Human resource management is one of the most dynamic fields in the management of the organizational assets (Davenport, 2002). Managers continuously face the ever changing business environment that is caused by the increasingly changing business climate, increased change and use of technology, changes employment legislation as well as changes in workforce composition changes (Davenport, 2002; Halal, 1996). The developments in the recent years have seen quite a number of organizations, both public and private increase in number hence the need to change in every aspect of human resource management initiative to gain the necessary competitive advantage since as many observes, human resource is the most priced asset in any organization (Davenport, 2002). The desire to change towards a more knowledge-based approach to the human resource management prompted many human resource scholars to emphasize the need for new strategic human resource management approaches that would come with new perspectives as well as critical analysis of the theoretical models of human resource management.
However, it is one of the organizational assets that many have observed to be facing crisis in terms of loss of trust and legitimacy in the perspective of the stakeholders and general observers (Iivonen, 1999; Kochan, 2004). Several attempts in the last two decades to alter the nature of the human resource management from a mere personnel management to a more strategic approach popularly referred to as strategic human resource management has yielded little in terms of withstanding the challenges at the work environment, against many observers expectations. This paper will describe the origin of failure and trust that has currently engulfed many organizations, what roles have not been played and by whom? What is needed to restore the culture of trust as well as what will be the next kind of generation of employees look like.
The Journey: From Personnel to Strategic Human Resource Management
The foundation of trust in human resource has a long history related to several sources. Some of the sources are identified to include conflict management, which is linked to the inherent tension and conflict at work and employment places, increased labor specialization as a result of mercurial growth in scale of organizations, and the adoption of scientific approach to people management by many organizations (Lane, 1998). Other sources are the desire to build ‘empire organizations’ linked to strong human relations among the specialists in a field which created the need to establish laws governing employment (Shaw, 1997; Lane, 1998; Iivonen, 1999).
The above description characterized the then known personnel management, with the history of challenges- history that extrapolated the prevailing belief as well as attitude that were rampant in the society about employers’ failure to respond appropriately to the employees’ needs (Shaw, 1997). The employees demand for a better working conditions in relation to response to issues such as health and safety, better remuneration as well as better employment policies championed by the emerging trade unions (Polanyi, 1958; Shaw, 1997; Nonaka & Konno, 1998). For instance, in 1840s the increased industrialization in North America and some European nations came with some absurd codes of conduct imposed by employers (the factory owners) with increased coercion of workers (Mathias, 1969 cited in Bratton & Gold, 2001). This subsequently increased the activities of common humanity and political pressure groups combined efforts to make workers aware of their rights and the employers to know better ways of improving workers productivity other that coercion and sanctions (Bratton & Gold, 2001). These groups intended to build the relationship of trust in their work places in an evidently fragile environment, with opposing forces from the industry owners who felt this threatened their position as employers as well as ‘lords’ of workers (Bratton & Gold, 2001).
The subsequent changes would occur after the World War I & II where many organizations began to bulge to pressure about employees’ welfare (Shaw, 1997; Bratton & Gold, 2001). Kochan (2004) attributes this the works of academicians and other stakeholders who strengthened personnel management as a profession. In lieu of this most of the scholarships and professional ventures in human resource management in the United States and elsewhere shifted most of their HRM approaches in strategic attempts to transform the human resource activities from the more administrative personnel management approach to the strategic human resource management approach (Kochan, 2003). For example, the highly respected professional association in the United Sates, the American Society for Personnel Administration (ASPA) had its name changed to the Society for Human Resource Management (SHRM) hence symbolizing a deeper focus and role in transforming of human resource management (Kochan, 2004). In this aspect, the largest professional association in the US had seen the need to change their focus towards building an identity as an organization that focused its activities towards achieving greater heights in harmonizing the needed support to help firms change to a more balanced act of accomplishing their interests as well as the interests of the employees to enable them achieve the desired competitive advantage (Kochan, 2004). The change also reflected a more advanced shift in the professional identity as well as human resource managers and professionals’ roles in defining organizations’ policies in line with interests and goals as outlined in their long term strategic plans (Kochan, 2004). To Doyle (1993, cited in Kochan, 2004), the development of human resource meant that the professionals in this field were changing to what he referred to as ‘perfect agents’ of top management in building organizations with higher degree of competitiveness that never was.
In fact, the changes in the public policy in America marked a very important phase in the development of human resource management. There was the emergence of a new collective and individual power of the human resource management within the work organizations, a reflection of how the human resource professionals increased in number and status, with the new authority and power to provide professional advice to the top executives of firms (Huotari & Livonen, 2004).
In a nutshell, the evolution from personnel management to strategic human resource management has taken place within the context of change. This kind of evolution is attributed to the significant influence from the pressure of public policy, rise in the pressure workplace trade unions and bargaining power, and the desire to change in order to give the stakeholders the shared value of revenue increase as well as completive advantage. But did this trust and belief stay in the workplace? Huotari & Iivonen (2004) observes that the result has been disappointing especially where the executives failed to link the performance with the ability of the staff, only focusing on the corporate strategy. In fact a research that was carried out at the Strategos Institute by the Gary Hamel’s International Consulting Company showed that just a handful of companies were actually able to provide the a sustained high return to their share holders in the last decade (Huotari & Iivonen, 2004). This research presented a very worrying trend that only 4 companies in the United States were able to provide their shareholders with constant return profits for seven consecutive years and that not even 20 companies could do this in five years in a raw (Huotari & Iivonen, 2004).
Why do majority of these organizations finding it difficult to constantly deliver sustained growth? Is there anything lacking? Logically, there are numerous reasons why a firm may not be in a position to deliver results to the expectations of the shareholders and observers. Stewart (2001) states that the most obvious reasons why firms do not continuously perform is because they lack the needed efficiency and effectiveness in creating and defining customer value, which subsequently define the shareholder value. Bratton & Gold (2001) expand on this pint that the idea that a firm’s success comes from selling idea is not new, but unfortunately many firms find it extremely difficult to define a unique strategic position that encompasses all the line management from human resource to maintenance in an ever changing competitive arena. In fact many of the professionals in the field of human resource can’t be trusted anymore with responsibility of steering the social contract between the firms and its employees (Bratton & Gold, 2001; Lane, 1998). This is because most of these professionals no longer have the courage and ability to present any significant challenge to the executives, in addition to lacking the much needed independently focused perspectives to change the policy and functionality of their respective firms (Kochan, 2004). Meisinger (2002) observes that the “invisible role of human resource management” is the cause of many organizational failures and that in the recent past the scandals that have engulfed the corporate is directly associated with human resource managements’ failure to execute their duties appropriately (p.1).
What are the activities of Human Resource Management activities that constitute its roles? Before we know what kind of activities human resource managers carry out, it is important to understand the meaning of human resource management. According to Bratton & Gold (2001), “human resource management is a body of knowledge and a set of practices that define the nature of work and regulate the employment relationships” (P.14). In this line he goes further to highlight some of the functional activities of human resource as follows:
- Staffing activities: they carry out the process of obtaining the right people with the right skills, abilities, knowledge as well as experience to occupy the jobs within their respective organizations (Bratton & Gold, 2001). Other pertinent practices such as human resource planning, carrying out job analysis, guiding the recruitment and selection process are the responsibilities of the human resource;
- Rewards guidance: they carry out the designing and administration of reward schemes where the practices entail the evaluation of jobs, appraisal of performance as well as benefits;
- Development of employees: they do regular analysis of the training requirements so as to ensure the employees get the knowledge and skills required to fit them in the organizations in order to perform the necessary responsibility and duty adequately as well as help them advance in the organizational ranks;
- Employee maintenance: human resource is in charge of the administration as well as monitoring the safety of workplace, health together with the welfare policies in order to retain the organization’s competent workforce and comply with statutory standards and regulations;
- Employee relations: this involves the responsibility of creating a range of employee involvement or participation in programs that boost the relationships in workplace (Bratton & Gold, 2001). In environment where union is present or in larger organizations, they also negotiate between the management and union representatives over the decisions that affect the employment contract (Bratton & Gold, 2001).
Even though it is apparent that these activities may differ from one organization to another, the latter role is very distinct that many observers believe is the source of failure of many human resource departments in organizations. In fact MacMorrow (2001) observes that the failure by the human resource to manage the salaries and remuneration of to executives show how much they are incapacitated in their duties to manage employment contracts and the harmonization of compensation strategies. However, a survey data indicate that there was a sharp increase in the top executives’ salaries and wages between the year 1970s to 1990s (ration of 40:1 to 400:1 respectively), thus extremely widening a gap between these CEOs and the average employees (Kochan, 2004). Eichinger & Ulrich (1996) conducted a survey on the human professionals, where they were asked to state what they considered to be a priority. The report revealed that the human resource professionals valued most what concerned their departments as a unit in the organization or what concerned the organization as a whole and the employee concern only came a distant seventh (Eichinger & Ulrich, 1996).
This is despite the fact that many studies have revealed that trusts is what builds the organization’s competencies, i.e. companies that practice high level of trust have a higher possibility of getting a “performance multiplier” that can change the entire level of competency in areas such as strength of the group employees, individual skills and asset (Iivonen, 1999; Meisinger, 2002). In fact there are a number researches that have shown that trust can specifically raise the level value that employees place on their jobs, speed up growth of an organization and, increases innovation capacity of individual employees and groups, increases the level of collaboration between the employees and their senior executives, developing and strengthening of partnership, accelerates execution of duties and increases loyalty scale (Iivonen, 1999; Business Week, 1999). On the other hand lack of trust in an organization has been found to withdraw all the feeling of competency among the employees and subsequently leading to low productivity (Iivonen, 1999). According to a survey by Yates-Mercer & Bawden (2002), it was revealed that only 46% of the staff who are not engaged trusts their organization’s executives while those engaged represented a whooping 96% of trust on their top executives. In another rejoinder, Business Week reported a national survey in 1999 which revealed that 75% of Americans believed that the economic benefits that were realized as a result of the dot.com boom never got to every American pocket in equal measure and only slightly over 30% acknowledged that they had felt the change in terms of their income, while only a half believed the boom had improved their living standards (Business Week, 1999). Boston Globe (2003) also reported a uniform trend that only 2 out of 5 workers expressed satisfaction with the wages, healthcare insurance, as well as pension, living the other three expressing deep dissatisfaction and lack of trusts on the authorities involved. It is also interesting to note that studies have shown that human resource managers use 20% of their working time to solve conflicts in the organization, as this is part of their responsibilities. But do they do this?
These studies actually reveal into a greater detail the gap between the current workforce and their executives, attributed to the failure of the ‘mediator’ turn ‘executive’, Human Resource management in leading their traditional role of building the trust between the workforce at all levels of organizational level. The divergent priorities set by the human resource professional in their respective organizations have not taken into consideration the needs of other workforce other than themselves and the top executives, whose wages are evidently not so proportionate to the organizations’ level of performance as compared to other workforce. In fact I would categorically state that human resource managers have taken the role of factories owners in the 19th century in a more soft approach to dictatorship.
Kochan (2004) says, for the human resource professionals to restructure the much needed trust, thy should do this by focusing more on external issues rather than the current internal issues as this is what will bring the stakeholders and the workforce together. He further states that people should never forget the role that the strategic human resource has played in laying the foundations of the line organizational performance thus the need to build the profession from this base (Kochan, 2004).
Rising to the Challenge: What Can Be Done?
Organizations in the 21st Century have been faced with new paradigm in the name of human resource management (HRM) strategy. The center of activities relies in the hypothesis that human resource practices should be designed to lead to a set of HRM outcome of high quality and flexible employees who are able to rise to any form of challenge once committed. In fact Huselid & Becker (2001) see high employee commitment as a vital human resource management outcome, concerned with the principle goal of building the employees to the organization and obtaining behavior outcomes increased effort, corporation, trust, involvement, and organizational citizenship. As Buckman (2004) says “Technology is the easy part, it’s culture change that’s hard”. According to Buckman (2004) high-quality employees means issues of workplace learning as well as the need for an organization to have a capable, qualified, and skillful workforce to produce high quality services and products. In this perspective, flexibility is to ensure that the employees or the workforce are receptive to innovations as well as change. As Atkinson (1984, cited in Stewart, 2001) puts it, have functional flexibility. According to Guest, as cited in Scott (2000), human resource management policies are basically concerned with more than ‘good’ selection or training: ‘they are intended to achieve the human resource management policy goals’. In simple terms human resource management should differ with orthodox personnel management practices in that they aim to engender commitment in the employment relationship hence the culture of trusts building.
But where can we start to rebuild this culture? Considering the fact that the generation of knowledge-based society in the 21st century is basically characterized by the process of knowledge generation as the basic source of wealth and social well-being (Huotari & Livonen, 2004). This will lead us to the concept of the role of our institutions in building this culture of trust.
Building Knowledge-Based Organizations
It is universally accepted among the human resource professionals that the best way to rebuild trust as well as seal the presently wide gap between interests of employees and the organizations is to direct all the focus towards organizational value generation to the stakeholders of the organization (Huotari & Livonen, 2004). Kochan (2004) says that this can be perfectly done through building of the employees’ knowledge and skills. In fact, he says that this is the defining moment for both the present and future human resource professionals to change from the rhetorical ‘knowledge economy’ in order to get the benefits that can be reaped from the economy as well as the society for the firm and the employees (Kochan, 2004).
Practically, the need to build knowledge-based institutions has subsequently heightened the interest in knowledge management concepts as well as the more technical knowledge capital or as some would refer to it, intellectual capital (Huotari & Livonen, 2004). There are numerous proposals that knowledge management and knowledge capital are in principle complementary issues, hence the need to put them in a more diverse arena of knowledge capital management (e.g (Boisot, 1998; Bratton & Gold, 2001; Huotari & Livonen, 2004). The organizational knowledge (intellectual) capital is that which can transform the raw material that can either be tangible or intangible into a usable product (Boisot, 1998). This knowledge capital can be subdivided into three: human capital (employees’ talent); structural capital (intellectual property, methodologies, software, documents, and any other knowledge artifacts); and customer capital (customer or client relationship) (Stewart, 2001). MacMorrow (20001) states, when an organization tries to integrate these organizational knowledge, it is in actual sense trying to transform human capital into structural capital. Huotari & Livonen (2004) further adds that social capital is likely to create impact on the intellectual capital generation when the resources increase.
Buckman (2004) says that the key to successful management of the human asset to help the organization prosper is through ensuring that the employees get the necessary knowledge that would enable them invent through creative contributions to the organizational process. How can the human resource management do this without risking the pressure of unsustainable cost of training that would increase overhead costs to maintain competitive advantage? Kochan (2004) advises that the best way to effectively do this is to ensure that organizations build a mutual relationship with external stakeholders in the human resource profession in order to help develop necessary and sustainable skill base. That is to say, human resource managements to develop collective external connections with institutions to enable them identify capable graduates who would be in a position to contribute effectively through their creative innovations (Kochan, 2004). This will also help in identifying the future generational leaders as outlined by their priorities (Halal, 1996).
To ensure this strategy works it would need a strong foundation for this group of future workforce right from their elementary level of schooling; emphasizing the strong scientific and technology oriented courses (Kochan, 2004). Unfortunately, there has been unprecedented reduction in the number of students who are willing to join these particular fields. Nonaka & Konno (1998) say that the best way to change this trend is to ensure that it becomes the priority of all stakeholders and that this opportunity should be used to expand the knowledge base and skills rather than the areas of specialties. This is to say the stakeholders should take it upon themselves to ensure these graduates not only come outside the institutions with only technical know-how but with the soft skills such as communication skills, hence boosting their negotiation as well as conflict management skills not only in their workplace but the society as a whole (Nonaka & Konno, 1998). Kochan (2004) sums it all, “everyone in the next generation work force should have both solid grounding in science, math, and technology and be skilled in the communicating their ideas, working effectively in and leading diverse, cross disciplinary teams, and negotiating differences and resolving conflicts at work and in society” (p.132). It is thus the responsibility of the human resource to ensure they enlighten the institutions where the knowledge gap exists and help these particularly institutions restructure their curriculum in line with the current and future workforce needs (p.134).
I the process of rebuilding the curriculum and supporting the learning institutions, the usefulness of the relevant firms will not diminish as they will remain the long time focus of these trained graduates and they will be required to offer opportunities for more training for more human capital development (Kochan, 2004).
Beyond Workplace Performance: Dual Agendas
In the modern knowledge-based workplace, it has become apparent that both knowledge and information is in line with the organizational knowing and its management instead of the more popular knowledge management (Huselid & Becker, 2001; Davenport, 2002). This is largely due to its expanded social nature and diversity (Davenport, 2002). In fact the process of being aware of an individual person implies that the person is known as a whole, that is, the emotions of a person, his or her cognitive as well as physical ability (Grant, 1996; Davenport, 2002). Davenport (2002) states, in this era of transformation in workforce, knowledge management will mainly focus on knowledge as a process and not as a thing. Boisot (1998) presents a more explicit explanation of knowledge when he says that it is a social learning circle that is composed of social different levels of transformation from an internal (personal) knowledge “through to proprietary knowledge to public knowledge and common sense” (p. 139).
In most sections of the literature about knowledge management, it is commonly acknowledged that knowledge is associated to the individual’s personal life i.e. the persons are recognized as individuals who live their normal lives and require and need full conformability in order to be more productive. However Halal (1996) observes that it is this particular aspect of knowledge management that has become very difficult for the human resource professionals to manage and has literally generated a lot of controversy among the scholars. In this aspect, knowledge management requires that other than the traditional workplace performance, it is always relevant and necessary for the organizations to consider the performance of their employees at the level of personal life up to family. Halal (1996) claims that the idea of intellectual and knowledge capital is in essence to capitalize on the social as well as behavioral factors in order to get appropriate output required for success. Bailyn & Fletcher (2003, cited in Kochan, 2004) go further to argue that the current work system should meet the dual agenda of high performance level at the place of work, and at the same time strive to meet their personal needs and that of family. Kochan (2004) says that to successfully accomplish these two agendas, the human resource practitioners have to involve wide range of stakeholders in and outside the field.
Lack of trust was explicitly exposed in a study conducted Women’s Bar Association of Massachusetts where a whooping 90% of Boston Law firms had at least a policy statements allowing young lawyers reduce their working hours or even work as part time (Boston Globe, 2003). However, a mere 4% had taken this available option as majority feared they would be branded less committed hence damaging their career (Boston Globe, 2003). In this aspect, it is important to develop the level of sharing thoughts together in matters of career to restore trust culture. The only way to accomplish this noble course is to ensure the employees and supervisors are part and parcel of the efforts to re-engineer the work environment. For this is the only way which the process of rebuilding trust can begin, hence eliminating the current trend where American firms do not respect the role of family in an individual capabilities (Nonaka & Konno, 1998).
In the increased literature on the on the human resource management, it is easy to notice there are quite a number of information about the human resource agenda. Mabey et al (1998, cited in Bratton & Gold, 2001) divides the agendas of human resource into four themes:
- the significance given to the economic and social context in ‘shaping and reshaping’ the field of human resource;
- focus on the link between human resource management discourse to examine the associated ideas that concerns knowledge as well as learning at work place
- attention on the structural relationships and the structural organizational forms; and
- human resource theme’s role of examining the related ideas that concerns knowledge and learning at workplace
While it is easy to accept that human resource model has a more proactive approach in defining the labor management (Bratton & Gold, 2001; Scott, 2000) the envisioned human resource management specialists have not lived up to their standards of expectations in relations to being the architects and intellectual partner on the management team. In fact it is evident that human has not followed one uniform path since the desire to pursue success as well as excellence has in essence produced leaner and ‘streamlined’ structural organizations that others may justly refer to as ‘flatter’ structure. Bratton & Gold (2001) say that the problem is that void philosophy of re-engineering provides arguments for those advocating the elimination of human resource management as a specialized function. Richard Schonberger once argued that human resource management is irrelevant when he said: “the fat is non-productive staff, which not only is expensive but actually is an obstacle to fast response and the pursuit of actions done for the good of the whole organization” (Bratton & Gold, 2001, p.6). In fact, I would specify concur with Schonberger that they lack the knack to pursue the entire interest of all stakeholders.
I would therefore recommend that the better way for the human resource personnel to restore trust within the work environment is to start their activities of restructuring and re-engineering the whole organization from the top hierarchy of the organization, as that is the only way they will convince the entire stakeholders that there is a developing culture of trust and respect downstream to the lower rank of the organizational structure. Despite the fact that theories have been drawn to explain the recommended ‘best’ practices that is in contrast to the traditional personnel management, the whole process still needs a coherent structure with a holistic view of knowledge development in the context of organization and society as a whole. Moreover, it is the responsibility of the human resource professionals to identify and maintain the process of knowledge acquisition that will foster information sharing, promoted by the good working relationships. This can only be found in an environment where trust has been taken as a legitimate means of acquiring knowledge and information sharing. As Yates-Mercer & Bawden (2002) aptly put it, “trust will allow us to communicate the outcomes of the processes as intangible assets whose value is difficult to estimate in the traditional economic, financial and quantitative terms. It must therefore be noted that the value of trust can may promote of deter the processes of growth.
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