resource Planning and Human Resource Development. Eventually, the element of specific elements in Project Human Resource Planning and Development – Project Organizational Planning and Team Development is included.
2.2 Overview of Construction Industry
2.2.1 General perspective of Construction Industry
Construction profession offers opportunity to create works for the benefit of mankind, but in turn those that work in the profession accept substantial responsibilities. Construction industries served as an industry that contributes to the growth of country economy and promote a continuous improvement to environment by enhancing mankind lifestyle. Type of construction into residential, commercial/institutional building, industrial, and heavy/high-way segments can break down construction. Most contracts are awarded to a general contractor who awards subcontracts to specialty contractors as practice in traditional design-bid-build procurement system method. The most common project delivery system used in commercial construction, heavy/highway work, and for nearly all government construction is design-bid-build, also known as competitive low bid; but that system is slowly being replaced by other procurement systems such as design-build, negotiated contracts, job-order contracting, construction management and so on
Within an construction industry that comprises of various organization group together their effort in forming a teams in running the project by performing intellectual effort in devoting individual capability in completing project within project deliveries criteria. As for the traditional design-bid-build procurement system, the project players many involved the professional in the industry such as owners/clients, Constructors group (main contractor, subcontractors, suppliers and etc.), Consultants groups (Architects, Civil and Structural Engineers, Quantity Surveyor, Land surveyors, M&E Engineers and etc.). (Clifford J. Schervayder, Richard E. Mayo, 2004).
Client group
Client financiers, tenants, etc.
Brief
Consultants group architects, engineers, surveyors, etc
Construction document
Constructors group
Main contractor, subcontractors, suppliers, managers, operatives, etc.
Performance-occupation
Disposal/transfer of ownership, etc.
Final disposal-demolition
Figure 2.1 Overview of provision of construction and main grouping of human resource
(D. Langford, M.R. Hancock, R Fellows & A. W. Gale, 1997)
2. Design-Bid-Build in view
The conventional method of procurement is based upon the rigid separation of design and construction. It is also known as the separate trades approach. Where the conventional approach exists, client using it as the basis of his project organizations need to define his objective. The client is hoping the design team can produce a suitable design and coordinate the work of the construction teams needed to produce the end product. The design team prepares detailed drawings, specifications and often bill of quantity (BQ). The tender documents are prepared and the contract awarded, usually to the contractor with the lowest bid or the one with the most appropriate capability in the performance among the lowest bid. During the construction commences on site, the contractor will carry out the work through the co-operation of its office site and site team in managing the progress through close monitoring the subcontractor and supplier. Architect act as Superintendent Officer and the consultant team then to advise on contract and technical matters and supervise the progress in respect of client; in order to ensure the work in completed within the project specification and deliveries.
Client
Contractor
Design Organization
Subcontractors/Supplier
Architect/Engineer
Structural
M & E
Domestic
Nominated
Figure 2.2 The Conventional System (Keith F. Potts, 1995)
2.2.3 Management Levels of Construction
Organizational considerations lead to a number to a number of hierarchical levels that can be identified in construction. This derives from a project format. Decision-making at levels above the project relate to company management considerations. Decisions within the project relate to operational considerations (e.g. selection of production methods) as well as the application of resources to the various construction production processes and work task selected to realize the constructed facility. Specially, four levels of hierarchy can be identified as follows:
1. Organizational- the organizational level is concerned with the legal and business structure of a firm, the various functional areas of management, and the various functional areas of management, and the interaction between head office and field managers performing these management functions.
2. Project - the project level vocabulary is dominated by terms relating to the break down of the project for the purpose of time and cost control (e.g., the project activity and the project and the project cost account). Also, the concept of resources is defined and related to the activity as either an added descriptive attribute of the activity or for resource scheduling purposes.
3. Operation (and Process) - the construction operation and process level is concerned with technology and details of how construction is performed. It focuses on work at the field level. Usually a construction operation is so complex that it encompasses several distinct processes, each having its own technology and work sequences. However, for simple situations involving a single process, the terms are synonymous.
4. Task- the task level is concerned with the identification and assignment of elemental portions of work to field units and work crews. ( Daniel W. Halpin. Ronald d. W. Woodhead, 1998).
3. Human Resource Management (HRM)
Management process consists of five basic functions that is planning, organizing, staffing, leading, and controlling. Human Resources Management refers to the practices and policies you need to carry out the people or personnel aspects of your management job. The scope or activities of the Human Resource Management refers to the practices and policies you need to carry out the people and personnel aspects of your management job. These include, conducting job analyses (determining the nature of each employee’s job), planning labour needs and recruiting job candidates, selecting job candidates, orientating and training new employees, managing wages and salaries (determining how to compensate employees), Providing incentives and benefits, appraisal performance, communicating (interviewing, counseling, disciplining), Training and developing, building employees commitment and also the consideration of equal opportunity and affirmative action, employee health and safety, Grievances and labour relation. (Gary Desler, 2000).
2.3.1 Human Resource Definition and Concept
Commonly, the Human Resource function and activities can be categorize in to Human Resource Planning, Recruitment and Selection of Employees, Orientation and Planning, Recruitment and Selection of Employees, Orientation and Training, Employees Performance Evaluation, Compensation and Benefits, Safety and Health at Workplace, Industrial Relation and International Human Resource.
Thus the current contemporary definition of HRM could be:
A managerial perspective, with theoretical and perspective dimensions, which argues for the need to establish an integrated series of personnel policies consistent with organization strategy, thus ensuring quality of working life, high commitment and performance from employees, and organizational effectiveness and competitive advantage. (Huczynski and Buchanan, 2001).
2. Characteristics of Human Resource Management (HRM)
The characteristic features of HRM as a new paradigm for managing people are as below stated:
* It stresses the importance of gaining commitment to the organization’s mission and values- it is’ commitment-oriented’.
* It emphasizes the need for strategic fit – the integration of business and HR strategic.
* It is a top-management driven activity.
* The performance and delivery of HRM is a line management responsibility.
* It contribute in measurable ways to the creation and maintenance of competitive advantage, and the focus is on adding value, especially for shareholders.
* It involves the adoption of a comprehensive and coherent approach to the provision of mutually supporting employment policies and practices, for instance the development of integrated HR policies and practices (configuration or bundling).
* Importance is attached to strong cultures and values.
* It is performance-oriented, emphasizing the need for ever-higher levels of achievement to meet new challenges.
* Organizing principles are elastically and decentralized with flexible roles, a focus on process (how things are done, especially across traditional organizational boundaries), and more concern for teamwork- flexibility and teambuilding are important.
* There is strong emphasis on the delivery of quality to customers and the achievement of high levels of customer satisfaction
* Rewards are differentiated according to performance, competence, contribution or skill. (Michael Armstrong, 2000).
3. The Soft ‘HRM’ and Hard ‘HRM’ in Construction
The argument surrounding personnel v. HRM has been polarized by the debate surrounding the ‘hard’ and soft’ views of HRM. The hard view of HRM focuses on the resource (or cost) dimension, whilst the soft view emphasizes the human-input dimension. However, Sisson, 1994 argues that the language of soft HRM can be used to mask what is in reality a hard HRM approach. Below Sisson’s the cynical analysis of the rhetoric embodied by the soft HRM concept is shown against the hard HRM realities that reflect the approaches of organizations managing the function today.
Table 2.1 Soft HRM rhetoric hiding grad HRM reality in the construction industry (Sisson, 1994)
Soft HRM rhetoric Hard HRM reality
Employees first Market pressure
Efficient production Lean production
Flexibility Re-engineering, scientific management
Core and periphery Outsourcing, reducing commitments
Devolution Reducing middle management
Right sizing Redundancy/downsizing
New working patterns Part-time instead of full time jobs
Empowerment Devolving risk and responsibility
Training and development Multi-disciplinary, doing more with less
Employability No employment security
Recognizing individual contributions Undermining trade union bargaining
Team working Reducing the individual’s discretion
Although this could be seen as somewhat disparaging view of HRM, it probably reflects the approach taken towards people management by many modern businesses in the construction industry (Druker et al. 1996). For example, increasing salary levels has traditionally been used as a key retention strategy, despite its ineffectiveness in securing the long-term commitment of employees (Knutt 1997). If the hard HRM approach reflects reality, then the construction industry has a long way to go in achieving what proponents of contemporary HRM want to achieve in the management of employee/management relationship.
The construction industry provides an interesting research alternative to other sectors because of the effect of contracting arrangements and the problems of certainty in a constantly changing business environment, with less scope for improvement of productivity through routine work systems or for technological innovation than in some other industries.
The construction industry is also interesting because it has a network of personnel practitioners. Construction members of the Institute of Personnel and Development (formerly the Institute of Personnel Management) sustain regular contracts and formal parts of the private sector. The term ‘construction’ embraces a wide variety of organizations in this con text, and membership of this forum includes multinationals that have a product division concerned with the construction industry; national contractors whose main business may be within construction but who may have one or more product divisions concerned with manufacturing or quarrying; and other business, including small number that are based in professional construction services.
While the organizations are diverse, they share a common element in terms of construction activity, and on this basis their representatives are able to sustain a formal program of meetings and less formal contracts and networks. The main objective is to consider whether changing practices identified in other sectors have impacted on the management of people within the industry. The factors to be drawn out previously are the development of ‘hard’ human resource management, particularly towards the manual workforce. However, similarly present are factors that would suggest the centrality of more ‘soft’ human resource management practices; the importance of design, innovation and teamwork suggest the appropriateness of more developmental and commitment-based approaches. Given that construction companies have shed much of their more operational employment through subcontracting, and have focused on retaining the professional and skilled employees, in many ways one would expected a longer term developmental approach to these staff. At the same time, longer-term changes in the labour market, related to demographics and to changes in the demand for skilled and educated people in the economy overall, required a proactive and longer-term approach to manpower planning (Agapiou, et, al, 1995).
Construction managed by the people who are concern with cost and production. They are more influenced by the value of ‘harder’ personnel issues and it is challenge to achieve credibility for ‘softer’ issue. The survey result done by this paper Greenwich survey suggest few signs of fundamental or far-reaching innovation in human resource management practice in the construction industry despite the changing shape of the construction companies. There are some, through limited, signs of change in respect to expectations of training and employee development in the future. (Janet, Geoffrey, Ariane, Lesley, 1996).
4. Strategic Human Resource Management
2.4.1 Strategic Human Resource Management Definition and Concept
One of the aspects that define the transition from ‘personnel’ management to HRM is the need to integrate HR planning within the strategy of the organization. Considering the HRM as strategic function rests on the belief that an organization’s human asset offer it a sustainable source of competitive advantage. Indeed, some take the radical view that SHRM offers organizations the main source of competitive advantages in the long term. Armstrong, 1996 suggests that SHRM: concerned with the development and implementation of people strategies which are integrated with corporate strategies and ensure that the culture, values and structure of the organization and the quality, motivation and commitment of its members contribute fully to the achievement of its goals.
SHRM comprises a set of practices designed to maximize organizational integration, employees commitment, flexibility and quality of work. Strategic human resource management is concerned with creating a competitive advantage for organizations by closely aligning human resource processes, such as HR planning, recruitment, selection, training, appraisal, and reward systems to direction where enhance the improvement toward organizational improvement that may bring about the organizational performance aspects such as process improvement, expert facilitation of internal interventions; productivity improvement, monitoring and evaluation, measuring and assessing climate and culture, improving communication processes; Team building and team effectiveness improvement; cohering management teams and Rationalizing the complexities of organizational structure ( Min-Huei Chien, 2004).
The philosophy of CIBA, the pharmaceuticals company, of business-driven strategic human resource management, as described by Morton ,1999, is as follows
* Quality improvement depends on high-quality personnel at all levels;
* Staff retention is important to support growth;
* The balance of motivation and cost reduction requires a clearly thought out reward strategy that has maximum impact without sending costs out of control;
* New HR technology can be used to capture process efficiencies and control costs;
* HR specialists will become subject experts in a team of internal consultants rather than members of the old-style hierarchy.
2. Strategic Human Resource Various Best practices Approaches in Construction
There is a set of best HRM practices and that adopting them will lead to superior organizational performance. The set of approach introduced by Pfeffer’s, 1994 list the seven HR practices of successful organizations; These are Employment security, selective hiring, self-hiring, self-managed teams, high compensation contingent on performance, training, reduction of status differentials, sharing information.
Apparently, thinking strategically about HRM demands that an organization look beyond the here and how to consider the external and long-term factors likely to impinge upon its business over the next few years. Later, Anthony et al, 1996 suggest six key characteristics of a strategic HRM approach, which provide a framework of requirements for SHRM formulation, and we discuss them in relation to construction below:
* It recognizes the outside environment: this comprises a set of opportunities and threats to the organization that must be recognized and taken account by strategic decision-making process. They can include social, demographic and labour-market changes, legislation, economic conditions, technology, political forces, etc. All of these factors can impact on an organizations’ ability to recruit, develop and retain people who will take the organization forward.
* It recognizes competition and labour-market dynamic: these affect wage/benefits levels, unemployment rates and working conditions and define the necessary conditions that an organization must provide to remain competitive in the labour market. For example, a construction company may recognize a future national shortage of quantity surveyors and seek to address this potential shortage by reviewing its recruitment and training activities, perhaps by sponsoring students or actively recruiting targeted campaigns. Alternatively, it could retrain some of its other staff in surveying skills to offset the shortage.
* It has a long-range focus: a strategic focus implies that consideration is given to the long-range direction and objectives of the organization. This will depend on the management philosophy of the organization regarding where it wants to position itself.
* It has a decision making focus: this means that the organization consciously choose to direct and commit its human resources in a particular direction.
* It considers all stakeholders: a strategic approach demands that the organization take account of the views and interests of all stake-holders, internal and external.
* It is integrated with corporate strategy: perhaps the most important characteristic is that HR strategy should be integrated should be integrated with the firm’s overall corporate strategy. For example, if a construction company wants to build a reputation for quality rather than low cost, then it will need to begin changing the culture of its workplace. This may involve retraining staff, recruiting new staff whose will champion the new philosophy, putting new reward system in place, etc.
As according Mullins, 1999, to achieve the platform of SHRM must involve:
1. Designing an effective organization structure
An effective SHRM policy can only take place within an effectively designed organizational structure. This can be viewed at two levels:
* The overall operation of the organization in terms of how it manages and distributes work amongst various employee groups and functions in pursuance of the strategic goals.
* The design of the organization in terms of hierarchies, roles, and relationships.
2. Staffing the structure with suitable people
This staffing function is also known as employees resourcing’ and forms one of the most challenging aspects of the SHRM function. The major components of the employee resourcing are recruitment and selection, deployment and team formation, performance management, retention and training career development, dismissal and redundancy (Taylor, 1998). Employee resourcing activities aim to ensure that the right numbers of employees with the right skills and competencies are in the right place at the right time.
3. Managing the employment relationship
This is particularly the case in geographically dispersed project-based industries such as construction, where line managers have the responsibility for many of the day-to-day aspects of the SHRM function. Whilst formal employment contracts can define many aspects of the employee-employer relationship, they cannot delineate every aspect, and socially constructed expectations and obligations fill the gaps that are left. These less formal expectations are known as psychological contracts, which describe the beliefs of each party as to their mutual obligations within the employment relationship (Herriot, 1998).
Thus, let us that previews the successful construction organizations for its best practice in strategic human resource management as below:
1. BE & K of Birmingham, Alabama, chief executive officer has claimed that human resource professionals play an important role in the “strategic planning processes” of the construction industry. This is because human resource management helps managers to understand their employees and to thereby match the skills of those employees to the organization’s overall needs (Leonard, 1998).
2. Centex corporation, of Dallas, Texas, is yet another construction company that has attained a high level of success by making use of the concepts of human resources management. Centex’s success was due in part to the fact that Hirsch had “spread out his management power” (Palmeri, 1999). Secondly, motivates individual managers by increasing their organizational responsibility and by rewarding them for turning in larger profits. Netherless, Centex also initiate to retain high-performing executives who might otherwise go to other companies, or start their own companies (Palmeri, 1999).
3. TDI industries, a Dallas-based contractor, the organization has been rated as an excellent place for people to work as a result of its “ servant as leader” management philosophy. Ben Houston, the president of TDI, is said to be continually seeking new ways to train and empower TDI partner to make their work more fulfilling. (“The Top Newsmakers”, 2000).
4. Webcor Builder, San Mateo, California, The President of the company revealed that Andy Ball, had success largely due to the implementation of Human Resource Techniques. Ball urges hat places a great deal of emphasis on the importance of giving his employees effective training. Apparently, most of the employees have received training primarily in college. As a result, they are not yet prepared for the special challenges that they will face when they start to engage in construction work in the field. Thus, in training project managers, the company will “often have them go out in the field and work for a concrete crew doing surveying, form design and layout to gain an understanding of how things go together in the filed and see the problems the workers face on a daily basis” (Kopochinski, 2000).
5. Thompson-McCully, Asphalt, Michigan. Thompson drew out that he adopted his uncle Wilford McCully, former co-owner of the company management approach, “ aware of the value of good people”. Thompson also recognized the importance of findings ways to motivate his employees, for instance “challenges people to achieve more by giving them more responsibility” In addition to that, the organization also establishment of some scholarship funds, in return of loyalty- the employees received annual bonuses. (Krizan, 2000).
Human resources are essential to the construction industry. Through practicing the philosophies of strategic human resource management, it is possible to develop a high level of consistency between organizational and individual needs. The most successful leaders are those who possess a fine balance between company’s interests and employee’s welfare. Strategic HRM (SHRM) in terms of conventional contingency approach (linking HRM practices to strategy, as well as a resourced-based view of the firm that may leads to developing “organizational capability” as competitive advantages.
5. Human Resource Planning in SHRM in Construction
1. Human Resource Planning an overview
Review by the Simon SK Lam and Jon Schaubroeck, 1998, HR planning has been identified as an important means to develop a clearer focus of the function on the organization’s business and it is a critical aid in identifying the areas in which it must excel in order to be successful. These generally include setting up formal objectives, identifying appropriate organizational strategies and searching for any innovative HR application.
The primary objective of HR planning is to incorporate forecasts about the types and numbers of workers who will be needed to meet longer-term demands, taking into consideration various programs such as career development, executive training, external recruiting, succession planning, employee appraisal and retirement programs. Operational data enables HR planners to accurately predict the costs and feasibility of HR initiatives based on known parameters. This date can be employed within HR planning to ground forecasts and projects about demand and supply. For example, a shortfall or a surplus of a certain type of skill means little without knowing how that skill contributes to the resource conversion process, what it costs and whether other skills or technologies can be substituted in place of it. Another example is without HR planning an organization that adapts its strategy to cope with a changing environment may find that much of its workforce has obsolete skills due to of changing technologies and that an appropriate skill base can be attained only through hurried, expensive and risky training and recruitment programs. Thus the concept of strategic HR planning recognizes that those who are most knowledgeable about the organization’s workforce should themselves be employed optimally by building commitment to organizational strategy across different levels and functions of the organization. There are four essential HR planning objectives were identified as
‘Strategic impact and communication’, ‘control’, “co-ordination’ and ‘clear-objective’.
A formal process of HR planning may better focus and clarify the various functions of HRM in the organizations and avoid inconsistencies among various practices, even when their integration is not a priority. As firms move towards a strategic orientation in HRM, the need fro integration among various HR practices increases (Delery and Doty, 1996).
2. Human Resource Planning Process in Construction Project
Business Plan
Forecast of activity levels
Analysis of requirement:
Numbers, skills and behaviours
Supply forecast
Demand forecast
Forecast of future requirements
Action Planning: Recruitment, training, downsizing, increasing flexibility
Figure 2.3: Human Resource Planning Flow Chart adopted sources from Taylor, 1998
Any organization including construction based company whether main constructor, consultant or developer must analyses current and future markets and ensure that it the right number of people with the required skills to exploit them successfully. This is the essence of the human resource planning function. Assessing the available human resources and relating these to potential future market opportunities enables judgments to be made about resourcing requirements which will form the basis of recruitment and staffing-development plans. These must be closely aligned with wider corporate planning and budgeting.
The competitive tendering process, which creates uncertain workloads, coupled with cyclical nature of the construction market makes the HR planning process difficult. It does so by facing HR managers with the dilemma that laying off staff in response to a downturn may pose problems of recruitment when an upturn returns. It is for this reason that construction companies may decide to hold an apparently inefficient surplus of labour during recession periods. Human resource planning approaches used to mitigate some of these problems comprise four basic operations, which are outlined below.
2.5.2.1 Needs Analysis
The first step in human resource planning is needs analysis, which is the assessment of current and future business needs. This is achieved through the careful analysis of an organization’s future goals and the market for its product and services. This applies as much to projects as it does to normal business organizations. In particular, organization which are growing rapidly or operating within a very turbulent environment need to conduct frequent reviews of their human resource planning policies to avoid the possibility of labour or skills shortages restraining growth. In detail, the stages of needs analysis involve:
a. Identifying what jobs need to be done, now, and in the future.
b. Identifying the technology people will need to do these jobs effectively, and therefore the skills they will need.
c. Identifying the knowledge and qualifications required – qualifications will indicate knowledge levels and may be important to an organization’s profile.
d. Identifying personal requirements – types of personality that fit with the organization’s culture and ethos.
e. Identifying performance standards expected to assess individual suitability on the basis of past performance.
The strategic nature of the need analysis requires the involvement of senior managers.
2.5.2.2 The Evaluation Current Resources
The next step in human resource planning is to evaluate current human resources, in term of people’s skills, interests, abilities and experiences. When compared to the SHRM plans, this will identify skills ‘gaps’ that need filling and resource deficiencies that need addressing. However, the existence of deficiencies does not necessarily indicate the need for an external recruitment policy, since the necessary skills may be obtainable from existing human resources through retraining programs or structural changes to the business. An adaptable multi-skilled workforce is essential in enabling organizations to respond quickly to the highly dynamic reality of the modern business world. In this sense, the maintenance of an efficient database of existing employees is extremely important for an organization. Such as database should contain information about employees’ interests, experience, training and qualifications obtained before and during their period of employment.
This will also allow the development of the individual to monitor and action taken should they not be developing and contributing to the organization’s strategic objectives. For example, Telstra, Australia’s largest telecommunications organization, established such a database to monitor the organization’s implementation of strategic occupational health and safety plans. These plans contained stringent requirements for employees to undergo occupational safety and health training each year, and these could be tracked through a central database. Employees’ training was audited during routine occupational health and safety management audits, and managers who had not released employees fro training could be identified using the database.
2.5.2.3 Job Analysis and Design
The task of collecting information about existing human resources and the jobs they do and then analyzing how an organization can restructure itself to meet current and future business needs is called a job analysis. Job analysis should be seen as a process involving the following series of step:
1. Examine the complete organization and the fit of each person and job to future needs.
2. Identify deficiencies/misfits.
3. Redesign misfit jobs and people to better suit an organization’s future needs. This may involve modifying elements, duties and tasks associated with a particular position and retraining those who perform the tasks.
Data for job analysis is usually collected via questionnaires, interviews, observation and/or job dairies/logs. To enable the job analyst to develop an unbiased picture of a job its important to collect this information from variety of sources – operatives, supervisors, high and low performers, males and females, older and younger incumbents, etc. The emphasis should be on the identification of the inputs (i.e. the skills and competences required of the job-holder), the process (how they apply these skills and competences to the tasks at hand) and the outputs of these activities. (Particularly with regard to the value that they add to the organization)
(Armstrong, 1991)
2.5.2.4 The Analysis of Internal Availability
Before committing to external recruitment, an organization should check the current and future availability of internal staff. This involves analyzing the future movements of people in terms of promotions, transfers, retirements, terminations and resignations. Some changes are easier to predict than others, and in this sense these will always be some reactive element to an organization’s SHRM policy. However, every attempt should be made to predict these trends so that an organization does not suffer temporary periods of short staffing.
The human resource planning process will enable an organization to compare future needs with availability of the internal resources. Following these analyses, the organization will have ascertained its needs with regard to internal staff-development activities and external recruitment. It will also use the findings to help define its overall SHRM approach and to decide where to target its resources to ensure that it does not suffer from skills shortfalls.
2.5.2.5 Analyzing Employee Turnover and Throughout
Employee turnover should be analyzed for two reasons: to assess the numbers of employees likely to be replaced in the future and to be ascertain why people are leaving the organization so that action ca be taken to retain them. An appropriate level of annual staff turnover is deemed by man organizations to be around 8 per cent. This allows a sufficient influx of new people, who bring with them new ideas, innovative practices and energy, which in turn promote organizational development. Thus some degree of wastage is desirable. However, excessive wastage can be damaging to an organization in terms of replacement costs and the loss of knowledge to potential competitors. At project level such problems can just as acute. For example, Loosemore, 2000, showed how changes in project personnel during project result in the loss of knowledge about potential problems, which then grow into major crises. Furthermore, Chapman, 1999, identified the problems that changes in personnel could cause for the efficacy of the design process during a project. He noted that the amount of project information developed becomes so voluminous that it cannot be transferred in its entirety to an incoming team member. Moreover, it is important to note that much of the historical design and development of construction projects centers around responding to design issues and problems as they arise. Many of the steps and decisions taken during its development are not documented in a formal way, but are retained informally by the project participants. This informal knowledge is very important in running projects effectively, which means that the loss of core project members during a project can create major problems.
Most organizations calculate an annual turnover index by diving the number of people leaving over the year by the number employed over the same period and multiplying by 100. Whilst this percentage measure is simplistic, a range of other can deepen it analyses, which provide insights into the types of employee that are leaving.
(such as department, length of service, etc).Monitoring the predictors of turnover is also important in managing the performance of employees who may want to leave their job but who perceive the alternatives to be no better. In addition, human resource planning also demands that an assessment is made of the impact of promoting and moving people around the organization. The promotion of one employee to fill a position left vacant by someone leaving or a growth in the business can set off a chain reaction of promotion and transfers.
2.5.2.6 Preparing Job Descriptions and Specifications
Whether an organization decides to fill skills gaps internally from exiting employees or externally, job descriptions and specifications will need to be created and used as a basis for recruitment. A job description is an outline of the specific responsibilities and duties associated with a job, and a job specification is an outline of the educational experience and skills necessary to perform well on a job.
Whilst it is important that job descriptions and specifications are clear an unambiguous, the nature of construction activity is such that they should retain a degree of flexibility in order to cope with the fluctuating demands of the projects. People should be made aware of this when they take up employment, so that resistance to redeployment and retention is minimized. For example, reporting relationships may need to be left fairly fluid, as project-team composition may vary depending on the stage of development. Similarly, the duties attached to a particular post may have to be amended to suit particular project types and/or client demands. However, this type of change can be minimized by seeking long-term relationships with clients via partnering arrangement.
3. Human Resource Development in Construction Project
Human resource development represents the developmental side of the SHRM cycle, in improving career management and the performance of the individual. The rationale behind investing in HRD is that investing in people in the right ways will ensure that they continue to contribute to the direction in which the business wants to go. Falling to address HRD needs inevitably leads to the reopening of skills gaps, which the above processes have been designed to fill.
Despite the importance of HRD, there is evidence that it is under-utilized within the construction industry. For example, Hancock et al., 1996 found that, whilst large construction companies generally understood the concepts of HRD, only around half actually practiced it. HRD reflects the industry’s economic reliance on ‘hard’ systems approaches, or those commonly attributed to ‘personnel-management’ practices. In the light of the industry’s revival in the late 1997, Knutt made a series of recommendations to promote loyalty and motivation among construction employees, including extended training schemes, career-review systems and performance-management systems. Together these mechanisms can ensure that the organization meets it successions needs, and that it has people moving through the organization with the requisite skills and abilities to fill vacancies and drive the business forward.
2.5.3.1 Staff Training and Development
Education and training are the other important factors for organizational performance. I fact, training must be tied to the enterprise’s strategic business requirements and maintain the organization’s core competencies in every filed at every level. Opportunities for lifelong learning should be provided to all levels of employees which will promote organizational performance directly ( Chien, 2003).
Employee training and development should closely interact with staffing and performance activities. It is a vehicle for facilitating organizational and individual learning through training and development (Sisson and Storey, 2000). Systematic as well as ad-hoc development programs help to ensure that staffs have skills required for their current roles and can develop those required for future posts. It can also work as a motivating factor: significant training indicates commitment to people and the recipients are more likely to feel valued. A construction organization must consider training both to integrate employees into the organization and then to facilitate their development and retention.
Orientation programs- with increasing understanding of organizational culture, learning processes and the important role of knowledge within organizations, issues of orientation and staff development have been attracting considerable attention. It is now recognized that organizations have distinct cultures and that new employees must go through a process of orientation/socialization to avoid the inefficient effects of culture shock when they join a new organization. Within construction firms the process of orienting and inducting new employees is also important for health and safety reasons. Explaining how systems and procedures work in order to protect employees are key in ensuring that everyone working on a project complies with the health and safety ethos.
There is considerable evidence to indicate that those who go through an effective orientation or induction programs are considerably more effective than those that do not. However, in reality most organizations give new employees no more than a quick tour around the workplace, with cursory introductions to their co-workers. Certainly, at construction project level there is very little evidence of comprehensive orientation programs other than in the most innovative projects. Those orientation programs that exist are typically superficial and factual, being restricted to mandatory requirements which have been imposed upon the employer by legislation relating to health and safety, etc. Often they are delivered by union officials. Such programs completely miss the point of orientation, which is to acclimatize people to their new job environment, to an organization’s goals and objectives, to its culture and to the expectations associated with their roles. Essentially, orientation should be a process of socialization and acclimatization, which needs to occur gradually over a period of time, particularly in large organizations where there is much information to absorb.
The basic principles of a well-designed orientation programs:
1. It should involve a series of incremental stages, the first beginning with the most job-specific, relevant and immediate information and the latter with more general policies about the organization as a whole
2. It should occur at a pace with the employee is comfortable. Four sessions over twelve weeks is widely accepted as ideal.
3. The most significant aspect of orientation is the human side – giving new employees information about their supervisors and co-workers, telling them how long it should take to reach effective work standards, and encouraging them to seek help and advice when they need it.
4. New employees should be mentored by an experienced and accessible worker during the induction period.
5. Introductions to co-workers should be gradual. A superficial introduction on the first day is insufficient.
6. There should be a period of lower work commitment to allow people to get their feet on the ground.
7. Supervisors should continue orientation after the twelve-week formal process is complete. Channels of communication to the SHRM department should be kept open to prevent isolation.
8. There should be a follow-up after six months to collect feedback from the new recruit to identify and redress any problems.
The important of the follow-up cannot be overstated. If problems are dealt with early on there is far less likelihood that the employee will be lost due to misunderstandings or through being unable to conform to the organization’s procedures or processes. Follow –ups can also be used to establish the efficacy of the recruitment and selection procedures. If people are being recruited who find it difficult to integrate into the organization, then this suggests that there is something wrong with the recruitment criteria and /or selection mechanisms, which can then be amended accordingly. (Noe et al, 2000).
2.5.3.2 Training and Development Programs
If employee orientation involves getting the employee started in the right direction, personnel department is about keeping them there and ensuring that they contribute and add value to the business, the continuous development and training of staff is essential to maintaining a healthy, motivated and adaptable workforce. It is critical to ensure that people have skills that they need to perform their job and advance along their career path, Indeed, with the construct ion industry’s need to recruit from an ever-wider range of disciplines, fewer and fewer employees starting a new job will have the necessary skills to do their job effectively, which makes training a necessity from the very beginning of a new job, particularly for new or recent graduates.
Essentially, the object of the training is to alter permanently the behaviour of the organizational goals. It should provide opportunities for an employee to learn job-related skills, attitudes and knowledge. Since training is a form of learning, to be successful it is essential that employees are motivated to learn, are able to learnt behaviour encouraged and reinforced in the workplace. Arguably the most important purpose of training in the modern dynamic business environment is to bring about a learning culture. There are three different states of learning within an organization:
* Individuals learning things
* Organizational learning, where the organization collectively develops ways in which it can learn collectively;
* The learning organization, where the central organizational goal is systematic learning.
The learning organization is one in which this level of learning is embraced and a high level of dialogue exists, enabling employees to explore organizational issues freely in search of creative solutions to problems. Thus the concept of learning organization effectively questions the individualization of learning, and suggests that the social and systematic dimensions of learning are key in determining how organizations acquire, develop and deploy their skills ( Keep and Rainbird, 2000).
Unfortunately, Druker et al, 1996 found that most construction companies are far from learning organizations and there is no evidence to suggest that the same is not true for projects. The challenge of learning from project to project faces most construction firms, and one useful mechanism to capture and share experiences in projects is to conduct focus groups participants as part of a post-project review (or post mortem). The data collected can then be compiled and shared with other project teams within the company. Unfortunately, this is often difficult, since most projects do not end suddenly, but with a gradual dissipation of staff on to other projects. The end of a project is therefore difficult to define, and learning would involve extracting people from other projects for a day or so. However, all the evidence indicates that the inconvenience is worth it.
Drucker et al, 1996 also discovered that training was in decline within the construction industry and found little evidence of old training initiative being replaced with new ones. Indeed, many companies were closing down their management-development centres. They also argued that the severe skills shortages, which predictably emerge in every construction boom, were largely the result of growing self-employment. The small subcontractors, which employ over 85 per cent of the industry, are so highly geared that long term investments in training have been impossible in the traditional short-term boom-bust cycle of the construction industry.
Nevertheless, training is still a fundamental requirement for improving organizational performance and filling skills gaps. Much of this information will be available from the job-analysis process, and these skills gaps will identify the needs and the objectives of the programs in the short, medium and long term. They will also identify the type of training which specific employees will needs,
An important part of developing a training program is the decision of whether to use on-the-job or off-the-job training. In terms of avoiding the potential problems of persuading project managers to release people from a project, on-the-job training offers a significant advantage over off-the-job training and is used for more than 60 per cent of training provision in the construction industry. Probably the biggest advantage is that people are still available to deal with problems occurring in the workplace. However, the close proximity to work also has the potential to reduce training effectiveness significantly by distracting those who attend. Furthermore, remaining on site can make the training seem less attractive and important than a day away from the project environment. However, one unobtrusive and stimulating method of on-the-job training is job rotation or transfers, which involve employees swapping jobs or site for periods of time to give a range of skills and experiences. Job rotation is particularly useful for providing people with insights into interdependencies with working colleagues and for placing their own project in context. Another unobtrusive method is mentoring or coaching, where a supervisor is given formal responsibility to train an employee. If managed well, this is an effective means of learning, although it depends upon the quality of the mentor and their ability to impart knowledge and form personal relationships with individual members of staff. In this sense it is crucial that potential mentors are given the proper training, resources and time to carry out this task. Simply asking a busy project manager to mentor his or her staff on top of existing workloads will be unlikely to succeed. Finally, one method of on-the-job training which is now becoming more popular relies upon company intranets. This is an internal company or project internet site which can deliver programs which have been customized for a particular site or company. Intranets can facilitate multimedia delivery, virtual reality, and online discussion groups and can support interactive training software. Employees can complete training modules at their own pace, and progress can be monitored centrally.
In terms of off-the-job-training, the choice is lectures/ discussion groups run by training companies, distance learning programs, programmed learning or external mentoring/coaching. The most frequently used approach is for a trainer to give a lecture and involve the trainee in a discussion about the material to be learnt. Alternatively, one could organize a series of courses and arrange some kind of accreditation through a private accrediting body or university. Choosing a respected partner and capable delivered is critical to the effectiveness of this approach in term of knowledge, reputation, experience, track record and presentation technique. As for all training material, it is essential that the organization undertaking the training be closely involved in developing and scrutinizing the material to be delivered. It is essential that it is seen as relevant, useful and interesting to the people involved. Innovative delivery mechanisms should also be considered to facilitate the training process. Distance learning is set to expand dramatically over the next decade, with companies creating strategic alliances with educational institutions to form virtual universities where students can ‘pick’ and mix individual modules to suit own needs. Clearly, the main advantage of distance learning is its flexibility and opportunity to study without regular attendance at a remote educational establishment. ( Noe et al. 2000)
Training and development are two basic components of SHRD. Since training is a form of learning, to be successful it is essential that the employee is motivated to learn, is able to learn, is able to transfer their learning to the job, and has their learnt behaviour encouraged and reinforced in the workplace. Those country whose economies have performed well in recent years, such as Germany and Japan, have been those emphasize the importance of training. This is also reflected at industry level, where those industries which invest in training tend to perform better and have a more positive public image than those which do not. This subsequently influences the quality of new recruits to industry, which in turn perpetuates the problem, leading to skills shortages and deficient performance in terms of product quality and delivery efficiency. Indeed, concerns over the quality of recruits to the construction industry have been a major problem in recent years and this has led to a range of training initiatives. In essence, training represents the mechanism by which organizations invest in the intellectual capital of their workforce, and it lies at the very heart of achieving a vibrant, healthy, motivated, happy and efficient organizational culture.
A reason for the acceptance of training as a core component of SHRM relates to the incontrovertible link between key SHRM-related concepts and the need to impart the requisite skills, knowledge, attitudes and abilities to employees. For example, encouraging employees to work in a way which leads to better-quality products and therefore a more positive organizational image demands that they are trained and developed in a way which strives to achieve quality improvements. Another example, in construction the past two decades has seen countless changes and advancements in procurement practices, IT, construction technology, and legislative demands and, perhaps most importantly, client demands in the industry. Each change has brought with it a need for construction companies to adapt to new demands and ways of working that cannot be achieved through external recruitment of skills alone
( Holden, 1997).
Naoum, 2001 put forward a simple framework when discussing training in the context of construction, which comprises the five steps listed below:
* Define a training policy, which involves defining clear links between organizational objectives and training provision.
* Identify staff training needs, expressed in terms of both organizational and individual needs.
* Prepare a training program which is carefully planned sequence of training activities.
* Decide on methods for delivery, which could include formal or informal approaches to training, including courses, training videos, job rotation or special assignments.
* Evaluate to review whether the training provision had the desired impact on the performance of the organization.
6. Project Human Resource Management focus on HR Planning
(Organizational Planning) and HR Development (Team Development)
2.6.1 Application of HR Planning (Organizational Planning) in Construction Project.
Project Human Resource Management includes the processes required to make the most effective use of the people involved with the project. As defining the processes Organizational Planning (HR Planning) – identifying, documenting, and assigning project roles, responsibilities, and reporting relationship.
Table 2.2: shown the Overview of Organizational Planning (HR Planning)
A) Inputs B) Tools & Techniques C) Outputs
1. Project Interfaces 1.Templates 1. Role and responsibility
2. Staffing requirements 2. Human Resource Practices 2. Staffing management plan
3. Constraints 3. Stakeholders analysis 3. Organization chart
4. Supporting Detail
A) Inputs to organizational Planning (HR Planning)
1. Project Interfaces.
o Organizational interfaces-formal and informal reporting relationships among different organizational units. Organizational interfaces may be highly complex or very simple. For example, developing a complex telecommunications system may require coordinating numerous subcontractors over several years, while fixing a programming error in a system installed at a single site may require little more than notifying the user and the operations staff upon completion.
o Technical interfaces- formal and informal reporting relationships among different technical disciplines. Technical interfaces occur both within project phrases (e.g. the site design developed by the civil engineers must be compatible with the superstructure developed by the structural engineers) and between project phrases.
o Interpersonal interfaces – formal and informal reporting relationships among different individuals working on the project.
2. Staff requirements
o Staffing requirements define what kinds of competencies are required from what kind of individuals or groups and in what time frames. Staffing requirements are a subset of the overall resource requirements identified during resource planning.
3. Constraints
o Organizational structure of the performing organization- an organization whose basic structure is a strong matrix means a relatively stronger role for the project manager than one whose basic structure is weak matrix.
o Collective bargaining agreements – contractual agreements with union or others employee groups may require certain roles or reporting relationships
o Preferences of the project management team – if members of the project management team have had success with certain structures in the past, then they are likely to advocate similar structures in the future.
o Expected staff assignment – how the project is organized is often influenced by the competencies of specific individuals
2. Tools and techniques for Organizational Planning ( HR Planning)
1. Templates- Although each project is unique, most project will assemble another project to some extent. Using the role and responsibility definitions or reporting relationships of a similar project can help expedite the process of organizational planning.
2. Human resource practices – Many organizations have a variety of policies, guidelines, and procedures that can help the project team with various aspects of organizational planning. For example, an organization that views managers as “coaches” is likely to have documentation on how the role of “coach’ is to be performed.
3. Stakeholder analysis – The identification of the stakeholders and the needs of the various stakeholders should be analyzed to ensure that their needs will be fulfill.
3. Outputs from the Organizational Planning ( HR Planning)
1. Roles and responsibility – Project roles (who does what) and responsibilities (who decide what) must be assigned to appropriate project stakeholder. Roles and responsibilities may vary over time. Most roles and responsibilities will be assigned to stakeholders who are actively involved in the work of the project, such as the project manager, other members of the project team, and the individuals’ contributors.
2. Staffing management plan – The staffing management plan described when and how human resources will be brought onto and taken off of the project team. The staffing plan may be formal and informal, highly detailed or broad framed, based on the needs of the project. It is a subsidiary element of the overall project plan. Particular attention should be paid to how project team member (individuals and groups) will be releases when they are no longer needed on the project. Appropriate reassignment procedures may:
o Reduce costs by reducing or eliminating the tendency to “make work” to fill the time between this assignment and the text.
o Improve morale by reducing or eliminating uncertainty about future employment opportunities.
3. Organization chart- An organization chart is any graphic display of project reporting relationships. It may be formal and informal, highly detailed or broadly framed, based on the needs of the needs of the project. For example, an organizational breakdown structure (OBS) is a specific type of organization chart shows which organizational units are responsible for which work packages.
4. Supporting detail – Supporting detail for organizational planning varies by application area and project size. Information frequently supplied as supporting detail includes,
o Job descriptions- written outlines by job title of the competencies, responsibilities, authority, physical environment, and other characteristics involved in performing a given job. Also called position descriptions.
o Training needs- If the staff to be assigned is not expected to have the competencies needed by the project, those competencies will need to be developed as part of the project.
2. Application of HR Development (Team Development) in Construction Project.
Team development includes both enhancing the ability of stakeholders to contribute as individuals as well as enhancing the ability of the team to function as a team, Individual development (managerial and technical) is the foundation necessary to develop the team. Development as a team is critical to the project’s ability to meet its objectives.
Table 2.3: The Overview of Team Development (HR Development)
A) Inputs B) Tools & Techniques C) Outputs
1. Project staff 1. Team-building activities 1. Performance improvements
2. Project plan 2. General management skills 2. Input to performance appraisals.
3. Staffing management plan 3. Reward and recognition systems
4. Performance reports 4. Collocation
5. External feedback 5. Training
A) Inputs to Team Development (HR Development)
1. Project Staff- The staff assignment implicitly define the individual competencies and team competencies available upon which to build.
2. Project plan- Project plan describes the technical context within the team operates.
3. Performance reports-performance reports provide feedback to the project team about performance against the project plan.
4. External feedback- The project team must periodically measure itself against the expectations of those outside the project.
B) Tools and Techniques for the Team Development (HR Development)
1. Team building activities- team building activities include management and individual actions taken specifically and primary to improve team performance. Many actions-such as involving non management-level team members in the planning process, or establishing ground rules for surfacing and dealing with conflict-may enhance team performance as a secondary effect. Team –building activities can vary from a five-minutes agenda item in regular status review meeting to an extended, off-site, professionally facilitated experience designed to improve interpersonal relationships among key stakeholders.
2. General management skills – General management skills are particular importance to team development.
3. Reward and recognition systems- Reward and recognition systems are formal management actions that promote or reinforce desired behaviour. To be effective, such systems must make link between project performance and reward clear, explicit, and achievable. For example, the willingness to work overtime to meet an aggressive schedule objective should be rewarded or recognized, needing to work overtime as the schedule objective should be rewarded or recognized; needing to work overtime as the result of poor planning should not be. Developing an appropriate team mechanism in a culture that prizes individualism may be very difficult.
4. Collocation involves placing of most active teams members in the same physical location to enhance their ability to perform as a team. On some projects, collocation may not be an option; where it is viable, an alternative may be scheduling frequent face-to-face meetings to encourage interaction.
5. Training includes all activities designed to enhance the competencies of the project teams. Training may be formal or informal, on-the-job or off-the-job training. This part had being discuss very clearly on the review of HR Development.
C) Outputs from Team Development (HR Development)
1. Performance improvement -Team performance improvements can come from many sources and can affect many areas of project performance; for example:
* Improvements in individual skills may allow a specific person to perform assigned activities more effectively.
* Improvements in team behaviours ( eg. Surfacing and dealing with conflict) may allow project team members to devote a greater percentage of their efforts to technical activities.
* Improvements in either individual or team competencies may facilitate identifying and developing better ways of doing project work.
2. Input to performance appraisals- project staff should generally provide input to the appraisals of any project staff members with whom they interact in a significant way. (PMBOK Guide, 2000)
7. Project Team Performance Improvement to achieve Organizational performance
Performance is one of the key terms of modern organization. “Performance” from a process view, performance means the transformation of inputs into outputs for achieving certain outcomes. Project informs about the relation between minimal and effective cost, between effective cost and realized output (efficiency) and between output and achieved outcome (effectiveness).of a certain project activities. Project deliveries may be in term of on time, cost effectiveness and quality standard achievement. Apparently, it indicates the possible minimizing in human error, conflict, motivation issue, high resignation rate, inefficient interfaces channel, slow decision making process, unfair compensation, low team working cohesiveness, possible delay. Organizational performance may be in tem of having low staff turnover rate, low cost in operation, competent and motivated workforce, efficient interfaces between employees, high staff commitment and motivation, organization effort in life long attachment and learning with staff, captivate repetitive business and etc. (Min-Huei Chien, 2003)
2.8 Impact of Project HR Planning and Development in Performance
a) Technical Performance- To measure what extend the technical requirements specified at the commencement of the execution phase was achieved. For example: human error, low skills level and possible delay.
b) Technical innovativeness- The success in identifying technical problems during the project and solving them. For instance: improve ability in critical thinking and problem solving ability.
c) Efficiency of project execution- The degree to which targets of time and cost were met. For example: the achievement in target time, cost and quality standard.
d) Team performance and interfaces- The aspects in term of overall team result or outcome in fulfilling the project desirable deliveries. The effect of good team performance and interfaces may include reducing risk in conflict, improve decision making process, and increase motivation level and team cohesiveness.
e) Efficiency of project execution- The degree to which targets of time and cost were met. For example: the project is deems to be achieving target time, cost, and quality.
f) Managerial and organizational competencies- The level in adaptation of corporate culture or value in project team motivation and long term attachment with the company.
g) Personal growth- The satisfaction of the project team, particularly in terms of challenge and professional development.
h) Business performance- The commercial performance for business activities with the capabilities in getting repetitive business, control the operation low and having a low staff turnover rate.
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