CHAPTER 1

Introduction
During the first decade of the twenty-first century, human resource management
(HRM) thinking and practice have evolved in significant new directions. Issues and
approaches that were previously seen in many organisations as being peripheral
have moved to centre stage as HR agendas have been adjusted to take account of
developments in the business environment. Hence we have seen much more interest
C TF

in work–life balance issues, in HR ethics, partnership agreements and in the formal

N
O O

evaluation and measurement of HR practices. Ideas developed in the 1990s have

O
PY R

moved from ‘fringe’ or ‘fad’ status to occupying a pivotal role in many organisations’
HR strategies. This is true of employer branding, the use of balanced scorecards,
R RE

the fostering of positive psychological contracts, the provision of flexible benefits

IG P

and the range of activities collectively comprising ‘e-HR’. Older, more-established

H R

approaches have been reconfigured and often relabelled to make them fit for
T O

purpose in the contemporary world. Workforce planning has thus been reinvented
M D

as talent management, pay administration has metamorphosed into total reward

AT UC

management, equal opportunities has become diversity management, while terms

such as coaching, mentoring, competencies and business partnering have been
ER T

accorded specific definitions in our professional vocabulary. We have also seen the
emergence of some genuinely new areas of research and practice, such as strengths-
IA ION

based performance management, formal strategies aimed at fostering well-being

L

and happiness at work and the evolving employee engagement agenda. At the same
time we have seen a substantial increase in the amount of regulation to which the
employment relationship is subject, the emergence of skills shortages across a range
of occupations and additional pressure both to intensify work and to increase levels
of employee commitment. Last, but not least, we have seen the development of a
situation in which the need to adapt, evolve and restructure is a constant presence in
many organisations. Whereas change used to be episodic in nature, it has for many
become endemic, with major implications for the way we carry out HRM.

There are two major purposes behind this book. The first is to focus on these major
contemporary issues and ideas in HRM, to explain their significance, assess some
of the research that has been carried out into them, debate their advantages and

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 2 Contemporary Issues in Human Resource Management

disadvantages and seek to understand their implications for HR practice. In addition,

the book aims to explore why this apparently diverse range of unconnected ideas
and practices have come to prominence in recent years. While the bulk of the
later chapters are focused on the key recent developments and emerging issues
themselves, the early part seeks to put forward a coherent explanation for their rise
rooted in an analysis of key, longer-term trends in the HR business environment.
Not only does an analysis of this kind enable us to explain why the HR agenda has
evolved in recent years in the way that it has, but it also provides a good basis for
thinking usefully about its likely future direction. It is this feature which makes the
book distinct from others. By focusing on the future as well as the present, it aims
C TF

to help prepare you for a future career in HRM. In short, an attempt will be made to
N
O O

answer the following question:

O
PY R

●● What will be the major issues and problems that are likely to shape HR work during
the coming 20 years?
R RE
IG P
H R

LE A R NIN G O UTC OM ES
T O

The objectives of this chapter are to:

M D

●● place contemporary developments in HRM in historical context

AT UC

●● explain how current HR priorities differ from those that prevailed 20 or 30 years ago
put the case in favour of the proposition that we are seeing the emergence of a distinct new era
ER T

●●
in the evolution of people management practice
discuss the major environmental constraints that increasingly influence HR practice in
IA ION

●●
organisations
L

●● assess the likely future direction of HRM practice

●● set out the key questions that are likely to dominate HR thinking and debate over the next 20
years.

CD26872.indb 2 15/08/2011 11:59

 Introduction 3

workforce wake-up call

2006 saw the publication of a book of skills are required. While other resources
articles by a variety of writers, consultants will be abundant, the most important
key a rt i cl e

and researchers working in the field of resource of all – talent – will become
HRM called Workforce Wake-Up Call: Your increasingly scarce. Organizations must ask
workforce is changing, are you? Addressed themselves: Are we prepared for this global
to a senior management audience, workforce revolution? Do we have the right
the book looks at key trends in the strategies in place? (Gandossy et al 2006:
contemporary business environment and xxiii).
makes judgements about how the world of
work and people management is likely to Questions
evolve and change in the coming decades 1 How far do you agree with the view
in Western industrialised countries. In that in the future all the resources that
C TF

their introduction the editors sum up the organisations draw on will be ‘abundant’
N
O O

key messages. Their conclusion begins as with the exception of talent? What
O

follows: arguments could be advanced against

PY R

The workforce is in the midst of an this point of view?

unstoppable and dramatic transformation. 2 Why should leaders be developed any
R RE

In the coming years, organizations will more swiftly in the future than they are
IG P

confront challenges related to demographic now?

trends, global mobility, diversity, work/life
3 Why should people be any keener to
H R

issues, technology changes and a virtual

switch jobs in the future than they are
T O

workforce. Competition will be global;

now?
capital will be abundant; leaders will be
M D

developed swiftly; and talented people 4 Thinking about your own organisation,
how relevant are these points? What
AT UC

will be keen to change jobs frequently.

These changes will influence how work is might be ‘the right strategies’ to adopt in
performed, where it is performed and what order to prepare for the future?
ER T
IA ION
L

c o nte mpo rary tre nds: t owards a n ew h r?

Throughout its history the profession or management function – now commonly
titled ‘human resource management’ (HRM) and previously known as ‘personnel
management’ – has evolved in definable new directions every 20 or 30 years (see
Torrington et al 2011: 10–14). In its earliest incarnation more than 100 years
ago, it was focused primarily on improving the welfare of workers in factories,
down mines and on docks and shipyards. Some employers began to realise that
they could secure greater loyalty, commitment and productivity if they looked
after the interests of their workforce by providing a healthy, safe workplace and
by providing paid holiday, sick pay and even subsidised housing. Between the
two World Wars – as professional, white-collar work became more common and
as the state welfare system started to develop – the focus shifted to improving
efficiency with the application of scientific management and organisation design
principles of the kind advanced by F.W. Taylor and Henri Fayol. Organisations
became more bureaucratic and mechanistic, with clearly defined grading

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 4 Contemporary Issues in Human Resource Management

structures and a preference for recruiting people at a relatively young age with a
view to promoting them over time. Workforce planning, occupational pensions
and extensive staff rulebooks were introduced, as management became less
personal. The profession then shifted gear again after the Second World War,
as the trade union movement grew in strength, requiring personnel managers
to negotiate new initiatives and to manage often difficult industrial relations
disputes.
The last major change occurred in the 1980s with the emergence of the
term human resource management signalling not just new rhetoric, but also
significant new thinking on the part of managers. At the time much effort was
expended debating what exactly ‘HRM’ was and how it differed from ‘personnel
management’ – a debate that was never really satisfactorily concluded before the
mainstream research agenda moved on to focus on establishing how and to what
extent HR practices contribute to the achievement of organisational performance
C TF
N

(see Guest 1987, Legge 1995, Sisson and Storey 2000). In retrospect, however,
O O

it is possible to see the evolution of HRM in the 1980s and 1990s very much
O
PY R

as a response on the part of management to the sharp decline in trade union

membership and influence that occurred at that time as a result of regulatory
changes, increased individualism, the decline of traditional industries and the
R RE

growth of the service sector. Over quite a short period of time managers found
IG P

themselves firmly in the driving seat and in control of the direction of people
H R

management in their organisations. Particularly important was the demolition

during the 1980s, at least in the private sector, of the established national-level
T O

collective bargaining system. Terms and conditions were no longer set for
M D

employers by a body negotiating with unions on their behalf for a whole industry.
AT UC

Bargaining was decentralised, and in many cases gave way altogether to a

situation in which pay and conditions were determined by management without
any need to negotiate with anyone at all. Power thus shifted sharply in many
ER T

organisations towards management, high levels of unemployment and low levels

of employment security reducing both the ability and willingness of employees to
IA ION

resist. Donkin (2001) neatly sums up the result as follows:

L

Like an improved soap powder with a biological ingredient, HRM,

equipped with something called strategy, promised a new set of tools and
measures to reward, motivate and organise employees in the re-engineered
workplace.
For a generation managers had been seriously constrained in terms of how
they approached the people-related aspects of their activities. Now they had
an opportunity to take control and shape approaches that were appropriate for
their own organisations’ particular circumstances. HR strategies were developed,
new individualised pay arrangements introduced, formal performance appraisal
systems established and competency frameworks defined. Employers also seized
the opportunity to employ people more flexibly, establishing more part-time
and temporary jobs, outsourcing ‘non-core’ activities to external providers
and abolishing long-established lines of demarcation which determined where
one group of workers’ duties ended and another’s began. At the same time

CD26872.indb 4 15/08/2011 11:59

 Introduction 5

new methods of relating to workers had to be established to replace union

consultation and negotiation arrangements, so we saw the spread of a range of
new involvement and communication initiatives along with a preference for
single-table or single-union bargaining in circumstances where trade unions
retained an influence. In short, HRM can largely be explained as a response on
the part of organisations to a newfound freedom to manage their workforces
in the way that they wanted to. Fewer compromises had to be made, allowing
decisions to be made and strategies to be established which operated exclusively
in the long-term interests of organisations.
The question that researchers and commentators are now starting to ask is
whether or not, 30 years on, we are beginning to see the evolution of another
new pathway in the historical development of ‘people management’? Can we yet
announce the arrival of a distinctly new era with any confidence, and if so, how
can it be characterised and what should it be labelled?
C TF
N
O O

The answer is that a credible argument can be put in favour of the proposition,
O

but that it is too early to conclude with great confidence that we are entering a
PY R

period which is clearly distinct from the ‘HRM era’ described above. Much will
depend on the fate of the world economy over the next few years. At the time
R RE

of writing (early 2011) the UK economy, along with those of most countries,
IG P

is slowly recovering from a deep recession. As a result, we have seen a reversal

of some key trends in HRM practice and thinking which had taken root and
H R

become established during the boom years of the 1990s and 2000s. If things
T O

follow the pattern of the two recessions we witnessed in the early 1980s and early
1990s, we will see a return to economic growth fairly quickly and a reasonably
M D

swift resumption of the earlier, established long-term trends. If this turns out to
AT UC

be the case, it is likely that we will soon be able to herald the arrival of a distinctly
new period in the development of HRM. Alternatively, and much less agreeably,
ER T

recessionary conditions could last for much longer, perhaps even leading to a
prolonged period of sluggish economic performance as occurred in the 1930s.
IA ION

Were that to be the case the key recent long-term trends that established
themselves 30 years ago would reverse. This might well herald a new direction
L

in the development of people management, but it would in all likelihood simply

point to the re-establishment of the kind of approaches first brought into being in
the early 1980s and labelled ‘HRM’.
However, let us assume for now that the first prognosis turns out to be fulfilled,
that the economy recovers reasonably swiftly and that the long-term established
trends in our business environment resume again. If this turns out to be the
case, it will soon be common for HR thinkers and leaders to proclaim the
establishment of a clearly defined, new trajectory. It is on this premise that some
of the thinking behind this book is largely based.
The term the new HRM has been adopted by some in recent years to describe
collectively some significant recent developments in professional thinking and
practice. It is commonly used in the HR press and has also now found its way
into books and articles authored by academic writers (see Price and Walker 1999,
Bach 2005, Boroughs et al 2008). There is little coherent agreement about what

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 6 Contemporary Issues in Human Resource Management

the term means but it is a convenient label for a new trajectory which retains
many features of HRM as established in the 1980s, yet is fundamentally distinct
in key respects. More pretentious terms which could well end up being used in
the academic community might be ‘post-HRM’ or even ‘HRM 2.0’ (both have
been used from time to time), but for the purposes of this chapter we will stick
with ‘new HRM’ simply because it has already been used quite widely.
So what is it that distinguishes ‘the new HR’ from HRM in the form it was
established during the 1980s and 1990s? The short, concise answer is that the new
HR operates under significant constraints of a type that were not present when
HRM originally emerged and became established during the last two decades of
the twentieth century. Three are of particular significance:
1 Tight labour markets: The first eight years of the new century saw labour
markets tighten very considerably. While the supply of would-be employees
C TF

remained larger than the demand for them in one or two areas of work and
N
O O

in some areas of the country, skills shortages emerged in most industries and
O

began to dominate the HR agenda before recessionary conditions arrived in

PY R

2008 and the economy began to contract. Recruitment and retention thus
moved to the top of the agenda in most HR departments as organisations
R RE

struggled to source the people they needed. Importantly, the evolution of

IG P

tight labour markets meant that skilled employees who were dissatisfied with
their work, their organisations or, most commonly, their managers, could
H R

find alternative work with some ease. In a tight labour market this reality
T O

gives employees a degree of power and hence influence over the nature of
managerial decisions which affect them.
M D
AT UC

2 Regulation: Since the 1990s the amount of regulation governing the

employment relationship in the UK, as well as in other EU countries, has
ER T

increased very markedly. Areas of employment which were completely free of

regulation prior to this period, such as age discrimination, have been regulated
for the first time, while others, where light-touch approaches were the norm
IA ION

previously, are now far more closely regulated. Disability discrimination

L

and maternity rights are two prominent examples. As a result the number of
employment tribunal claims lodged each year has increased very significantly
indeed, reflecting an increased propensity on the part of aggrieved employees
to seek redress in the courts.
3 The nature of the jobs we do: Increasingly in recent years demand for
labour has been focused on higher-paid, higher-skilled jobs of a professional,
managerial or technically sophisticated kind. Job-holders in these roles are
well educated and typically have greater knowledge about their work than the
people who manage the organisation. As a result, if they are wise, managers are
required to take account of their employees’ views and have increasingly found
it necessary to involve them in decision-making. Moreover, because there is
much truth in the saying ‘knowledge is power’, professional and managerial
staff are well placed to resist attempts by managers to impose decisions on
them with which they disagree.

CD26872.indb 6 15/08/2011 11:59

 Introduction 7

In addition, there is another form of constraint which has had an impact,

although as yet it has been of a good deal less practical significance than the first
three:
4 Ethical awareness: Consumers, investors and job-seekers, particularly those
who are from the younger generations, have started demonstrating both
increasing awareness of ethical matters and also a willingness to take ethical
considerations into account when making decisions about what goods and
services to buy, where to put their savings and which organisations they seek
to work for. As a result, organisations have begun to embrace ‘corporate social
responsibility’, have actively sought to develop a reputation for ethical conduct
and have tried to associate leading brands with ethical values. In the main the
nature of ethical awareness has focused on green matters and on fair trade, but
there are significant examples of concern spreading into the HR field, notably
in respect of the working conditions established by multinational corporations
C TF
N

operating in developing countries.

O O
O

We will look in detail at these developments, as well as others in the business

PY R

environment which are shaping the contemporary HR agenda, in Chapters 2,

3, 4 and 5. For now it is simply necessary to establish that together their impact
R RE

has been to constrain the freedom of manoeuvre enjoyed by HR managers, thus

IG P

restricting the extent to which decision-making can be taken uniquely in the

interests of organisations and their shareholders. As a result there has been a
H R

change in what is generally considered to constitute ‘effective HR practice’. In the

T O

1980s and 1990s the dominant idea was that the prime role of the HR manager
was to develop HR strategies which aimed to help ‘deliver’ the organisation’s
M D

strategic objectives. The starting point was thus a clear understanding of the
AT UC

organisation’s aims and priorities. An HR strategy would then be developed and

implemented, organisational strategy being ‘translated’ accordingly into HR
ER T

practice. There is nothing at all wrong with this approach – and in Chapter 13
you will find examples which set out the thinking behind it – but it can only
IA ION

be the focus of professional HR practice in circumstances in which managers

are free to implement such strategies without substantial constraint. In other
L

words, there is an assumption behind it that putting the defined HR strategy into
practice will be unproblematic. During the first decade of the twenty-first century
it became increasingly apparent that this is by no means the case. Constraints of
the kind set out above have loomed ever larger, acting singly or in combination
to restrict the capacity of the HR function simply to deliver objectives which
underpin the organisation’s long-term strategy. Major compromises are
increasingly required.
We can therefore usefully conceptualise the distinction between the HRM era and
that of ‘the new HR’ as being concerned with the priorities of the HR function
and of HR work. Helping to deliver organisational objectives remains present in
the ‘new HR’, but there are more fundamental matters to focus on first. Key is the
need to ensure that the organisation has at its disposal the human resources it
needs in order to function at all. Effective recruitment, retention and employee
development are thus the prime concerns. The staff, once assembled, then have to

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 8 Contemporary Issues in Human Resource Management

be motivated and encouraged to perform at the highest achievable level. Thirdly,

the function needs to manage the employment relationship (when seen from the
perspective of both employer and employee) in an efficient and fair manner. Such
is necessary if it is to gain and maintain a reputation as an effective, and indeed
an ethical, manager of people.
As a result of the need to manage HR with these constraints, we are seeing the
development of thinking and of approaches which are clearly different from
those associated with HRM in the 1980s and 1990s. The most striking and
significant is the increased tendency of HR functions to use language and ideas
associated with customer relationships when talking about employees. It has
for example become common for HR managers to refer to employees, as well
as to line managers, as ‘our internal customers’, the implication being that the
purpose of a well-run contemporary HR function is to provide a service to a
client group which specifically includes employees. Moving on from this we are
C TF
N

seeing a pronounced increased interest in undertaking staff attitude, satisfaction

O O

and engagement surveys, the purpose being to measure and track over time the
O
PY R

perceptions of employees towards the organisation and its managers. Signs of

growing dissatisfaction are then investigated and action taken to try to secure
improved ratings the following year. HR practices are becoming increasingly
R RE

employee-focused in other ways too. We can point, for example, to increased

IG P

interest in and use of 360-degree appraisal systems in which staff are involved
H R

formally in providing feedback on performance to their peers and bosses. Further

evidence comes from the increased use of self-managed teams, of flexible benefits
T O

systems which allow employees to determine the make-up of their own pay
M D

packages and of payment systems which link remuneration to the achievement

AT UC

of objectives which are agreed ahead of time between managers and staff. Finally,
and most interestingly of all, HR managers are increasingly borrowing ideas
long used by colleagues in the marketing function and applying them to the
ER T

labour market. Employer branding is the most prominent of these (see Chapter
7), but we can also point to job sculpting (designing jobs around the preferences
IA ION

and qualifications of individuals) and to approaches which ‘segment’ staff into

L

groups and design employment experiences around their perceived needs and
aspirations.
One way of summing up this group of trends in HR practice is to argue that ‘the
new HR’ is as concerned with effectively competing in the labour market as it
is with supporting the efforts of the organisation in competing in the product
market. It has to be – because if it does not, it will not deliver to the organisation
the pool of human resources necessary to enable it to function at all.

resource dependency theory

It is helpful in this context to draw on the ideas that underpin ‘resource
dependency theory’ (see Hatch 1997). Adherents of this theory focus on
the extent to which organisations rely on a variety of different ‘sources of
dependence’, the main examples being labour, capital, raw materials, knowledge,
plant and equipment, and a market for their products and services. These sources

CD26872.indb 8 15/08/2011 11:59

 Introduction 9

of dependence vary in terms of how critical they are to the organisation’s success
or survival and in terms of how scarce they are at any one time. The more critical
and scarce a source of dependence becomes, the more attention the organisation
must pay to it in order to ensure that it can continue to benefit from its supply,
and the less freedom of manoeuvre managers enjoy in carrying out their job.
Hence where an organisation is heavily reliant on one or two large customers,
it is in a situation of high resource-dependence. Customers are relatively scarce
and each is utterly critical to the organisation’s future. Satisfying those customers
becomes a priority. By contrast an organisation which has many thousands of
customers is in a wholly different position. Customers are neither scarce nor, as
individuals, critical. If one is dissatisfied and takes their business to a competitor
it is a matter of concern, but it is not hugely damaging to the organisation. In
such an environment individual customers inevitably have less power over how
the organisation manages its relationship with them. The same analysis can be
C TF

carried out in respect of access to financial capital (the more critical and scarce
N

the more influence the provider of the capital has over the organisation), raw
O O
O

materials and any other potential source of dependence.

PY R

Resource dependency theory is useful as a means of explaining recent

developments in HR because of these concepts of ‘criticality’ and ‘scarcity’. In
R RE

short, we can plausibly argue that in recent years, until the recent recession
IG P

reversed trends somewhat, employees (as a source of dependence) became

H R

both more critical and more scarce. They became more critical because the jobs
we are looking to fill increasingly require people who are more skilled, highly
T O

educated and experienced. Each individual’s contribution to the achievement of

M D

the organisation’s objectives is thus more significant. When they leave they are
AT UC

harder and more costly to replace with a satisfactory successor, not least because
they walk away with a great deal of knowledge in their heads which it is going
to take a successor some time to build up. The departure of such employees is
ER T

thus damaging to the organisation, and indeed doubly so if they go on to work

for a competitor and to deploy their knowledge and experience against the
IA ION

interests of the organisation. In short, the more skilled, qualified and experienced
L

job-holders are required to be, the more critical each is from an organisation’s
perspective.
Over the long term, too, employees have become increasingly scarce. While this
trend was interrupted to a degree by the onset of recession, there is no question
that over a long period now many labour markets have become steadily tighter.
Mainly because the skills that are in most demand are more specialised and
higher-level in nature, the size of potential applicant pools has declined. Hence, in
recent years we have seen a great deal of overseas recruitment, the development
of a ‘war for talent’ between organisations seeking the best-qualified staff, the
growth of headhunting agents and many examples of organisations seeking to
position themselves in the labour market as ‘employers of choice’.
In short, the first years of the twenty-first century saw a situation develop
in which employees have started to become both increasingly critical and
increasingly scarce, ratcheting up the degree to which organisations are

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 10 Contemporary Issues in Human Resource Management

dependent on securing their services. Arguably this can be seen as a fundamental

change and is central to any understanding of ‘a new HR’.

c r i t i c a l re f l e c t io n
Think about the recent experience of your own organisation. How far is it true in its case to state
that employees are becoming ‘increasingly critical’ to its operations? How far is it true to state
that would-be employees are becoming increasingly scarce?

f u ture ag e ndas
Above I argued that we have seen a clear and decisive move towards ‘a new HR’
C TF
N

in recent years as a result of the rise of a knowledge-based economy, of tighter

O O
O

labour markets, increased regulation and increased ethical awareness. The big
PY R

question for the future is, will this be sustainable? Is the ‘new HR’ as we have
defined it here to stay for the long term, or are the trends that have brought it
R RE

into being likely to cease, slow down or reverse direction?

IG P

The answer depends in part on the extent to which the economy is able to recover
fully from the recent downturn. If recovery is strong and the longer-term trends
H R

are re-established, the answer will be ‘yes’. If, by contrast, we enter a lengthy
T O

period of international depression, with high levels of unemployment for many

M D

years, a contraction in international trade and reduced demand for human

resources, the answer will be ‘no’. In these circumstances HRM will have to alter
AT UC

its orientation, but it will be in a wholly different direction from that of ‘the new
HR’ as defined in this chapter.
ER T

It is important to introduce this caveat at the start of this section to make it clear
IA ION

that this book is not intended to be a work of prophecy. Its purpose is not to set
out a vision of the future of HRM that will be fulfilled. Instead, one of its core
L

aims is to speculate in an informed manner about how the future of HRM in

the UK is most likely to pan out if these acknowledged, long-term trends in our
business environment do continue to develop along their established lines in the
future.
In the above discussion about ‘the new HR’ a number of these key contemporary
trends were introduced. Each of those discussed so far is further explored in
the chapters which follow, along with an assessment of its likely future impact
on HRM. However, one further contemporary trend of major significance has
not yet been discussed. It will form the focus of Chapter 2, but needs to be
introduced at this stage as it is fundamental to any credible assessment of the
future direction of HRM. This is increasing competitive intensity.
Over a long period now, in both the public and the private sectors, organisations
have been faced, year on year, with increased competition from other providers.
This trend is partly due to the globalisation of world economic activity, partly due

CD26872.indb 10 15/08/2011 11:59

 Introduction 11

to the rapid advance of technological developments in recent years, partly due

to government policy aimed at increasing ‘competition and choice’, and partly
due to increased customer expectations and a greater willingness on their part to
switch suppliers or brands when they are unhappy with the quality or price of the
product or service they are receiving. Moreover, it has not just been customers
who have become increasingly demanding. The situation has been exacerbated by
the increased tendency of shareholders to demand higher and faster returns on
their investment. Markets for capital have become much more competitive as well
as markets for goods and services.
The result is a situation in which organisations are obliged to compete harder
in order to survive and prosper, leading to a situation in which pressure is
placed on employees to work much more productively and efficiently. Aside
from intensifying work in this way, increased competitive intensity has other
significant effects too:
C TF
N

Employers are required to rationalise, restructure and reorganise much

O O

●●
O

more frequently. Mergers, demergers, acquisitions, sell-offs, outsourcing and

PY R

downsizing exercises are thus more common than in the past. This means
that HR managers are having to focus more than they did in the past on the
R RE

effective management of major change episodes.

IG P

●● Increased competitive intensity has brought with it increased volatility. As

a result business is a great deal less predictable than it used to be. The time
H R

horizons in which we can plan with any degree of certainty have declined,
T O

while insecurity has become a good deal more common.

M D

●● The harder we are required to compete for business with others, the more
AT UC

important good HRM becomes. This is because those organisations which

are most effective at recruiting, retaining and motivating a committed and
productive workforce are better able to compete successfully than those who
ER T

are less effective in these areas.

IA ION

●● A greater premium is placed on efficiency. Cost control becomes more

important the more intense the competitive environment because price is
L

one of the most significant determinants of which organisation secures

business.
When thinking about the likely future evolution of HRM over the coming 10 to
20 years we need to take account of increasing competitive intensity alongside the
further development of the other key trends we have identified, such as tighter
labour market conditions, increased regulation of the employment relationship,
the changing nature of the work we are employed to do and the rise of greater
ethical awareness. The central argument of this book is that it is the interplay
of these various trends that will determine the future character of the HR
function in organisations, of HR priorities and the key problems that future HR
professionals will have to grapple with.
So what does this kind of analysis suggest will be the key preoccupations of HR
managers as the next two decades unfold? What will be the major professional
issues that they will have to try to resolve? The following are likely to be the

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 12 Contemporary Issues in Human Resource Management

major questions that will need to be addressed and hence the defining issues
faced by HR managers in coming years:
1 How can an organisation compete for staff when its labour markets are
tightening and its environment is increasingly resource-constrained?
This may very well turn out to be the most significant question faced by HR
managers in coming decades. What may develop is something of a ‘perfect
storm’ in which people with the required skills and experience are in ever
shorter supply, but at the same time due to increased competitive intensity
organisations are less and less able to respond by paying recruits higher
salaries.
2 How can an organisation become more flexible and responsive to change
while also successfully recruiting, retaining and motivating committed
employees?
C TF
N
O O

This is another fundamental issue that could very well preoccupy HR

O

managers in the years ahead. On the one hand, a capacity for flexibility is
PY R

going to become increasingly significant in order for organisations to compete

successfully in volatile and unpredictable market conditions. On the other
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hand, maximising flexibility is incompatible with the need to mobilise and

IG P

motivate a highly committed workforce because it brings with it insecurity. Yet

the nature of the work that we will increasingly be carrying out in the future
H R

will require committed staff.

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3 How can an organisation compete effectively, often in international

M D

markets, while also gaining and maintaining a reputation for high

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standards of ethics and legal compliance in its dealings with employees?

This is another difficult issue to resolve. Increased competition makes it harder
ER T

for organisations to survive and prosper. There is a need to keep a lid on costs
and sometimes considerable temptation to cut corners in order to secure
IA ION

business. The extent to which it is possible to duck and dive sufficiently in

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order to maintain a competitive position while also adhering to high standards

of employment practice – defined in ethical and legal terms – is questionable,
particularly when international competitors are not required to maintain the
same standards.
These three questions are not at all easy to answer. Moreover, of course, they can
be answered in a number of very different ways. For these reasons they are likely
to form the basis of the major professional debates in HRM that will evolve over
the next few years. This book will not provide any easy answers, but readers will
hopefully find it useful as a guide to the underlying issues and to some of the
tools, techniques, ideas and theories that may be the basis of possible solutions.

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 Introduction 13

Since the early 1980s the highly influential ideas an easy target for critics. Long-term
UK-based management guru Charles employment remains a reality for many,
Handy, along with many others, has been self-employment has become more
predicting the arrival of a world of work common but is very much the preserve of a
in which most jobs are of a temporary small minority, while job tenure rates have
ca s e s tu dy

nature. He has argued that in the future remained stable for many years. Handy
most people will progress through himself, however, remains unrepentant and
‘portfolio careers’, moving from short-term convinced that given time his vision of the
assignment to short-term assignment, future will turn out to be accurate.
sometimes employed, other times in Questions
the capacity of a self-employed person.
Long-term, stable employment for a single 1 Which environmental trends discussed in
employer will become rare. this chapter are compatible with Charles
Handy’s predictions and which are not?
Handy’s view has been much criticised
2 To what extent do you agree with Charles
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in recent years, largely because he was

N

predicting that these developments would Handy that portfolio careers will one day
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be the norm in countries such as the UK?

O

be with us by the turn of the millennium.

PY R

In practice, of course, the predictions Why?

proved to be faulty, making Handy and his
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H R

●● Recent years have seen the emergence of a range of new ideas, practices and
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priorities for HR managers that have no obvious apparent coherence.

ke y l e arning po int s

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●● It is possible to argue that we are witnessing the evolution of a distinct new

stage in the historical development of people management practice. Some
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writers and commentators have adopted the term the new HR to describe this
trajectory.
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●● The new HR is characterised by a need to manage within and around

environmental constraints such as tighter labour market conditions, increased
IA ION

regulation and the rise of ethical awareness on the part of organisational

stakeholders.
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●● A further key contemporary business trend which is affecting HR practice is

increased competitive intensity.
●● It can be plausibly argued that the key professional debates that will dominate
the next 20 years in HRM will derive from the interplay between these various
environmental developments.

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 14 Contemporary Issues in Human Resource Management

Stephen Bach’s introductory chapter in the 4th edition of his book Managing

W
N
human resources: personnel management in transition (2005) provides a useful

S
E explanation of thinking about the key current trends in HR practice.
e x plo re fu rt her
Bach, S. (2005) Personnel management in transition. In S. Bach (ed.) Managing
human resources: personnel management in transition. 4th edition. Oxford:
Blackwell Publishing.

You will also find a number of useful articles on long-term developments in HRM in
Reinventing HRM, edited by Ronald J. Burke and Cary Cooper (2005).

Burke, R.J. and Cooper, C. (eds) (2005) Reinventing HRM: challenges and new
directions. London: Routledge.

Lynda Gratton’s recent book entitled The shift: the future of work is already here
(2011) is an enjoyable and accessible read about environmental developments and
how they will shape the experience of work in the future.
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N
O O

Gratton, L. (2011) The shift: the future of work is already here. London: Collins.
O
PY R

references
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Boroughs, A., Palmer, L. and Hunter, I. (2008) HR transformation technology:

IG P

delivering systems to support the new HR model. Aldershot: Gower.

H R

Donkin, R. (2001) A quiet revolution in human resource management. Financial

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Times. 16 August.
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Gandossy, R., Tucker, E. and Verma, N. (eds) (2006) Workforce wake-up call: your
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workforce is changing, are you? Hoboken, NJ: Wiley.

Guest, D. (1987) Human resource management and industrial relations. Journal
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of Management Studies. Vol 24, No 5.

Hatch, M.J. (1997) Organisation theory: modern symbolic and postmodern
IA ION

perspectives. Oxford: Oxford University Press.

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Legge, K. (1995) Human resource management: rhetorics and realities. London:

Macmillan.
Price, K. and Walker, J. (1999) The new HR: strategic positioning of the human
resource function. Chicago, IL: Human Resource Planning Society.
Sisson, K. and Storey, J. (2000) The realities of human resource management:
managing the employment relationship. Buckingham: Open University Press.
Torrington, D., Hall, L., Taylor, S. and Atkinson, C. (2011) Human resource
management. 8th edition. London: FT/Prentice Hall.

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