A concise introduction

by Richard Pettinger

Chapter 9

Human resource management (HRM) exists at a strategic and operational levels in order to structure and integrate the staff effort with company or organisation objectives, and to ensure that:
  • they are properly selected and trained for work
  • they are properly rewarded
  • the collective and individual conduct behaviour and performance are kept up to standards
  • the systems and procedures are structured and managed
  • the place of work is healthy and safe

You need to know what the organisational perspectives are, and whether these are based fundamentally on consensus, cooperation, conformity or conflict. This assessment gives the full basis on which HRM is to be conducted. If it based on consensus and participation, overtly so much the better, though this does bring with it a total responsibility for creating the conditions in which consensus and participation are possible and sought by the staff. If it is based on conflict, then you have to have effective and comprehensive systems and procedures in place to structure and manage the problems and issues and patterns of behaviour that are certain to arise.

The whole of hr is bounded by employment law and some very key principles. The areas of recruitment and selection, training and development, health and safety, pay and rewards, employee relations, are all bounded by both law and also principles which state the absolute standards to which you have to conduct behave and perform, in terms of:
  • equality and fairness of treatment
  • diversity and recognising and respecting people’s differences
  • fairness and reasonableness
  • staff collective and individual representation
  • natural justice
  • transparency.
There are minimum standards for wages, disciplinary and grievance procedures and health and safety practice. There are also sanctions for allowing, encouraging and participating in bullying, victimization, harassment discrimination, vandalism, violence and theft.  Failure to follow and adhere to these minimum standards means that the company and its managers are normally found to be at fault, and there are statutory and discretionary remedies which are applied by courts and by employment tribunals.

Additional readings

You should read extensively around the subject of leadership. Especially, you need to make sure that you read the biographies or autobiographies of leaders, for example:
  • R Branson (2007) Losing My Virginity – Virgin Publishing
  • A Morita (1999) Made in Japan – The Sony Story HarperCollins
Reading anything and everything in this genre will give insights; and so do always consider anything that reflects your tastes and interests. Most industrial and commercial sectors have their own iconic figures, and so do (if this is where your interests lie) look at for example:
  • D Bannatyne (2007) Anyone Can Do It – Pan
  • L Lourenco (2007) Jose Mourinho – Made in Portugal - HarperCollins
  • B Wyman (2002) A Stone Alone – HarperCollins
There are also excellent works by many others. In particular you are recommended to become familiar with the works of Jonathan (Jo) Owen, the founder of TeachFirst and a major authority on leadership and management in action. See for example:
  • J Owen (2011) Hard Edged Management – Pearson
Whatever you choose, you are looking for insights into how they pursue their goals and aspirations, what has made them successful, how they learn from their successes and failures, how they approach other people, and how they identify and overcome the obstacles in their pathways.

Case studies and examples

Promotion - or not?

Adrian Brownson had been a successful sales person for many years for the Servis company, which manufactured and sold kitchen appliances and white goods. For the past three periods he had produced the company's top sales figures; and this had included gaining major orders from catalogue companies and online retailers. Adrian was well liked and respected by his colleagues; and the company considered him to be management material.

In fact his own manager had already recommended him for promotion. On that occasion, together with other sales staff, Adrian had been interviewed; and he was offered a management job in another area.

Adrian stated quite clearly that he wanted to move to management; however, for personal reasons he did not want to uproot his family. Also, the removal expenses that the company were prepared to pay would not have covered the cost of this particular move, since he would be required to relocate to a more expensive part of the country. He therefore turned down the opportunity and the move.

After some months, another opportunity for promotion came up, again in another area. Adrian was again invited to apply for the position.

On the one hand this is a common enough dilemma faced by many people; on the other, many might say that if you either aspire to a leadership position, or want to make any progress, then removal expenses and uprooting families are a part of the package. It illustrates some of the complexities that are always present, and you should assess in detail what complexities are.

Royston Construction Ltd

Royston Construction Ltd is a large building company specialising in claddings and exterior fixtures and finishings for commercial premises and office blocks.

The company was founded sixty years ago by Charles Royston; and it grew quickly, gaining a very strong reputation for quality work, delivered on time and within budget. Royston was one of the very few construction companies to weather the various building industry recessions without layoffs.

Mr Royston retired nine years ago at the age of eighty. He handed the company on to his niece, Maria Strong. Four other members of the family continued to be involved in various capacities. Maria was thirty four; and she set about changing one or two important things, while being determined never to compromise her uncle's main principles of quality and deadlines.

Until he retired, Mr Royston kept a schedule of contracts on his office walls; and he used this to follow the progress of everything that was going on. Maria now thought that proper planning, including network schedules and analyses, were now required, and she determined to introduce them. Other things that she wanted to do included speeding up response times to general requests for meetings; streamlining the tendering process; and moving towards a position of being a preferred contractor for more clients and main contractors. She also sought to provide a single and fully compatible management, information and design system for the whole company.

The whole process took longer than anticipated; and was not completed until early last year. Revenues and work volumes remained high, however, and turnover continued to grow. In particular she had found it hard to convince other members of the family involved of the reasons for what she was doing; though Charles supported her unconditionally.

The questions that anyone in this position have to address are:
  • how to make the transition from one very strong, dominant and influential leader to another;
  • how to support the new person into the position;
  • how to develop the authority and credibility and position of the new person;
  • how to build on the strengths of what has happened in the past, while at the same time allowing the new person to take things on as they see fit.
These questions do not just apply to a company such as Royston above: they will be asked for example when Michael O’Leary leaves Ryanair, Richard Branson leaves Virgin and Alex Ferguson leaves Manchester United. These questions have proved very difficult for easyJet – in spite of the growth of the company to the position where it is now the largest UK based or owned airline, there are continuing disputes between the present management of the company, and the airline’s founder, Stelios Hadjouannou. These questions have to addressed directly and immediately in the case of Innocent Smoothies (see below).

Innocent Smoothies

In February 2013, Coca-Cola announced that they were to take complete control of Innocent Drinks after the smoothie company’s three founders agreed to sell almost all their remaining shares to the American drinks giant. The deal will see Richard Reed, Adam Balon and Jon Wright step away from day-to-day involvement with the company they founded in 1999. 
In particular, Mr Reed had previously said he would have to be “dragged out kicking and screaming” from Innocent (Other OTC: INCT - news) in response to reports that the co-founders were due to sell the remainder of their stake. However, in February 2013 he said that “any great business has to outlive its original founders”. He noted that he, Mr Balon and Mr Wright will retain a small stake and will sit on the company’s executive committee.

The outcome is that Coca-Cola will purchase almost all of the 42pc stake the founders had retained after the American company bought 58pc of Innocent in 2010 for around £65m. The size of the final deal was not disclosed but it was widely stated that it represented a much higher valuation of the London-based business, reflecting the fact that its sales had almost trebled over the period 2010-2013.

Mr Reed said Innocent would continue to be run as a “separate business unit; it will look and feel the same”. He added that the founders will spend more time with the company’s charitable arm and work on “personal projects”.
The questions here that Coca Cola have to face are:
  • creating a leadership that ensures the continued viability and effectiveness of the smoothies business;
  • creating and maintaining a strength and distinctiveness of organisation culture and behaviour that ensures compatibility of the smoothies operation with the whole of the Coca Cola organisation;
maintaining and enhancing the future operations of both the smoothies activities, and also integrating this with the overall activities of the company.

Discussion questions

To what extent are the words ‘leadership’ and ‘management’ interchangeable? In terms of organisation effectiveness, which is more valuable: leadership or management?

How do you establish the presence of leadership traits and potential in people that you want to appoint to key positions?

How important are ‘credibility’ and ‘confidence’ (both self-confidence and also the confidence of others) in those in leadership and key positions? How do you establish credibility and build confidence?

Web links to other examples, materials and sources

You need to be familiar with the main regulatory drives that influence business and managerial behaviour and the ways in which companies and organisations are supposed to conduct their business. The most high profile regulatory approach is the US Sarbanes-Oxley Act 2002, which was brought in to try and ensure that companies worked to a universal set of standards in the wake of the collapse of Enron. The link is:

You should also be familiar with the links to the regulatory and statutory bodies with which you have dealings as the result of involvement in particular industries, sectors and locations.

You should also be familiar with universal statutory bodies: